~~Table of Contents~~UNITED STATES

~~UNITED STATES~~ SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2004~~ 2007

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission file number: 333-111423 ~~333-111423-01~~

CCH II, LLC* CCH II Capital Corp.* 333-111423-01

~~(Exact~~CCH II, ~~name~~LLC ~~of registrants as specified in their charters)~~*

Delaware Delaware		030511293 134257703
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

CCH II Capital Corp. *

~~12405~~(Exact name ~~Powerscourt~~of ~~Drive St.~~registrants ~~Louis,~~as ~~Missouri~~specified ~~63131~~ in their charters)

(Address of principal executive offices including zip code)

Delaware Delaware	03-0511293 13-4257703
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

~~(314) 965-0555~~12405 Powerscourt Drive

~~(Registrants’ telephone number~~St. Louis, ~~including area code)~~Missouri 63131

~~Indicate by check mark whether the registrants~~ (~~1) have filed all reports~~Address ~~required to be filed by Section 13 or 15(d)~~ of ~~the~~principal ~~Securities~~executive ~~Exchange~~offices ~~Act~~including ~~of 1934~~zip ~~during the preceding 12 months (or for such shorter period that the registrants were required to file reports~~code)~~, and (2) have been subject to such filing requirements for the past 90 days. YES [X] NO [ ]~~

~~Indicate by check mark whether the registrants are accelerated filers~~ (~~as defined in Rule 12b-2 of the Exchange Act~~314)~~. YES [ ] NO [X]~~ 965-0555

~~Indicate the number of shares outstanding of each of the issuers~~(Registrants’ ~~classes of~~ ~~common~~ telephone ~~stock~~number, asincluding ofarea ~~the latest practicable date:~~ code)

~~All~~Indicate by ofcheck ~~the~~mark ~~issued~~whether ~~and~~the ~~outstanding~~registrants ~~shares~~(1) ofhave ~~capital~~filed ~~stock~~all ofreports ~~CCH~~required ~~II Capital~~to ~~Corp.~~ be filed ~~are held~~ by ~~CCH~~Section ~~II,~~13 ~~LLC.~~or ~~All~~15(d) of the ~~limited~~Securities ~~liability~~Exchange ~~company~~Act ~~membership interests~~ of ~~CCH~~1934 ~~II,~~during the preceding ~~LLC~~12 ~~are~~months ~~held~~(or byfor ~~CCH~~such I,shorter ~~LLC~~period (athat ~~wholly~~the ~~owned~~registrants ~~subsidiary of~~were ~~Charter~~ required ~~Communications~~to ~~Holdings,~~file ~~LLC~~such reports), aand ~~reporting company under the Exchange Act~~(2). ~~There~~have isbeen nosubject ~~public~~to ~~trading~~such ~~market~~filing requirements for ~~any of~~ the ~~aforementioned~~past ~~limited liability~~90 ~~company~~days. ~~membership~~YES ~~interests~~[X] orNO ~~shares of capital stock.~~ [ ]

*Indicate by ~~CCH~~check ~~II,~~mark ~~LLC~~whether ~~and~~the ~~CCH~~registrants IIare ~~Capital~~large ~~Corp.~~accelerated ~~meet~~filers, ~~the~~accelerated filers, ~~conditions~~or ~~set~~non-accelerated ~~forth~~filers. inSee ~~General Instruction~~definition ~~H(1)(a) and (b)~~ of ~~Form 10-Q~~“accelerated filer and large ~~are~~accelerated ~~therefore~~filer” ~~filing~~in ~~this~~Rule ~~Form with~~12b-2 of the ~~reduced~~Exchange ~~disclosure format~~Act. (Check one):

~~CCH~~Large accelerated ~~II,~~filer ~~LLC~~o Accelerated ~~CCH~~ filer ~~II Capital Corp.~~o Non-accelerated filer þ

~~Quarterly~~Indicate by ~~Report~~check onmark ~~Form~~whether 10the registrants are shell companies (as defined in Rule 12b-Q2 ~~for~~of the ~~Period~~Act). ~~ended~~Yes ~~June 30,~~oNo ~~2004~~þ

~~Table~~Number of shares of ~~Contents~~common stock of CCH II Capital Corp. outstanding as of August 10, 2007: 1

	Page
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements - CCH II, LLC and Subsidiaries
Condensed Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003		4
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2004 and 2003		5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2003		6
Notes to Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 4. Controls and Procedures		41
PART II. OTHER INFORMATION
Item 1.Legal Proceedings		42
Item 6.Exhibits and Reports on Form 8-K		42
SIGNATURES		43
EXHIBIT INDEX		44
Certificate of Chief Executive Officer
Certificate of Chief Financial Officer
906 Certification of Chief Executive Officer
906 Certification of Chief Financial Officer

* CCH II, LLC and CCH II Capital Corp. meet the conditions set forth in General Instruction H(1)(a) and (b) to Form 10-Q and are therefore filing with the reduced disclosure format.

This quarterly report on Form 10-Q is for the three and six months ended June 30, 2004. The Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with the SEC, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this quarterly report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this quarterly report. In this quarterly report, “we,” “us” and “our” refer to CCH II, LLC ~~and its subsidiaries .~~

~~Table~~CCH II ofCapital ~~Contents~~Corp.

~~CAUTIONARY~~Quarterly Report ~~STATEMENT~~on ~~REGARDING~~Form ~~FORWARD~~10-~~LOOKING~~Q ~~STATEMENTS:~~ for the Period ended June 30, 2007

~~This quarterly report includes forward-looking statements within the meaning of~~Table ~~Section 27A~~ of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding, among other things, our plans, strategies and prospects, both business and financial including, without limitation, the forward-looking statements set forth in the “Results of Operations” and “Liquidity and Capital Resources” sections under Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this quarterly report. 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 including, without limitation, the factors described under “Certain Trends and Uncertainties” under Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this quarterly report. Many of the forward-looking statements contained in this quarterly report may be identified by the use of forward-looking words such as “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,” “intend,” “estimated” and “potential,” among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this quarterly report are set forth in this quarterly report and in other reports or documents that we file from time to time with the SEC, and include, but are not limited to: Contents

• our ability to sustain and grow revenues and cash flows from operating activities by offering video, high-speed data, telephony and other services and to maintain a stable customer base, particularly in the face of increasingly aggressive competition from other service providers; • our and our parent companies’ ability to pay or refinance debt as it becomes due; • the availability of funds to meet interest payment obligations under our and our parent companies’ debt and to fund our operations and necessary capital expenditures, either through cash flows from operating activities, further borrowings or other sources; • any adverse consequences arising out of our and our parent company’s restatement of our 2000, 2001 and 2002 financial statements; • the results of the pending grand jury investigation by the United States Attorney’s Office for the Eastern District of Missouri, and the ability to reach a final approved settlement with respect to the putative class action, the unconsolidated state action, and derivative shareholders litigation against Charter Communications, Inc., our indirect parent, on the terms of the memoranda of understanding described herein; • our ability to comply with all covenants in our indentures and credit facilities, any violation of which would result in a violation of the applicable facility or indenture and could trigger a default of other obligations of our affiliates under cross-default provisions; • our ability to obtain programming at reasonable prices or to pass cost increases on to our customers; • general business conditions, economic uncertainty or slowdown; and • the effects of governmental regulation, including but not limited to local franchise taxing authorities, on our business.

PART I. FINANCIAL INFORMATION	Page

Item 1. Financial Statements - CCH II, LLC and Subsidiaries
Condensed Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006	4
Condensed Consolidated Statements of Operations for the three and six
months ended June 30, 2007 and 2006	5
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 2007 and 2006	6
Notes to Condensed Consolidated Financial Statements	7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	16

Item 4. Controls and Procedures	26

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	27

Item 1A. Risk Factors	27

Item 6. Exhibits	32

SIGNATURES	S-1

EXHIBIT INDEX	E-1

~~All~~This quarterly ~~forward~~report on Form 10-~~looking~~Q ~~statements~~is ~~attributable~~for tothe three and six months ended June 30, 2007. The Securities and Exchange Commission ("SEC") allows us orto a"incorporate ~~person~~by ~~acting~~reference" oninformation ~~our~~that we file with the SEC, which ~~behalf~~ means ~~are~~that ~~expressly~~we ~~qualified~~can indisclose ~~their~~important ~~entirety~~information to you by ~~this~~referring ~~cautionary~~you directly ~~statement~~to those documents. We This ~~are~~information ~~under~~incorporates nodocuments previously ~~duty~~filed orby ~~obligation~~our toparent ~~update~~company, ~~any~~Charter ofCommunications, Inc., with the SEC ~~forward~~including its quarterly report on Form 10-~~looking statements~~Q ~~after~~for the ~~date~~quarter ended June 30, 2007, filed on August 2 ,2007. Information incorporated by reference is considered to be part of this quarterly report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this quarterly report. In this quarterly report, "we," "us" and "our" refer to CCH II, LLC and its subsidiaries.

3CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:

~~Table~~This quarterly report includes forward-looking statements within the meaning of Section 27A ~~Contents~~of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), regarding, among other things, our plans, strategies and prospects, both business and financial including, without limitation, the forward-looking statements set forth in the "Results of Operations" and "Liquidity and Capital Resources" sections under Part I, Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in this quarterly report. 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 including, without limitation, the factors described under "Risk Factors" under Part II, Item 1A. Many of the forward-looking statements contained in this quarterly report may be identified by the use of forward-looking words such as "believe," "expect," "anticipate," "should," "planned," "will," "may," "intend," "estimated," "aim," "on track," "target," "opportunity" and "potential" among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this quarterly report are set forth in this quarterly report and in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

~~PART~~· I.the ~~FINANCIAL~~availability, ~~INFORMATION.~~ in general, of funds to meet interest payment obligations under our and our parent companies’ debt and to fund our operations and necessary capital expenditures, either through cash flows from operating activities, further borrowings or other sources and, in particular, our and our parent companies’ ability to be able to provide under the applicable debt instruments such funds (by dividend, investment or otherwise) to the applicable obligor of such debt;

~~ITEM~~· 1.our ~~FINANCIAL~~and ~~STATEMENTS.~~our parent companies’ ability to comply with all covenants in our and our parent companies’ indentures and credit facilities, any violation of which could trigger a default of our other obligations under cross-default provisions;

~~CCH~~· IIour and our parent companies’ ability to pay or refinance debt prior to or when it becomes due and/or refinance that debt through new issuances, ~~LLC~~exchange ~~AND~~offers ~~SUBSIDIARIES~~ or otherwise, including restructuring our and our parent companies’ balance sheet and leverage position;

~~CONDENSED~~· ~~CONSOLIDATED~~competition ~~BALANCE~~from ~~SHEETS~~other distributors, including incumbent telephone companies, direct broadcast satellite operators, wireless broadband providers, and DSL providers;

~~(DOLLARS~~· INdifficulties ~~MILLIONS)~~in introducing and operating our telephone services, such as our ability to adequately meet customer expectations for the reliability of voice services, and our ability to adequately meet demand for installations and customer service;

	June 30,			December 31,
	2004			2003
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	88		$	85
Accounts receivable, less allowance for doubtful accounts of $20 and $17, respectively		176			178
Receivables from related party		—			59
Prepaid expenses and other current assets		20			21
Total current assets		284			343
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated depreciation of $4,428 and $3,834, respectively		6,348			6,808
Franchises, net of accumulated amortization of $3,299 and $3,445, respectively		13,195			13,680
Total investment in cable properties, net		19,543			20,488
OTHER NONCURRENT ASSETS		248			178
Total assets	$	20,075		$	21,009
LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	902		$	1,044
Payables to related party		20			—
Total current liabilities		922			1,044
LONG-TERM DEBT		9,210			9,557
LOANS PAYABLE – RELATED PARTY		39			37
DEFERRED MANAGEMENT FEES – RELATED PARTY		14			14
OTHER LONG-TERM LIABILITIES		569			687
MINORITY INTEREST		727			719
MEMBER’S EQUITY:
Member’s equity		8,622			9,008
Accumulated other comprehensive loss		(28	)		(57	)
Total member’s equity		8,594			8,951
Total liabilities and member’s equity	$	20,075		$	21,009

our ability to sustain and grow revenues and cash flows from operating activities by offering video, high-speed Internet, telephone and other services, and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition;

4 · our ability to obtain programming at reasonable prices or to adequately raise prices to offset the effects of higher programming costs;

~~Table~~· ofgeneral ~~Contents~~business conditions, economic uncertainty or slowdown; and

~~CCH~~· IIthe effects of governmental regulation, ~~LLC~~including ~~AND~~but ~~SUBSIDIARIES~~ not limited to local and state franchise authorities, on our business.

~~CONDENSED~~All forward-looking ~~CONSOLIDATED~~statements ~~STATEMENTS~~attributable OFto ~~OPERATIONS~~us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this quarterly report.

~~(DOLLARS IN MILLIONS) Unaudited~~3

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
REVENUES	$	1,239		$	1,217		$	2,453		$	2,395
COSTS AND EXPENSES:
Operating (excluding depreciation and amortization)		515			488			1,027			973
Selling, general and administrative		244			232			483			467
Depreciation and amortization		364			373			734			743
(Gain) loss on sale of assets, net		2			4			(104	)		13
Option compensation expense, net		12			—			26			—
Special charges, net		87			8			97			10
		1,224			1,105			2,263			2,206
Income from operations		15			112			190			189
OTHER INCOME AND EXPENSE:
Interest expense, net		(179	)		(124	)		(342	)		(254	)
Gain (loss) on derivative instruments and hedging activities, net		63			(10	)		56			4
Loss on extinguishment of debt		(21	)		—			(21	)		—
Other, net		1			(1	)		—			(1	)
		(136	)		(135	)		(307	)		(251	)
Loss before minority interest and income taxes		(121	)		(23	)		(117	)		(62	)
MINORITY INTEREST		(6	)		(4	)		(9	)		(7	)
Loss before income taxes		(127	)		(27	)		(126	)		(69	)
INCOME TAX EXPENSE		(3	)		(1	)		(4	)		(2	)
Net loss	$	(130	)	$	(28	)	$	(130	)	$	(71	)

PART I. FINANCIAL INFORMATION.

~~The~~Item ~~accompanying~~1. ~~notes~~Financial ~~are an integral part of these condensed consolidated financial statements~~Statements.

5CCH II, LLC AND SUBSIDIARIES

~~Table~~CONDENSED CONSOLIDATED ofBALANCE ~~Contents~~SHEETS

~~CCH II, LLC AND SUBSIDIARIES~~(DOLLARS IN MILLIONS)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	June 30,		December 31,
	2007		2006
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	34	$	32
Accounts receivable, less allowance for doubtful accounts of
$19 and $16, respectively		220		194
Prepaid expenses and other current assets		20		23
Total current assets		274		249

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated
depreciation of $8,239 and $7,602, respectively		5,088		5,181
Franchises, net		9,201		9,223
Total investment in cable properties, net		14,289		14,404

OTHER NONCURRENT ASSETS		253		201

Total assets	$	14,816	$	14,854

LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	931	$	975
Payables to related party		140		139
Total current liabilities		1,071		1,114

LONG-TERM DEBT		11,966		11,062
LOANS PAYABLE – RELATED PARTY		117		108
DEFERRED MANAGEMENT FEES – RELATED PARTY		14		14
OTHER LONG-TERM LIABILITIES		374		362
MINORITY INTEREST		651		641

MEMBER’S EQUITY
Member’s equity		575		1,552
Accumulated other comprehensive income		48		1

Total member’s equity		623		1,553

Total liabilities and member’s equity	$	14,816	$	14,854

~~(DOLLARS~~The accompanying INnotes are an integral part of these condensed consolidated ~~MILLIONS) Unaudited~~ financial statements.

	Six Months Ended
	June 30,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(130	)	$	(71	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Minority interest		9			7
Depreciation and amortization		734			743
Option compensation expense, net		23			—
Special charges, net		85			—
Noncash interest expense		8			19
Gain on derivative instruments and hedging activities, net		(56	)		(4	)
(Gain) loss on sale of assets, net		(104	)		13
Loss on extinguishment of debt		18			—
Deferred income taxes		4			2
Other, net		(5	)		(1	)
Changes in operating assets and liabilities, net of effects from dispositions:
Accounts receivable		(1	)		41
Prepaid expenses and other assets		(4	)		15
Accounts payable, accrued expenses and other		(129	)		(153	)
Receivables from and payables to related party, including deferred management fees		(50	)		(27	)
Net cash flows from operating activities		402			584
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(380	)		(254	)
Change in accrued expenses related to capital expenditures		(38	)		(103	)
Proceeds from sale of assets		727			—
Other, net		(2	)		(1	)
Net cash flows from investing activities		307			(358	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt		2,812			347
Repayments of long-term debt		(3,159	)		(341	)
Repayments to related parties		—			(96	)
Payments for debt issuance costs		(97	)		(14	)
Capital contributions		—			10
Distributions		(262	)		(245	)
Net cash flows from financing activities		(706	)		(339	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		3			(113	)
CASH AND CASH EQUIVALENTS, beginning of period		85			310
CASH AND CASH EQUIVALENTS, end of period	$	88		$	197
CASH PAID FOR INTEREST	$	328		$	235

~~The~~CCH II, ~~accompanying~~LLC ~~notes~~AND ~~are an integral part of these condensed consolidated financial statements.~~ SUBSIDIARIES

6CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS

~~Table~~(DOLLARS IN ~~of Contents~~MILLIONS)

~~CCH II, LLC AND SUBSIDIARIES~~ Unaudited

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollars in millions, except where indicated)

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006

REVENUES	$	1,499		$	1,383		$	2,924		$	2,703

COSTS AND EXPENSES:
Operating (excluding depreciation and amortization)		647			611			1,278			1,215
Selling, general and administrative		317			279			620			551
Depreciation and amortization		334			340			665			690
Asset impairment charges		--			--			--			99
Other operating expenses, net		1			7			5			10

		1,299			1,237			2,568			2,565

Operating income from continuing operations		200			146			356			138

OTHER EXPENSES:
Interest expense, net		(256	)		(248	)		(506	)		(488	)
Other expense, net		(31	)		(26	)		(38	)		(19	)

		(287	)		(274	)		(544	)		(507	)

Loss from continuing operations before income taxes		(87	)		(128	)		(188	)		(369	)

INCOME TAX BENEFIT (EXPENSE)		1			(2	)		(1	)		(4	)

Loss from continuing operations		(86	)		(130	)		(189	)		(373	)

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		--			23			--			38

Net loss	$	(86	)	$	(107	)	$	(189	)	$	(335	)

1.The accompanying ~~Organization~~notes ~~and~~are ~~Basis~~an integral part of ~~Presentation~~these condensed consolidated financial statements.

CCH II, LLC (“CCH II”) is a holding company whose primary assets at June 30, 2004 are equity interests in its operating subsidiaries. CCH II was formed in March 2003 and is a wholly owned subsidiary of CCH I, LLC (“CCH I”). CCH I is a wholly owned subsidiary of Charter Communications Holdings, LLC (“Charter Holdings”). Charter Holdings is a wholly owned subsidiary of Charter Communications Holding Company, LLC (“Charter Holdco”), which is a subsidiary of Charter Communications, Inc. (“Charter”). 5

CCH II ~~is the sole owner of CCO Holdings~~, LLC ~~(“CCO~~AND Holdings”), which in turn is sole owner of Charter Communications Operating, LLC (“Charter Operating”). Charter Operating was formed in February 1999 to own and operate its cable systems. In June and July of 2003, Charter Holdings entered into a series of transactions and contributions which had the effect of i) creating CCH I, CCH II and CCO Holdings and ii) combining/contributing all of Charter Holdings’ interest in cable operations not previously owned by Charter Operating to Charter Operating (the “Systems Transfer”). The Systems Transfer was accounted for as a reorganization of entities under common control. Accordingly, the accompanying financial statements combine the historical financial condition and results of operations of Charter Operating, and the operations of subsidiaries contributed by Charter Holdings for the three and six months ended June 30, 2003. CCH II and its subsidiaries are collectively referred to herein as the “Company.” All significant intercompany accounts and transactions among consolidated entities have been eliminated. SUBSIDIARIES

~~The Company is a broadband communications company operating in the United~~CONDENSED ~~States.~~ CONSOLIDATED ~~The~~STATEMENTS ~~Company~~OF ~~offers~~CASH its customers traditional cable video programming (analog and digital video) as well as high-speed data services and, in some areas, advanced broadband services such as high definition television, video on demand, telephony and interactive television. The Company sells its cable video programming, high-speed data and advanced broadband services on a subscription basis. FLOWS

The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission (~~“SEC”). Accordingly,~~DOLLARS ~~certain~~ IN information and footnote disclosures included in the Amendment No. 2 to the Company’s 2003 financial statements included in the Registration Statement on Form S-4 filed on May 5, 2004 have been condensed or omitted for this quarterly report. The accompanying condensed consolidated financial statements are unaudited and are subject to review by regulatory authorities. However, in the opinion of management, such financial statements include all adjustments, which consist of only normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. Interim results are not necessarily indicative of results for a full year. MILLIONS)

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. Areas involving significant judgments and estimates include capitalization of labor and overhead costs; depreciation and amortization costs; impairments of property, plant and equipment, franchises and goodwill; income taxes; and contingencies. Actual results could differ from those estimates. Unaudited

Reclassifications

	Six Months Ended June 30,
	2007			2006

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(189	)	$	(335	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization		665			698
Asset impairment charges		--			99
Noncash interest expense		12			16
Deferred income taxes		(3	)		--
Other, net		39			27
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable		(26	)		29
Prepaid expenses and other assets		2			--
Accounts payable, accrued expenses and other		--			(10	)
Receivables from and payables to related party, including deferred management fees		1			1

Net cash flows from operating activities		501			525

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(579	)		(539	)
Change in accrued expenses related to capital expenditures		(39	)		(9	)
Other, net		31			(5	)

Net cash flows from investing activities		(587	)		(553	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt		7,247			5,830
Repayments of long-term debt		(6,338	)		(5,838	)
Repayments to related parties		--			(20	)
Proceeds from issuance of debt		--			440
Payments for debt issuance costs		(33	)		(29	)
Distributions		(788	)		(314	)

Net cash flows from financing activities		88			69

NET INCREASE IN CASH AND CASH EQUIVALENTS		2			41
CASH AND CASH EQUIVALENTS, beginning of period		32			3

CASH AND CASH EQUIVALENTS, end of period	$	34		$	44

CASH PAID FOR INTEREST	$	506		$	451

NONCASH TRANSACTIONS:
Issuance of debt by Charter Communications Operating, LLC	$	--		$	37
Retirement of Renaissance Media Group LLC debt	$	--		$	(37	)
Distribution of intercompany note to related party	$	--		$	(105	)

~~Certain 2003~~The ~~amounts~~ accompanying ~~have~~notes ~~been~~are ~~reclassified~~an tointegral ~~conform~~part ~~with~~of ~~the~~these ~~2004~~condensed ~~presentation.~~consolidated financial statements.

~~2. Liquidity and Capital Resources~~ 6

~~The Company incurred net losses of $130 million~~CCH ~~for each of the three and six months ended June 30~~ II, ~~2004,~~LLC ~~and~~AND ~~$28 million and $71 million for the three and six months ended June 30, 2003, respectively. The Company’s net cash~~ SUBSIDIARIES

7NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Table of Contents~~(UNAUDITED)

~~CCH II, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ (~~UNAUDITED) (~~dollars in millions, except where indicated)

~~flows from operating activities were $402 million and $584 million for the six months ended June 30, 2004 and 2003, respectively~~1. ~~The Company has~~ Organization ~~historically required significant cash to fund capital expenditures~~ and ~~debt service~~Basis costs. Historically, the Company has funded these requirements through cash flows from operating activities, borrowings under its credit facilities, equity contributions from its parent companies, borrowings from parent companies, issuances of debt securities and cash on hand. The mix of funding sources changes from period to period, but for the six months ended June 30, 2004, approximately 59% of the Company’s funding requirements were from cash flows from operating activities and 41% from borrowings of long-term debt. This gives effect to the use of proceeds from the sale of systems, described below, to repay long-term debt. For the six months ended June 30, 2004, the Company had net cash flows used in financing activities of $706 million, reflecting a net repayment of $347 million of debt. Additionally, the Company increased cash on hand by $3 million to $88 million. Presentation

~~The~~CCH II, LLC ~~Company’s~~("CCH ~~long-term financing~~II") asis ofa ~~June 30,~~holding ~~2004~~company ~~consists~~whose ofprincipal ~~$5.4 billion~~assets ofat ~~credit~~June ~~facility~~30, ~~debt~~2007 ~~which~~ are the ~~was~~equity ~~refinanced~~interests in ~~April 2004~~its ~~and~~operating $3subsidiaries.~~8 billion~~ CCH ofII ~~high-yield~~is ~~notes. For~~a ~~the~~ direct ~~remainder~~subsidiary of ~~2004~~CCH I, ~~$15 million~~LLC of(“CCH ~~the Company’s debt matures~~I”), ~~and~~which is an ~~additional~~ ~~$30 million~~indirect ~~will~~subsidiary ~~mature in each~~ of ~~2005 and 2006. In addition, the~~ Charter ~~Operating~~Communications ~~credit facilities require the CC V~~ Holdings, LLC ~~notes to be redeemed within 45 days after the~~ ("Charter Holdings ~~leverage ratio discussed~~"). Charter ~~below~~ Holdings is ~~determined~~an toindirect besubsidiary ~~below~~of ~~8.75~~Charter ~~to 1.0. In subsequent years~~Communications, ~~significant additional amounts will become due under the Company’s remaining obligations~~Inc. As (“Charter”). The ~~the~~condensed ~~principal~~consolidated ~~amounts~~financial ~~owing~~statements ~~under the Company’s various debt obligations~~include ~~become due beginning in 2008, sustaining~~ the ~~Company’s~~accounts ~~liquidity will likely depend on its ability to access additional sources~~ of ~~capital~~CCH ~~over~~II ~~time.~~and ~~A default~~all ~~under the covenants governing any~~ of ~~the~~its ~~Company’s~~subsidiaries ~~debt~~where ~~instruments could result in~~ the ~~acceleration of its payment obligations under that debt~~underlying ~~and,~~ operations ~~under certain circumstances~~reside, ~~in cross-defaults under its other debt obligations,~~ which ~~would~~are ~~have~~collectively areferred ~~material~~to ~~adverse~~herein ~~effect~~as on the ~~Company’s~~ ~~consolidated financial condition or results of operations~~ "Company." All ~~The~~significant ~~Company’s borrowing~~intercompany ~~availability~~accounts ~~under~~and ~~the credit facilities totaled $977 million as of~~transactions ~~June 30,~~ among ~~2004,~~consolidated ~~none~~entities ofhave ~~which~~been ~~was restricted due to covenants~~eliminated.

The Company ~~expects~~is ~~that~~a ~~cash~~broadband oncommunications ~~hand,~~company ~~cash flows from~~ operating ~~activities~~in ~~and~~ the ~~amounts~~United States. The ~~available~~Company ~~under~~offers ~~its~~to ~~credit~~residential ~~facilities~~and ~~will~~commercial ~~be adequate to meet its~~customers ~~cash~~ traditional ~~needs~~cable ~~for~~video ~~the~~programming ~~foreseeable~~(analog ~~future.~~and ~~However~~digital video), ~~these credit facilities are~~high-speed ~~subject~~ Internet ~~to certain restrictive covenants~~services, ~~some~~advanced ofbroadband ~~which~~services ~~require~~such ~~the~~as ~~Company~~high todefinition ~~achieve~~ television, ~~specified~~Charter ~~operating~~OnDemand™, ~~results.~~and ~~The~~digital ~~Company~~video ~~expects~~recorder toservice, ~~maintain compliance~~and, ~~with these covenants~~ in ~~2004. If the Company’s actual operating~~many ~~performance~~ of ~~results~~our inmarkets, ~~non-compliance~~telephone ~~with~~service. The ~~these~~Company ~~covenants,~~sells orits ifcable ~~other events~~video of programming, ~~non~~high-~~compliance~~speed ~~under~~Internet, ~~these credit facilities or indentures governing subsidiary debt occur~~telephone, ~~funding~~and ~~under~~advanced ~~the~~broadband ~~credit facilities may not be available~~services ~~and defaults~~ on a ~~some~~subscription ~~or potentially all debt obligations could occur~~basis. ~~Additionally,~~ The ~~no assurances can be given that the~~ Company ~~will~~also ~~not~~sells ~~experience liquidity~~local ~~problems~~advertising ~~because of adverse market conditions, increased competition~~on or cable ~~other unfavorable events~~networks.

~~CCH~~The accompanying ~~II’s~~condensed ~~parent~~consolidated ~~companies~~financial ~~have~~statements ~~a significant amount~~ of ~~debt.~~the ~~The~~Company ~~indentures~~have ~~governing~~ been ~~the~~prepared ~~CCH~~in IIaccordance ~~notes,~~with ~~CCO~~accounting ~~Holdings~~principles ~~notes,~~generally ~~and~~accepted ~~Charter Operating notes~~in ~~restrict~~ the United ~~those~~States ~~subsidiaries~~for ~~from~~interim ~~making~~financial ~~distributions~~information toand ~~their~~the ~~parent~~rules ~~companies (including, as applicable, Charter~~ and ~~Charter Holdings) for payment~~ regulations of ~~principal~~ the onSecurities ~~parent company notes, in each case unless there is no default under those indentures~~ and aExchange ~~specified~~Commission ~~leverage~~(the ~~ratio test can be met~~"SEC"). ~~Each~~ Accordingly, ~~such~~ certain ~~subsidiary~~information ~~currently~~and ~~meets~~footnote ~~the~~disclosures ~~applicable~~typically ~~leverage~~included ~~ratio~~in ~~test,~~CCH ~~and~~II’s ~~therefore~~ Annual isReport ~~not~~on ~~currently~~Form ~~prohibited~~10-K ~~from~~have ~~making~~been ~~any~~condensed ~~such~~or ~~distributions~~omitted tofor ~~its direct~~this ~~parent~~quarterly report. The ~~indentures~~accompanying ~~governing~~condensed ~~the~~consolidated ~~Charter~~financial ~~Holdings notes permit~~statements ~~Charter~~ are ~~Holdings~~unaudited toand ~~make~~are ~~distributions~~subject to ~~Charter~~review ~~Holdco~~by ~~for payment of~~regulatory ~~interest or principal on Charter’s convertible senior notes~~ authorities. However, ~~only~~in ~~if, after giving effect to~~ the ~~distribution,~~opinion ~~Charter Holdings can incur additional debt under the leverage ratio test~~ of ~~8.75 to 1.0~~management, ~~there~~such ~~is no default under Charter~~financial ~~Holdings’~~ statements ~~indentures~~include ~~and~~all ~~other specified tests are met. However~~adjustments, ~~Charter Holdings~~which ~~continued~~consist ~~not~~of toonly ~~meet~~normal ~~the leverage ratio test at June 30~~recurring adjustments, ~~2004.~~necessary Asfor a ~~result,~~ ~~distributions~~fair ~~from~~presentation ~~Charter~~of ~~Holdings~~the toresults ~~Charter~~for ~~have~~the ~~been restricted and~~periods ~~will continue to be restricted until that test is met~~ presented. Interim ~~Any~~results ~~financial~~are ~~or liquidity~~not ~~problems~~necessarily indicative of ~~CCH II’s parent companies would likely cause serious~~results ~~disruption~~ for ~~to the Company’s business and have~~ a ~~material~~full ~~adverse effect on its business and results of operations~~year.

OnThe preparation ~~March 1,~~of ~~2004,~~financial statements in conformity with accounting principles generally accepted in the ~~Company~~United ~~closed~~States requires management to make estimates and assumptions that affect the ~~sale~~reported amounts of ~~certain~~assets ~~cable~~and ~~systems in~~liabilities ~~Florida,~~ and disclosure ~~Pennsylvania,~~of ~~Maryland,~~contingent ~~Delaware~~assets and ~~West~~liabilities ~~Virginia~~at tothe ~~Atlantic~~date of the financial ~~Broadband~~ statements ~~Finance,~~and ~~LLC.~~the ~~The~~reported ~~Company~~amounts ~~closed~~of onrevenues and expenses during the reporting ~~sale~~period. Areas involving significant judgments and estimates include capitalization of anlabor ~~additional~~and overhead costs; depreciation and amortization costs; impairments of property, plant and equipment, franchises and goodwill; income taxes; and contingencies. Actual results could differ from those estimates.

82. Liquidity and Capital Resources

~~Table~~The Company incurred net losses of ~~Contents~~$86 million and $107 million for the three months ended June 30, 2007 and 2006, respectively, and $189 million and $335 million for the six months ended June 30, 2007 and 2006, respectively. The Company’s net cash flows from operating activities were $501 million and $525 million for the six months ended June 30, 2007 and 2006, respectively.

~~CCH~~The Company's IIlong-term financing as of June 30, ~~LLC~~2007 ~~AND~~consisted ~~SUBSIDIARIES~~of $6.9 billion ~~NOTES~~ of credit TOfacility ~~CONDENSED~~debt ~~CONSOLIDATED~~and ~~FINANCIAL~~$5.1 ~~STATEMENTS~~billion accreted value of high-yield ~~(UNAUDITED)~~ notes. For the remaining two quarterly periods of 2007, none of the ~~(dollars~~ Company’s indebt ~~millions~~matures. In each of 2008 and 2009, ~~except~~$65 ~~where~~million ~~indicated)~~of the Company’s debt matures. In 2010 and beyond, significant additional amounts will become due under the Company’s remaining long-term debt obligations.

~~cable~~The Company ~~system~~requires insignificant ~~New~~cash ~~York~~ to ~~Atlantic~~fund ~~Broadband~~debt ~~Finance~~service costs, ~~LLC~~capital expenditures inand ~~April 2004~~ongoing operations. ~~These~~ The ~~transactions~~Company ~~resulted~~has inhistorically funded athese ~~$105 million~~requirements ~~pretax~~through ~~gain~~cash ~~recorded~~flows asfrom aoperating ~~gain on~~activities, ~~sale~~ borrowings ofunder ~~assets~~its incredit ~~the~~facilities, ~~Company’s~~equity ~~condensed~~contributions ~~consolidated~~from ~~statements~~its ofparent ~~operations.~~ companies, ~~Subject~~sales toof ~~post-closing contractual adjustments~~assets, ~~the~~issuances ~~Company expects~~of ~~the~~debt ~~total~~securities, ~~net~~and ~~proceeds~~cash ~~from~~on hand. However, the ~~sale~~mix of ~~all~~funding ofsources ~~these~~changes ~~systems~~from toperiod beto ~~approximately~~ period. For ~~$733 million,~~the ofsix ~~which~~months ~~$10 million~~ended isJune ~~currently~~30, ~~held~~2007, inthe anCompany generated ~~indemnity~~ $501 ~~escrow~~million ~~account~~of ~~(with~~net ~~the~~cash ~~unused~~flows ~~portion~~from ~~thereof~~operating toactivities, beafter ~~released~~paying bycash ~~March 1,~~ interest ~~2005).~~of ~~The~~$506 ~~proceeds~~million. In ~~received~~addition, tothe ~~date~~Company ~~have been~~ used toapproximately $579 ~~repay~~million ~~a portion~~for purchases of ~~amounts~~property, ~~outstanding~~plant ~~under~~and equipment. Finally, the Company’s ~~credit~~generated ~~facilities.~~net cash flows from financing activities of $88 million.

~~3. Franchises and Goodwill~~ 7

~~On January 1, 2002, the Company adopted Statement of Financial Accounting~~CCH ~~Standards (“SFAS”) No. 142~~ II, ~~which~~LLC ~~eliminates~~AND the amortization of indefinite-lived intangible assets. Accordingly, beginning January 1, 2002, all franchises that qualify for indefinite-life treatment under SFAS No. 142 are no longer amortized against earnings but instead are tested for impairment annually, or more frequently as warranted by events or changes in circumstances. Based on the guidance prescribed in Emerging Issues Task Force (“EITF”) Issue No. 02-7, Unit of Accounting for Testing of Impairment of Indefinite-Lived Intangible Assets, franchises are aggregated into essentially inseparable asset groups to conduct the valuations. The asset groups generally represented geographic clusters of the Company’s cable systems by which the Company manages its operating assets, which management believes represents the highest and best use of those assets. Fair value is determined based on estimated discounted future cash flows using assumptions that are consistent with internal forecasts. SUBSIDIARIES

~~As of June 30, 2004 and December 31, 2003, indefinite-lived and finite-lived~~NOTES ~~intangible~~ TO ~~assets~~CONDENSED ~~are~~CONSOLIDATED ~~presented~~FINANCIAL ~~in the following table:~~ STATEMENTS

	June 30, 2004						December 31, 2003
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Indefinite-lived intangible assets:
Franchises with indefinite lives	$	16,438	$	3,287	$	13,151	$	17,018	$	3,412	$	13,606
Goodwill		52		—		52		52		—		52
	$	16,490	$	3,287	$	13,203	$	17,070	$	3,412	$	13,658
Finite-lived intangible assets:
Franchises with finite lives	$	56	$	12	$	44	$	107	$	33	$	74

(UNAUDITED)

~~For the three and six months ended June 30, 2004, the net carrying amount of~~(dollars ~~indefinite-lived intangible assets was reduced by $1 million and $484 million, respectively, as a result of the sale of cable systems to Atlantic Broadband Finance, LLC discussed~~ in ~~Note 2. Additionally~~millions, inexcept ~~the~~where first quarter of 2004, approximately $29 million of franchises that were previously classified as finite-lived were reclassified to indefinite-lived, based on the Company’s ability in 2003 to renew these franchise assets. Franchise amortization expense for the three and six months ended June 30, 2004 was $1 million and $2 million, respectively, and franchise amortization expense for the three and six months ended June 30, 2003 was $2 million and $4 million, respectively, which represents the amortization relating to franchises that did not qualify for indefinite-life treatment under SFAS No. 142, including costs associated with franchise renewals. The Company expects that amortization expense on franchise assets will be approximately $4 million annually. Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions or divestitures, changes in useful lives and other relevant factors. indicated)

9The Company expects that cash on hand, cash flows from operating activities, and the amounts available under its credit facilities will be adequate to meet its and its parent companies’ cash needs through 2008. The Company believes that cash flows from operating activities and amounts available under the Company’s credit facilities may not be sufficient to fund the Company’s operations and satisfy its and its parent companies’ interest and principal repayment obligations in 2009, and will not be sufficient to fund such needs in 2010 and beyond. The Company has been advised that Charter continues to work with its financial advisors concerning its approach to addressing liquidity, debt maturities, and overall balance sheet leverage.

~~Table~~Credit Facility ~~of Contents~~Availability

~~CCH~~The Company’s IIability to operate depends upon, ~~LLC~~among ~~AND~~other ~~SUBSIDIARIES~~things, its continued ~~NOTES~~ access TOto ~~CONDENSED~~capital, ~~CONSOLIDATED~~including ~~FINANCIAL~~credit ~~STATEMENTS~~under the Charter Communications Operating, LLC (~~UNAUDITED~~“Charter Operating”) credit facilities. The Charter Operating credit facilities, along with the Company’s indentures and the CCO Holdings, LLC (~~dollars~~“CCO Holdings”) credit facilities, contain certain restrictive covenants, some of which require the Company to maintain specified leverage ratios, meet financial tests, and provide annual audited financial statements with an unqualified opinion from the Company’s independent auditors. As of June 30, 2007, the Company was in ~~millions~~compliance with the covenants under its indentures and credit facilities, ~~except~~and ~~where~~the ~~indicated)~~Company expects to remain in compliance with those covenants for the next twelve months. As of June 30, 2007, the Company’s potential availability under its revolving credit facility totaled approximately $1.4 billion, none of which was limited by covenant restrictions. Continued access to the Company’s credit facilities is subject to the Company remaining in compliance with these covenants, including covenants tied to the Company’s leverage ratio. If any event of non-compliance were to occur, funding under the credit facilities may not be available and defaults on some or potentially all of the Company’s and its parent companies’ debt obligations could occur. An event of default under any of the Company’s debt instruments could result in the acceleration of its payment obligations under that debt and, under certain circumstances, in cross-defaults under its and its parent companies’ other debt obligations, which could have a material adverse effect on the Company’s consolidated financial condition and results of operations.

4.Parent Company ~~Accounts~~Debt ~~Payable and Accrued Expenses~~ Obligations

~~Accounts~~Any financial ~~payable~~or liquidity problems of the Company’s parent companies could cause serious disruption to the Company’s business and ~~accrued~~have ~~expenses~~a ~~consist~~material ofadverse effect on the ~~following~~Company’s asbusiness and results of ~~June 30~~operations. A failure by Charter Holdings, CCH I Holdings, LLC (“CIH”), or CCH I to satisfy their debt ~~2004~~ payment ~~and~~obligations ~~December 31~~or a bankruptcy with respect to Charter Holdings, ~~2003:~~CIH, or CCH I would give the lenders under the Company’s credit facilities the right to accelerate the payment obligations under these facilities. Any such acceleration would be a default under the indenture governing the Company’s notes. On a consolidated basis, the Company’s parent companies have a significant level of debt, which, including the Company’s debt, totaled approximately $19.6 billion as of June 30, 2007.

	June 30,		December 31,
	2004		2003
Accounts payable-trade	$	78	$	144
Accrued capital expenditures		55		93
Accrued expenses:
Interest		147		142
Programming costs		298		319
Franchise-related fees		51		70
State sales tax		55		61
Other		218		215
	$	902	$	1,044

Limitations on Distributions

5As long as Charter’s convertible notes remain outstanding and are not otherwise converted into shares of common stock, Charter must pay interest on the convertible senior notes and repay the principal amount in November 2009. Charter’s ~~Long~~ability to make interest payments on its convertible senior notes, and, in 2009, to repay the outstanding principal of its convertible senior notes of $413 million, net of $450 million of convertible senior notes now held by Charter Communications Holding Company, LLC (“Charter Holdco”), will depend on its ability to raise additional capital and/or on receipt of payments or distributions from Charter Holdco and its subsidiaries. As of June 30, 2007, Charter Holdco was owed $4 million in intercompany loans from its subsidiaries and had $14 million in cash, which were available to pay interest and principal on Charter's convertible senior notes. In addition, Charter has $25 million of U.S. government securities pledged as security for the semi-~~Term~~annual ~~Debt~~interest payments on Charter’s convertible senior notes scheduled in 2007. On August 1, 2007, Charter Holdings distributed to CCHC, LLC (“CCHC”) an intercompany note issued by Charter Operating with an outstanding balance, including accrued interest, of $119 million. On the same day, CCHC distributed such note to Charter Holdco along with $450 million of Charter’s convertible senior notes and an investment account with $26 million of cash. As long as Charter Holdco continues to

~~Long-term debt consists of the following as of June 30, 2004 and December 31, 2003:~~ 8

	June 30, 2004				December 31, 2003
	Face Value		Accreted Value		Face Value		Accreted Value
Long-Term Debt
CCH II:
10.250% senior notes due 2010		1,601		1,601		1,601		1,601
CCO Holdings:
8¾% senior notes due 2013		500		500		500		500
Charter Operating:
8.000% senior second lien notes due 2012		1,100		1,100		—		—
8.375% senior second lien notes due 2014		400		400		—		—
Renaissance:
10.00% senior discount notes due 2008		114		116		114		116
CC V Holdings:
11.875% senior discount notes due 2008		113		113		113		113
Credit Facilities
Charter Operating		5,380		5,380		4,459		4,459
CC VI Operating		—		—		868		868
Falcon Cable		—		—		856		856
CC VIII Operating		—		—		1,044		1,044
	$	9,208	$	9,210	$	9,555	$	9,557

CCH II, LLC AND SUBSIDIARIES

~~In April 2004, the Company’s indirect subsidiaries, Charter Operating and~~NOTES ~~Charter~~ TO ~~Communications~~CONDENSED ~~Operating~~CONSOLIDATED ~~Capital~~FINANCIAL Corp., sold $1.5 billion of senior second lien notes in a private transaction. Additionally, Charter Operating amended and restated its $5.1 billion credit facilities, among other things, to defer maturities and increase availability under those facilities to approximately $6.5 billion, consisting of a $1.5 billion six-year revolving credit facility, a $2.0 billion six-year term loan facility and a $3.0 billion seven-year term loan facility. Charter Operating used the additional borrowings under the credit facilities, together with proceeds from the sale of the Charter Operating senior STATEMENTS

10 (UNAUDITED)

~~Table~~(dollars in ofmillions, ~~Contents~~except where indicated)

~~CCH~~hold the $450 IImillion of Charter’s convertible senior notes, ~~LLC~~Charter ~~AND~~Holdco ~~SUBSIDIARIES~~will receive ~~NOTES~~ interest TOpayments ~~CONDENSED~~from ~~CONSOLIDATED~~the ~~FINANCIAL~~government ~~STATEMENTS~~securities pledged for Charter’s ~~(UNAUDITED)~~ convertible senior notes. The cumulative amount of interest payments ~~(dollars~~ expected into ~~millions,~~be ~~except~~received ~~where~~by ~~indicated)~~Charter Holdco is $40 million and may be available to be distributed to pay semiannual interest due in 2008 and May 2009 on the outstanding principal amount of $413 million of Charter’s convertible senior notes, although Charter Holdco may use those amounts for other purposes.

~~second~~As of June ~~lien~~30, ~~notes~~2007, toCharter ~~refinance~~Holdings, ~~the~~CIH, ~~credit~~and ~~facilities~~CCH ofI ~~its~~had ~~subsidiaries,~~approximately CC$7.1 VIbillion ~~Operating~~ principal ~~Company,~~amount ~~LLC~~of ~~(“CC~~high-yield VInotes ~~Operating”),~~outstanding ~~Falcon~~with ~~Cable~~approximately ~~Communications~~$0, ~~LLC~~$188 ~~(“Falcon~~ million, ~~Cable”)~~$34 million, and CC$6.9 ~~VIII~~billion ~~Operating~~maturing in 2008, ~~LLC~~2009, ~~(“CC~~2010, ~~VIII~~and thereafter, ~~Operating”)~~respectively. Charter Holdings, ~~all~~CIH, inand ~~one~~CCH I will need ~~concurrent~~ to ~~transaction.~~raise ~~The~~additional ~~effect~~capital ofor receive distributions or payments from the Company ~~transaction~~in ~~was~~order to ~~substitute~~satisfy their debt obligations. However, because ~~Charter~~ of ~~Operating~~their assignificant indebtedness, the ~~lender~~Company’s inability, ~~place~~and ability of ~~the~~its parent ~~banks~~companies ~~under~~to ~~those~~raise ~~subsidiaries’ credit~~additional ~~facilities.~~capital at reasonable rates or at all is uncertain. During the six months ended June 30, 2007, the Company distributed $788 million of cash to its parent company.

6Distributions by Charter’s subsidiaries to a parent company (including Charter, Charter Holdco, CCHC, Charter Holdings, CIH, and CCH I) for payment of principal on parent company notes, are restricted under the indentures governing the CIH notes, CCH I notes, CCH II notes, CCO Holdings notes, and Charter Operating notes and under the CCO Holdings credit facilities unless there is no default under the applicable indenture and credit facilities, and unless each applicable subsidiary’s leverage ratio test is met at the time of such distribution. For ~~Comprehensive~~the ~~Loss~~quarter ended June 30, 2007, there was no default under any of these indentures or credit facilities and each subsidiary met its applicable leverage ratio tests based on June 30, 2007 financial results. Such distributions would be restricted, however, if any such subsidiary fails to meet these tests at the time of the contemplated distribution. In the past, certain subsidiaries have from time to time failed to meet their leverage ratio test. There can be no assurance that they will satisfy these tests at the time of the contemplated distribution. Distributions by Charter Operating for payment of principal on parent company notes are further restricted by the covenants in its credit facilities.

~~Certain marketable equity securities are classified as available-for-sale and~~Distributions ~~reported~~ by atCIH, ~~market~~CCH ~~value~~I, ~~with~~CCH ~~unrealized~~II, ~~gains~~CCO ~~and losses recorded as accumulated other comprehensive loss on the accompanying consolidated balance sheets. Additionally~~Holdings, ~~the~~and ~~Company~~Charter ~~reports~~Operating ~~changes~~to ina ~~the~~parent ~~fair value of~~company ~~interest~~ for ~~rate~~payment ~~agreements designated as hedging the variability~~ of ~~cash~~parent ~~flows associated~~company ~~with~~interest ~~floating-rate~~are ~~debt~~permitted ~~obligations,~~if ~~that~~there ~~meet~~is ~~the~~no ~~effectiveness~~default ~~criteria~~ under ~~of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, in accumulated other comprehensive loss. Comprehensive loss for~~ the ~~three~~aforementioned ~~months~~indentures ~~ended June 30, 2004~~ and ~~2003~~CCO ~~was~~Holdings ~~$99 million and $26 million,~~credit ~~respectively, and $101 million and $62 million for the six months ended June 30, 2004 and 2003, respectively~~ facilities.

7.The indentures ~~Accounting~~governing the Charter Holdings notes permit Charter Holdings to make distributions to Charter Holdco for ~~Derivative~~payment ~~Instruments~~of interest or principal on Charter’s convertible senior notes, only if, after giving effect to the distribution, Charter Holdings can incur additional debt under the leverage ratio of 8.75 to 1.0, there is no default under Charter Holdings’ indentures, and ~~Hedging~~other ~~Activities~~specified tests are met. For the quarter ended June 30, 2007, there was no default under Charter Holdings’ indentures, the other specified tests were met, and Charter Holdings met its leverage ratio test based on June 30, 2007 financial results. Such distributions would be restricted, however, if Charter Holdings fails to meet these tests at the time of the contemplated distribution. In the past, Charter Holdings has from time to time failed to meet this leverage ratio test. There can be no assurance that Charter Holdings will satisfy these tests at the time of the contemplated distribution. During periods in which distributions are restricted, the indentures governing the Charter Holdings notes permit Charter Holdings and its subsidiaries to make specified investments (that are not restricted payments) in Charter Holdco or Charter, up to an amount determined by a formula, as long as there is no default under the indentures.

~~The Company uses interest rate risk management derivative instruments, such as~~Recent ~~interest~~ Financing rate swap agreements and interest rate collar agreements (collectively referred to herein as interest rate agreements) to manage its interest costs. The Company’s policy is to manage interest costs using a mix of fixed and variable rate debt. Using interest rate swap agreements, the Company has agreed to exchange, at specified intervals through 2007, the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount. Interest rate collar agreements are used to limit the Company’s exposure to and benefits from interest rate fluctuations on variable rate debt to within a certain range of rates. Transactions

~~The~~In March 2007, ~~Company~~Charter ~~does~~Operating ~~not~~entered ~~hold~~into oran ~~issue~~Amended ~~derivative~~and ~~instruments~~Restated ~~for~~Credit ~~trading purposes.~~Agreement ~~The~~ (the ~~Company~~“Charter ~~does,~~Operating ~~however,~~Credit ~~have~~Agreement”) ~~certain~~which ~~interest~~provides ~~rate~~for ~~derivative~~a ~~instruments that have been designated as cash flow hedging instruments~~$1.5 ~~Such instruments~~billion ~~are~~ senior ~~those~~secured ~~that~~revolving ~~effectively~~line ~~convert~~of ~~variable~~credit, ~~interest~~a ~~payments~~continuation onof ~~certain~~the ~~debt instruments~~existing ~~into fixed payments~~$5. ~~For qualifying hedges, SFAS No. 133 allows~~0 ~~derivative~~ billion ~~gains~~term ~~and~~loan ~~losses~~facility to(which ~~offset~~was ~~related~~refinanced ~~results~~with onnew ~~hedged~~term ~~items~~loans in ~~the~~April ~~consolidated statement of operations. The Company has formally documented~~ 2007), ~~designated~~ and ~~assessed~~a ~~the effectiveness of transactions that receive hedge accounting~~$1.5 ~~For~~billion ~~the~~new ~~three~~term ~~months~~loan ~~ended June 30~~facility, ~~2004~~which ~~and~~was ~~2003,~~funded ~~net~~in ~~gain (loss)~~March ~~on derivative instruments~~ and ~~hedging activities includes gains of $3 million~~ ~~and~~ April ~~losses~~2007. In ofMarch ~~$1 million~~2007, ~~respectively,~~CCO ~~and~~Holdings ~~for~~entered ~~the~~into ~~six~~a ~~months ended June 30,~~credit ~~2004~~ agreement ~~and~~which ~~2003,~~consisted ~~net gain (loss) on derivative instruments and hedging activities includes gains~~ of ~~$2 million~~a ~~and~~ $8 350 million, ~~respectively,~~term ~~which~~loan ~~represent~~facility ~~cash flow~~funded ~~hedge~~in ~~ineffectiveness on interest rate hedge agreements arising from~~March ~~differences between the critical terms of the agreements~~ and ~~the~~April ~~related hedged obligations~~2007. In ~~Changes~~April in2007, ~~the~~Charter ~~fair~~Holdings ~~value~~completed ofa ~~interest rate agreements designated as hedging instruments of the variability of~~ cash ~~flows associated with~~ ~~floating-rate~~ tender ~~debt~~offer ~~obligations~~to ~~that~~purchase ~~meet~~$97 ~~the~~million ~~effectiveness criteria~~ of ~~SFAS~~its ~~No. 133~~outstanding ~~are reported in accumulated other comprehensive loss~~notes. ~~For the three and~~ In ~~six months ended June 30~~ addition, ~~2004,~~Charter aHoldings ~~gain~~redeemed of $~~27 million~~187 ~~and $29~~ million~~, respectively,~~ ~~and~~of ~~for~~its ~~the~~8.625% ~~three~~senior ~~and~~notes due April ~~six months ended June 30~~1, ~~2003,~~2009 aand ~~gain~~CCO ~~of $2 million~~Holdings ~~and~~redeemed $9 550 million, ~~respectively,~~of ~~related~~its tosenior ~~derivative instruments~~floating ~~designated~~ rate notes asdue ~~cash~~December ~~flow hedges~~15, ~~was recorded in accumulated other comprehensive loss~~2010. These ~~The~~redemptions ~~amounts~~closed ~~are subsequently reclassified into interest expense as a yield adjustment~~ in ~~the same period in which the related interest on the~~April ~~floating-rate~~ 2007. See ~~debt~~Note ~~obligations affects earnings (losses)~~6.

Certain interest rate derivative instruments are not designated as hedges as they do not meet the effectiveness criteria specified by SFAS No. 133. However, management believes such instruments are closely correlated with the respective debt, thus managing associated risk. Interest rate derivative instruments not designated as hedges are marked to fair value with the impact recorded as gain (loss) on derivative instruments and hedging activities in the Company’s condensed consolidated statements of operations. For the three months ended June 30, 2004 and 2003, net gain (loss) on derivative instruments and hedging activities includes gains of $60 million and losses of $9

11CCH II, LLC AND SUBSIDIARIES

~~Table~~NOTES TO ofCONDENSED ~~Contents~~CONSOLIDATED FINANCIAL STATEMENTS

~~CCH II, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ (UNAUDITED) ~~(dollars in millions, except where indicated)~~

~~million, respectively, and for the six months ended June 30, 2004 and 2003 net gain~~ (~~loss) on derivative instruments and hedging activities includes gains of~~dollars ~~$54 million~~ in ~~and losses of $4 million~~millions, ~~respectively,~~except ~~for~~where ~~interest rate derivative instruments not designated as hedges.~~ indicated)

~~As of June 30, 2004 and December 31, 2003, the Company had outstanding $2.8 billion and $~~3.~~0 billion and $20 million and $520 million, respectively, in~~ Sale ~~notional amounts~~ of ~~interest rate swaps and collars, respectively. The~~ notional amounts of interest rate instruments do not represent amounts exchanged by the parties and, thus, are not a measure of exposure to credit loss. The amounts exchanged are determined by reference to the notional amount and the other terms of the contracts. Assets

8In 2006, the Company sold certain cable television systems serving a total of approximately 356,000 analog video customers in 1) West Virginia and Virginia to Cebridge Connections, Inc. ~~Revenues~~(the “Cebridge Transaction”); 2) Illinois and Kentucky to Telecommunications Management, LLC, doing business as New Wave Communications (the “New Wave Transaction”) and 3) Nevada, Colorado, New Mexico and Utah to Orange Broadband Holding Company, LLC (the “Orange Transaction”) for a total sales price of approximately $971 million. The Company used the net proceeds from the asset sales to reduce borrowings, but not commitments, under the revolving portion of the Company’s credit facilities. These cable systems met the criteria for assets held for sale. As such, the assets were written down to fair value less estimated costs to sell resulting in asset impairment charges during the six months ended June 30, 2006 of approximately $99 million related to the New Wave Transaction and the Orange Transaction. The Company determined that the West Virginia and Virginia cable systems comprise operations and cash flows that for financial reporting purposes meet the criteria for discontinued operations. Accordingly, the results of operations for the West Virginia and Virginia cable systems have been presented as discontinued operations, net of tax for the three and six months ended June 30, 2006.

~~Revenues~~Summarized consolidated ~~consist~~financial ofinformation ~~the following~~ for the three and six months ended June 30, ~~2004~~ 2006 for the West Virginia and ~~2003:~~Virginia cable systems is as follows:

	Three Months				Six Months
	Three Months Ended June 30, 2006		Six Months Ended June 30, 2006
	Ended June 30,				Ended June 30,
Revenues	$	55	$	109
	2004		2003		2004		2003
Net income	$	23	$	38
Video	$	846	$	875	$	1,695	$	1,741
High-speed data		181		136		349		258
Advertising sales		73		67		132		124
Commercial		58		50		114		97
Other		81		89		163		175
	$	1,239	$	1,217	$	2,453	$	2,395

94. Franchises ~~Operating~~and ~~Expenses~~ Goodwill

~~Operating~~Franchise rights ~~expenses~~represent ~~consist~~the value attributed to agreements with local authorities that allow access to homes in cable service areas acquired through the purchase of cable systems. Management estimates the ~~following~~fair ~~for~~value of franchise rights at the ~~three~~date of acquisition and ~~six~~determines ~~months~~if ~~ended~~the franchise has a ~~June 30~~ finite-life or an indefinite-life as defined by Statement of Financial Accounting Standards (“SFAS”) No. 142, ~~2004~~Goodwill and ~~2003:~~Other Intangible Assets. Franchises that qualify for indefinite-life treatment under SFAS No. 142 are tested for impairment annually each October 1 based on valuations, or more frequently as warranted by events or changes in circumstances. Franchises are aggregated into essentially inseparable asset groups to conduct the valuations. The asset groups generally represent geographical clustering of the Company’s cable systems into groups by which such systems are managed. Management believes such grouping represents the highest and best use of those assets.

	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2004		2003		2004		2003
Programming	$	329	$	313	$	663	$	627
Advertising sales		25		23		48		44
Service		161		152		316		302
	$	515	$	488	$	1,027	$	973

As of June 30, 2007 and December 31, 2006, indefinite-lived and finite-lived intangible assets are presented in the following table:

	June 30, 2007						December 31, 2006
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Indefinite-lived intangible assets:
Franchises with indefinite lives	$	9,187	$	--	$	9,187	$	9,207	$	--	$	9,207
Goodwill		64		--		64		61		--		61

	$	9,251	$	--	$	9,251	$	9,268	$	--	$	9,268
Finite-lived intangible assets:
Franchises with finite lives	$	23	$	9	$	14	$	23	$	7	$	16

~~Table of Contents~~10

CCH II, LLC AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollars in millions, except where indicated)~~

~~10.~~NOTES TO ~~Selling,~~CONDENSED ~~General~~CONSOLIDATED ~~and~~FINANCIAL ~~Administrative Expenses~~ STATEMENTS

~~Selling, general and administrative expenses consist of the following for the three and six months ended June 30, 2004 and 2003:~~ (UNAUDITED)

	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2004		2003		2004		2003
General and administrative	$	208	$	203	$	416	$	418
Marketing		36		29		67		49
	$	244	$	232	$	483	$	467

(dollars in millions, except where indicated)

~~Components~~For the six months ended June 30, 2007, the net carrying amount of ~~selling~~indefinite-lived franchises ~~expense~~was ~~are~~reduced ~~included~~by $20 million, related to cable asset sales completed in the ~~general~~first six months of 2007. Franchise amortization expense represents the amortization relating to franchises that did not qualify for indefinite-life treatment under SFAS No. 142, including costs associated with franchise renewals. Franchise amortization expense for the three and six ~~administrative~~months ended June 30, 2007 was approximately $1 million and $2 million, ~~marketing~~ respectively. The Company expects that amortization expense. on franchise assets will be approximately $3 million annually for each of the next five years. Actual amortization expense in future periods could differ from these estimates as a result of new intangible asset acquisitions or divestitures, changes in useful lives and other relevant factors.

~~11.~~For the six ~~Special~~months ~~Charges~~ended June 30, 2007, the net carrying amount of goodwill increased $3 million as a result of the Company’s purchase of certain cable systems in Pasadena, California in June 2007.

In the fourth quarter of 2002, the Company recorded a special charge of $31 million associated with the Company’s workforce reduction program and the consolidation of its operations from three divisions and ten regions into five operating divisions, elimination of redundant practices and streamlining its management structure5. ~~During the year ended December 31, 2003, additional~~ Accounts ~~severance~~ Payable ~~related costs of $26 million were incurred~~ and ~~recorded~~Accrued as a special charge. During the three and six months ended June 30, 2004, an additional 50 and 150 employees, respectively, were identified for termination, and severance costs of $2 million and $3 million, respectively, were recorded in special charges. Payments are made over a period of up to two years with approximately $3 million and $11 million paid during the three and six months ended June 30, 2004, respectively, and $43 million paid during the year ended December 31, 2003. As of June 30, 2004 and December 31, 2003, a liability of approximately $6 million and $14 million, respectively, is recorded on the accompanying condensed consolidated balance sheets related to the reorganization activities discussed above. For the six months ended June 30, 2004, special charges also includes approximately $85 million, which represents the allocation to the Company of expense for the aggregate value of the Charter Class A common stock and warrants to purchase Charter Class A common stock contemplated to be issued as part of the terms set forth in memoranda of understanding regarding settlement of the consolidated Federal Class Action and Federal Derivative Action and approximately $9 million of litigation costs related to the tentative settlement of the South Carolina national class action suit, all of which settlements are subject to final documentation and court approval (see note 13). Expenses

~~During~~Accounts payable ~~the three~~ and ~~six~~accrued ~~months~~expenses ~~ended~~consist ~~June 30,~~of ~~2003,~~ the ~~Company~~following ~~recorded severance~~as ~~costs~~ of ~~$8 million and $15 million, respectively, in special charges. For the six months ended~~ June 30, ~~2003,~~2007 ~~the severance costs were~~and ~~offset~~ December ~~by a $5 million settlement from the Internet service provider Excite@Home related to the conversion of approximately 145~~31,~~000~~ ~~high-speed data customers to our Charter Pipeline service in 2001.~~ 2006:

12. Income Taxes

	June 30, 2007		December 31, 2006

Accounts payable - trade	$	92	$	79
Accrued capital expenditures		58		97
Accrued expenses:
Interest		175		190
Programming costs		283		268
Franchise-related fees		52		68
Compensation		66		74
Other		205		199

	$	931	$	975

~~CCH II is a single member limited liability company not subject to income tax~~6. ~~CCH~~ Long-Term II holds all operations through indirect subsidiaries. The majority of these indirect subsidiaries are limited liability companies that are not subject to income tax. However, certain of CCH II’s indirect subsidiaries are corporations that are subject to income tax. Debt

~~As of June 30, 2004 and December 31, 2003, the Company had net deferred income~~Long-term ~~tax~~ debt ~~liabilities~~consists of ~~approximately~~the ~~$267 million.~~following ~~The~~as ~~net deferred income tax liabilities relate to certain~~ of ~~CCH~~June ~~II’s indirect subsidiaries~~30, ~~which~~2007 ~~file separate income tax returns. During the three~~ and ~~six~~December ~~months ended June 30~~31, ~~2004, the Company recorded $3 million~~ 2006:

	June 30, 2007				December 31, 2006
	Principal Amount		Accreted Value		Principal Amount		Accreted Value
Long-Term Debt
CCH II, LLC:
10.250% senior notes due September 15, 2010	$	2,198	$	2,190	$	2,198	$	2,190
10.250% senior notes due October 1, 2013		250		261		250		262
CCO Holdings, LLC:
Senior floating notes due December 15, 2010		--		--		550		550
8 3/4% senior notes due November 15, 2013		800		795		800		795
Credit facility		350		350		--		--
Charter Communications Operating, LLC:
8.000% senior second lien notes due April 30, 2012		1,100		1,100		1,100		1,100
8 3/8% senior second lien notes due April 30, 2014		770		770		770		770
Credit facilities		6,500		6,500		5,395		5,395
	$	11,968	$	11,966	$	11,063	$	11,062

~~Table of Contents~~11

CCH II, LLC AND SUBSIDIARIES ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollars in millions, except where indicated)~~

~~and $4 million of income tax expense, respectively, and during the three and~~NOTES ~~six~~ TO ~~months~~CONDENSED ~~ended~~CONSOLIDATED ~~June 30,~~FINANCIAL 2003, the Company recorded $1 million and $2 million of income tax expense, respectively. The income tax expense is recognized through increases in current state and federal income tax expense as well as increases to the deferred tax liabilities of certain of CCH II’s indirect corporate subsidiaries. STATEMENTS

Charter Holdco is currently under examination by the Internal Revenue Service for the tax years ending December 31, 2000 and 1999. Management does not expect the results of this examination to have a material adverse effect on the Company’s financial position or results of operations. (UNAUDITED)

~~13. Contingencies~~(dollars in millions, except where indicated)

~~Fourteen~~The accreted ~~putative~~values ~~federal~~presented ~~class~~above ~~action~~generally ~~lawsuits~~represent (the ~~''Federal~~principal ~~Class Actions’’)~~amount of ~~have~~ the notes ~~been~~less ~~filed~~the ~~against~~original ~~Charter~~issue ~~and~~discount ~~certain~~at ofthe ~~its~~time ~~former~~of ~~and~~sale ~~present~~plus ~~officers~~the accretion ~~and~~ to the ~~directors~~balance insheet ~~various~~date. However, ~~jurisdictions~~certain ~~allegedly~~of onthe ~~behalf~~CCH ofII ~~all~~notes ~~purchasers of~~issued ~~Charter’s~~ in ~~securities~~exchange ~~during~~for ~~the~~Charter ~~period~~Holdings ~~from~~notes ~~either~~and ~~November~~Charter 8convertible ornotes ~~November 9,~~in 2006 ~~1999~~ are recorded ~~through~~for ~~July 17~~financial orreporting ~~July 18,~~purposes ~~2002.~~at ~~Unspecified~~values ~~damages~~different ~~are~~from ~~sought by~~ the current ~~plaintiffs.~~ accreted Invalue ~~general,~~for ~~the~~legal ~~lawsuits~~purposes ~~allege~~and ~~that~~notes ~~Charter~~indenture ~~utilized~~purposes ~~misleading~~(the amount ~~accounting~~ that is ~~practices~~currently ~~and~~payable ~~failed~~if tothe ~~disclose~~debt ~~these~~becomes ~~accounting~~immediately ~~practices~~due). As ~~and/or~~of June ~~issued~~ 30, ~~false~~2007, ~~and~~the ~~misleading~~accreted ~~financial~~value ~~statements~~of ~~and~~the ~~press releases concerning Charter~~Company’s ~~operations~~debt ~~and~~for ~~prospects.~~legal ~~The~~purposes ~~Federal Class Actions were specifically~~ and ~~individually identified in public filings made by Charter~~notes ~~prior~~ indenture topurposes ~~the~~is ~~date~~approximately of$12.0 ~~this quarterly report~~billion.

In ~~October 2002~~ March 2007, Charter ~~filed~~Operating aentered ~~motion~~into ~~with~~ the ~~Judicial~~Charter ~~Panel~~Operating onCredit Agreement ~~Multidistrict~~ which ~~Litigation~~provides ~~(the~~for ~~''Panel’’)~~a to$1.5 ~~transfer~~billion ~~the~~senior ~~Federal~~secured ~~Class Actions to~~revolving ~~the~~line ~~Eastern District~~ of ~~Missouri. On March 12~~credit, a continuation ~~2003,~~of the ~~Panel~~existing ~~transferred the~~$5.0 ~~six~~billion ~~Federal~~term ~~Class Actions~~loan ~~not~~facility ~~filed in~~ (the ~~Eastern~~“Existing ~~District of Missouri to~~Term ~~that~~ Loan”), ~~district~~and ~~for~~a ~~coordinated~~$1.5 orbillion ~~consolidated~~new ~~pretrial~~term ~~proceedings~~loan ~~with~~facility (the ~~eight~~ ~~Federal~~“New ~~Class Actions~~Term ~~already~~Loan”), ~~pending there. The Panel’s transfer order~~which ~~assigned~~ was ~~the~~funded ~~Federal~~in ~~Class Actions~~March toand ~~Judge~~April ~~Charles A~~2007. Borrowings ~~Shaw.~~under Bythe ~~virtue of a~~Charter ~~prior~~ Operating ~~court~~Credit ~~order,~~Agreement ~~StoneRidge~~bear ~~Investment~~interest ~~Partners~~at ~~LLC became lead plaintiff upon entry of the Panel’s transfer order. StoneRidge subsequently filed~~ a ~~Consolidated~~ ~~Amended~~variable ~~Complaint.~~interest ~~The~~rate ~~Court subsequently consolidated the~~based ~~Federal~~ on either ~~Class Actions~~LIBOR ~~into~~or a ~~single~~base ~~consolidated~~rate, ~~action~~plus ~~(the~~in ~~''Consolidated Federal~~either ~~Class Action’’) for pretrial purposes. On June 19~~case, ~~2003,~~an ~~following a~~applicable ~~status~~ margin. The ~~and~~applicable ~~scheduling~~margin ~~conference~~for ~~with~~LIBOR ~~the~~loans ~~parties,~~under the ~~Court~~New ~~issued~~Term ~~a Case~~Loan ~~Management~~ and ~~Order~~revolving ~~setting~~loans ~~forth~~is a2.00% ~~schedule~~above ~~for~~LIBOR. The ~~the~~revolving ~~pretrial~~line ~~phase~~ of ~~the~~ ~~Consolidated~~ credit ~~Federal~~commitments ~~Class Action.~~terminate ~~Motions~~in toMarch ~~dismiss the Consolidated Amended Complaint were filed~~2013. The OnExisting ~~February 10,~~Term ~~2004, in response to a joint motion made~~Loan ~~by StoneRidge~~ and ~~defendants, Charter, Vogel and Allen,~~ the ~~Court~~New ~~entered~~Term ~~an order~~Loan ~~providing,~~are ~~among~~subject ~~other~~to ~~things,~~amortization ~~that:~~at (1~~) the~~% ~~parties~~of ~~who~~their ~~filed such~~initial ~~motion,~~ principal ~~engage~~amount inper aannum ~~mediation~~commencing ~~within~~on ~~ninety~~March ~~(90) days;~~31, ~~and~~2008 ~~(2) all~~with ~~proceedings in~~ the ~~Consolidated Federal Class Actions were stayed until May 10, 2004. On~~remaining ~~May 11,~~ principal ~~2004,~~amount of the ~~Court~~New ~~extended~~Term ~~the~~Loan ~~stay~~due in ~~the~~March ~~Consolidated Federal Class Action for an additional sixty (60) days~~2014. The ~~On July 12, 2004, the parties~~Charter ~~submitted~~ Operating aCredit ~~joint~~Agreement ~~motion~~also tomodified ~~again extend~~ the ~~stay,~~quarterly ~~this~~consolidated ~~time until September~~leverage ~~10,~~ ratio ~~2004.~~to ~~The~~be ~~Court~~less ~~granted that extension on July 20, 2004~~restrictive.

~~On September 12~~In March 2007, ~~2002,~~CCO aHoldings ~~shareholders~~entered ~~derivative~~into ~~suit~~a credit agreement (the ~~''State~~“CCO ~~Derivative~~Holdings Credit ~~Action’’~~ Agreement”) ~~was~~which ~~filed~~consisted inof ~~the~~a ~~Circuit~~$350 ~~Court~~million ofterm ~~the~~loan ~~City~~facility of(the St“Term Facility”). The ~~Louis,~~Term ~~State~~Facility ~~of Missouri~~matures in September 2014 (the “~~Missouri~~Maturity ~~State Court~~Date”). Borrowings ~~against~~under ~~Charter~~the ~~and~~CCO ~~its~~Holdings ~~then~~Credit ~~current~~Agreement ~~directors,~~ bear asinterest ~~well~~at asa ~~its~~variable ~~former~~interest ~~auditors.~~rate Abased ~~substantively~~on ~~identical derivative~~either ~~action~~LIBOR ~~was~~or ~~later~~a ~~filed~~base ~~and~~rate plus, ~~consolidated~~in ~~into~~either ~~the~~case, ~~State~~an ~~Derivative Action.~~applicable margin. The ~~plaintiffs~~applicable ~~allege~~margin ~~that the individual defendants breached their~~for ~~fiduciary~~ LIBOR ~~duties~~term byloans ~~failing~~is to2.50% ~~establish~~above ~~and~~LIBOR. The ~~maintain~~CCO ~~adequate~~Holdings ~~internal~~Credit ~~controls~~ Agreement ~~and~~is ~~procedures.~~secured ~~Unspecified~~by ~~damages,~~the ~~allegedly~~equity oninterests of Charter’s ~~behalf~~Operating, ~~are~~ ~~sought~~and byall proceeds ~~the plaintiffs~~thereof.

OnAs part of ~~March 12,~~the ~~2004~~refinancing, anthe ~~action~~existing ~~substantively~~$350 ~~identical~~million torevolving/term ~~the~~credit ~~State Derivative~~facility ~~Action~~ was terminated. The ~~filed~~refinancing resulted in ~~the~~a ~~Missouri~~loss ~~State~~on ~~Court,~~extinguishment ~~against Charter and certain~~ of ~~its~~ debt ~~current~~for ~~and~~the ~~former~~three ~~directors,~~and assix ~~well~~months asended ~~its~~June ~~former~~30, ~~auditors.~~2007 ~~The plaintiffs~~of ~~allege~~approximately ~~that the individual defendants breached their fiduciary~~$12 ~~duties~~ million ~~by failing to establish~~ and ~~maintain~~$13 ~~adequate~~million, ~~internal~~respectively, ~~controls~~included ~~and procedures.~~in ~~Unspecified~~other ~~damages~~expense, ~~allegedly~~net on ~~Charter~~the Company’s ~~behalf,~~condensed ~~are sought by plaintiffs. On July 14, 2004, the Court~~ consolidated ~~this~~statements ~~case~~of ~~with the State Derivative Action~~operations.

14In April 2007, CCO Holdings redeemed $550 million of its senior floating rate notes due December 15, 2010. The redemption resulted in a loss on extinguishment of debt for each of the three and six months ended June 30, 2007 of approximately $19 million included in other expense, net on the Company’s condensed consolidated statements of operations.

~~Table~~7. Loans Payable-Related ~~of Contents~~Party

~~CCH~~Loans payable-related IIparty as of June 30, ~~LLC~~2007 ~~AND~~and ~~SUBSIDIARIES~~December 31, 2006 consists of ~~NOTES~~ loans TOfrom ~~CONDENSED~~Charter ~~CONSOLIDATED~~Holdco ~~FINANCIAL~~to ~~STATEMENTS~~the Company of $4 million and $3 million, ~~(UNAUDITED) (dollars~~ respectively, inand ~~millions~~from Charter Holdings to the Company of $113 million and $105 million, ~~except~~respectively. These ~~where~~loans ~~indicated)~~bear interest at a rate of LIBOR plus 3.0% reset quarterly. These loans are subject to certain limitations and may be repaid with borrowings under the Company’s revolving credit facility. In August 2007, the loan from Charter Holdings to the Company was distributed to CCHC.

Separately, on February 12, 2003, a shareholders derivative suit (the ''Federal Derivative Action’’), was filed against Charter and its then current directors in the United States District Court for the Eastern District of Missouri8. ~~The~~ Minority plaintiff alleges that the individual defendants breached their fiduciary duties and grossly mismanaged Charter by failing to establish and maintain adequate internal controls and procedures. Unspecified damages, allegedly on Charter’s behalf, are sought by the plaintiffs. Interest

~~On August 5, 2004, Charter entered into Memoranda of Understanding setting~~Minority ~~forth~~ interest ~~agreements~~on inthe ~~principle~~Company’s ~~regarding~~condensed ~~settlement of the~~ consolidated ~~Federal Class Action~~balance ~~and~~sheets ~~the~~at ~~Federal~~June ~~Derivative Action (the “Actions”). In exchange for a release of all claims by plaintiffs against Charter and its former and present officers and directors named in the Actions~~30, ~~Charter will pay to the~~2007 ~~plaintiffs a combination of cash~~ and ~~equity~~December ~~collectively valued at $144 million~~31, ~~which~~2006 ~~will~~represents ~~include~~preferred ~~the~~membership ~~fees~~interests ~~and expenses of plaintiffs’ counsel. Of this amount, $64 million will be paid~~ in ~~cash~~CC ~~(by Charter’s insurance carriers)~~VIII, ~~and the balance will be paid in shares of Charter Class A common stock having~~ LLC an aggregate value of $40 million and ten-year warrants to purchase shares of Charter Class A common stock having an aggregate warrant value of $40 million. The warrants would have an exercise price equal to 150% of the fair market value (as“CC ~~defined~~VIII”) ~~of Charter Class A common stock as of the date of the entry of the order of final judgment approving the settlement. In addition~~, ~~Charter expects to issue additional shares of its Class A common stock to its insurance carrier having~~ an ~~aggregate~~indirect ~~value~~subsidiary of ~~$5 million.~~CCH ~~As a result~~II, ~~the~~of ~~Company recorded an~~ $85 651 million ~~special charge on its consolidated statement of operations for the three~~ and ~~six~~$641 ~~months ended June 30~~million, ~~2004 related to the~~ ~~allocation~~ respectively. This ofpreferred ~~expense~~interest ~~for~~is ~~the~~held ~~aggregate~~by ~~value of Charter Class A common stock and warrants~~Mr. ~~Additionally~~Allen, ~~as part of the settlements,~~ Charter ~~will also~~’s ~~commit~~ Chairman toand acontrolling ~~variety of corporate governance changes~~shareholder, ~~internal practices~~ and ~~public~~ ~~disclosures,~~CCH ~~some~~I. Minority ofinterest ~~which have already been undertaken and none of which are inconsistent with measures Charter is taking~~ in ~~connection with the~~ ~~recent conclusion of~~ the ~~SEC~~accompanying ~~investigation~~condensed ~~described~~consolidated ~~below.~~statements ~~The settlement~~ of ~~each~~ ofoperations ~~the~~includes ~~lawsuits is conditioned upon, among other things,~~ the ~~parties’~~ ~~approval and execution of definitive settlement agreements with respect to the~~ 2% ~~matters~~ accretion ~~described above, judicial approval~~ of the ~~settlements~~preferred bymembership ~~the~~interests ~~Court following~~plus ~~notice~~approximately to18.6% ~~the class, and dismissal~~ of ~~the consolidated derivative~~ ~~actions~~ CC VIII’s ~~now pending in Missouri State Court~~income, ~~which~~net ~~are~~of ~~related to the Federal Derivative Action~~accretion.

In addition to the Federal Class Actions, the State Derivative Action, the new Missouri State Court derivative action and the Federal Derivative Action, six putative class action lawsuits were filed against Charter and certain of its then current directors and officers in the Court of Chancery of the State of Delaware (the ''Delaware Class Actions’’). The lawsuits were filed after the filing of a Schedule 13D amendment by Mr. Allen indicating that he was exploring a number of possible alternatives with respect to restructuring or expanding his ownership interest in Charter. Charter believes that the plaintiffs speculated that Mr. Allen might have been contemplating an unfair bid for shares of Charter or some other sort of going private transaction on unfair terms and generally alleged that the defendants breached their fiduciary duties by participating in or acquiescing to such a transaction. The lawsuits, which are substantively identical, were brought on behalf of Charter’s securities holders as of July 29, 2002, and sought unspecified damages and possible injunctive relief. However, Charter has informed the Company that no such transaction by Mr. Allen has been presented. On April 30, 2004, orders of dismissal without prejudice were entered in each of the Delaware Class Actions. 12

~~In August 2002, Charter became aware of a grand jury investigation being~~CCH ~~conducted by the U.S. Attorney’s Office for the Eastern District of Missouri into certain of its accounting and reporting practices~~ II, ~~focusing~~LLC onAND how Charter reported customer numbers, and its reporting of amounts received from digital set-top terminal suppliers for advertising. The U.S. Attorney’s Office has publicly stated that Charter is not a target of the investigation. Charter has also been advised by the U. S. Attorney’s office that no member of its board of directors, including its Chief Executive Officer, is a target of the investigation. On July 24, 2003, a federal grand jury charged four former officers of Charter with conspiracy and mail and wire fraud, alleging improper accounting and reporting practices focusing on revenue from digital set-top terminal suppliers and inflated customer account numbers. On July 25, 2003, one of the former officers who was indicted entered a guilty plea. Charter has advised the Company that it is fully cooperating with the investigation. SUBSIDIARIES

15NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Table of Contents~~(UNAUDITED)

~~CCH II, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ (~~UNAUDITED) (~~dollars in millions, except where indicated)

~~On November 4, 2002, Charter received an informal, non-public inquiry from the staff of the SEC~~9. ~~The SEC issued a formal order of investigation dated January~~ Comprehensive 23, 2003, and subsequently served document and testimony subpoenas on Charter and a number of its former employees. The investigation and subpoenas generally concerned Charter’s prior reports with respect to its determination of the number of customers, and various of its accounting policies and practices including its capitalization of certain expenses and dealings with certain vendors, including programmers and digital set-top terminal suppliers. On July 27, 2004, the SEC and Charter reached a final agreement to settle the investigation. In the Settlement Agreement and Cease and Desist Order, Charter agreed to entry of an administrative order prohibiting any future violations of United States securities laws and requiring certain other remedial internal practices and public disclosures. Charter neither admitted nor denied any wrongdoing, and the SEC assessed no fine against Charter. Loss

~~Charter~~The Company isreports ~~generally~~changes ~~required~~in tothe ~~indemnify~~fair ~~each~~value of ~~the~~interest ~~named~~rate ~~individual~~agreements designated ~~defendants~~ as inhedging ~~connection with~~ the ~~matters~~variability ~~described~~of ~~above~~cash ~~pursuant~~flows toassociated ~~the~~with ~~terms~~floating-rate debt of obligations, ~~its~~that ~~bylaws~~meet ~~and~~the ~~(where~~effectiveness ~~applicable)~~criteria ~~such~~of ~~individual~~SFAS ~~defendants’~~No. ~~employment~~133, ~~agreements.~~Accounting Infor ~~accordance~~Derivative ~~with~~Instruments ~~these~~and ~~documents~~Hedging Activities, in accumulated ~~connection~~other ~~with~~comprehensive ~~the~~income, ~~pending grand~~after ~~jury~~giving ~~investigation,~~effect to the ~~now~~minority interest ~~settled~~share ~~SEC~~of ~~investigation~~such gains and ~~the~~losses. Comprehensive ~~above~~loss was $36 ~~described~~ million ~~lawsuits,~~and ~~some~~$106 ofmillion ~~its~~for ~~current~~the ~~and~~three ~~former~~months ~~directors~~ended June 30, 2007 and ~~Charter’s~~2006, ~~current~~ respectively, and ~~former~~$142 ~~officers~~million ~~have~~and ~~been~~$335 ~~advanced~~million ~~certain~~for ~~costs~~the ~~and~~six ~~expenses incurred~~months inended ~~connection~~June 30, ~~with~~2007 ~~their~~and ~~defense~~2006, respectively.

~~Charter has liability insurance coverage that it believes is available for the matters described above, where applicable, subject to the terms, conditions and limitations of the respective policies~~10. ~~There is no assurance that current~~ Accounting ~~coverage will be sufficient~~ for ~~all~~Derivative ~~claims~~Instruments ~~described~~and ~~above~~Hedging ~~or any future claims that may arise.~~ Activities

InThe Company ~~October 2001,~~uses ~~two~~interest ~~customers,~~rate ~~Nikki~~risk ~~Nicholls~~management ~~and~~derivative ~~Geraldine M. Barber~~instruments, ~~filed a~~including ~~class~~ but not ~~action~~limited ~~suit~~to ~~against~~interest ~~Charter~~rate ~~Holdco~~swap inagreements ~~South~~and ~~Carolina~~interest ~~Court~~rate ofcollar ~~Common~~agreements ~~Pleas~~ (~~''South~~collectively ~~Carolina~~referred ~~Class Action’’),~~to ~~purportedly~~herein onas ~~behalf~~interest ofrate aagreements) ~~class~~to ~~of Charter~~manage ~~Holdco’s customers, alleging that Charter Holdco improperly charged~~its ~~them~~ interest ~~a wire maintenance fee without request or permission~~costs. The ~~They~~Company’s ~~also~~policy ~~claimed that~~is ~~Charter Holdco improperly required them~~ to ~~rent~~manage ~~analog~~its ~~and/or~~exposure ~~digital~~to ~~set-top~~ fluctuations ~~terminals even though their television sets were ''cable ready.’’ A substantively identical case was filed~~ in ~~the~~interest ~~Superior~~rates ~~Court of Athens – Clarke County, Georgia~~ by ~~Emma~~maintaining S.a ~~Tobar~~mix onof ~~March 26,~~fixed ~~2002~~and ~~(the~~variable ~~“Georgia Class~~rate ~~Action”),~~ debt ~~alleging~~within a ~~nationwide~~targeted ~~class for these claims~~range. Using ~~Charter~~interest ~~Holdco~~rate ~~removed the~~swap ~~South Carolina Class Action to the United States District Court for the District of South Carolina in November 2001~~agreements, ~~and moved to dismiss the suit in~~ ~~December 2001. The federal judge remanded~~ the ~~case~~Company tohas ~~the~~agreed ~~South Carolina Court of Common Pleas in August 2002 without ruling on the motion~~ to ~~dismiss. The plaintiffs subsequently moved for a default judgment~~exchange, ~~arguing~~at ~~that~~specified ~~upon~~intervals ~~return to~~through ~~state court~~2013, ~~Charter Holdco should have but did not file a new motion to dismiss. The state court judge granted~~ the ~~plaintiff’s motion over Charter~~ ~~Holdco’s~~ difference ~~objection~~between infixed ~~September 2002. Charter Holdco immediately appealed that decision to the South Carolina Court of Appeals~~ and ~~the~~variable ~~South~~interest ~~Carolina~~amounts ~~Supreme Court,~~calculated ~~but~~by ~~those courts have ruled that until a final judgment is entered~~reference ~~against Charter Holdco, they lack jurisdiction~~ to ~~hear~~agreed-upon ~~the~~notional ~~appeal~~principal amounts.

InThe Company’s ~~January 2003,~~hedging ~~the~~policy ~~Court~~does ofnot ~~Common~~permit ~~Pleas~~it ~~granted~~to ~~the~~hold ~~plaintiffs’~~or ~~motion~~issue ~~for~~derivative ~~class~~ instruments ~~certification.~~for Intrading ~~October~~purposes. The ~~and~~Company ~~November 2003~~does, ~~Charter~~however, ~~Holdco filed~~have ~~motions~~ certain ~~(a) asking~~interest ~~that~~rate ~~court~~derivative toinstruments ~~set~~that ~~aside~~have ~~the~~been ~~default~~designated ~~judgment,~~as ~~and (b)~~cash ~~seeking~~ flow ~~dismissal~~hedging ofinstruments. Such ~~plaintiffs’~~instruments ~~suit~~effectively ~~for~~convert variable ~~failure~~interest topayments ~~state~~on acertain ~~claim.~~debt Ininstruments ~~January~~into fixed ~~2004,~~ payments. For ~~the~~qualifying ~~Court~~hedges, ofSFAS ~~Common~~No. ~~Pleas~~133 ~~granted~~allows inderivative ~~part~~ gains and ~~denied~~losses into ~~part~~offset ~~Charter Holdco’s~~related ~~motion~~results toon ~~dismiss~~hedged ~~for~~items ~~failure~~in tothe ~~state~~consolidated statement aof ~~claim~~operations. The ItCompany ~~also~~has ~~took~~formally ~~under~~documented, ~~advisement~~ designated ~~Charter~~and ~~Holdco’s~~assessed ~~motion~~the toeffectiveness ~~set~~of ~~aside~~transactions ~~the~~that ~~default~~receive ~~judgment~~hedge accounting. For Ineach ~~April 2004,~~of the ~~parties~~three tomonths ~~both~~ended ~~the~~June ~~Georgia~~30, 2007 and ~~South~~2006, ~~Carolina~~other ~~Class Actions participated~~expense, innet aincludes ~~mediation.~~$0, ~~The~~and ~~mediator~~for ~~made a proposal to~~ the ~~parties~~six tomonths ended ~~settle~~ June 30, ~~the~~2007 ~~lawsuits.~~and ~~In May 2004~~2006, ~~the~~other ~~parties~~expense, ~~accepted~~net ~~the~~includes ~~mediator’s~~$0 ~~proposal~~ and ~~reached~~ a ~~tentative~~gain ~~settlement~~of $2 million, respectively, ~~subject~~which torepresent ~~final~~cash ~~documentation~~flow ~~and~~hedge ~~court~~ineffectiveness on interest rate ~~approval~~ hedge agreements. This Asineffectiveness aarises ~~result~~from differences between critical terms of the ~~tentative~~agreements ~~settlement,~~and the ~~Company~~related ~~recorded a~~hedged ~~special~~ obligations. Changes ~~charge of $9 million~~ in ~~its~~the ~~consolidated~~fair ~~statement~~value of ~~operations~~interest inrate ~~the~~agreements ~~first~~ that ~~quarter~~are ofdesignated ~~2004~~as ~~(see~~hedging ~~note~~instruments ~~12).~~of Onthe ~~July 8,~~variability ~~2004,~~of ~~the~~cash ~~Superior~~flows associated ~~Court~~with ~~of Athens~~floating –rate ~~Clarke~~debt ~~County~~obligations, ~~Georgia~~and ~~granted~~that ameet ~~motion~~the toeffectiveness criteria ~~amend~~of ~~the~~SFAS ~~Tobar~~No. ~~complaint to~~133 ~~add~~are ~~Nicholls,~~reported ~~Barber~~in ~~and~~accumulated ~~April~~other ~~Jones~~comprehensive income. For asthe ~~plaintiffs~~three inmonths ~~the~~ended ~~Georgia~~June ~~Class~~30, ~~Action~~ 2007 and to2006, ~~add~~gains ~~any~~of ~~potential~~$50 ~~class~~million ~~members~~and in$1 ~~South~~million, ~~Carolina.~~respectively, ~~The~~and ~~court~~for the ~~also~~ six ~~granted~~months ~~preliminary~~ended ~~approval~~June of30, ~~the~~2007 ~~proposed~~and ~~settlement~~2006, ona ~~that~~gain ~~date.~~of A$48 million and $0, ~~hearing~~ respectively, related to ~~consider~~derivative ~~final~~instruments ~~approval~~designated ofas ~~the~~cash ~~settlement~~flow ishedges, were ~~scheduled~~recorded toin ~~occur~~accumulated ~~on November 10,~~other ~~2004~~comprehensive income. The Onamounts are ~~August 2,~~subsequently ~~2004,~~reclassified ~~the~~as ~~parties~~an ~~submitted~~increase aor ~~joint~~decrease ~~request~~ to interest expense in the ~~South~~same ~~Carolina~~periods ~~Court~~in ofwhich ~~Common~~the ~~Pleas~~related tointerest ~~stay~~on the ~~South~~floating-rate ~~Carolina Class~~debt obligations affects earnings (losses).

16Certain interest rate derivative instruments are not designated as hedges as they do not meet the effectiveness criteria specified by SFAS No. 133. However, management believes such instruments are closely correlated with the respective debt, thus managing associated risk. Interest rate derivative instruments not designated as hedges are marked to fair value, with the impact recorded as other income (expense) in the Company’s condensed consolidated statements of operations. For the three months ended June 30, 2007 and 2006, other expense, net, includes gains of $6 million and $3 million, respectively, and for the six months ended June 30, 2007 and 2006, other expense, net includes gains of $5 million and $9 million, respectively, resulting from interest rate derivative instruments not designated as hedges.

~~Table~~As of June 30, 2007 and December 31, 2006, the Company had outstanding $3.0 billion and $1.7 billion, respectively, in notional amounts of ~~Contents~~interest rate swaps. The notional amounts of interest rate instruments do not represent amounts exchanged by the parties and, thus, are not a measure of exposure to credit loss. The amounts exchanged are determined by reference to the notional amount and the other terms of the contracts.

~~CCH II, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollars in millions, except where indicated)~~ 13

~~Action pending final approval of the settlement. Charter is awaiting a ruling~~CCH on II, ~~that~~LLC ~~request.~~ AND SUBSIDIARIES

~~Charter is unable to predict the outcome of the lawsuits and the government~~NOTES ~~investigation~~ TO ~~described~~CONDENSED ~~above.~~CONSOLIDATED AnFINANCIAL ~~unfavorable outcome in any of these lawsuits or the government investigation could have a material adverse effect on the Company’s financial condition, results of operations or its liquidity.~~ STATEMENTS

In addition to the matters set forth above, Charter is also party to other lawsuits and claims that arose in the ordinary course of conducting its business. In the opinion of management, after taking into account recorded liabilities, the outcome of these other lawsuits and claims are not expected to have a material adverse effect on the Company’s financial condition, results of operations or its liquidity. (UNAUDITED)

~~14.~~(dollars in ~~Stock~~millions, ~~Compensation~~except ~~Plans~~ where indicated)

~~The Company has historically accounted for stock-based compensation in accordance with Accounting Principles Board (“APB”) Opinion No~~11. 25, Accounting for Stock Issued to Employees, and related interpretations, as permitted by SFAS No. 123, Accounting for Stock-Based Compensation. On January 1, 2003, the Company adopted the fair value measurement provisions of SFAS No. 123 using the prospective method, under which the Company recognizes compensation expense of a stock-based award to an employee over the vesting period based on the fair value of the award on the grant date consistent with the method described in Financial Accounting Standards Board Interpretation No. 28, Accounting for Stock Appreciation Rights and Other ~~Variable Stock Option or Award Plans.~~ ~~Adoption~~ Operating of these provisions resulted in utilizing a preferable accounting method as the condensed consolidated financial statements will present the estimated fair value of stock-based compensation in expense consistently with other forms of compensation and other expense associated with goods and services received for equity instruments. In accordance with SFAS No. 148Expenses, ~~Accounting~~ for Stock-Based Compensation – Transition and Disclosure, the fair value method is being applied only to awards granted or modified after January 1, 2003, whereas awards granted prior to such date will continue to be accounted for under APB No. 25, unless they are modified or settled in cash. The ongoing effect on consolidated results of operations or financial condition will depend on future stock-based compensation awards granted by the Company. Net

~~SFAS~~Other operating ~~No. 123~~expenses, ~~requires~~net ~~pro~~consist ~~forma disclosure~~ of the ~~impact~~following ~~on earnings as if the compensation expense~~ for ~~these plans had been determined using~~ the ~~fair~~three ~~value method. The following table presents the Company’s net loss as reported~~ and ~~the~~ ~~pro~~six ~~forma amounts that would have been reported using the fair value method~~months ~~under~~ ended ~~SFAS~~June ~~No. 123~~30, ~~for~~2007 ~~the~~and ~~periods presented~~2006:

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
	2007			2006			2007			2006
Net loss	$	(130	)	$	(28	)	$	(130	)	$	(71	)
Loss on sale of assets, net	$	--		$	--		$	3		$	--
Add back stock-based compensation expense related to stock options included in reported net loss		12			—			26			—
Special charges, net		1			7			2			10
Less employee stock-based compensation expense determined under fair value based method for all employee stock option awards		(10	)		(5	)		(31	)		(7	)
	$	1		$	7		$	5		$	10
Effects of unvested options in stock option exchange		—			—			48			—
Pro forma	$	(128	)	$	(33	)	$	(87	)	$	(78	)

~~In January 2004~~Special charges, ~~Charter~~net ~~began~~for ~~an option exchange program in which~~ the ~~employees~~ ofthree ~~the Company were offered the right to exchange all stock options (vested~~ and ~~unvested)~~six ~~under~~months ~~the~~ended ~~1999~~June ~~Charter~~30, ~~Communications~~2007 ~~Option Plan~~ and ~~2001~~ ~~Stock~~2006 ~~Incentive Plan that had an exercise price over $10 per share for~~primarily ~~shares~~ represent ofseverance ~~restricted~~associated ~~Charter~~with ~~Class A common stock or, in some instances, cash. Based on a sliding exchange ratio, which varied depending on~~ the ~~exercise~~closing ~~price~~ of ancall ~~employee’s~~centers ~~outstanding~~and ~~options, if an employee would have received more~~divisional ~~than 400 shares of~~ restructuring.

1712. Other Expense, Net

~~Table~~Other expense, net consists of ~~Contents~~the following for the three and six months ended June 30, 2007 and 2006:

CCH II, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollars in millions, except where indicated)

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006

Gain on derivative instruments and hedging activities, net	$	6		$	3		$	5		$	11
Loss on extinguishment of debt		(31	)		(27	)		(32	)		(27	)
Minority interest		(5	)		(6	)		(10	)		(10	)
Gain (loss) on investments		(1	)		5			(1	)		4
Other, net		--			(1	)		--			3

	$	(31	)	$	(26	)	$	(38	)	$	(19	)

~~restricted stock in exchange for tendered options, Charter issued to that employee shares of restricted stock in the exchange~~13. ~~If, based on the exchange~~ Income ratios, an employee would have received 400 or fewer shares of restricted stock in exchange for tendered options, Charter instead paid the employee cash in an amount equal to the number of shares the employee would have received multiplied by $5.00. The offer applied to options (vested and unvested) to purchase a total of 22,929,573 shares of Charter Class A common stock, or approximately 48% of Charter’s 47,882,365 total options (vested and unvested) issued and outstanding as of December 31, 2003. Participation by employees was voluntary. Those members of Charter’s board of directors who were not also employees of the Company were not eligible to participate in the exchange offer. Taxes

InCCH II ~~the~~is a ~~closing~~single ofmember ~~the~~limited ~~exchange~~liability ~~offer~~company onnot ~~February 20,~~subject ~~2004,~~to ~~Charter accepted for~~income ~~cancellation~~ tax. CCH ~~eligible~~II ~~options~~holds toall ~~purchase~~operations ~~approximately~~through ~~18,137,664 shares of~~indirect ~~Charter Class A common stock~~ subsidiaries. The Inmajority ~~exchange,~~of ~~Charter~~these ~~granted~~indirect ~~1,966,686~~subsidiaries ~~shares of~~are ~~restricted~~ generally ~~stock,~~limited ~~including~~liability ~~460,777~~companies ~~performance~~that ~~shares~~are toalso ~~eligible~~not ~~employees~~subject ~~of the~~to ~~rank of senior vice president and above~~income tax. However, ~~and~~certain ~~paid a total cash amount~~ of ~~approximately~~ ~~$4 million~~these ~~(which~~limited ~~amount~~liability ~~includes~~companies ~~applicable withholding taxes)~~are subject to ~~those~~state ~~employees~~income ~~who received cash rather than shares of restricted stock~~tax. ~~The~~ In ~~restricted stock was granted on February 25~~addition, ~~2004.~~the ~~Employees~~subsidiaries ~~tendered~~that are ~~approximately~~ corporations ~~79%~~are ofsubject ~~the~~to ~~options~~federal ~~exchangeable~~and ~~under~~state ~~the~~income ~~program~~tax.

~~The cost to the Company~~ As of June ~~the~~30, ~~stock~~2007 ~~option~~and ~~exchange~~December ~~program~~31, ~~was approximately $12 million~~2006, ~~with~~the aCompany ~~2004~~had ~~cash~~net ~~compensation~~deferred ~~expense~~income tax liabilities of approximately $4 197 million and a$200 ~~non-cash~~million, respectively. The ~~compensation~~deferred ~~expense~~tax ofliabilities ~~approximately~~relate ~~$8 million~~ to becertain ~~expensed ratably~~of ~~over~~ the Company’s ~~three-year~~indirect ~~vesting~~subsidiaries, ~~period~~which offile ~~the~~separate ~~restricted~~income ~~stock issued in~~tax ~~the exchange~~ returns.

~~In January 2004,~~ During the ~~Compensation~~three ~~Committee~~and ofsix ~~the~~months ~~board~~ended ofJune ~~directors~~30, ~~of Charter approved Charter’s Long-Term Incentive Program (“LTIP”)~~2007, ~~which is a program administered under~~ the ~~2001~~Company ~~Stock~~recorded ~~Incentive~~$1 ~~Plan. Employees~~ million of ~~Charter~~ ~~and~~ income ~~its~~tax ~~subsidiaries~~benefit ~~whose~~and ~~pay~~$1 ~~classifications~~million ~~exceed~~of aincome ~~certain~~tax ~~level~~expense, ~~are eligible to receive stock options~~respectively, and ~~more senior level employees are eligible~~ to during ~~receive~~the ~~stock~~three ~~options~~ and ~~performance~~six ~~shares.~~months ~~Under~~ended ~~the~~June ~~LTIP~~30, ~~the~~2006, ~~stock options vest 25% on each of~~ the ~~first~~Company ~~four~~recorded ~~anniversaries of the date of grant.~~$2 ~~The~~ million ~~performance~~and ~~units~~$4 ~~vest~~million ~~on the third anniversary~~ of ~~the~~income ~~grant~~tax ~~date and shares of Charter Class A common stock are issued~~expense, ~~conditional upon Charter’s performance against financial performance targets established by Charter’s management and approved by its board of directors as of the time of the award~~respectively.

~~15.~~Charter Holdco, ~~Related~~the ~~Parties~~Company’s indirect parent company, is currently under examination by the Internal Revenue Service for the tax years ending December 31, 2002 through 2005. In addition, Charter and one of the Company’s indirect corporate subsidiaries are under examination by the Internal Revenue Service for the tax year ended December

CC VIII, LLC. As part of the acquisition of the cable systems owned by Bresnan Communications Company Limited Partnership in February 2000, CC VIII, LLC (“CC VIII”), CCH II’s indirect limited liability company subsidiary, issued, after adjustments, 24,273,943 Class A preferred membership units (collectively, the ''CC VIII interest’’) with a value and an initial capital account of approximately $630 million to certain sellers affiliated with AT&T Broadband, subsequently owned by Comcast Corporation (the ''Comcast sellers’’). While held by the Comcast sellers, the CC VIII interest was entitled to a 2% priority return on its initial capital account and such priority return was entitled to preferential distributions from available cash and upon liquidation of CC VIII. While held by the Comcast sellers, the CC VIII interest generally did not share in the profits and losses of CC VIII. Mr. Allen granted the Comcast sellers the right to sell to him the CC VIII interest for approximately $630 million plus 4.5% interest annually from February 2000 (the ''Comcast put right’’). In April 2002, the Comcast sellers exercised the Comcast put right in full, and this transaction was consummated on June 6, 2003. Accordingly, Mr. Allen has become the holder of the CC VIII interest, indirectly through an affiliate. Consequently, subject to the matters referenced in the next paragraph, Mr. Allen generally thereafter will be allocated his pro rata share (based on number of membership interests outstanding) of profits or losses of CC VIII. In the event of a liquidation of CC VIII, Mr. Allen would be entitled to a priority distribution with respect to the 2% priority return (which will continue to accrete). Any remaining distributions in liquidation would be distributed to CC V Holdings, LLC and Mr. Allen in proportion to CC V Holdings, LLC’s capital account and Mr. Allen’s capital account (which will equal the initial capital account of the Comcast sellers of approximately $630 million, increased or decreased by Mr. Allen’s pro rata share of CC VIII’s profits or losses (as computed for capital account purposes) after June 6, 2003). The limited 14

18CCH II, LLC AND SUBSIDIARIES

~~Table~~NOTES TO ofCONDENSED ~~Contents~~CONSOLIDATED FINANCIAL STATEMENTS

~~CCH II, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ (UNAUDITED) ~~(dollars in millions, except where indicated)~~

~~liability company agreement of CC VIII does not provide for a mandatory~~(dollars ~~redemption~~ in ofmillions, ~~the~~except CCwhere ~~VIII interest.~~ indicated)

An issue has arisen as to whether the documentation for the Bresnan transaction was correct and complete with regard to the ultimate ownership of the CC VIII interest following consummation of the Comcast put right. Specifically31, ~~under~~ the terms of the Bresnan transaction documents that were entered into in June 1999, the Comcast sellers originally would have received, after adjustments, 24,273,943 Charter Holdco membership units, but due to an FCC regulatory issue raised by the Comcast sellers shortly before closing, the Bresnan transaction was modified to provide that the Comcast sellers instead would receive the preferred equity interests in CC VIII represented by the CC VIII interest 2004. Management ~~As part~~does ofnot ~~the~~expect ~~last-minute changes to~~ the ~~Bresnan~~results ~~transaction documents, a draft amended version~~ of ~~the Charter Holdco limited liability company agreement was~~these ~~prepared,~~ examinations ~~and~~to ~~contract provisions were drafted for that agreement that would~~ have ~~required~~a anmaterial ~~automatic~~adverse ~~exchange~~effect ofon the CCCompany’s ~~VIII interest for 24,273,943~~consolidated ~~Charter~~ financial ~~Holdco~~condition ~~membership units if the Comcast sellers exercised the Comcast put right and sold the CC VIII interest to Mr. Allen~~ or ~~his~~results ~~affiliates. However, the provisions that would have required this automatic exchange did not appear in the final version~~ of ~~the Charter Holdco limited liability company agreement that was delivered and executed at the closing of the Bresnan transaction~~operations. ~~The law firm that prepared the documents for the Bresnan transaction brought this matter to the attention of Charter and representatives of Mr. Allen in 2002.~~

~~Thereafter, the board of directors of Charter formed a Special Committee (currently comprised of Messrs~~14. Merritt, Tory and Wangberg) to investigate the matter and take any other appropriate action on behalf of Charter with respect to this matter. After conducting an investigation of the relevant facts and circumstances, the Special Committee determined that a ''scrivener’s error’’ had occurred in February 2000 in connection with the preparation of the last-minute revisions to the Bresnan transaction documents and that, as a result, Charter should seek the reformation of the Charter Holdco limited liability company agreement, or alternative relief, in order to restore and ensure the obligation that the CC VIII interest be automatically exchanged for Charter Holdco units. The Special Committee further determined that, as part of such contract reformation or alternative relief, Mr. Allen should be required to contribute the CC VIII interest to Charter Holdco in exchange for 24,273,943 Charter Holdco membership units. The Special Committee also recommended to the board of directors of Charter that, to the extent the contract reformation is achieved, the board of directors should consider whether the CC VIII interest should ultimately be held by Charter Holdco or Charter Holdings or another entity owned directly or indirectly by them. Contingencies

~~Mr. Allen~~The Company ~~disagrees~~and ~~with~~its ~~the~~parent ~~Special~~companies ~~Committee’s~~are ~~determinations~~defendants ~~described~~or ~~above~~co-defendants in several unrelated lawsuits claiming infringement of various patents relating to various aspects of its businesses. Other industry participants are also defendants in certain of these cases, and, ~~has~~in somany ~~notified~~cases, the ~~Special~~Company ~~Committee.~~expects that Mrany potential liability would be the responsibility of its equipment vendors pursuant to applicable contractual indemnification provisions. ~~Allen~~ ~~contends~~In the event that a court ultimately determines that the Company infringes on any ~~transaction~~ intellectual isproperty ~~accurately~~rights, ~~reflected~~it inmay ~~the~~be ~~transaction~~subject ~~documentation~~to substantial damages and/or ~~contemporaneous~~ an injunction that could require the Company or its vendors to modify certain products and ~~subsequent~~services ~~company~~the ~~public~~Company ~~disclosures~~offers to its subscribers. While the Company believes the lawsuits are without merit and intends to defend the actions vigorously, the lawsuits could be material to the Company’s consolidated results of operations of any one period, and no assurance can be given that any adverse outcome would not be material to the Company’s consolidated financial condition, results of operations, or liquidity.

The ~~parties engaged in a process of non-binding mediation to seek to resolve~~ ~~this~~ Company ~~matter,~~and ~~without~~its ~~success.~~parent ~~The~~companies ~~Special~~are ~~Committee is evaluating what further actions or processes it may undertake to resolve this dispute. To accommodate further deliberation, each~~ party ~~has agreed~~ to ~~refrain from initiating legal proceedings over this matter until it has given at least ten days’ prior notice to the~~ other. Inlawsuits ~~addition, the Special Committee~~ and ~~Mr. Allen~~claims ~~have determined~~that to arise ~~utilize~~in the ~~Delaware~~ordinary ~~Court~~course of ~~Chancery’s~~conducting ~~program~~its ~~for~~business. The ~~mediation~~ultimate outcome of ~~complex business~~these ~~disputes~~other inlegal anmatters ~~effort~~pending toagainst ~~resolve~~ the CCCompany ~~VIII~~or ~~interest~~its ~~dispute. If the~~parent ~~Special Committee and Mr.~~ companies ~~Allen~~cannot ~~are~~be ~~unable~~predicted, toand ~~reach~~although asuch ~~resolution~~lawsuits ~~through~~and ~~that~~claims are ~~mediation~~ not ~~process~~expected orindividually to ~~agree~~have ona anmaterial ~~alternative~~adverse ~~dispute~~effect ~~resolution~~on ~~process,~~ the Company’s ~~Special~~ consolidated ~~Committee~~financial ~~intends~~condition, toresults ~~seek resolution~~ of ~~this~~operations, ~~dispute~~or ~~through~~liquidity, ~~judicial~~such ~~proceedings~~ lawsuits incould ~~an action that would be commenced~~have, ~~after appropriate notice,~~ in the ~~Delaware Court of Chancery against Mr. Allen and his affiliates seeking contract reformation~~aggregate, ~~declaratory~~a ~~relief~~material asadverse toeffect ~~the~~on ~~respective rights of~~ the ~~parties~~ Company’s ~~regarding~~consolidated ~~this~~financial ~~dispute~~condition, ~~and~~results ~~alternative forms~~ of ~~legal~~operations, ~~and equitable~~or ~~relief~~ liquidity. ~~The ultimate resolution and financial impact of the dispute are not determinable at this time.~~

~~TechTV, Inc~~15. ~~TechTV, Inc. (''TechTV’’) operated a cable television network~~ Stock ~~that~~ Compensation offered programming mostly related to technology. Pursuant to an affiliation agreement that originated in 1998 and that terminates in 2008, TechTV has provided the Company with programming for distribution via its cable systems. The affiliation agreement provides, among other things, that TechTV must offer the Company certain terms and conditions that are Plans

19Charter has stock option plans (the “Plans”) which provide for the grant of non-qualified stock options, stock appreciation rights, dividend equivalent rights, performance units and performance shares, share awards, phantom stock and/or restricted stock (not to exceed 20,000,000 shares of Charter Class A common stock), as each term is defined in the Plans. Employees, officers, consultants and directors of Charter and its subsidiaries and affiliates are eligible to receive grants under the Plans. Options granted generally vest over four years from the grant date, with 25% generally vesting on the anniversary of the grant date and ratably thereafter. Generally, options expire 10 years from the grant date. The Plans allow for the issuance of up to a total of 90,000,000 shares of Charter Class A common stock (or units convertible into Charter Class A common stock). During the three and six months ended June 30, 2007, Charter granted 0.1 million and 3.9 million stock options, respectively, and 0.2 million and 6.9 million performance units, respectively, under Charter’s Long-Term Incentive Program. The Company recorded $5 million and $3 million of stock compensation expense for the three months ended June 30, 2007 and 2006, respectively, and $10 million and $7 million for the six months ended June 30, 2007 and 2006, which is included in selling, general, and administrative expense.

~~Table of Contents~~15

~~CCH II, LLC AND SUBSIDIARIES~~Item ~~NOTES~~ 2. Management's Discussion TOand ~~CONDENSED~~Analysis ~~CONSOLIDATED~~of ~~FINANCIAL~~Financial ~~STATEMENTS (UNAUDITED) (dollars~~Condition inand ~~millions,~~Results ~~except where indicated)~~of Operations.

no less favorable in the affiliation agreement than are given to any other distributor that serves the same number of or fewer TechTV viewing customers. Additionally, pursuant to the affiliation agreement, the Company was entitled to incentive payments for channel launches through December 31, 2003. General

~~In March 2004, Charter Holdco entered into agreements with Vulcan Programming~~CCH ~~and TechTV~~ II, ~~which provide for (i) Charter Holdco and TechTV to amend the~~ ~~affiliation~~ LLC agreement which, among other things, revises the description of the TechTV network content, provides for Charter Holdco to waive certain claims against TechTV relating to alleged breaches of the affiliation agreement and provides for TechTV to make payment of outstanding launch receivables due to Charter Holdco under the affiliation agreement, (ii"CCH II") ~~Vulcan~~ ~~Programming~~is toa ~~pay approximately~~holding ~~$10 million~~company ~~and~~whose ~~purchase~~principal ~~over~~assets ~~a 24-month period,~~ at ~~fair~~June ~~market rates~~30, ~~$2 million of advertising time across various cable networks on the~~2007 ~~Company’s cable systems in consideration of the agreements, obligations,~~ are ~~releases and waivers under~~ the ~~agreements~~equity ~~and~~interests in ~~settlement~~its ofoperating ~~the aforementioned~~subsidiaries. CCH ~~claims~~II ~~and~~is ~~(iii) TechTV to be~~ a direct ~~provider~~subsidiary of ~~content~~CCH ~~relating to technology and video gaming for the Company’s interactive television platforms through December 31~~I, ~~2006~~LLC (~~exclusive~~“CCH ~~for the first year~~I”)~~. The Company recognized approximately $4 million of the Vulcan Programming payment as an offset to programming expense during the six months ended June 30~~, ~~2004 with the remaining $6 million to be recognized over the term of the agreement. The Company believes that Vulcan Programming,~~ which is ~~100% owned by Mr. Allen, owned~~ an ~~approximate~~indirect ~~98%~~subsidiary ~~equity interest in TechTV at the time~~ of ~~the~~ ~~transaction.~~ Charter ~~Until~~Communications ~~September 2003~~Holdings, ~~Mr. Savoy,~~LLC ~~a former~~ ("Charter ~~director, was~~Holdings"). Charter ~~the~~ Holdings ~~president~~is ~~and~~an ~~director~~indirect ofsubsidiary ~~Vulcan Programming and was a director~~ of ~~TechTV. Mr. Wangberg, one of~~ Charter’s ~~directors~~Communications, ~~was the chairman, chief executive officer and a director of TechTV~~Inc. Mr(“Charter”). ~~Wangberg resigned as the chief executive~~ ~~officer~~ "We," of"us" ~~TechTV~~and in"our" ~~July 2002.~~refer ~~He remained a director of TechTV along with Mr. Allen until Vulcan Programming sold TechTV~~ to anCCH ~~unrelated~~II ~~third~~and/or ~~party~~its ~~in May 2004~~subsidiaries.

~~Digeo,~~We are ~~Inc.~~a broadband Oncommunications ~~June 30,~~company ~~2003,~~operating ~~Charter~~in ~~Holdco~~the ~~entered~~United ~~into an agreement with~~States. We ~~Motorola,~~ offer ~~Inc.~~our ~~for~~residential ~~the~~and ~~purchase~~commercial ofcustomers ~~100,000~~traditional ~~digital~~cable video programming ~~recorder~~ (~~“DVR”) units.~~analog ~~The~~and ~~software~~digital ~~for~~video, ~~these~~which ~~DVR~~we ~~units~~refer isto ~~being~~as ~~supplied by Digeo Interactive, LLC (~~“~~Digeo~~video ~~Interactive~~service”), high-speed aInternet ~~wholly~~services, ~~owned~~advanced ~~subsidiary~~broadband ofcable ~~Digeo, Inc.~~services (~~“Digeo”),~~such ~~under~~as ~~a license agreement entered into in April 2004. Under~~Charter ~~the~~ OnDemand™ ~~license~~video ~~agreement~~service ~~Digeo~~(“OnDemand”), ~~Interactive~~high ~~granted~~definition totelevision ~~Charter~~service, ~~Holdco the right to~~and ~~use~~ digital ~~Digeo’s~~video ~~proprietary~~recorder ~~software for the number of~~ (“DVR”) ~~units~~service) ~~that~~and, ~~the~~in ~~Company deploys~~many ~~from a maximum~~ of 15our ~~headends~~markets, ~~through year-end 2004~~telephone service. We ~~The~~sell ~~license granted~~our ~~for~~cable ~~each~~video ~~unit deployed under the agreement is valid for five years. In addition~~programming, ~~the Company will pay certain other fees including a per~~high-~~headend license~~speed fee and maintenance fees. Total license and maintenance fees during the term of the agreement are expected to be approximately $3 million. The agreement provides that the Company is entitled to receive contract termsInternet, ~~considered on the whole~~ telephone, and ~~license~~advanced ~~fees,~~broadband ~~considered~~services ~~apart~~on ~~from~~a ~~other~~subscription ~~contract terms, no less favorable than those accorded to any other Digeo customer~~basis. ~~In April 2004, the Company launched DVR service utilizing the Digeo proprietary software in its Rochester, Minnesota market.~~

~~In May 2004, Charter Holdco entered into a binding term sheet with Digeo Interactive for the purchase of 70,000 Digeo PowerKey DVR units.~~ The ~~term~~ ~~sheet~~ following ~~provides~~table ~~that~~summarizes ~~the~~our ~~parties~~customer ~~will~~statistics ~~proceed~~for inanalog ~~good~~and ~~faith~~digital ~~to negotiate~~video, ~~prior~~ to residential ~~year~~high-~~end~~speed ~~2004,~~Internet ~~definitive agreements for the purchase of the DVR units~~ and ~~that~~ ~~the~~residential ~~parties~~telephone ~~will~~as ~~enter into a license agreement for Digeo’s proprietary software on terms significantly similar to the terms~~ of ~~the~~June ~~license~~30, ~~agreement~~2007 ~~described above. Total purchase price~~ and license and maintenance fees during the term of the definitive agreements are expected to be approximately $40 million. The term sheet and any definitive agreements will be terminable at no penalty to the Company in certain circumstances. 2006:

The Company believes that Vulcan Ventures, an entity controlled by Mr. Allen, owns an approximate 60% equity interest in Digeo, Inc. Messrs. Allen and Vogel are directors of Digeo. Mr. Savoy, who resigned from Charter’s board of directors in April 2004, was a director and served on the compensation committee of Digeo until September 2003. Mr. Vogel owns options to purchase 10,000 shares of Digeo common stock.

	Approximate as of
	June 30,		June 30,
	2007 (a)		2006 (a)

Video Cable Services:
Analog Video:
Residential (non-bulk) analog video customers (b)		5,107,800		5,600,300
Multi-dwelling (bulk) and commercial unit customers (c)		269,000		275,800
Total analog video customers (b)(c)		5,376,800		5,876,100

Digital Video:
Digital video customers (d)		2,866,000		2,889,000

Non-Video Cable Services:
Residential high-speed Internet customers (e)		2,583,200		2,375,100
Telephone customers (f)		700,300		257,600

~~Oxygen~~After giving ~~Media~~effect ~~LLC.~~to ~~Oxygen~~sales ~~Media~~of ~~LLC~~certain ~~(“Oxygen”)~~non-strategic ~~provides~~cable ~~programming~~systems ~~content~~in the third ~~aimed~~ quarter atof ~~the~~2006, ~~female~~January ~~audience~~2007 ~~for~~and ~~distribution~~May ~~over~~2007, ~~cable~~analog ~~systems~~video customers, digital video customers, high-speed Internet customers and ~~satellite.~~telephone customers would On have ~~July 22~~been 5,439,800, ~~2002~~2,703,300, ~~Charter~~2,252,500 ~~Holdco~~and ~~entered~~257,600, ~~into~~respectively, aas ~~carriage agreement~~of June 30, 2006.

20 (a) "Customers" include all persons our corporate billing records show as receiving service (regardless of their payment status), except for complimentary accounts (such as our employees). At June 30, 2007 and 2006, "customers" include approximately 33,600 and 55,900 persons whose accounts were over 60 days past due in payment, approximately 4,000 and 14,300 persons whose accounts were over 90 days past due in payment, and approximately 1,700 and 8,900 of which were over 120 days past due in payment, respectively.

~~Table~~(b) of"Analog ~~Contents~~video customers" include all customers who receive video services.

~~CCH~~(c) IIIncluded within "video customers" are those in commercial and multi-dwelling structures, ~~LLC~~which ~~AND~~are ~~SUBSIDIARIES NOTES~~calculated TOon ~~CONDENSED~~an ~~CONSOLIDATED~~equivalent ~~FINANCIAL~~bulk ~~STATEMENTS~~ unit (~~UNAUDITED~~"EBU") ~~(dollars~~ basis. EBU is calculated for a system by dividing the bulk price charged to accounts in ~~millions,~~an ~~except~~area ~~where~~by ~~indicated)~~ the most prevalent price charged to non-bulk residential customers in that market for the comparable tier of service. The EBU method of estimating analog video customers is consistent with the methodology used in determining costs paid to programmers and has been used consistently.

~~with~~(d) ~~Oxygen~~"Digital ~~to carry programming content from Oxygen to the Company’s customers. Under the carriage agreement, the Company currently makes Oxygen programming available to approximately 5 million of its~~ video customers." ~~The term~~include ofall ~~the~~households ~~carriage agreement was retroactive to February 1, 2000, the date of launch of Oxygen programming by the Company, and runs for a period of five years from~~ that ~~date.~~have ~~For~~one ~~the~~or ~~six~~more ~~months~~digital ~~ended~~set-top ~~June 30,~~boxes ~~2004~~or ~~and~~cable ~~2003,~~cards ~~the Company paid Oxygen approximately $7 million and $4 million, respectively, for programming content~~deployed. In addition, Oxygen pays the Company marketing support fees for customers launched after the first year of the term of the carriage agreement up to a total of $4 million. The Company recorded approximately $0.7 million related to these launch incentives as a reduction of programming expense for each of the six months ended June 30, 2004 and 2003.

Concurrently with the execution of the carriage agreement, Charter Holdco entered into an equity issuance agreement pursuant to which Oxygen’s parent company, Oxygen Media Corporation (“Oxygen Media”), granted a subsidiary of Charter Holdco a warrant to purchase 2.4 million shares of Oxygen Media common stock for an exercise price of $22.00 per share. Charter Holdco was also to receive unregistered shares of Oxygen Media common stock with a guaranteed fair market value on the date of issuance of $34 million, on or prior to February 2, 2005, with the exact date to be determined by Oxygen Media. 16

~~The~~(e) ~~Company~~"Residential ~~recognizes~~high-speed ~~the~~Internet ~~guaranteed~~customers" ~~value~~represent ofthose ~~the~~residential ~~investment~~customers ~~over~~who ~~the~~subscribe ~~life~~to ~~of the~~our ~~carriage~~high-speed ~~agreement~~Internet ~~as a reduction of programming expense~~service. For the six months ended June 30, 2004 and 2003, the Company recorded approximately $7 million and $4 million, respectively, as a reduction of programming expense. The carrying value of the Company’s investment in Oxygen was approximately $26 million and $19 million as of June 30, 2004 and December 31, 2003, respectively.

~~In August 2004, Charter Holdco and Oxygen entered into agreements that amend and renew the carriage agreement. The amendment to the carriage agreement~~ (af) ~~revises~~ ~~the~~"Telephone ~~number of the Company’s~~ customers" toinclude ~~which~~all Oxygen programming must be carried and for which the Company must pay, (b) releases Charter Holdco from any claims related to the failure to achieve distribution benchmarks under the carriage agreement, (c) requires Oxygen to make payment on outstanding receivables for marketing support fees due to the Company under the carriage agreement; and (d) requires that Oxygen provide its programming content to the Company on economic terms no less favorable than Oxygen provides to any other cable or satellite operator having fewer subscribers than the Company. The renewal of the carriage agreement (a) extends the period that the Company will carry Oxygen programming to its customers ~~through January 31, 2008, and (b) requires license fees to be paid based on customers~~ receiving ~~Oxygen programming,~~telephone ~~rather than for specific customer benchmarks~~service.

In August 2004, Charter Holdco and Oxygen also amended the equity issuance agreement to provide for the issuance of 1 million shares of Oxygen Preferred Stock with a liquidation preference of $33.10 per share plus accrued dividends to Charter Holdco on February 1, 2005 in lieu of the $34 million of unregistered shares of Oxygen Media common stock. The preferred stock is convertible into common stock after December 31, 2007 at a conversion ratio, the numerator of which is the liquidation preference and the denominator of which is the fair market value per share of common stock on the conversion date. Overview

~~Mr. William~~For the three ~~Savoy,~~months aended ~~director~~June ~~of Charter~~30, ~~Charter~~2007 ~~Holdco~~and 2006, ~~and~~our ~~Charter~~operating ~~Holdings~~income from continuing ~~until~~ operations ~~his~~was ~~resignation~~$200 inmillion ~~April 2004~~and $146 million, ~~served~~respectively, onand for the ~~board~~six months ofended ~~directors~~June of30, ~~Oxygen~~2007 and 2006, our operating income from continuing ~~until~~ operations ~~September 2003~~was $356 million and $138 million, respectively. We Ashad operating margins of 13% and 11% for the three months ended June 30, ~~2004~~2007 and 2006, ~~through~~respectively, ~~Vulcan~~and ~~Programming~~12% and 5% for the six months ended June 30, Mr2007 and 2006, respectively. The increase in operating income from continuing ~~Allen~~ operations ~~owned~~and anoperating ~~approximate~~margins ~~31%~~for ~~interest~~the inthree ~~Oxygen~~and ~~assuming~~six nomonths ~~exercises~~ended ofJune 30, ~~outstanding~~ 2007 ~~warrants~~compared orto ~~conversion~~the orthree ~~exchange~~and ofsix ~~convertible~~months orended ~~exchangeable~~June 30, 2006 was principally ~~securities.~~ due to revenues increasing at a faster rate than expenses, reflecting increased operational efficiencies, improved geographic footprint, and benefits from improved third party contracts, coupled with asset impairment charges during the six months ended June 30, 2006, which did not recur in 2007.

~~Marc~~We have ~~Nathanson~~a history ~~has~~of annet ~~indirect~~losses. Further, ~~beneficial~~we expect to continue to report net losses for the foreseeable future. Our net losses are principally attributable to insufficient revenue to cover the combination of operating expenses and interest expenses we incur because of ~~less~~our ~~than~~high 1%level inof ~~Oxygen.~~debt, and depreciation expenses resulting from the capital investments we have made and continue to make in our cable properties. We expect that these expenses will remain significant.

21Sale of Assets

~~Table~~In 2006, we sold cable systems serving a total of ~~Contents~~approximately 356,000 analog video customers for a total sales price of approximately $971 million. We used the net proceeds from the asset sales to reduce borrowings, but not commitments, under the revolving portion of our credit facilities. These cable systems met the criteria for assets held for sale. As such, the assets were written down to fair value less estimated costs to sell resulting in asset impairment charges during the six months ended June 30, 2006 of approximately $99 million. The results of operations for the West Virginia and Virginia cable systems have been presented as discontinued operations, net of tax for the three and six months ended June 30, 2006.

~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~17

~~General~~RESULTS OF OPERATIONS

~~CCH~~Six Months ~~II,~~Ended ~~LLC (“CCH II”) is a holding company whose principal assets as of~~ June 30, ~~2004~~2007 ~~are~~Compared equity interests in its operating subsidiaries. CCH II is a wholly owned subsidiary of CCH I, LLC (“CCH I”). CCH I is a wholly owned subsidiary of Charter Communications Holdings, LLC (“Charter Holdings”). Charter Holdings is a wholly owned subsidiary of Charter Communications Holding Company, LLC (“Charter Holdco”), which is a subsidiary of Charter Communications, Inc. (“Charter”). “We,” “us” and “our” refer to ~~CCH~~Six IIMonths ~~and~~Ended ~~its subsidiaries.~~June ~~Our “parent companies” are CCH I~~30, ~~Charter Holdings, Charter~~ Holdco and Charter. We are a broadband communications company operating in the United States. We offer our customers traditional cable video programming (analog and digital video) as well as high-speed data services and in some areas advanced broadband services such as high definition television, video on demand, telephony and interactive television. We sell our cable video programming, high-speed data and advanced broadband services on a subscription basis. 2006

The following table ~~summarizes~~sets ~~our~~forth ~~customer~~the ~~statistics~~percentages ~~for~~of ~~analog~~revenues ~~and~~that ~~digital video,~~items ~~residential~~in ~~high-speed~~the accompanying ~~data~~condensed ~~and~~consolidated ~~residential~~statements ~~telephony~~of asoperations ofconstituted ~~June 30,~~for ~~2004~~ the periods ~~and~~presented ~~2003~~(dollars in millions):

	Approximate as of
	Six Months Ended June 30,
	June 30,			June 30,
	2007						2006
	2004 (a)			2003 (a)
REVENUES	$	2,924			100	%	$	2,703		100	%
Cable Video Services:
COSTS AND EXPENSES:
Analog Video:
Operating (excluding depreciation and amortization)		1,278			44	%		1,215		45	%
Residential (non-bulk) analog video customers (b)		5,892,600			6,234,500
Selling, general and administrative		620			21	%		551		20	%
Multi-dwelling (bulk) and commercial unit customers (c)		240,600			252,400
Depreciation and amortization		665			23	%		690		26	%
Analog video customers (b)(c)		6,133,200			6,486,900
Asset impairment charges		--			--			99		4	%
Digital Video:
Other operating expenses, net		5			--			10		--
Digital video customers (d)		2,650,200			2,603,900
		2,568			88	%		2,565		95	%
Digital percentage of analog video customers (b)(c)(d)(e)		43	%		40	%
Operating income from continuing operations		356			12	%		138		5	%
Digital set-top terminals deployed		3,751,900			3,680,000
OTHER EXPENSES:
Non-Video Cable Services:
Interest expense, net		(506	)					(488	)
Residential high-speed data customers (f)		1,711,400			1,349,000
Other expense, net		(38	)					(19	)
Dial-up customers		7,800			11,700
		(544	)					(507	)
Telephony customers (g)		31,200			23,700
Loss from continuing operations before income taxes		(188	)					(369	)
INCOME TAX EXPENSE		(1	)					(4	)
Loss from continuing operations		(189	)					(373	)
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		--						38
Net loss	$	(189	)				$	(335	)

~~Pro~~Revenues. Average monthly ~~forma~~revenue ~~for~~per ~~the~~analog ~~effect~~video ofcustomer ~~the~~increased ~~sale~~to of$88 ~~systems~~for tothe ~~Atlantic~~six ~~Broadband~~months ended ~~Finance~~June 30, ~~LLC,~~ ~~which~~2007 ~~closed~~from on$80 ~~March~~for 1the ~~and~~six ~~April~~ months ended June 30, ~~2004~~2006, ~~and~~primarily as toa ~~WaveDivision~~result ~~Holdings~~of increases in digital, high-speed Internet and telephone ~~LLC~~ customers, ~~which~~and ~~closed~~incremental onrevenues ~~October 1~~from OnDemand, ~~2003~~DVR, ashigh-definition television ifservices, ~~all~~and ofrate ~~these~~adjustments. Average ~~sales~~monthly ~~had~~revenue per ~~occurred~~analog ~~as of~~video ~~January 1,~~customer ~~2003,~~represents ~~analog~~total ~~video~~quarterly ~~customers~~revenue, ~~digital~~divided ~~video~~by ~~customers and~~the ~~residential~~ number ~~high-speed~~of ~~data~~respective ~~customers~~months, ~~would~~divided ~~have~~by ~~been~~the ~~6,228,000,~~average ~~2,511,800~~number ~~and 1,304,100,~~of ~~respectively,~~analog asvideo customers ofduring ~~June 30,~~the ~~2003~~respective period.

(a) “Customers” include all persons our corporate billing records show as receiving service (regardless of their payment status), except for complimentary accounts (such as our employees). Further, “customers” include persons receiving service under promotional programs that offered up to two months of service for free, some of whom had not requested to be disconnected, but had not become paying customers as of June 30, 2004. If such persons do not become paying customers, we do not believe this would have a material impact on our consolidated financial condition or consolidated results of operations. In addition, at June 30, 2004 and 2003, “customers” include approximately 58,700 and 71,400 persons whose accounts were over 60 days past due in payment, approximately 6,300 and 8,700 persons whose accounts were over 90 days past due in payment, and approximately 2,000 and 1,900 of which were over 120 days past due in18

22Revenues by service offering were as follows (dollars in millions):

	Six Months Ended June 30,
	2007					2006					2007 over 2006
	Revenues		% of Revenues			Revenues		% of Revenues			Change			% Change

Video	$	1,697		58	%	$	1,684		62	%	$	13			1	%
High-speed Internet		606		21	%		506		19	%		100			20	%
Telephone		142		5	%		49		2	%		93			190	%
Advertising sales		139		4	%		147		5	%		(8	)		(5	)%
Commercial		164		6	%		149		6	%		15			10	%
Other		176		6	%		168		6	%		8			5	%

	$	2,924		100	%	$	2,703		100	%	$	221			8	%

~~payment~~Video revenues consist primarily of revenues from analog and digital video services provided to our non-commercial customers. Analog video customers decreased by 259,700 ~~respectively~~customers from June 30, 2006, 196,700 of which was related to asset sales, compared to June 30, 2007. Digital video customers increased by 97,000, offset by a loss of 65,600 customers related to asset sales. The increase in video revenues is attributable to the following (dollars in millions):

(b) “Residential (non-bulk) analog video customers” include all residential customers who receive video services, except for complimentary accounts (such as our employees). (c) Included within “video customers” are those in commercial and multi-dwelling structures, which are calculated on an equivalent bulk unit (“EBU”) basis. EBU is calculated for a system by dividing the bulk price charged to accounts in an area by the most prevalent price charged to non-bulk residential customers in that market for the comparable tier of service. The EBU method of estimating analog video customers is consistent with the methodology used in determining costs paid to programmers and has been consistently applied year over year. As we increase our effective analog video prices to residential customers without a corresponding increase in the prices charged to commercial service or multi-dwelling customers, our EBU count will decline even if there is no real loss in commercial service or multi-dwelling customers. (d) “Digital video customers” include all households that have one or more digital set-top terminals. Included in “digital video customers” on June 30, 2004 and 2003 are approximately 11,400 and 13,300 customers, respectively, that receive digital video service directly through satellite transmission. (e) Represents the number of digital video customers as a percentage of analog video customers. (f) All of these customers also receive video service and are included in the video statistics above. However, the video statistics do not include approximately 168,400 and 71,900 of these customers at June 30, 2004 and 2003, respectively, who were residential high-speed data only customers. (g) “Telephony customers” include all households receiving telephone service.

	2007 compared to 2006 Increase / (Decrease)

Rate adjustments and incremental video services	$	43
Increase in digital video customers		32
Decrease in analog video customers		(18	)
System sales		(44	)

	$	13

~~Overview~~High-speed Internet customers grew by 291,100 customers, offset by a loss of ~~Operations~~39,600 customers related to asset sales, from June 30, 2006 to June 30, 2007. The increase in high-speed Internet revenues from our non-commercial customers is attributable to the following (dollars in millions):

We have a history of net losses. Further, we expect to continue to report net losses for the foreseeable future. Our net losses are principally attributable to insufficient revenue to cover the combination of operating costs and interest costs we incur because of our high level of debt, depreciation expenses that we incur resulting from the capital investments we have made and continue to make in our cable properties, and amortization and impairment of our franchise intangibles. We expect that these expenses (other than amortization and impairment of franchises) will remain significant, and we therefore expect to continue to report net losses for the foreseeable future.

	2007 compared to 2006 Increase / (Decrease)

Increase in high-speed Internet customers	$	76
Price increases		33
System sales		(9	)

	$	100

~~For the six months ended June 30, 2004 and 2003, our income~~ Revenues from ~~operations~~telephone ~~was $190 million~~services ~~and~~increased ~~$189 million, respectively. Our operating margins remained constant at 8% for the six months ended June 30, 2003 and 2004~~ primarily as a result of aan ~~gain~~increase ~~on the sale~~ of ~~certain cable systems to Atlantic Broadband~~ ~~Finance~~ 442,700 ~~LLC~~telephone ~~recorded~~customers infrom ~~the~~June ~~first~~30, ~~quarter~~2006 ofto ~~2004~~June ~~offset~~30, ~~by the increase in option compensation expense and special charges that were recorded in the second quarter of 2004~~2007.

~~Since~~Advertising sales ~~our~~revenues ~~inception,~~consist ~~and~~primarily ~~currently,~~of ~~our~~revenues ~~ability~~from tocommercial ~~conduct~~advertising customers, ~~operations~~programmers, ~~has been~~ and ~~continues~~other tovendors. Advertising besales ~~dependent on our access to credit under our credit~~revenues ~~facilities.~~ decreased ~~The~~primarily ~~occurrence~~as ofa anresult ~~event~~ of ~~default~~a ~~under~~decrease ~~our credit facilities could result~~ in ~~borrowings~~national ~~from~~advertising ~~these~~sales, including ~~credit~~political ~~facilities~~advertising ~~being unavailable to us~~ and ~~could,~~as ina ~~the~~result ~~event~~ of adecreases ~~payment~~in ~~default or acceleration, also trigger~~advertising ~~events~~ sales ofrevenues ~~default~~from ~~under~~programmers. For ~~our~~the ~~outstanding~~six ~~public~~months ~~notes~~ended ~~and~~June ~~would have a material~~30, ~~adverse~~ 2007 ~~effect~~and on2006, ~~us.~~we ~~Approximately~~received $15 6 million ofand ~~our~~$10 ~~financing matures during the remainder of 2004~~million, ~~which~~in weadvertising ~~expect to fund through borrowings under~~sales ~~our~~ revenues ~~credit~~from ~~facilities~~programmers, respectively.

~~CRITICAL~~Commercial revenues ~~ACCOUNTING~~consist ~~POLICIES~~primarily ~~AND~~of ~~ESTIMATES~~revenues from cable video and high-speed Internet services provided to our commercial customers. Commercial revenues increased primarily as a result of an increase in commercial video

For a discussion of our critical accounting policies and the means by which we develop estimates therefor, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Amendment No. 2 to our Registration Statement on Form S-4 filed on May 5, 2004. 19

23and high-speed Internet revenues, offset by a decrease of $5 million related to asset sales for the six months ended June 30, 2007.

~~Table~~Other revenues consist of ~~Contents~~franchise fees, equipment rental, customer installations, home shopping, dial-up Internet service, late payment fees, wire maintenance fees and other miscellaneous revenues. For the six months ended June 30, 2007 and 2006, franchise fees represented approximately 50% and 53%, respectively, of total other revenues. The increase in other revenues was primarily the result of increases in wire maintenance fees and late payment fees.

~~RESULTS~~Operating expenses. The OFincrease ~~OPERATIONS~~in operating expenses is attributable to the following (dollars in millions):

Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003

	2007 compared to 2006 Increase / (Decrease)

Programming costs	$	47
Costs of providing telephone services		21
Labor costs		17
Maintenance costs		8
Other, net		5
System sales		(35	)

	$	63

Programming costs were approximately $781 million and $755 million, representing 61% and 62% of total operating expenses for the six months ended June 30, 2007 and 2006, respectively. Programming costs consist primarily of costs paid to programmers for analog, premium, digital, OnDemand, and pay-per-view programming. The ~~following~~increase ~~table~~in ~~sets~~programming ~~forth~~costs is primarily a result of contractual rate increases. Programming costs were also offset by the ~~percentages~~amortization of ~~revenues~~payments ~~that~~received ~~items~~from programmers in support of launches of new channels of $10 million and $9 million for the six months ended June 30, ~~accompanying~~ 2007 ~~consolidated~~and ~~statements~~2006, respectively. System sales above include decreases in expense of ~~operations~~approximately ~~constituted~~$21 million for the ~~periods~~six months ended June 30, 2007 ~~presented~~ related ~~(dollars~~to inprogramming. We ~~millions):~~expect programming expenses to continue to increase due to a variety of factors, including annual increases imposed by programmers, and additional programming, including high-definition and OnDemand programming, being provided to customers.

	Six Months Ended June 30,
	2004					2003
Revenues	$	2,453		100	%	$	2,395		100	%
Costs and expenses:
Operating (excluding depreciation and amortization)		1,027		42	%		973		41	%
Selling, general and administrative		483		19	%		467		19	%
Depreciation and amortization		734		30	%		743		31	%
(Gain) loss on sale of assets, net		(104	)	(4	)%		13		1	%
Option compensation expense, net		26		1	%		—		—
Special charges, net		97		4	%		10		—
		2,263		92	%		2,206		92	%
Income from operations		190		8	%		189		8	%
Interest expense, net		(342	)				(254	)
Gain on derivative instruments and hedging activities, net		56					4
Loss on extinguishment of debt		(21	)				—
Other, net		—					(1	)
		(307	)				(251	)
Loss before minority interest and income taxes		(117	)				(62	)
Minority interest		(9	)				(7	)
Loss before income taxes		(126	)				(69	)
Income tax expense		(4	)				(2	)
Net loss	$	(130	)			$	(71	)

Selling, general and administrative expenses. The increase in selling, general and administrative expenses is attributable to the following (dollars in millions):

Revenues. Revenues increased by $58 million, or 2%, from $2.4 billion for the six months ended June 30, 2003 to $2.5 billion for the six months ended June 30, 2004. This increase is principally the result of an increase of 362,400 and 46,300 high-speed data and digital video customers, respectively, as well as price increases for video and high-speed data services, and is offset partially by a decrease of 353,700 analog video customers. Included in the reduction in analog video customers and reducing the increase in digital video and high-speed data customers are 258,900 analog video customers, 92,100 digital video customers and 44,900 high-speed data customers related to the Systems Sales. The systems sold pursuant to the Systems Sales reduced the increase in revenues by $126 million. Our goal is to increase revenues by stabilizing our analog video customer base, implementing price increases on certain services and packages and increasing revenues from incremental high-speed data services, digital video and advanced products and services such as telephony using VOIP, VOD, high definition television and digital video recorders provided to some of our existing residential customer base and commercial customers.

	2007 compared to 2006 Increase / (Decrease)

Customer care costs	$	37
Marketing costs		35
Employee costs		15
Other, net		(8	)
System sales		(10	)

	$	69

24Depreciation and amortization. Depreciation and amortization expense decreased by $25 million for the six months ended June 30, 2007 compared to June 30, 2006, respectively, and was primarily the result of systems sales and certain assets becoming fully depreciated.

~~Table~~Other operating expenses, net. For the six months ended June 30, 2007 compared to June 30, 2006, the decrease in other operating expenses, net is attributable to an $8 million decrease in special charges, offset by a $3 million increase in losses on sales of ~~Contents~~assets. For more information, see Note 11 to the accompanying condensed consolidated financial statements contained in “Item 1. Financial Statements.”

~~Revenues~~Interest expense, net. For the six months ended June 30, 2007 compared to the six months ended June 30, 2006, net interest expense increased by ~~service~~$18 ~~offering~~million, ~~were~~due asto ~~follows~~an ~~(dollars~~increase in ~~millions):~~average debt outstanding from $10.9 billion for the

	Six Months Ended June 30,
	2004					2003					2004 over 2003
			% of					% of
	Revenues		Revenues			Revenues		Revenues			Change			% Change
Video	$	1,695		69	%	$	1,741		73	%	$	(46	)		(3	)%
High-speed data		349		14	%		258		11	%		91			35	%
Advertising sales		132		5	%		124		5	%		8			6	%
Commercial		114		5	%		97		4	%		17			18	%
Other		163		7	%		175		7	%		(12	)		(7	)%
	$	2,453		100	%	$	2,395		100	%	$	58			2	%

Video revenues consist primarily of revenues from analog and digital video services provided to our non-commercial customers. Video revenues decreased by $46 million, or 3%, from $1.74 billion for the six months ended June 30, ~~2003~~ 2006 to $111.70 4 billion for the six months ended June 30, ~~2004. Approximately $49~~ ~~million~~ 2007, ofoffset ~~the~~by a decrease ~~was~~in ~~the~~our ~~result~~average ofborrowing ~~the~~rate ~~Systems~~from ~~Sales,~~8.5% ~~while~~for the ~~remaining~~ six months ~~increase~~ended ofJune ~~approximately~~30, ~~$3 million~~2006 ~~was~~to ~~primarily~~8.2% for the ~~result~~six ~~of price~~months ~~increases~~ended ~~and~~June ~~an increase in digital video customers~~30, ~~partially offset by~~ ~~a decline in analog video customers~~ 2007.

~~Revenues from high-speed data services provided to our non-commercial customers~~Other ~~increased $91 million~~ expense, ~~or 35%, from $258 million for the six months ended June 30, 2003 to $349 million for the six months ended June 30, 2004~~net. The ~~Approximately 87% of the~~ increase ~~related to the increase~~ in ~~the~~other ~~average number of customers receiving high-speed data services~~expense, ~~whereas~~net ~~approximately 13% related to the~~is ~~increase~~ attributable ~~in average price of the service. The increase was primarily the result of the addition of high-speed data customers within our existing service areas. We were also able~~ to ~~offer this service to more of our customers, as~~ the ~~estimated~~following ~~percentage~~(dollars ~~of homes passed that could receive high-speed data service increased from 82% as of June 30, 2003 to 87% as of June 30, 2004 as a result of our system upgrades. The increase~~ in ~~high-speed data revenues was reduced by approximately $5 million as a result of the Systems Sales.~~ millions):

Advertising sales revenues consist primarily of revenues from commercial advertising customers, programmers and other vendors. Advertising sales increased $8 million, or 6%, from $124 million for the six months ended June 30, 2003 to $132 million for the six months ended June 30, 2004, primarily as a result of an increase in national advertising campaigns, offset partially by a decrease in advertising revenue from vendors. For the six months ended June 30, 2004 and 2003, we received $6 million and $7 million, respectively, in advertising revenue from vendors.

	2007 compared to 2006

Increase (decrease) in gain on derivative instruments and hedging activities, net	$	(6	)
Increase in loss on extinguishment of debt		(5	)
Increase in loss on investments		(5	)
Other, net		(3	)

	$	(19	)

~~Commercial revenues consist primarily of revenues from cable video and~~For ~~high-speed data services to our commercial customers. Commercial revenues~~ more ~~increased $17 million~~ information, orsee ~~18%,~~Note ~~from~~12 ~~$97 million for the six months ended June 30, 2003~~ to ~~$114 million for~~ the ~~six~~accompanying ~~months~~condensed ~~ended~~consolidated ~~June 30, 2004, primarily as a~~financial ~~result~~ statements ofcontained ~~an increase~~ in ~~commercial~~“Item ~~high-speed data revenues~~1. ~~The~~Financial ~~increase was reduced by approximately $6 million as a result of the Systems Sales~~Statements. ”

~~Other revenues consist of revenues from franchise fees, telephony revenue,~~Income ~~equipment~~ tax ~~rental, customer installations, home shopping, dial-up Internet service, late payment fees, wire maintenance fees and other miscellaneous revenues~~expense. ~~Other revenues decreased $12~~ ~~million,~~Income ortax ~~7%,~~expense ~~from~~was ~~$175 million for~~recognized ~~the~~ through ~~six~~increases ~~months~~in ~~ended~~deferred ~~June 30,~~tax ~~2003~~liabilities toand ~~$163 million~~current ~~for~~federal ~~the~~and ~~six months ended~~state ~~June 30,~~ income ~~2004.~~tax ~~Approximately~~expenses ~~$5 million~~ of ~~the~~our ~~decrease~~indirect ~~was the result of the Systems Sales, while the remaining decrease was primarily the result of a decrease in installation revenue~~subsidiaries.

~~Operating~~Income from ~~Expenses.~~discontinued ~~Operating~~operations, ~~expenses~~net ~~increased~~of ~~$54 million,~~tax. Income orfrom discontinued 6%operations, ~~from~~net ~~$973 million~~of ~~for~~tax decreased in the six months ended June 30, 2007 ~~2003~~compared to ~~$1.0 billion for~~ the six months ended June 30, ~~2004.~~2006 ~~The~~due ~~increase~~to inthe ~~operating~~sale ~~expenses~~of ~~was reduced by~~the ~~$78 million~~ West Virginia asand aVirginia ~~result~~systems ofin ~~the~~July ~~System Sales~~2006. For ~~Programming~~more ~~costs~~information, ~~included~~see inNote 3 to the accompanying condensed consolidated financial statements ~~of operations were $663 million~~contained ~~and $627 million, representing 29% and 28% of total costs and expenses for the~~ in ~~six~~“Item ~~months ended June 30, 2004 and 2003, respectively~~1. ~~Key~~Financial ~~expense components as a percentage of revenues were as follows (dollars in millions):~~ Statements.”

25Net loss. Net loss decreased by $146 million, or 44%, for the six months ended June 30, 2007 compared to the six months ended June 30, 2006, as a result of the factors described above.

~~Table~~Liquidity and ofCapital ~~Contents~~Resources

	Six Months Ended June 30,
	2004					2003					2004 over 2003
			% of					% of
	Expenses		Revenues			Expenses		Revenues			Change		% Change
Programming	$	663		27	%	$	627		26	%	$	36		6	%
Advertising sales		48		2	%		44		2	%		4		9	%
Service		316		13	%		302		13	%		14		5	%
	$	1,027		42	%	$	973		41	%	$	54		6	%

Introduction

~~Programming costs consist primarily of costs paid to programmers for the~~This ~~provision~~ section ofcontains basic, premium and digital channels and pay-per-view programming. The increase in programming costs of $36 million, or 6%, for the six months ended June 30, 2004 over the six months ended June 30, 2003 was a ~~result~~discussion of ~~price~~ ~~increases, particularly in sports programming, an increased number of channels carried on~~ our ~~systems~~liquidity and ancapital ~~increase in digital video customers~~resources, ~~partially~~ ~~offset by decreases in analog video customers. Additionally, the~~including ~~increase in programming costs was reduced by $17 million as~~ a ~~result~~discussion of ~~the Systems~~our ~~Sales.~~cash ~~Programming~~position, ~~costs~~sources ~~were~~and ~~offset~~uses ~~by the amortization~~ of ~~payments received~~cash, ~~from~~access ~~programmers~~to ~~in support of launches of new channels of $28 million~~credit facilities and ~~$31 million~~other ~~for~~financing ~~the six months ended June 30~~sources, ~~2004~~historical ~~and~~financing ~~2003~~activities, ~~respectively.~~cash ~~Programming costs for the six months ended June 30~~ needs, ~~2004~~capital ~~also~~expenditures ~~include~~and aoutstanding ~~$4 million reduction related to the settlement of a dispute with TechTV, Inc~~debt. ~~See note 16 to the condensed consolidated financial statements.~~

Our ~~cable programming costs have increased in every year we have operated in~~ ~~excess~~ long-term offinancing ~~customary~~as ~~inflationary and cost-~~of~~-living~~ ~~type~~June ~~increases~~30, ~~and~~2007 ~~we expect~~consisted ~~them to continue to increase because~~ of a$6.9 ~~variety~~billion of ~~factors, including~~credit ~~additional~~ facility ~~programming~~debt ~~being~~and ~~provided~~$5.1 tobillion ~~customers~~accreted asvalue ~~a result~~ of ~~system~~high-yield ~~rebuilds~~ notes. For ~~that~~the ~~increase~~remaining ~~channel~~two ~~capacity,~~quarterly ~~increased~~periods ~~costs~~of ~~to produce or purchase programming~~2007, ~~increased~~none ~~costs~~of ~~for previously discounted programming and~~our ~~inflationary~~ debt ~~or negotiated annual increases~~matures. In ~~Our~~each ~~increasing~~of ~~programming~~2008 ~~costs will~~and ~~result~~2009, in$65 ~~declining~~million ~~video~~of ~~product margins to the extent we are unable to pass on cost increases to~~ our ~~customers~~debt matures. In We2010 ~~expect~~and tobeyond, ~~partially~~significant ~~offset~~additional ~~any~~amounts will ~~resulting~~ become ~~margin~~due ~~compression~~under ~~from~~ our ~~traditional~~remaining ~~video services with revenue from advanced video services, increased incremental high~~long-~~speed~~term ~~data~~debt ~~revenues, advertising revenues and commercial service revenues~~obligations.

~~Advertising~~Our business ~~sales~~requires ~~expenses~~significant ~~consist~~cash ofto fund debt service costs, ~~related~~capital expenditures toand ~~traditional~~ongoing ~~advertising~~operations. We have historically funded ~~services~~ these ~~provided~~requirements tothrough ~~advertising~~cash ~~customers~~flows from operating activities, ~~including~~borrowings under ~~salaries~~our credit facilities, ~~benefits~~equity contributions from our parent companies, sales of assets, issuances of debt securities and cash on ~~commissions~~ hand. However, ~~Advertising~~the ~~sales~~mix ~~expenses~~of ~~increased~~funding sources changes from period to period. For the six months ended June 30, 2007, we generated $4 501 million, orof 9%net cash flows from operating activities after paying cash interest of $506 million. In addition, ~~primarily~~we used approximately $579 million for ~~due~~ purchases toof ~~increased~~property, ~~salary~~plant and ~~benefit~~equipment. Finally, ~~costs~~we had net cash flows provided by financing activities of $88 million. We ~~Service~~expect ~~costs~~that our ~~consist~~mix ~~primarily~~of sources of funds will continue to change in the future based on ~~service~~ overall ~~personnel~~needs ~~salaries~~relative to our cash flow and ~~benefits,~~on ~~franchise~~the ~~fees,~~availability ~~system~~of ~~utilities,~~funds under ~~Internet~~ our ~~service~~credit ~~provider fees~~facilities, ~~maintenance~~our and ~~pole~~our ~~rent~~parent ~~expense.~~companies’ ~~The~~access to the debt and ~~increase~~ equity inmarkets, ~~service~~the ~~costs~~timing of ~~$14 million,~~possible orasset ~~5%,~~sales ~~resulted~~and ~~primarily~~based on our ability to generate cash flows from operating activities. We continue to explore ~~additional~~ asset ~~activity~~dispositions ~~associated~~as ~~with~~one ~~ongoing~~of ~~infrastructure~~several ~~maintenance.~~possible actions that we could take in the future to improve our liquidity, but we do not presently believe future asset sales to be a significant source of liquidity.

~~Selling, General and Administrative Expenses. Selling, general and~~We ~~administrative~~ expect that ~~expenses~~cash ~~increased~~on ~~by $16 million~~hand, orcash ~~3%,~~flows from ~~$467 million~~operating ~~for the six months ended June 30~~activities, ~~2003~~and tothe ~~$483 million~~amounts available ~~for~~under ~~the~~our ~~six~~credit ~~months~~facilities ~~ended June 30,~~will ~~2004.~~be ~~The~~adequate ~~increase~~to inmeet ~~selling,~~our ~~general~~ and ~~administrative expenses~~our ~~was~~ parent ~~reduced~~companies’ bycash ~~$26 million~~needs asthrough ~~a result of the System Sales~~2008. We ~~Key~~believe ~~components~~that ofcash ~~expense as a percentage of revenues were as follows (dollars in millions):~~

	Six Months Ended June 30,
	2004					2003					2004 over 2003
			% of					% of
	Expenses		Revenues			Expenses		Revenues			Change			% Change
General and administrative	$	416		17	%	$	418		17	%	$	(2	)		—
Marketing		67		2	%		49		2	%		18			37	%
	$	483		19	%	$	467		19	%	$	16			3	%

26flows from operating activities and amounts available under our credit facilities may not be sufficient to fund our operations and satisfy our and our parent companies’ interest and principal repayment obligations in 2009, and will not be sufficient to fund such needs in 2010 and beyond. We have been advised that Charter continues to work with its financial advisors concerning its approach to addressing liquidity, debt maturities and its overall balance sheet leverage.

~~Table~~Credit Facility ~~of Contents~~Availability

~~General~~Our ability ~~and~~to ~~administrative~~operate ~~expenses~~depends ~~consist~~upon, ~~primarily~~among ofother ~~salaries~~things, ~~and~~our ~~benefits~~continued access to capital, including credit under the Charter Communications Operating, LLC ~~rent~~ (“Charter ~~expense~~Operating”) credit facilities. The Charter Operating credit facilities, ~~billing~~along ~~costs~~with our indentures and the CCO Holdings, ~~call~~LLC ~~center~~(“CCO ~~costs~~Holdings”) credit facilities, ~~internal~~contain ~~network~~certain ~~costs~~restrictive covenants, ~~bad~~some of which require ~~debt~~ us ~~expense~~to ~~and~~maintain ~~property~~specified ~~taxes.~~leverage ~~The~~ratios ~~decrease~~and inmeet ~~general~~financial tests and ~~administrative~~to provide ~~expenses~~ annual ofaudited ~~$2 million~~financial ~~resulted~~statements ~~primarily~~with an unqualified opinion from ~~decreases~~our independent auditors. As of June 30, 2007, we were in ~~salaries~~compliance ~~and~~with ~~benefits~~ the ofcovenants ~~$11 million~~under our indentures and ~~property~~credit ~~taxes~~facilities, and we expect to remain in compliance with those covenants for the next twelve months. As of June 30, 2007, our potential availability under our revolving credit facility totaled approximately $~~14 million~~1.4 ~~These~~billion, ~~decreases were~~none ~~partially~~of ~~offset~~which was limited by ancovenant ~~increase~~restrictions. Continued access to our credit facilities is subject to our remaining in ~~bad~~compliance ~~debt~~with ~~expense~~these covenants, including covenants tied to our leverage ratio. If any event of non-compliance ~~$10 million~~occur, ~~call~~funding under the credit facilities may not be available ~~center~~ and ~~costs~~defaults on some or potentially all of ~~$9 million~~our and ~~state~~our ~~franchise~~parent ~~taxes~~companies’ ofdebt obligations ~~$4 million~~could occur. An event of default under any of our debt instruments could result in the acceleration of our payment obligations under that debt and, under certain circumstances, in cross-defaults under our and our parent companies’ other debt obligations, which could have a material adverse effect on our consolidated financial condition and results of operations.

~~Marketing expenses increased $18 million, or 37%, as a result of an increased~~Parent ~~investment~~ Company inDebt ~~marketing and branding campaigns.~~ Obligations

~~Depreciation~~Any financial ~~and~~or ~~Amortization.~~liquidity ~~Depreciation~~problems of our parent companies could cause serious disruption to our business and ~~amortization~~have ~~expense~~a ~~decreased~~material adverse effect on our business and results of operations. A failure by ~~$9 million~~Charter Holdings, orCCH 1%I Holdings, ~~from~~LLC ~~$743 million~~(“CIH”), ~~for~~or ~~the~~CCH ~~six~~I ~~months~~to ~~ended~~satisfy ~~June 30,~~their ~~2003~~debt payment obligations or a bankruptcy with respect to ~~$734 million~~Charter ~~for~~Holdings, CIH, or CCH I would give the lenders ~~six~~under ~~months~~our ~~ended~~credit ~~June 30,~~facilities ~~2004~~the right to accelerate the payment obligations under these facilities. Any ~~The~~such ~~increase~~acceleration inwould be a ~~depreciation~~ default ~~related~~under tothe anindenture ~~increase~~governing inour ~~capital~~notes. On ~~expenditures~~a consolidated basis, ~~which~~our ~~was~~parent ~~offset~~companies have a significant level of debt, which, including by our ~~lower~~debt, ~~depreciation~~totaled asapproximately ~~the~~$19.6 ~~result~~billion as of ~~the~~June ~~Systems~~30, ~~Sales~~2007.

~~(Gain) Loss on Sale of Assets, Net. Gain on sale of assets of $104 million for~~Limitations ~~the six months ended June 30, 2004 primarily represents the pretax gain realized~~ on the sale of systems to Atlantic Broadband Finance, LLC which closed on March 1 and April 30, 2004. Loss on sale of assets of $13 million for the three months ended June 30, 2003 primarily represents the loss recognized on the sale of fixed assets. Distributions

~~Option~~As long as ~~Compensation~~Charter’s ~~Expense,~~convertible ~~Net.~~notes ~~Option~~remain ~~compensation~~outstanding ~~expense~~and are not otherwise converted into shares of ~~$26 million~~common stock, Charter must pay interest on the ~~for~~ convertible senior notes and repay the ~~six~~principal ~~months~~amount ~~ended~~in ~~June 30~~November 2009. Charter’s ability to make interest payments on its convertible senior notes, ~~2004~~and, ~~primarily~~in ~~represents~~2009, to repay the ~~expense~~outstanding principal of its ~~approximately~~ convertible senior notes of $8 413 million, ~~related~~net toof a$450 ~~stock~~million ~~option~~of ~~exchange~~convertible senior ~~program~~notes now held by Charter Communications Holding Company, ~~under~~LLC (“Charter ~~which~~ Holdco”), ~~our~~will ~~employees~~depend ~~were~~on ~~offered~~its ~~the~~ability ~~right~~ to ~~exchange~~raise ~~all~~additional ~~stock~~capital ~~options (vested~~ and/or ~~unvested)~~on receipt ~~issued~~of ~~under~~payments ~~the~~or ~~1999~~distributions from Charter ~~Communications~~Holdco ~~Option Plan~~ and ~~2001~~its ~~Stock~~subsidiaries. As ~~Incentive~~of ~~Plan~~June ~~that~~30, ~~had~~2007, anCharter ~~exercise~~Holdco ~~price~~was ~~over~~owed $104 ~~per~~million ~~share~~in ~~for~~intercompany ~~shares~~ loans offrom ~~restricted~~its ~~Charter~~subsidiaries ~~Class A~~and ~~common~~had ~~stock~~$14 ~~or,~~million in ~~some~~cash, ~~instances~~which were available to pay interest and principal on Charter's convertible senior notes. In addition, ~~cash~~Charter has $25 million of U.S. government securities pledged as ~~The~~ security ~~exchange~~for ~~offer~~the ~~closed~~semi-annual interest payments on Charter’s convertible senior notes scheduled in ~~February 2004~~2007. On ~~Additionally~~August 1, ~~during~~2007, ~~the~~Charter ~~six~~Holdings ~~months~~ distributed ~~ended~~to ~~June 30~~CCHC, ~~2004~~LLC (“CCHC”) an intercompany note issued by Charter Operating with an outstanding balance, weincluding ~~recognized~~accrued ~~approximately~~interest, of $6 119 million. On ~~related~~the same day, CCHC distributed such note to Charter ~~the~~ Holdco ~~options~~along ~~granted~~with ~~under~~$450 ~~the~~million of Charter’s ~~Long-Term~~convertible ~~Incentive~~senior ~~Program~~note and an ~~approximately~~ investment account with $12 26 million ~~related~~of tocash. As ~~options~~long ~~granted~~as ~~following~~Charter Holdco continues to hold the ~~adoption~~$450 million of Charter’s convertible senior notes, ~~Statement~~ Charter ofHoldco ~~Financial~~will ~~Accounting~~receive ~~Standards~~interest ~~(“SFAS”)~~payments ~~No. 123,~~from ~~Accounting~~the ~~for~~government securities ~~Stock-Based~~ pledged ~~Compensation~~for the convertible senior notes. The cumulative amount of interest payments expected to be received by Charter Holdco is $40 million and may be available to be distributed to pay semiannual interest due in 2008 and May 2009 on the outstanding principal amount of $413 million of Charter’s convertible senior notes, although Charter Holdco may use those amounts for other purposes.

~~Special Charges, Net. Special charges~~ As of ~~$97 million for the six months ended~~ June 30, ~~2004~~2007, ~~represents the allocation of approximately $85 million of expense for the aggregate value of the~~ Charter ~~Class A~~Holdings, ~~common~~CIH, ~~stock~~ and ~~warrants~~CCH ~~to purchase~~I ~~Charter~~had Class A common stock contemplated to be issued as part of the terms set forth in memoranda of understanding regarding settlement of the consolidated Federal Class Action and Federal Derivative Action and approximately $~~9 million~~7.1 ~~of litigation costs related to the tentative~~billion ~~settlement~~ principal ofamount ~~the South Carolina national class action suit, all~~ of ~~which settlements~~high-yield ~~are~~notes ~~subject~~outstanding towith ~~final documentation and court approval and~~ approximately $~~3 million~~0, ~~of severance and related costs of our workforce reduction. Special charges of~~ $10 188 million ~~for the six months ended June 30~~, ~~2003~~ ~~represents approximately~~ $15 34 million, ~~of severance~~ and ~~related costs of our workforce reduction partially offset by a~~ $~~5 million~~6.9 ~~credit~~billion ~~from~~maturing ain ~~settlement from~~2008, ~~the~~2009, ~~Internet~~2010, ~~service provider Excite@Home related to the conversion of~~and ~~about 145~~ thereafter,~~000~~ ~~high-speed~~respectively. Charter ~~data~~Holdings, ~~customers~~CIH, toand ~~our~~CCH ~~Charter~~I ~~Pipeline~~will ~~service in~~need ~~2001. We expect~~ to ~~continue~~raise ~~to record~~ additional ~~special~~capital ~~charges~~or inreceive ~~2004 related to the continued reorganization of our operations.~~

Interest Expense, Net. Net interest expense increased by $88 million, or 35%, from $254 million for the six months ended June 30, 2003 to $342 million for the six months ended June 30, 2004. The increase in net interest expense was a result of an increase in our average borrowing rate from 5.7% in the six months ended June 30, 2003 to 7.1% in the six months ended June 30, 2004, coupled with an increase of $1.0 billion in average debt outstanding from $8.2 billion for the six months ended June 30, 2003 compared to $9.2 billion for the six months ended June 30, 2004. 22

~~Gain on Derivative Instruments and Hedging Activities, Net. Net gain on~~distributions ~~derivative~~ or ~~instruments~~payments ~~and hedging activities increased $52 million~~ from ~~$4 million for~~ the ~~six~~Company ~~months~~in ~~ended~~order ~~June 30, 2003~~ to ~~$56 million~~satisfy ~~for~~their ~~the six~~debt ~~months ended June 30~~ obligations. However, ~~2004.~~because ~~The increase is primarily a result~~ of antheir ~~increase in~~significant ~~gains on interest rate agreements~~indebtedness, ~~which do not qualify for hedge accounting~~the ~~under~~ Company’s ~~SFAS No. 133~~ability, ~~which~~and ~~increased~~ability ~~from~~of athe ~~loss~~parent ofcompanies ~~$4 million~~to ~~for~~raise ~~the six~~additional ~~months~~ capital ~~ended~~at ~~June 30,~~reasonable ~~2003~~rates toor aat ~~gain~~all ofis ~~$54 million~~uncertain. During ~~for~~ the six months ended June 30, ~~2004. This was coupled with a decrease in gains on interest rate agreements~~2007, aswe adistributed ~~result~~$788 million of ~~hedge~~cash ~~ineffectiveness,~~to onour ~~designated hedges, which~~parent company.

27Distributions by Charter’s subsidiaries to a parent company (including Charter, Charter Holdco CCHC, Charter Holdings, CIH, and CCH I) for payment of principal on parent company notes, are restricted under the indentures governing the CIH notes, CCH I notes, CCH II notes, CCO Holdings notes, and Charter Operating notes and under the CCO Holdings credit facilities unless there is no default under the applicable indenture and credit facilities, and unless each applicable subsidiary’s leverage ratio test is met at the time of such distribution. For the quarter ended June 30, 2007, there was no default under any of these indentures or credit facilities and each subsidiary met its applicable leverage ratio tests based on June 30, 2007 financial results. Such distributions would be restricted, however, if any such subsidiary fails to meet these tests at the time of the contemplated distribution. In the past, certain subsidiaries have from time to time failed to meet their leverage ratio test. There can be no assurance that they will satisfy these tests at the time of the contemplated distribution. Distributions by Charter Operating for payment of principal on parent company notes are further restricted by the covenants in its credit facilities.

~~Table~~Distributions by CIH, CCH I, CCH II, CCO Holdings and Charter Operating to a parent company for payment of ~~Contents~~parent company interest are permitted if there is no default under the aforementioned indentures and CCO Holdings Credit facilities.

~~decreased~~The indentures ~~from~~governing ~~$8 million~~the Charter Holdings notes permit Charter Holdings to make distributions to Charter Holdco for payment of interest or principal on Charter’s convertible senior notes, only if, after giving effect to the distribution, ~~six~~Charter ~~months~~Holdings can incur additional debt under the leverage ratio of 8.75 to 1.0, there is no default under Charter Holdings’ indentures, and other specified tests are met. For the quarter ended June 30, 2007, ~~2003~~there towas ~~$2 million for~~no default under Charter Holdings’ indentures, the ~~six~~other specified ~~months~~tests ~~ended~~were met, and Charter Holdings met its leverage ratio test based on June 30, ~~2004~~2007 financial results. Such distributions would be restricted, however, if Charter Holdings fails to meet these tests at the time of the contemplated distribution. In the past, Charter Holdings has from time to time failed to meet this leverage ratio test. There can be no assurance that Charter Holdings will satisfy these tests at the time of the contemplated distribution. During periods in which distributions are restricted, the indentures governing the Charter Holdings notes permit Charter Holdings and its subsidiaries to make specified investments (that are not restricted payments) in Charter Holdco or Charter, up to an amount determined by a formula, as long as there is no default under the indentures.

~~Loss~~In addition to the limitation on ~~extinguishment~~distributions ofunder ~~debt.~~the ~~Loss~~various onindentures discussed ~~extinguishment~~above, ofdistributions ~~debt~~by ofour ~~$21~~subsidiaries may be limited by applicable ~~million~~ law. See ~~for~~“Risk ~~the~~Factors ~~six~~— ~~months~~Because ~~ended~~of ~~June 30~~our holding company structure, our ~~2004~~outstanding ~~represents~~notes ~~the~~are ~~write-off~~structurally subordinated in right of payment to ~~deferred~~ all liabilities ~~financing~~of ~~fees~~our subsidiaries. Restrictions in our subsidiaries’ debt instruments and ~~third~~under ~~party~~applicable ~~costs~~law ~~related~~limit totheir ~~the~~ability ~~Charter~~to ~~Operating~~provide funds ~~refinancing~~ to inus ~~April 2004~~or our various parent companies who are debt issuers. ”

~~Other, Net. Net other expense of $1 million for the six months ended June 30,~~Access ~~2003~~ to ~~primarily represents losses on equity investments.~~ Capital

~~Minority~~Our ability ~~Interest.~~to ~~Minority~~incur ~~interest~~additional ~~expense~~debt ~~represents~~may be limited by the ~~10%~~restrictive ~~dividend~~covenants in our onindentures and credit facilities. No assurances can be given that ~~preferred~~ we ~~membership~~will ~~units~~not inexperience ~~CCH~~liquidity ~~II’s~~problems ~~indirect~~if ~~subsidiary,~~we ~~Charter~~do ~~Helicon,~~not obtain sufficient ~~LLC~~ additional ~~and~~financing ~~the~~on 2%a ~~accretion~~timely ofbasis ~~the~~as ~~preferred~~our ~~membership~~debt ~~interests~~becomes indue CCor ~~VIII,~~because ~~LLC~~of ~~and~~ adverse market conditions, ~~since~~increased ~~June 6~~competition or other unfavorable events. If, ~~2003~~at any time, ~~the~~additional ~~pro~~capital ~~rata~~or ~~share~~borrowing ofcapacity ~~the~~is required ~~profits~~beyond ~~and~~amounts ~~losses~~internally ofgenerated CCor available under our credit ~~VIII,~~ facilities ~~LLC~~or ~~allocated~~through toadditional ~~Mr. Allen.~~debt or equity financings, we would consider:

~~Income~~• ~~Tax~~issuing ~~Expense.~~equity ~~Income~~at ~~tax~~a ~~expense~~parent company level, the proceeds of ~~$4 million~~which ~~and~~could ~~$2 million~~be ~~was recognized~~loaned ~~for~~or ~~the~~contributed ~~six~~to ~~months~~us; ~~ended~~• ~~June 30,~~issuing ~~2004~~debt securities that may have structural or other priority over our existing notes; • further reducing our expenses and ~~2003,~~capital ~~respectively~~expenditures, which ~~represents~~ ~~increases~~may inimpair ~~the~~our ~~deferred~~ability ~~tax~~to ~~liabilities~~increase revenue and ~~current~~grow ~~federal~~operating ~~and state~~cash ~~income~~flows; ~~tax~~• ~~expenses~~selling ofassets; ~~certain~~or of• ~~CCH~~requesting ~~II’s~~waivers ~~indirect~~or ~~corporate subsidiaries~~amendments with respect to our credit facilities, which may not be available on acceptable terms; and cannot be assured.

Net Loss. Net loss increased by $59 million, from $71 million for the six months ended June 30, 2003 to $130 million for the six months ended June 30, 2004 as a result of the factors described above. 23

~~Liquidity~~If the above ~~and~~strategies ~~Capital~~were ~~Resources~~not successful, we could be forced to restructure our obligations or seek protection under the bankruptcy laws. In addition, if we find it necessary to engage in a recapitalization or other similar transaction, our noteholders might not receive the full principal and interest payments to which they are contractually entitled.

~~Introduction~~Recent Financing Transactions

~~This~~On March 6, ~~section~~2007, ~~contains~~Charter aOperating ~~discussion of~~entered ~~our~~into ~~liquidity~~an Amended and ~~capital~~Restated ~~resources,~~Credit ~~including~~Agreement among aCharter ~~discussion~~Operating, ofCCO ~~our cash position~~Holdings, ~~sources~~the ~~and~~several ~~uses~~lenders offrom ~~cash,~~time ~~access~~ to ~~credit~~time that ~~facilities~~are ~~and~~parties ~~other financing sources~~thereto, ~~historical~~JPMorgan ~~financing~~Chase ~~activities~~Bank, ~~cash needs~~N.A., ~~capital expenditures~~as administrative agent, and ~~outstanding~~certain ~~debt.~~other agents (the “Charter Operating Credit Agreement”).

~~Overview~~The Charter Operating Credit Agreement provides for a $1.5 billion senior secured revolving line of credit, a continuation of the existing $5.0 billion term loan facility (which was refinanced with new term loans in April 2007) (“Replacement Existing Term Loan”), and a $1.5 billion new term loan facility (the “New Term Loan”) which was funded in March and April 2007. Borrowings under the Charter Operating Credit Agreement bear interest at a variable interest rate based on either LIBOR or a base rate, plus in either case, an applicable margin. The applicable margin for LIBOR loans under the Replacement Existing Term Loan, the New Term Loan, and revolving loans is 2.00% above LIBOR. The revolving line of credit commitments terminate on March 6, 2013. The Replacement Existing Term Loan and the New Term Loan are subject to amortization at 1% of their initial principal amount per annum and amortization commences on March 31, 2008. The remaining principal amount of the Replacement Existing Term Loan and the New Term Loan will be due on March 6, 2014. The Charter Operating Credit Agreement contains financial covenants requiring Charter Operating to maintain a quarterly consolidated leverage ratio not to exceed 5 to 1 and a first lien leverage ratio not to exceed 4 to 1.

~~Our business requires significant~~On ~~cash to fund capital expenditures~~ March 6, ~~debt service costs and ongoing operations. We have historically funded our operating activities~~2007, ~~capital~~CCO ~~requirements~~Holdings ~~and debt~~entered ~~service~~into ~~costs~~a ~~through~~credit ~~cash~~agreement ~~flows~~among ~~from~~CCO ~~operating activities~~Holdings, ~~borrowings~~the ~~under~~ several ~~our~~lenders ~~credit facilities, equity contributions~~ from ~~our~~time ~~parent~~to ~~companies, borrowings~~time ~~from~~that ~~our~~are ~~parent~~parties ~~companies~~thereto, ~~issuances~~Bank of ~~debt securities and cash on~~America, ~~hand~~ N.A., ~~The~~as ~~mix~~administrative ofagent, ~~funding~~and ~~sources~~certain ~~changes~~other ~~from~~agents ~~period~~(the to“CCO ~~period, but for the~~Holdings ~~six~~ Credit ~~months~~Agreement”). The ~~ended~~CCO ~~June 30,~~Holdings ~~2004,~~Credit ~~approximately~~Agreement ~~59%~~consists of ~~our funding requirements~~a ~~were~~ $350 ~~from~~million ~~cash flows from operating activities and 41% was from borrowings of long-~~term ~~debt.~~loan ~~This~~facility ~~gives effect to~~ (the ~~use~~“Term ofFacility”). The ~~proceeds~~term ~~from~~loan matures ~~the~~on ~~sale~~September ~~of systems~~6, ~~described~~2014 ~~below,~~(the to“Maturity ~~repay long-term debt~~Date”). Borrowings ~~For~~ under the ~~six~~CCO ~~months~~Holdings ~~ended June 30,~~Credit ~~2004,~~Agreement ~~net~~bear ~~cash~~interest ~~flows~~at ~~used in financing activities were $706 million, reflecting~~ a ~~net~~variable ~~repayment~~interest ~~of $347 million of debt. Additionally, we increased~~rate ~~cash~~ based on ~~hand~~either byLIBOR ~~$3 million~~or toa ~~$88 million.~~base Werate ~~expect~~plus, ~~that~~in ~~our~~either ~~mix~~case, ofan ~~sources~~applicable of margin. The ~~funds~~applicable ~~will~~margin ~~continue~~for toLIBOR ~~change~~term inloans ~~the~~is ~~future~~2.50% ~~based~~above LIBOR. The onCCO ~~overall~~Holdings ~~needs~~Credit ~~relative to~~Agreement ~~our~~is ~~cash~~secured ~~flow~~by ~~and on~~ the ~~availability~~equity interests of ~~funds~~Charter ~~under our credit facilities~~Operating, ~~our~~ ~~access to the debt markets~~ and ~~our~~all ~~ability~~proceeds ~~to generate cash flows from operating activities~~thereof.

OnWe used ~~March 1,~~a portion ~~2004,~~of ~~we closed~~ the ~~sale~~additional ofproceeds ~~certain~~from ~~cable~~the ~~systems~~Charter inOperating ~~Florida,~~Credit Agreement ~~Pennsylvania,~~ and ~~Maryland,~~CCO ~~Delaware~~Holdings ~~and~~Credit ~~West~~Agreement ~~Virginia~~ to ~~Atlantic~~redeem ~~Broadband Finance,~~$550 ~~LLC.~~million Weof ~~closed~~CCO onHoldings’ outstanding ~~the~~floating ~~sale~~rate ofnotes andue ~~additional~~2010, ~~cable~~to ~~system~~redeem inapproximately ~~New~~$187 ~~York~~million to of ~~Atlantic~~Charter ~~Broadband~~Holdings’ ~~Finance,~~outstanding ~~LLC in April 2004~~8.625% ~~Subject~~senior tonotes ~~post~~due ~~closing contractual adjustments~~2009, weto ~~expect~~fund the purchase ~~total~~of ~~net~~notes ~~proceeds~~in ~~from~~a ~~the~~tender ~~sale~~offer offor ~~all of~~total ~~these~~consideration ~~systems~~(including topremiums and beaccrued ~~approximately~~interest) ~~$733 million,~~ of ~~which~~ $10 100 million ~~is currently~~of ~~held~~certain innotes anoutstanding ~~indemnity~~at ~~escrow~~Charter Holdings, ~~account~~and ~~(with~~to ~~the~~repay ~~unused~~$105 ~~portion~~million ~~thereof to~~of beCharter ~~released~~Holdings’ bynotes ~~March 1,~~maturing ~~2005).~~in April 2007. The ~~proceeds~~remainder ~~received~~was ~~to date have been~~ used to ~~repay~~for aother ~~portion~~general ~~of our credit facilities.~~corporate purposes.

~~As of June 30, 2004, we were and, as of the date of this report, we are in~~Historical compliance with the covenants under our credit facilities and our indentures, and we expect to remain in compliance with those covenants throughout 2004. Further, as of June 30, 2004, we had borrowing availability under the Charter Communications Operating, ~~LLC~~Financing ~~(“Charter~~and ~~Operating”)~~Investing ~~credit facilities of $977 million, none of which was restricted due to covenants. If our actual~~ Activities

28Our cash flows for the six months ended June 30, 2006 include the cash flows related to our discontinued operations.

~~Table~~We held $34 million in cash and cash equivalents as of ~~Contents~~June 30, 2007 compared to $32 million as of December 31, 2006. For the six months ended June 30, 2007, we generated $501 million of net cash flows from operating activities after paying cash interest of $506 million. In addition, we used approximately $579 million for purchases of property, plant and equipment. Finally, we had net cash flows provided by financing activities of $88 million.

~~operating~~Operating Activities. Net ~~performance~~cash ~~results~~provided inby ~~non-compliance~~operating activities ~~with~~decreased ~~these~~$24 ~~covenants~~million, or ~~if other~~5%, ~~events~~from of$525 ~~non-compliance~~million ~~occur,~~for ~~funding under~~ the ~~credit~~six ~~facilities may~~months ~~not~~ ended beJune ~~available and defaults on some or potentially all debt obligations could occur. However~~30, we2006 ~~expect~~to ~~that~~$501 ~~our~~million ~~cash~~for ~~on hand, cash flows from operating activities, and~~ the ~~amounts~~six ~~available~~months ~~under~~ended ~~our~~June ~~credit facilities should be~~30, ~~sufficient~~ 2007. For ~~to satisfy our liquidity needs for~~ the ~~foreseeable~~six ~~future.~~months Asended of June 30, ~~2004~~2007, wenet ~~held $88 million in~~ cash ~~and~~provided ~~cash equivalents. However, cash~~by ~~flows from~~ operating activities ~~and~~decreased ~~amounts~~primarily ~~available~~as ~~under~~a ~~credit~~result ~~facilities may~~of ~~not~~changes bein ~~sufficient~~operating assets toand ~~permit~~liabilities usthat toprovided ~~satisfy~~$43 ~~our~~million ~~principal~~less ~~repayment obligations~~cash ~~beginning~~during inthe ~~2008.~~six ~~Continued access to our credit facilities is~~months ~~subject~~ ended toJune ~~our~~30, ~~remaining~~2007 inthan ~~compliance with~~ the ~~applicable~~corresponding ~~covenants~~period ofin ~~these credit facilities~~2006, ~~including~~and ~~covenants tied to our operating performance. If there is~~ an ~~event~~ increase of $22 ~~default~~million ~~under~~in ~~our~~interest ~~credit~~on ~~facilities,~~cash ~~such~~pay asobligations ~~the~~during ~~failure to maintain~~ the ~~applicable~~same ~~required financial ratios~~period, ~~we would be unable to~~offset ~~borrow~~ by ~~under~~revenues ~~these~~increasing ~~credit~~at ~~facilities,~~a ~~which~~faster ~~could~~rate ~~materially~~than ~~adversely~~cash ~~impact our ability to operate our business and to make payments under our debt instruments~~expenses.

~~Although Mr~~Investing Activities. ~~Allen~~Net ~~and~~cash ~~his~~used ~~affiliates~~by ~~have~~investing ~~purchased equity from Charter~~activities ~~and~~ increased ~~its~~to ~~subsidiaries~~$587 inmillion for the ~~past,~~six ~~Mr. Allen~~months ~~and~~ended ~~his~~June ~~affiliates~~30, ~~are~~2007 ~~not obligated~~compared to $553 ~~purchase~~million ~~equity~~for ~~from,~~the ~~contribute~~six tomonths orended ~~loan~~June ~~funds~~30, to2006, ~~Charter~~which orwas toprimarily related ~~its~~ to ~~subsidiaries~~an ~~in the future.~~

Our parent companies have a significant amount of debt. The indentures governing the CCH II notes, CCO Holdings, LLC (“CCO Holdings”) notes, and Charter Operating notes restrict those subsidiaries from making distributions to their parent companies (including, as applicable, Charter and Charter Holdings) for payment of principal on parent company notes, in each case unless there is no default under those indentures and a specified leverage ratio test can be met. Each such subsidiary currently meets the applicable leverage ratio test, and therefore is not currently prohibited from making any such distributions to its direct parent. The indentures governing the Charter Holdings notes permit Charter Holdings to make distributions to Charter Holdco for payment of interest or principal on Charter’s convertible senior notes, only if, after giving effect to the distribution, Charter Holdings can incur additional debt under the leverage ratio test of 8.75 to 1.0, there is no default under Charter Holdings’ indentures and other specified tests are met. However, Charter Holdings continued not to meet the leverage ratio test at June 30, 2004. As a result, distributions from Charter Holdings to Charter have been restricted and will continue to be restricted until that test is met. Any financial or liquidity problems of our parent companies would likely cause serious disruption to the Company’s business and have a material adverse effect on its business and results of operations. 24

~~In the past, our parent companies have accessed the equity and high-yield bond~~increase ~~markets~~ in ascash aused ~~source of capital~~ for ~~their subsidiaries’ growth. We believe that our parent companies’ continued access to~~ the ~~debt~~purchase ~~markets will depend on market conditions in light~~ of, ~~among other things~~property, ~~general economic conditions~~plant, ~~the~~ ~~business condition of the cable, telecommunications~~ and ~~technology industry,~~equipment ~~their significant levels of debt,~~ and ~~their~~a ~~debt~~decrease in ~~ratings.~~accrued Ifexpenses ~~they~~related ~~are unable~~ to ~~raise the required~~ capital on reasonable terms, our parent companies may elect to cause us to distribute or otherwise pay to them (to the extent available and permitted by the indenture governing our notes) the necessary funds to service or repay Charter’s or Charter Holdings’ debt, thereby impacting our liquidityexpenditures.

~~Long-Term~~Financing Activities. Net ~~Debt~~cash provided by financing activities was $88 million and $69 million for the six months ended June 30, 2007 and 2006, respectively. The increase in cash provided during the six months ended June 30, 2007 as compared to the corresponding period in 2006, was primarily the result of increased borrowings of long-term debt offset by an increase of distributions to parent companies.

~~As of June 30, 2004 and December 31, 2003, long-term debt totaled approximately~~Capital $9.2 billion and $9.6 billion, respectively. This debt was comprised of approximately $5.4 billion and $7.2 billion of debt under our credit facilities and $3.8 billion and $2.3 billion of high-yield debt at June 30, 2004 and December 31, 2003, respectively. As of June 30, 2004 and December 31, 2003, the weighted average interest rate on the bank debt, including the effects of hedging, was approximately 6.5% and 5.4%, respectively, while the weighted average interest rate on the high-yield debt was approximately 9.3% and 10.0%, respectively, resulting in a blended weighted average interest rate of 7.6% and 6.5%, respectively. Approximately 72% of our debt was effectively fixed including the effects of our interest rate hedge agreements as of June 30, 2004 compared to approximately 60% at December 31, 2003. Expenditures

~~April 2004 Charter Operating Notes. In April 2004, CCH II’s indirect~~We ~~subsidiaries,~~ have significant ~~Charter~~ongoing ~~Operating~~capital ~~and~~expenditure ~~Charter Communications Operating~~ requirements. Capital ~~Corp.,~~ expenditures ~~jointly~~were ~~issued~~ $~~1.1 billion~~579 ofmillion ~~8% senior second lien notes due 2012~~ and $~~400~~ 539 million offor 8the ~~3/8%~~six ~~senior~~months ~~second~~ended ~~lien~~June 30, ~~notes~~2007 ~~due~~and ~~2014~~2006, ~~for~~respectively. Capital ~~total~~expenditures ~~gross~~increased as a ~~proceeds~~ result of ~~$1.5 billion.~~spending ~~These~~on ~~notes~~customer ~~are~~premise ~~structurally~~equipment ~~senior~~and tosupport ~~the~~capital ~~notes~~to ofmeet ~~Charter~~ increased digital, ~~Charter~~high-speed ~~Holdings~~Internet, ~~CCH II~~ and ~~CCO~~telephone ~~Holdings and rank equally with all~~customer ~~other~~ growth. See ~~current~~the ortable ~~future~~below ~~unsubordinated~~for ~~obligations~~more ~~of Charter Operating~~details. ~~The Charter Operating notes are structurally~~

29Our capital expenditures are funded primarily from cash flows from operating activities, the issuance of debt and borrowings under credit facilities. In addition, during the six months ended June 30, 2007 and 2006, our liabilities related to capital expenditures decreased $39 million and $9 million, respectively.

~~Table~~During 2007, we expect capital expenditures to be approximately $1.2 billion. We expect that the nature of ~~Contents~~these expenditures will continue to be composed primarily of purchases of customer premise equipment related to telephone and other advanced services, support capital, and for scalable infrastructure costs. We have funded and expect to continue to fund capital expenditures for 2007 primarily from cash flows from operating activities and borrowings under our credit facilities.

~~subordinated~~We have adopted tocapital ~~all~~expenditure ~~obligations~~disclosure ofguidance, ~~Charter~~which ~~Operating’s~~was ~~subsidiaries~~developed by eleven publicly traded cable system operators, including us, with the support of the ~~Charter~~ National ~~Operating~~Cable ~~credit~~& ~~facilities~~Telecommunications ~~described~~Association ~~below~~("NCTA"). The disclosure is intended to provide more consistency in the reporting of operating statistics in capital expenditures among peer companies in the cable industry. These disclosure guidelines are not required disclosure under Generally Accepted Accounting Principles ("GAAP"), nor do they impact our accounting for capital expenditures under GAAP.

~~At any time prior to April 30, 2007, the issuers of the 8% senior second lien~~The ~~notes~~ following ~~may~~table ~~redeem,~~presents onour amajor ~~pro~~capital ~~rata~~expenditures ~~basis,~~categories upin ~~to 35% of the total original~~accordance ~~principal amount of these notes~~ with ~~proceeds~~NCTA ~~from~~disclosure ~~public~~guidelines ~~equity~~for ~~sales~~the atsix ~~a redemption~~months ~~price~~ended ~~equal~~June ~~to 108.000% of the principal amount thereof~~30, ~~plus~~2007 ~~any accrued~~ and ~~unpaid interest. Interest on the $1.1 billion 8% senior second~~ ~~lien~~ 2006 (dollars ~~notes accrues at 8% per year and is payable semi-annually~~ in ~~arrears on each April 30 and October 30, commencing on October 30, 2004.~~ millions):

At any time prior to April 30, 2007, the issuers of the 8 3/8% senior second lien notes may redeem, on a pro rata basis, up to 35% of the total original principal amount of these notes with proceeds from public equity sales at a redemption price equal to 108.375% of the principal amount thereof, plus any accrued and unpaid interest. In addition, Charter Operating may redeem all or any portion of these notes on or after April 30, 2009, at an initial purchase price equal to 104.188% of the outstanding principal amount redeemed declining ratably to 100% for redemptions on or after April 30, 2012, plus any accrued and unpaid interest. Interest on the $400 million 8 3/8% senior second lien notes accrues at 8 3/8% per year and is payable semi-annually in arrears on each April 30 and October 30, commencing on October 30, 2004.

	Six Months Ended June 30,
	2007		2006

Customer premise equipment (a)	$	289	$	258
Scalable infrastructure (b)		100		97
Line extensions (c)		49		59
Upgrade/Rebuild (d)		24		23
Support capital (e)		117		102

Total capital expenditures	$	579	$	539

In(a) ~~the~~Customer ~~event~~premise ofequipment ~~specified~~includes ~~change~~costs ofincurred ~~control~~at ~~events~~the customer residence to secure new customers, ~~Charter~~revenue ~~Operating~~units ~~must offer~~and toadditional ~~purchase~~bandwidth ~~the~~revenues. ~~outstanding~~It ~~Charter~~also ~~Operating~~includes ~~senior~~customer ~~second~~installation ~~lien~~costs ~~notes~~in ~~at a~~accordance ~~purchase~~with ~~price~~SFAS ~~equal~~No. to51, ~~101%~~Financial ofReporting ~~the~~by ~~total~~Cable ~~principal~~Television ~~amount~~Companies, ofand ~~the~~customer ~~notes~~premise equipment (e.g., ~~plus any~~set-top ~~accrued~~boxes and ~~unpaid~~cable ~~interest~~modems, etc. ).

~~Until the guarantee and pledge date~~ (asb) ~~defined~~Scalable ininfrastructure ~~the~~includes ~~indenture governing the Charter Operating notes~~costs, ~~generally~~not ~~the~~related ~~fifth~~to ~~business~~customer ~~day~~premise ~~after~~equipment ~~the~~or ~~Charter Holdings~~our ~~leverage~~network, ~~ratio is certified~~ to ~~be below 8.75 to 1.0), the Charter Operating notes are secured by a second-priority lien on significantly all of Charter Operating’s assets that~~ secure ~~the~~growth ~~obligations~~ of ~~Charter~~new ~~Operating under~~customers, ~~the~~revenue ~~Charter~~units ~~Operating credit facilities~~ and ~~specified~~additional ~~related obligations.~~bandwidth ~~The~~revenues ~~collateral~~or ~~consists~~provide ofservice ~~significantly~~enhancements ~~all of Charter Operating’s direct assets in which security interests may be perfected under the Uniform Commercial Code by filing a financing statement~~ (~~including~~e.g., ~~capital stock~~headend ~~and intercompany obligations~~equipment).

On(c) ~~and~~Line ~~after~~extensions ~~the~~include ~~guarantee~~network ~~and~~costs ~~pledge~~associated date, the collateral for the Charter Operating notes will consist of all of Charter Operating’s and its subsidiaries’ assets that secure the obligations of Charter Operating or any subsidiary of Charter Operating with ~~respect~~entering tonew ~~the~~service ~~Charter~~areas ~~Operating credit facility and the related obligations or certain other indebtedness on such date~~(e. ~~It is currently contemplated that~~g., asfiber/coaxial ~~of the guarantee and pledge date~~cable, ~~such~~ ~~collateral will consist of the capital stock of Charter Operating held by CCO Holdings~~amplifiers, ~~all~~electronic ~~of the intercompany obligations owing to CCO Holdings by Charter Operating or any subsidiary of Charter Operating~~equipment, ~~and~~make-ready ~~significantly all of Charter Operating’s~~ and ~~the~~design ~~guarantors’ assets (other than the assets of CCO Holdings~~engineering) ~~in which security interests may be perfected under the Uniform Commercial Code by filing a financing statement (including capital stock and intercompany obligations)~~.

In addition, within a time frame specified under the Charter Operating credit facilities, Charter Operating will be required to redeem or cause to be redeemed in full the notes outstanding under the CC V Holdings, LLC indenture. In addition, when Charter Operating or its subsidiaries exercise any option to redeem in full the notes outstanding under the Renaissance Media Group, LLC (~~“Renaissance”~~d) orUpgrade/rebuild CCincludes Vcosts ~~Holdings,~~to ~~LLC~~modify ~~indentures, then, provided that the leverage ratio test remains satisfied, the Renaissance~~ or CCreplace Vexisting ~~Holdings,~~fiber/coaxial ~~LLC entities~~cable ~~will be required to guarantee the Charter Operating credit facilities and the related obligations and to secure those guarantees with first-priority liens~~networks, and to guarantee the notes and to secure the Charter Operating senior second lien notes with second-priority liens, on significantly all of their assets in which security interests may be perfected under the Uniform Commercial Code by filing a financing statement (including ~~capital stock and intercompany obligations)~~betterments.

Charter Operating Credit Facilities. In April 2004, the Charter Operating credit facilities were amended and restated concurrently with the sale of $1.5 billion senior second lien notes described above, among other things, to defer maturities and increase availability under these facilities and to enable Charter Operating to acquire the interests of the lenders under the CC VI Operating Company, LLC (“CC VI Operating”), CC VIII Operating, LLC (“CC VIII Operating”) and the Falcon Cable Communications, LLC (“Falcon Cable”) credit facilities. The Charter 25

30 (e) Support capital includes costs associated with the replacement or enhancement of non-network assets due to technological and physical obsolescence (e.g., non-network equipment, land, buildings and vehicles).

~~Table~~Item 4. Controls and ~~of Contents~~Procedures.

~~Operating~~As of ~~credit~~the end ~~facilities~~of ~~increase~~ the ~~availability~~period ~~from~~covered ~~$5.1 billion~~by tothis ~~$6.5 billion~~report, ~~and provide for two term facilities~~management, ~~one~~including ~~with~~our ~~a total principal amount~~Chief of Executive ~~$2.0 billion,~~Officer ofand ~~which~~Chief ~~12.5%~~Financial ~~matures in 2007~~Officer, ~~30%~~evaluated ~~matures~~the ~~in 2008, 37.5%~~effectiveness ~~matures~~ of the indesign ~~2009~~ and ~~20%~~operation ~~matures~~of inour ~~2010~~disclosure ~~(Term~~controls ~~A);~~ and ~~one~~procedures with ~~a total~~respect ~~principal amount of $3.0 billion, which is repayable in 27 equal quarterly installments aggregating in each loan year~~ to ~~approximately $30 million, with~~ the ~~remaining~~information ~~balance~~generated ~~due~~for atuse ~~final maturity~~ in ~~2011~~this ~~(Term~~quarterly B)report. The ~~Charter~~ ~~Operating~~ evaluation ~~credit~~was ~~facilities~~based ~~also~~in ~~provide~~part ~~for~~upon areports ~~revolving~~and ~~credit~~certifications ~~facility,~~provided inby a ~~total~~ number ~~amount~~ of $1executives.~~5 billion~~ Based upon, ~~with~~and aas ~~maturity~~of ~~date in 2010. Amounts under~~ the ~~Charter~~ ~~Operating~~date ~~credit~~of ~~facilities bear interest, at Charter Operating’s~~that ~~election~~ evaluation, atour aChief ~~base~~Executive ~~rate~~Officer orand ~~the~~Chief ~~Eurodollar~~Financial ~~rate,~~Officer ~~as defined, plus a margin for~~concluded ~~Eurodollar~~ that ~~loans of up to 3.00% for~~ the ~~Term~~disclosure Acontrols and ~~revolving~~procedures ~~credit~~were ~~facilities and~~effective up to ~~3.25%~~provide ~~for~~reasonable assurances ~~the~~that ~~Term~~information Brequired ~~credit~~to ~~facility,~~be ~~and~~disclosed ~~for~~in ~~base~~the ~~rate~~reports ~~loans,~~we ~~up to~~file ~~2.00%~~ or submit ~~for~~under the ~~Term~~Securities AExchange ~~facility~~Act ~~and~~of ~~revolving~~1934 ~~credit~~is ~~facilities~~recorded, processed, summarized and upreported towithin ~~2.25% for~~ the ~~Term~~time Bperiods ~~credit~~specified ~~facility.~~in Athe ~~quarterly commitment fee of up to 0.75% is~~Commission’s ~~payable~~ rules onand ~~the unused balance of the revolving credit facility~~forms.

~~Obligations under the amended commitment amount of $6.5 billion are secured by~~There a were ~~lien~~no onchanges ~~all~~in ~~assets~~our ofinternal ~~Charter~~controls ~~Operating,~~over tofinancial ~~the~~reporting ~~extent~~during ~~such lien can be~~the ~~perfected~~ quarter ~~under~~ended ~~the~~June ~~Uniform~~30, ~~Commercial~~2007 ~~Code~~that byhas ~~filing~~materially ~~a financing statement~~affected, ~~which~~ ~~assets~~or ~~include~~is ~~capital stock owned by Charter Operating and intercompany~~reasonably ~~obligations~~ likely ~~owing~~ to ~~it,~~materially ~~including from its subsidiaries~~affect, CCour VIinternal ~~Operating,~~control ~~CC VIII~~over ~~Operating and Falcon Cable.~~financial reporting.

~~Obligations~~In designing ~~arising~~and ~~under~~evaluating the ~~original~~disclosure ~~commitment~~controls ~~amount of $5.1 billion continue to be guaranteed by CCO Holdings~~ and ~~by Charter Operating’s subsidiaries~~procedures, ~~other~~our ~~than the non-guarantor subsidiaries (defined below). The~~management ~~“non-guarantor~~ recognized ~~subsidiaries,”~~that ~~generally~~any ~~include~~controls ~~CCO NR Holdings, LLC~~ and ~~subsidiaries~~ ~~contributed to CCO NR Holdings~~procedures, ~~LLC~~no bymatter ~~Charter~~how ~~Holdings~~well indesigned ~~the~~and ~~organizational restructuring that occurred in June 2003~~ operated, ~~including~~can CCprovide ~~VI Operating,~~only ~~CC VIII Operating~~reasonable, ~~Falcon~~not ~~Cable~~absolute, ~~and~~assurance ~~their~~of ~~respective subsidiaries.~~achieving ~~Obligations arising under~~ the ~~original commitment amount of $5.1 billion~~ ~~continue~~ desired tocontrol beobjectives ~~secured~~and bymanagement anecessarily ~~pledge~~was ofrequired ~~the~~to ~~equity interests owned by the~~apply ~~subsidiary~~ its judgment ~~guarantors~~in ~~and~~evaluating ~~intercompany obligations owing to~~ the ~~subsidiary guarantors,~~cost-benefit asrelationship ~~well as a pledge~~ of ~~CCO~~possible ~~Holdings’~~controls ~~equity interests in Charter~~and ~~Operating~~ procedures. Based ~~and~~upon ~~its~~the ~~subsidiaries~~above evaluation, ~~and~~our ~~intercompany~~management ~~obligations owing to CCO~~believes ~~Holdings~~ that byour ~~Charter~~controls ~~Operating~~provide ~~and~~such ~~its~~reasonable ~~subsidiaries and intercompany obligations owing to the subsidiary guarantors~~assurances.

At such time as Charter Holdings’ leverage ratio is determined to be below 8.75 to 1.0: (i) the guarantors’ guarantees will be amended to increase the amount guaranteed to include all of the obligations arising under the amended commitment amount of $6.5 billion; (ii) most of the non-guarantor subsidiaries will become additional subsidiary guarantors of the amended commitment amount of $6.5 billion; and (iii) such guarantees will be secured by a lien on all assets of the subsidiary guarantors to the extent such lien can be perfected under the Uniform Commercial Code by filing a financing statement; provided that the guarantee and pledge of such interests is not otherwise restricted by certain of Charter Holdings’ subsidiaries’ indentures. 26

~~The Charter Operating credit facilities permit Charter Operating and its~~PART ~~subsidiaries to make distributions to pay interest on the Charter Operating senior second lien notes, the CCO Holdings senior notes, the CCH~~ II senior notes, the Charter Holdings senior notes and Charter’s convertible senior notes, provided that, among other things, no default has occurred and is continuing under the Charter Operating credit facilities. ~~Conditions~~OTHER to future borrowings include the absence of a default or an event of default under the Charter Operating credit facilities and the continued accuracy in all material respects of the representations and warranties, including the absence since December 31, 2003 of any event, development or circumstance that has had or could reasonably be expected to have a material adverse affect on our businessINFORMATION.

~~The events of default under the Charter Operating credit facilities include~~Item those customary for financings of this type, as well as events of default for, among other things: (i) the failure to pay or the occurrence of events that result in the acceleration of other indebtedness owing by certain of CCO Holdings’ direct and indirect parent companies in amounts in excess of $200 million in aggregate principal amount, (ii) Paul Allen and/or certain of his family members and/or their exclusively owned entities ceasing to have power, directly or indirectly, to vote at least 35% of the ordinary voting power of Charter Operating, and (iii) certain of Charter Operating’s direct or indirect parent companies having indebtedness in excess of $500 million aggregate principal amount which remains undefeased three months prior to the final maturity of such indebtedness 1. Legal Proceedings.

~~Charter~~We and our ~~Operating~~parent ~~used~~companies ~~the~~are ~~additional~~defendants ~~borrowings~~or ~~under~~co-defendants ~~the~~in ~~credit~~several ~~facilities,~~unrelated ~~together~~ lawsuits ~~with~~claiming ~~proceeds~~infringement ~~from~~of various patents relating to various aspects of our businesses. Other industry participants are also defendants in certain of these cases, and, in many cases, we expect that any potential liability would be the ~~sale~~responsibility of our equipment vendors pursuant to applicable contractual indemnification provisions. In the ~~Charter~~event ~~Operating~~that ~~senior~~a ~~second~~court ~~lien~~ ultimately ~~notes~~determines that we infringe on any intellectual property rights, we may be subject to ~~refinance~~substantial damages and/or an injunction that could require us or our vendors to modify certain products and services we offer to our subscribers. While we believe the ~~credit~~lawsuits ~~facilities~~are ofwithout ~~its~~merit ~~subsidiaries~~and intend to defend the actions vigorously, CCthe VIlawsuits could be material to ~~Operating~~ our consolidated results of operations of any one period, and no assurance can be given that any adverse outcome would not be material to our consolidated financial condition, results of operations or liquidity.

31We and our parent companies are party to other lawsuits and claims that arise in the ordinary course of conducting our business. The ultimate outcome of these other legal matters pending against us or our parent companies cannot be predicted, and although such lawsuits and claims are not expected individually to have a material adverse effect on our consolidated financial condition, results of operations or liquidity, such lawsuits could have, in the aggregate, a material adverse effect on our consolidated financial condition, results of operations or liquidity.

~~Table~~Item 1A. Risk ~~of Contents~~Factors.

~~Falcon~~Our Annual ~~Cable,~~Report ~~and~~on CCForm ~~VIII~~10-K ~~Operating,~~for ~~all~~the inyear ~~one~~ended ~~concurrent~~December ~~transaction. Borrowing~~31, ~~availability~~2006 ~~under~~includes ~~the~~“Risk Factors” ~~credit~~under ~~facilities~~Item as1A of ~~June 30,~~Part ~~2004~~I. Except ~~was~~for the updated risk factors ~~approximately~~ described ~~$977 million~~below, ~~none~~there ofhave ~~which~~been ~~was~~no ~~restricted~~material ~~due~~changes tofrom ~~covenants.~~the Inrisk factors ~~the~~ described ~~refinancing~~in ~~Charter~~our ~~Operating~~Form ~~was~~10-K. The ~~substituted~~information asbelow ~~the~~updates, ~~lender~~and should be read in ~~place~~conjunction ofwith, the ~~banks~~ ~~under~~risk ~~those~~factors ~~subsidiaries’~~and ~~credit~~information ~~facilities.~~disclosed in our Form 10-K.

~~As noted above, our access to capital from our credit facilities is contingent~~Risks on Related ~~compliance with a number of restrictive covenants, including covenants tied~~ to ~~our~~Significant ~~operating~~Indebtedness ~~performance. We may not be able to comply with all~~ of ~~these restrictive~~Us covenants. If there is an event of default under our credit facilities, such as the failure to maintain the applicable required financial ratios, we would be unable to borrow under these credit facilities, which could materially adversely impact our ability to operate our business and toOur ~~make~~Parent payments under our debt instruments. In addition, an event of default under certain of our debt obligations, if not waived, may result in the acceleration of those debt obligations, which could in turn result in the acceleration of other debt obligations, and could result in exercise of remedies by our creditors and could force us to seek the protection of the bankruptcy laws. Companies

~~Historical~~We and ~~Operating,~~our ~~Financing~~parent companies have a significant amount of debt and ~~Investing~~may ~~Activities~~incur significant additional debt, including secured debt, in the future, which could adversely affect our and our parent companies’ financial health and our and their ability to react to changes in our business.

We and our ~~held~~parent ~~$88 million~~companies inhave ~~cash~~a significant amount of debt and ~~cash~~may ~~equivalents~~(subject asto applicable restrictions in their debt instruments) incur additional debt in the future. As of June 30, ~~2004~~2007, ~~compared~~our total debt was approximately $12.0 to billion, our member’s equity was approximately $85 623 million asand the deficiency of ~~December 31~~earnings to cover fixed charges for the six months ended June 30, ~~2003.~~2007 was $178 million.

~~Operating Activities. Net cash~~As ~~provided by operating activities decreased 31%, from $584 million for the six~~ of ~~months ended~~ June 30, ~~2003~~2007, toour ~~$402 million~~parent ~~for~~companies ~~the~~had ~~six~~approximately ~~months~~$7.5 ~~ended~~billion ~~June 30,~~aggregate ~~2004.~~ principal ~~For~~amount ~~the~~of ~~six~~debt. We ~~months~~and ~~ended~~our ~~June 30,~~parent ~~2004,~~companies ~~net~~will ~~cash~~need ~~provided by operating~~to ~~activities~~ raise ~~decreased~~additional ~~primarily~~capital asand/or areceive ~~result~~distributions ofor ~~changes~~payments ~~in operating assets and~~from ~~liabilities~~ subsidiaries ~~that~~in ~~used~~order ~~$60 million~~to ~~more~~satisfy ~~cash~~our ~~during~~and ~~the~~their ~~six~~respective ~~months~~debt obligations. Effective ~~ended~~August ~~June 30~~1, ~~2004~~2007, ~~than the corresponding period in 2003 coupled with~~ an ~~increase~~additional in$450 ~~cash~~million ~~interest~~ aggregate ~~expense~~principal amount of ~~$99 million~~Charter’s ~~over~~convertible ~~the~~notes ~~corresponding~~are ~~prior~~held ~~period.~~by Charter Holdco.

~~Investing~~Because ~~Activities.~~ of ~~Net~~our ~~cash~~and ~~provided~~their bysignificant ~~investing~~indebtedness, ~~activities~~our ~~for~~and ~~the~~our ~~six~~parent ~~months~~companies’ ~~ended~~ability ~~June 30,~~ to ~~2004~~raise ~~was~~additional ~~$307 million~~capital ~~and~~at ~~net~~reasonable ~~cash~~rates ~~used~~or inat ~~investing~~all ~~activities~~is ~~for~~uncertain, and ~~the~~ our and ~~six~~our ~~months~~parent ~~ended~~companies’ ~~June 30,~~ability ~~2003~~to ~~was~~make ~~$358 million.~~distributions ~~Investing~~or ~~activities provided~~payments ~~$665 million~~to ~~more~~our ~~cash~~and their ~~during~~respective ~~the~~parent ~~six~~companies ~~months~~is ~~ended~~subject ~~June 30,~~to ~~2004~~availability ~~than~~of funds and ~~the~~ restrictions ~~corresponding~~under ~~period~~our inand ~~2003~~our ~~primarily~~subsidiaries’ asapplicable adebt ~~result~~instruments ofand under ~~proceeds~~applicable ~~from~~law. If ~~the sale~~we offind ~~certain~~it ~~cable~~necessary ~~systems~~to engage in ~~Florida,~~a recapitalization ~~Pennsylvania,~~or ~~Maryland,~~other ~~Delaware~~similar transaction, ~~New~~our noteholders might not receive ~~York~~ principal and ~~West~~interest ~~Virginia~~payments to ~~Atlantic~~which ~~Broadband~~they ~~Finance,~~are ~~LLC.~~contractually entitled.

~~Financing~~Our ~~Activities.~~ and our ~~Net~~parent ~~cash~~companies’ ~~used~~significant inamount ~~financing~~of ~~activities~~debt ~~for~~could ~~the~~have ~~six~~other ~~months ended June~~important ~~30, 2004 and 2003 was $706 million and $339 million, respectively~~ consequences. For ~~The increase in cash used during the six months ended June 30~~example, ~~2004 as compared to~~ the ~~corresponding~~debt ~~period~~will inor ~~2003 was primarily the result of an increase in net repayments of long-term debt.~~ could:

~~Capital~~· ~~Expenditures~~ require us to dedicate a significant portion of our cash flow from operating activities to make payments on our and our parent companies’ debt, which will reduce our funds available for working capital, capital expenditures and other general corporate expenses;

We· ~~have~~limit ~~significant~~our ~~ongoing~~flexibility ~~capital~~in ~~expenditure~~planning ~~requirements. Capital expenditures were $380 million and $254 million~~ for ~~the six months ended June 30~~, ~~2004~~or ~~and~~reacting ~~2003~~to, ~~respectively.~~changes ~~The~~in ~~majority~~our ofbusiness, the ~~capital~~cable ~~expenditures~~and ~~for the~~telecommunications ~~six~~industries ~~months ended June 30, 2004~~ and ~~2003~~the ~~related~~economy toat ~~our customer premise equipment. See table below for more details.~~ large;

Upgrading our cable systems has enabled us to offer digital television, high-speed data services, VOD, interactive services, additional channels and tiers, and expanded pay-per-view options to a larger customer base. Our capital expenditures are funded primarily from cash flows from operating activities, the issuance of debt and borrowings under credit facilities. In addition, during the six months ended June 30, 2004 and 2003, our liabilities related to capital expenditures decreased $38 million and $103 million, respectively. 27

~~During~~· ~~2004,~~place weus ~~expect~~at ~~to spend~~ a ~~total~~disadvantage ofas ~~$850 million~~compared to ~~$950 million~~our ~~on capital~~competitors ~~expenditures. We expect~~ that ~~the~~have ~~nature~~proportionately ofless these expenditures will continue to shift from upgrade/rebuild costs to customer premise equipment and scalable infrastructure costs. We expect to fund capital expenditures for 2004 primarily from cash flows from operating activities and borrowings under our credit facilities. debt;

We· ~~have~~make ~~adopted~~us ~~capital~~vulnerable ~~expenditure~~to ~~disclosure~~interest ~~guidance~~rate increases, ~~which~~ ~~was~~because ~~developed~~approximately by33% ~~eleven~~of ~~publicly~~our ~~traded~~borrowings ~~cable~~ are, and will continue to be, subject to variable rates of interest;

32 · expose us to increased interest expense as we refinance existing lower interest rate instruments;

~~Table~~· ofadversely ~~Contents~~affect our relationship with customers and suppliers;

~~system~~· ~~operators,~~limit ~~including~~our ~~Charter,~~and ~~with~~our ~~the~~parent ~~support~~companies’ ofability ~~the National Cable & Telecommunications Association (“NCTA”). The new disclosure is intended~~ to ~~provide~~ ~~more~~borrow ~~consistency~~additional funds in the ~~reporting~~future, ofdue ~~operating~~to ~~statistics~~applicable infinancial ~~capital expenditures~~ and ~~customers~~restrictive ~~among~~covenants ~~peer companies~~ in ~~the cable industry. These disclosure guidelines are not required disclosure under GAAP, nor do they impact~~ our ~~accounting for capital expenditures under GAAP.~~ debt;

~~The~~· ~~following~~make ~~table~~it ~~presents~~more ~~our~~difficult ~~major~~for ~~capital~~us ~~expenditures~~to ~~categories~~satisfy ~~in accordance~~our ~~with~~obligations ~~NCTA~~to ~~disclosure~~the ~~guidelines~~holders ~~for~~of ~~the~~our ~~three~~notes and ~~six~~to ~~months~~the ~~ended June 30,~~lenders ~~2004~~under ~~and~~our ~~2003~~credit ~~(dollars~~facilities inas ~~millions):~~ well as our parent companies’ ability to satisfy their obligations to their noteholders; and

	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2003		2004		2003
Customer premise equipment (a)	$	105	$	70	$	217	$	134
Scalable infrastructure (b)		14		12		33		20
Line extensions (c)		35		17		60		24
Upgrade/Rebuild (d)		6		25		18		40
Support capital (e)		33		29		52		36
Total capital expenditures (f)	$	193	$	153	$	380	$	254

limit future increases in the value, or cause a decline in the value of Charter’s equity, which could limit Charter’s ability to raise additional capital by issuing equity.

~~(a)~~A default by ~~Customer~~us ~~premise~~or ~~equipment~~one ~~includes~~of ~~costs~~our ~~incurred~~parent atcompanies ~~the~~under ~~customer~~our ~~residence~~and totheir ~~secure~~debt ~~new~~obligations ~~customers,~~could result ~~revenue~~in ~~units~~the ~~and~~acceleration ~~additional~~of ~~bandwidth~~those ~~revenues.~~obligations, Itwhich ~~also~~in ~~includes~~turn ~~customer~~could ~~installation~~trigger cross ~~costs~~defaults inunder ~~accordance~~other ~~with~~agreements ~~SFAS~~governing 51our and ~~customer~~our ~~premise~~parent ~~equipment~~companies’ long-term (eindebtedness.g. In addition, ~~set-top~~the ~~terminals~~secured ~~and~~lenders ~~cable~~under ~~modems,~~our credit ~~etc.).~~facilities ~~(b)~~and ~~Scalable~~the ~~infrastructure~~holders ~~includes~~of ~~costs,~~the ~~not~~Charter ~~related~~Operating tosenior ~~customer~~second-lien notes ~~premise~~could ~~equipment~~foreclose oron ~~our~~their ~~network~~collateral, towhich ~~secure~~includes ~~growth~~equity ofinterest ~~new customers~~in our subsidiaries, ~~revenue~~and ~~units~~exercise ~~and~~other ~~additional~~rights ~~bandwidth~~of ~~revenues~~secured orcreditors. Any default ~~provide~~under ~~service~~those ~~enhancements~~credit ~~(e.g.,~~facilities ~~headend~~or ~~equipment).~~the ~~(c)~~indentures ~~Line~~governing ~~extensions~~Charter’s convertible ~~include~~notes ~~network~~or ~~costs~~our ~~associated~~and ~~with~~our ~~entering~~parent ~~new~~companies’ ~~service~~debt ~~areas~~could ~~(e.g.,~~adversely ~~fiber/coaxial~~affect our ~~cable~~growth, ~~amplifiers,~~our ~~electronic~~financial ~~equipment~~condition, ~~make-ready~~our ~~and~~results ~~design~~of ~~engineering).~~operations, ~~(d)~~and ~~Upgrade/rebuild~~our ~~includes~~and our parent ~~costs~~companies’ ability to ~~modify~~make orpayments ~~replace~~on ~~existing~~our ~~fiber/coaxial~~credit ~~cable~~facilities ~~networks,~~and ~~including~~our ~~betterments.~~and our ~~(e)~~parent ~~Support~~companies’ ~~capital~~other ~~includes~~debt, ~~costs~~and ~~associated~~could ~~with~~force ~~the~~us ~~replacement~~to orseek ~~enhancement~~the protection of the ~~non-network~~bankruptcy ~~assets~~laws. We ~~due to technological~~ and ~~physical~~our ~~obsolescence~~parent ~~(e.g.,~~companies ~~non-network~~may ~~equipment,~~incur significant ~~land,~~additional ~~buildings~~debt ~~and~~in ~~vehicles)~~the future. If ~~(f)~~current ~~Represents~~debt ~~all~~amounts increase, ~~capital expenditures made during~~ the ~~three~~related ~~and~~risks ~~six~~that ~~months~~we ~~ended~~now ~~June~~face ~~30,~~will ~~2004 and 2003, respectively~~intensify.

~~Certain~~We may ~~Trends~~not ~~and~~be ~~Uncertainties~~able to access funds under the Charter Operating credit facilities if we fail to satisfy the covenant restrictions in such credit facilities, which could adversely affect our financial condition and our ability to conduct our business.

~~The~~We have historically ~~following~~relied ~~discussion~~on ~~highlights~~access ato ~~number~~credit offacilities ~~trends~~in ~~and~~order ~~uncertainties,~~to infund operations ~~addition~~ and to ~~those~~service ~~discussed~~parent ~~elsewhere~~company indebt, ~~this~~and ~~quarterly~~we ~~report~~expect ~~and~~such inreliance ~~the~~to continue ~~“Critical~~ in the ~~Accounting~~future. Our ~~Policies~~total ~~and~~potential ~~Estimates”~~borrowing ~~section~~availability ofunder ~~Item 7. “Management’s~~our ~~Discussion~~ revolving ~~and~~credit ~~Analysis~~facility ofwas ~~Financial~~approximately ~~Condition~~$1.4 ~~and~~billion ~~Results~~as of ~~Operations”~~June in30, 2007, ~~the~~ none ~~Amendment~~of ~~No. 2~~which tois ~~our~~limited ~~Registration~~by ~~Statement~~covenant onrestrictions. There ~~Form S-4~~can ~~filed~~be ~~on May 5,~~no ~~2004~~ assurance that ~~could~~our ~~materially~~actual ~~impact~~availability under our ~~business,~~credit ~~results~~facilities ofwill ~~operations and~~not ~~financial~~ be limited ~~condition~~by covenant restrictions in the future.

~~Restrictive~~One of the ~~Covenants.~~conditions ~~Our~~to the availability of funding under our credit facilities ~~and~~ is the absence ~~indentures~~of ~~governing~~a ~~our publicly~~default ~~held~~under ~~notes~~such ~~contain~~facilities, including as a ~~number~~result of ~~significant~~any ~~covenants~~failure to ~~that~~comply ~~could adversely~~with ~~impact~~the ~~our~~covenants ~~business.~~under Inthe ~~particular~~facilities. Among other covenants, ~~our~~the Charter Operating credit facilities ~~and~~require us to maintain ~~indentures~~ specific ~~restrict~~leverage ~~our~~ratios. The ~~ability~~Charter Operating credit facilities also provide that Charter Operating has to: obtain an unqualified audit opinion from its independent accountants for each fiscal year. There can be no assurance that Charter Operating will be able to continue to comply with these or any other of the covenants under the credit facilities.

•An event of ~~pay~~default ~~dividends~~under the credit facilities or ~~make~~indentures, if not waived, could result in the acceleration of those debt obligations and, consequently, could trigger cross defaults under other ~~distributions;~~agreements •governing ~~make~~our ~~certain~~and ~~investments~~our orparent companies’ ~~acquisitions;~~long-term •indebtedness. In ~~enter~~addition, ~~into~~the ~~related~~secured ~~party~~lenders under ~~transactions;~~the •Charter ~~dispose~~Operating credit facilities and the holders of ~~assets~~the orCharter Operating ~~merge;~~senior •second-lien ~~incur~~notes ~~additional~~could ~~debt;~~foreclose •on ~~issue~~their collateral, which includes equity; •interest ~~repurchase~~in our subsidiaries, and exercise other rights of secured creditors. Any default under those credit facilities or ~~redeem~~the indentures ~~equity~~governing ~~interests~~our or our parent companies’ debt could adversely affect our growth, our financial condition, our results of operations, and our and our parent companies’ ability to make payments on our credit facilities and our and our parent companies’ other debt;, •and ~~grant~~could ~~liens;~~force us to seek the protection of the bankruptcy laws, which could materially adversely impact our ability to operate our business and •to ~~pledge~~make ~~assets~~payments under our debt instruments.

33We depend on generating sufficient cash flow and having access to additional external liquidity sources to fund our and our parent companies’ debt obligations, capital expenditures, and ongoing operations.

~~Table~~Our ability ofto ~~Contents~~service our and our parent companies’ debt and to fund our planned capital expenditures and ongoing operations will depend on both our and our parent companies’ ability to generate cash flow and our and our parent

Furthermore, our credit facilities require us to maintain specified financial ratios and meet financial tests. Our 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 and could trigger acceleration of the related debt under the applicable agreement, and in certain cases under other agreements governing our indebtedness. Any default under the credit facilities or indentures applicable to us could adversely affect our growth, our financial condition and our results of operations and the ability to make payments on our publicly held notes and those of our subsidiaries, and our credit facilities. For more information, see the section above entitled “— Liquidity and Capital Resources.” 28

~~Parent Company Liquidity Concerns. Our parent~~ companies ~~have a significant~~’ ~~amount~~ access ofto ~~debt and may incur~~ additional ~~debt~~external inliquidity ~~the future~~sources. Our ~~At June 30, 2004, Charter had approximately $744 million aggregate principal amount of convertible senior notes outstanding, which mature in 2005~~ and 2006, and Charter Holdings had approximately $8.5 billion aggregate principal amount of senior notes and senior discount notes, some of which mature in 2007 and the remainder of which mature in 2009 through 2012. Charter and Charter Holdings will need to raise additional capital or receive distributions or payments from us in order to satisfy their debt obligations. The indentures governing our ~~notes~~ ~~restrict us from making distributions to our~~ parent ~~companies (including,~~ as applicable, Charter and Charter Holdings) for payment of principal on parent company notes, in each case unless there is no default under those indentures and a specified leverage ratio test can be met. Each such issuer currently meets the applicable leverage ratio test, and therefore is not currently prohibited from making any such distributions to its direct parent. The indentures governing the Charter Holdings notes permit Charter Holdings to make distributions to Charter Holdco for payment of interest or principal on Charter companies’s ~~convertible~~ability ~~senior notes, only if, after giving effect~~ to ~~the distribution,~~generate ~~Charter~~cash ~~Holdings~~flow ~~can incur additional debt under the leverage ratio test of 8.75 to 1.0, there~~ is nodependent default under Charter Holdings’ indentures and other specified tests are met. However, in the event that Charter Holdings could not incur any additional debt under the 8.75 to 1.0 leverage ratio test, the indentures governing the Charter Holdings notes permit us to make specified investments in Charter Holdco or Charter, up to its formulaic capacity, as long as there is no default under the indentures. For the quarter ended June 30, 2004, there were no defaults under the Charter Holdings indentures and other specified tests were met. However, Charter Holdings continued not to meet the leverage ratio test at June 30, 2004. As a result, distributions from Charter Holdings to Charter Holdco or Charter again have been restricted and will continue to be restricted until that test is met. Charter currently has sufficient assets to pay interest due on ~~its~~many ~~outstanding convertible senior notes during 2004. However~~factors, ~~Charter’s ability to make~~ interest payments, or principal payments at maturity in 2005 and 2006, on its outstanding convertible senior notes is contingent upon it obtaining additional debt and/or equity financing or receiving distributions or other payments from its subsidiaries. including:

~~Because~~· ~~Charter~~competition isfrom ~~our~~other ~~manager~~distributors, ~~and~~including ~~because~~incumbent wetelephone ~~are indirectly wholly owned by Charter Holdings~~companies, ~~their~~direct ~~financial~~broadcast orsatellite liquidity problems could cause serious disruption to our business and could have a material adverse effect on our business and results of operations. Any such event would likely adversely impact our own credit ratingoperators, ~~and~~wireless ~~our~~broadband ~~relations~~providers ~~with customers~~ and ~~suppliers, which~~DSL could in turn further impair our ability to obtain financing and operate our business. Further, to the extent that any such event results in a change of control of Charter or Charter Holdings (whether through a bankruptcy, receivership or other reorganization, or otherwise), it could result in an event of default under our credit facilities and our outstanding notes and would require a change of control repurchase offer under our outstanding notes. providers;

~~Acceleration~~· ofdifficulties ~~Our~~in ~~Indebtedness.~~introducing Inand ~~the~~operating ~~event of a default under~~ our ~~credit~~ ~~facilities~~telephone ~~or notes~~services, ~~our creditors could elect to declare all amounts borrowed, together with accrued and unpaid interest and other fees, to be due and payable. In~~ such ~~event,~~as our ~~credit~~ability ~~facilities and indentures will not permit CCH II’s subsidiaries~~ to ~~distribute~~adequately ~~funds~~meet tocustomer ~~CCH~~expectations IIfor ~~to pay interest or principal on its notes. If~~ the ~~amounts~~reliability ~~outstanding under such credit facilities or notes are accelerated, all~~ of ~~the~~voice ~~debt and liabilities would be payable from the assets of CCH II’s subsidiaries~~services, ~~prior to any distribution of CCH II’s subsidiaries’ assets to pay the interest~~ and ~~principal amounts on CCH II’s notes. In addition, the lenders under~~ our ~~credit~~ability facilities could foreclose on their collateral, which includes equity interests in CCH II’s subsidiaries, and they could exercise other rights of secured creditors. In any such case, we might not be able to ~~repay~~adequately ormeet ~~make~~demand ~~any~~for ~~payments~~installations on CCH II’s notes. Additionally, an acceleration or payment default under our credit facilities would cause a cross-default in the indentures governing our notes. Any default under any of our credit facilities or notes might adversely affect the holders of our notes and ~~our~~customer ~~growth, financial condition and results of~~ service;

34 · our ability to sustain and grow revenues and cash flows from operating activities by offering video, high-speed Internet, telephone and other services, and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition;

~~Table~~· our ability to obtain programming at reasonable prices or to adequately raise prices to offset the effects of ~~Contents~~higher programming costs;

~~operations~~· ~~and~~general ~~could~~business ~~force us to examine all options~~conditions, ~~including~~economic ~~seeking~~uncertainty ~~the protection~~or ofslowdown; ~~the bankruptcy laws.~~ and

~~CCH~~· ~~II’s Notes are Structurally Subordinated to all Liabilities of CCH II’s Subsidiaries. The borrowers and guarantors under~~ the ~~Charter~~effects ~~Operating credit facilities and senior second lien notes are indirect subsidiaries~~ of ~~CCH~~governmental ~~II. A number of CCH II’s subsidiaries are also obligors under other debt instruments~~regulation, including ~~CCO~~but ~~Holdings~~not ~~and~~limited ~~Charter Operating,~~to ~~which~~local ~~are co-issuers of senior notes~~ and~~/or~~ ~~senior~~state ~~discount~~franchise ~~notes. As of June 30~~authorities, ~~2004,~~on our ~~total debt was approximately $9~~business.2 billion, of which $7.6 billion would have been structurally senior to CCH II’s notes. In a liquidation, the lenders under our credit facilities and the holders of the other debt instruments and all other creditors of CCH II’s subsidiaries would have the right to be paid before CCH II from any of its subsidiaries’ assets.

IfSome of these ~~CCH~~factors IIare ~~caused~~beyond aour ~~subsidiary~~control. If towe ~~make~~and aour ~~distribution~~parent companies are unable to ~~enable~~generate itsufficient tocash ~~make payments~~flow inor ~~respect~~access ofadditional ~~its~~external ~~notes~~liquidity sources, we and ~~such~~our ~~transfer~~parent ~~were~~companies ~~deemed~~may anot ~~fraudulent~~be able to service and repay our ~~transfer~~ and orour anparent ~~unlawful~~companies’ ~~distribution~~debt, ~~the~~operate ~~holders~~our ofbusiness, ~~CCH~~respond IIto competitive challenges, or fund our and our parent companies’s ~~notes~~other ~~could~~liquidity beand capital ~~required~~ needs. Although towe ~~return~~and ~~the~~our ~~payment~~parent tocompanies ~~(or~~have ~~for~~been ~~the~~able ~~benefit~~to raise funds through issuances of) debt in the ~~creditors~~past, ofwe ~~CCH II’s~~may ~~subsidiaries.~~not Inbe ~~the~~able ~~event~~to access additional sources of ~~the~~external ~~bankruptcy~~liquidity on similar terms, ~~liquidation~~if orat ~~dissolution~~all. We expect that of cash aon ~~subsidiary~~hand, ~~following~~cash ~~payment~~flows byfrom ~~such~~operating ~~subsidiary~~activities, ofand ~~its~~the ~~liabilities,~~amounts ~~such~~available ~~subsidiary~~ under ~~may~~our ~~not~~credit ~~have~~facilities ~~sufficient~~will ~~assets~~be ~~remaining~~adequate to ~~make~~meet ~~any~~our ~~payments~~and toour usparent as companies’ ancash ~~equity~~needs ~~holder~~through or2008. We ~~otherwise~~believe that cash flows from operating activities and ~~may~~amounts available under our credit facilities may not be ~~restricted~~sufficient byto ~~bankruptcy~~fund our operations and ~~insolvency~~ ~~laws~~satisfy ~~from~~our ~~making~~and ~~any~~our ~~such~~parent ~~payments.~~companies’ interest ~~The~~and ~~foregoing~~principal ~~contractual~~repayment obligations in 2009, and will not be sufficient ~~legal~~ to ~~restrictions~~fund ~~could~~such ~~limit~~needs ~~our~~in ~~ability~~2010 toand ~~make~~beyond. See ~~payments~~“Part toI. Item 2. Management's ~~the~~Discussion ~~holders~~and Analysis of Financial Condition and ~~CCH~~ Results ~~II’s~~of ~~notes~~Operations — Liquidity and Capital Resources. ”

~~Securities Litigation and Government Investigations. A number of~~Because ~~putative federal class action lawsuits have been filed against Charter and certain~~ of ~~its~~our ~~former~~holding ~~and~~company ~~present officers and directors alleging violations of securities laws~~structure, ~~which~~our ~~have~~outstanding ~~been~~notes ~~consolidated~~are ~~for pretrial purposes. In~~structurally ~~addition,~~ subordinated ~~a number of other lawsuits have been filed against Charter~~ in ~~other jurisdictions.~~right ~~A shareholders derivative suit was filed in the U.S. District Court for the Eastern District~~ of ~~Missouri,~~payment ~~and~~to ~~several~~all ~~class~~liabilities ~~action lawsuits were filed in Delaware state court against Charter and certain~~ of ~~its directors~~our ~~and officers~~ subsidiaries. Restrictions ~~Finally, three shareholders derivative suits were filed~~ in ~~Missouri~~ ~~state~~our ~~court~~subsidiaries’ ~~against~~debt ~~Charter,~~instruments ~~its then current directors~~ and ~~its former~~ ~~independent~~ under ~~auditor.~~applicable ~~These~~law ~~actions~~limit ~~have~~their ~~been~~ability ~~consolidated.~~to ~~The~~provide ~~federal shareholders~~funds ~~derivative~~to ~~suit,~~us ~~the~~or ~~Delaware~~our ~~class actions and the consolidated~~various ~~derivative~~ parent ~~suit~~companies ~~each~~who ~~allege~~are ~~that~~debt ~~the defendants breached their fiduciary duties~~issuers.

InOur primary ~~August 2002,~~assets ~~Charter~~are ~~became~~our ~~aware~~equity ofinterests ain ~~grand~~our ~~jury investigation being~~subsidiaries. Our ~~conducted~~ operating bysubsidiaries ~~the~~are ~~U.S.~~separate ~~Attorney’s~~and ~~Office~~distinct ~~for~~legal ~~the~~entities ~~Eastern~~and ~~District~~are ~~of Missouri~~not ~~into~~ obligated ~~certain~~to ofmake ~~its~~funds ~~accounting~~available ~~and~~to ~~reporting~~us ~~practices~~for ~~focusing~~payments on ~~how~~our ~~it reported~~notes ~~customer~~or ~~numbers,~~other obligations ~~and~~in ~~its~~the ~~reporting~~form of ~~amounts~~loans, ~~received~~distributions ~~from~~or ~~digital~~otherwise. Our ~~set-top~~ subsidiaries’ ~~terminal~~ability ~~suppliers~~to ~~for~~make ~~advertising.~~distributions ~~The~~to ~~U.S.~~us ~~Attorney’s~~is ~~Office~~subject ~~has publicly~~to ~~stated~~their ~~that~~compliance with ~~Charter~~the isterms ~~not a target~~ of ~~the~~their ~~investigation.~~credit ~~Charter~~facilities ~~has also~~and ~~been~~indentures ~~advised~~and byrestrictions ~~the~~under applicable Ulaw.S. Under ~~Attorney’s~~the ~~Office~~Delaware ~~that~~limited noliability ~~member~~company ofact, ~~its~~our subsidiaries ~~board~~may ~~of directors,~~only ~~including~~make ~~its~~distributions ~~Chief~~to ~~Executive~~us ~~Officer,~~if isthey ahave ~~target~~“surplus” ofas ~~the~~defined ~~investigation~~ in the act. Under Onfraudulent ~~July 24,~~transfer ~~2003~~laws, aour ~~federal~~subsidiaries ~~grand~~may ~~jury charged four former~~not ~~officers~~ make ofdistributions ~~Charter~~to ~~with~~us ~~conspiracy~~or ~~and~~the ~~mail~~applicable ~~and~~debt ~~wire~~issuers ~~fraud,~~to ~~alleging~~service ~~improper~~debt ~~accounting~~ obligations ~~and~~if ~~reporting~~they ~~practices~~are ~~focusing~~insolvent onor ~~revenue~~are ~~from~~rendered ~~digital set-top~~insolvent ~~terminal~~ thereby. The ~~suppliers~~measures ~~and~~of ~~inflated~~insolvency ~~customer~~for ~~account~~purposes ~~numbers.~~of Onthese ~~July 25, 2003,~~fraudulent ~~one~~ transfer oflaws vary depending upon the ~~former~~law ~~officers~~applied ~~who~~in ~~was~~any ~~indicted~~proceeding ~~entered~~to determine whether a ~~guilty~~fraudulent ~~plea.~~transfer ~~Charter~~ has ~~advised~~ usoccurred. ~~that~~Generally, ithowever, isan ~~fully~~entity ~~cooperating~~would be ~~with~~considered ~~the~~insolvent ~~investigation.~~ if:

On· ~~November 4, 2002, Charter received an informal, non-public inquiry from~~ the ~~staff~~ ofsum ~~the SEC. The SEC issued a formal order~~ of ~~investigation dated January 23, 2003, and subsequently served document and testimony subpoenas on Charter and a number of~~ its former employees. The investigation and subpoenas generally concerned Charter’s prior reports with respect to its determination of the number of customers and various of its accounting policies and practices including its capitalization of certain expenses and dealings with certain vendorsdebts, including ~~programmers~~contingent ~~and digital set-top terminal suppliers. On July 27~~liabilities, ~~2004,~~was ~~the~~greater ~~SEC~~than ~~and Charter reached a final agreement to settle~~ the ~~investigation.~~ Infair ~~the~~saleable ~~Settlement~~value ~~Agreement and Cease and Desist Order, Charter agreed to entry~~ of anall ~~administrative~~its order prohibiting any future violations of United States securities laws and requiring certain other remedial internal practices and public disclosures. Charter neither admitted nor denied any wrongdoing, and the SEC assessed no fine against Charter. assets;

In· ~~addition,~~the ~~Charter~~present ~~has~~fair ~~recently~~saleable ~~entered~~value ~~into Memoranda~~ of ~~Understanding setting~~its ~~forth~~assets ~~proposed~~was ~~terms~~less ofthan ~~settlement for~~ the ~~above~~amount ~~described~~that ~~class actions~~would ~~and~~be ~~derivative~~required ~~suits.~~to ~~Settlement~~pay ofits ~~those~~probable ~~actions~~liability ~~under~~on ~~the~~its ~~terms~~existing ~~of the~~debts, ~~memoranda~~including iscontingent ~~subject~~liabilities, toas athey ~~number~~became ofabsolute ~~conditions,~~ and ~~there~~mature; ~~can therefore be no assurance that the actions will be settled on those terms~~ or ~~at all. See “Part II, Item 1. Legal Proceedings.”~~

35 · it could not pay its debts as they became due.

~~Table~~While we believe that our relevant subsidiaries currently have surplus and are not insolvent, there can be no assurance that these subsidiaries will be permitted to make distributions in the future in compliance with these restrictions in amounts needed to service our indebtedness. Our direct or indirect subsidiaries include the borrowers and guarantors under the Charter Operating and CCO Holdings credit facilities. Several of ~~Contents~~our subsidiaries are also obligors and guarantors under other senior high yield notes. As of June 30, 2007, our total debt was approximately $12.0 billion, of which approximately $9.5 billion was structurally senior to the CCH II notes.

However, due to the inherent uncertainties of litigation and investigations, and due to the remaining conditions to the finalization of our anticipated settlements, Charter cannot predict with certainty the ultimate outcome of these proceedings. An unfavorable outcome in the lawsuits or the government investigation described above could result in significant potential liabilities and have a material adverse effect on our consolidated financial condition and results of operations or our liquidity. Further, these proceedings, and Charter’s actions in response to these proceedings, could result in significant additional defense costs and the diversion of management’s attention, and could adversely affect our ability to execute our business and financial strategies. 29

~~Competition.~~In the event ~~The~~of ~~industry~~bankruptcy, inliquidation ~~which~~or wedissolution ~~operate~~of isone ~~highly~~or ~~competitive.~~more Inof ~~some~~our ~~instances~~ subsidiaries, wethat ~~compete~~subsidiary’s ~~against~~assets ~~companies~~would ~~with~~first ~~fewer~~be ~~regulatory~~applied ~~burdens, easier access~~ to ~~financing,~~satisfy ~~greater~~its ~~personnel resources~~own obligations, ~~greater brand name recognition~~ and ~~long-established~~following ~~relationships~~such ~~with~~payments, ~~regulatory~~such ~~authorities~~subsidiary ~~and customers.~~may ~~Increasing~~not ~~consolidation in the cable industry and the repeal of~~have ~~certain~~ sufficient ~~ownership~~assets ~~rules~~remaining ~~may~~to ~~provide~~make ~~additional~~payments ~~benefits~~ to ~~certain~~us ofas ~~our competitors,~~an ~~either~~equity ~~through~~holder ~~access to financing, resources~~ or ~~efficiencies of~~ ~~scale~~ otherwise. In that event:

~~Our~~· principal competitor for video services throughout our territory is direct broadcast satellite television services, also known as DBS. Competition from DBS, including intensive marketing efforts, aggressive pricing, and the ~~ability of~~lenders ~~DBS~~under toCharter ~~provide~~Operating’s ~~certain~~credit ~~services~~facilities ~~that~~whose weinterests are insecured ~~the~~by ~~process~~substantially all of ~~developing, has had an adverse impact on~~ our ~~ability~~operating ~~to retain customers. Local telephone companies and electric utilities can compete in this area~~assets, ~~and~~will ~~they increasingly~~have ~~may do so in~~ the ~~future.~~right ~~The subscription television industry also faces competition from free broadcast television and from other communications and entertainment media. With respect~~ to ~~our~~be ~~Internet~~paid ~~access services,~~in wefull ~~face~~before ~~competition,~~us ~~including intensive marketing efforts and aggressive pricing,~~ from ~~telephone~~any ~~companies and other providers~~ of ~~“dial-up” and~~our ~~digital~~subsidiaries’ ~~subscriber~~assets; ~~line technology, also known as DSL. Further loss of customers to DBS or other alternative video~~ and ~~data services could have a material negative impact on our business.~~

~~Mergers,~~· ~~joint~~the ~~ventures~~holders ~~and~~of ~~alliances~~preferred ~~among~~membership ~~franchised,~~interests ~~wireless~~in orour ~~private cable operators~~subsidiary, ~~satellite~~CC ~~television providers~~VIII, ~~local~~would ~~exchange~~have ~~carriers~~a ~~and others,~~claim ~~and~~on ~~the~~a ~~repeal~~portion of ~~certain~~its ~~ownership~~assets ~~rules~~that may ~~provide~~reduce ~~additional benefits~~the toamounts ~~some~~available offor ~~our~~repayment ~~competitors, either through access~~ to ~~financing, resources~~holders ~~or efficiencies~~ of ~~scale,~~our oroutstanding ~~the ability to provide multiple services in direct competition with us~~notes.

~~Variable Interest Rates. At June 30, 2004,~~Risks ~~excluding~~ Related ~~the effects of hedging, approximately 58% of our debt bears interest at variable rates that are linked~~ to ~~short-term~~Our interest rates. In addition, a significant portion of our existing debt, assumed debt or debt we might arrange in the future will bear interest at variable rates. If interest rates rise, our costs relative to those obligations will also rise. As of June 30, 2004 and December 31, 2003, the weighted average interest rate on the bank debt was approximately 6.5% and 5.4%, respectively, while the weighted average interest rate on the high-yield debt was approximately 9.3% and 10.0%, respectively, resulting in a blended weighted average interest rate of 7.6% and 6.5%, respectively. Approximately 72% of our debt was effectively fixed including the effects of our interest rate hedge agreements as of June 30, 2004 compared to approximately 60% at December 31, 2003. Business

~~Streamlining of Operations. In the~~We ~~past,~~ operate wein ~~experienced rapid growth from acquisitions of~~ a ~~number~~very ofcompetitive ~~smaller cable~~business ~~operators~~environment, ~~and~~which ~~the~~affects ~~rapid rebuild and rollout of advanced services. Our future success will depend in part on~~ our ability ~~to standardize and streamline~~ ~~our operations. The failure~~ to ~~implement a consistent corporate culture and~~ ~~management,~~ attract ~~operating or financial systems or procedures necessary to standardize~~ and ~~streamline~~retain ~~our~~customers ~~operations~~ and ~~effectively~~can ~~operate~~adversely ~~our enterprise~~affect ~~could have a material adverse effect on~~ our business, ~~results of operations~~ and ~~financial condition. In addition, Charter’s ability to properly~~ ~~manage our~~ operations ~~will be impacted by Charter’s ability to attract, retain and incentivize experienced, qualified, professional management.~~

~~Services. We expect that a significant portion of our near-term growth will be~~The ~~achieved~~ industry ~~through~~in ~~revenues~~which ~~from~~we ~~high-speed~~operate ~~data~~is ~~services,~~highly ~~digital~~competitive ~~video, bundled service packages,~~ and tohas abecome ~~lesser~~more ~~extent,~~so ~~various commercial services that take~~in ~~advantage~~ recent ~~of cable’s broadband capacity~~years. In ~~The~~some ~~technology~~instances, ~~involved in our product and service offerings generally requires that~~ we ~~have~~compete ~~permission~~against tocompanies ~~use~~with ~~intellectual~~ fewer ~~property~~regulatory ~~and~~burdens, ~~that~~easier ~~such~~access ~~property not infringe on rights claimed by others. We may not be able~~ to ~~offer~~financing, ~~these~~greater ~~advanced services successfully to~~personnel ~~our~~ resources, ~~customers~~greater orbrand ~~provide~~name ~~adequate~~recognition, ~~customer service~~ and ~~these~~long-established ~~advanced services~~relationships ~~may~~ with ~~not~~regulatory ~~generate~~authorities ~~adequate~~and ~~revenues~~customers. Increasing ~~Also,~~consolidation in if the ~~vendors~~cable weindustry ~~use~~and ~~for~~the ~~these services~~repeal ~~are~~of ~~not~~certain ~~financially~~ownership ~~viable~~rules ~~over time, we~~ may ~~experience disruption of~~provide ~~service~~ additional ~~and~~benefits ~~incur costs~~ to ~~find~~certain ~~alternative~~of ~~vendors.~~our ~~In addition~~competitors, ifeither itthrough isaccess to ~~determined~~ financing, ~~that~~resources, ~~the product~~ or ~~service~~efficiencies ~~being~~of ~~utilized infringes on the~~ scale.

36Our principal competitors for video services throughout our territory are direct broadcast satellite operators (“DBS”). The two largest DBS providers are The DIRECTV Group, Inc. and Echostar Communications, Inc. Competition from DBS, including intensive marketing efforts with aggressive pricing and exclusive programming has had an adverse impact on our ability to retain customers. DBS has grown rapidly over the last several years. The cable industry, including us, has lost a significant number of video customers to DBS competition, and we face serious challenges in this area in the future. In some areas, DBS operators have entered into co-marketing arrangements with other of our competitors to offer service bundles combining video services provided by the DBS operator and digital subscriber line Internet services (“DSL”) along with traditional telephone service offered by the telephone companies. These service bundles substantially resemble our bundles. We believe that competition from DBS service providers may present greater challenges in areas of lower population density, and that our systems service a higher concentration of such areas than those of certain other major cable service providers.

~~Table~~Local telephone companies and electric utilities can offer video and other services in competition with us and they increasingly may do so in the future. Two major local telephone companies, AT&T and Verizon, have both announced that they are making upgrades of ~~Contents~~their networks. Some upgraded portions of these networks are or will be capable of carrying two-way video services that are comparable to ours, high-speed data services that operate at speeds as high or higher than those we make available to customers in these areas, and digital voice services that are similar to ours. In addition, these companies continue to offer their traditional telephone services as well as bundles that include wireless voice services provided by affiliated companies. Based on internal estimates, we believe that AT&T’s and Verizon’s upgrades have been completed in systems representing approximately 6% to 7% of our homes passed as of June 30, 2007, an increase from an estimated 2% at March 31, 2007. Additional upgrades in markets in which we operate are expected. In areas where they have launched video services, these parties are aggressively marketing video, voice and data bundles at entry level prices similar to those we use to market our bundles.

~~rights~~The existence of ~~others~~more than one cable system operating in the same territory is referred to as an overbuild. Overbuilds could adversely affect our growth, wefinancial ~~may~~condition, beand ~~sued~~results of operations, by creating or increasing becompetition. Based ~~precluded~~on ~~from~~internal ~~using~~estimates, ~~the~~as ~~technology.~~of June 30, 2007, we are aware of traditional overbuild situations impacting approximately 8% of our estimated homes passed, and potential traditional overbuild situations in areas servicing approximately an additional 1% of our estimated homes passed. Additional overbuild situations may occur in other systems.

~~Increasing~~With respect ~~Programming Costs. Programming has been, and is expected~~ to ~~continue to be,~~ our ~~largest~~Internet ~~operating~~access ~~expense item. In recent years~~services, ~~the~~we ~~cable~~face ~~industry has experienced a rapid escalation in the cost of programming~~competition, ~~particularly~~including ~~sports~~ intensive ~~programming.~~marketing ~~This~~efforts ~~escalation~~and ~~may~~aggressive ~~continue~~pricing, ~~and~~from wetelephone ~~may not be able to~~companies ~~pass~~ and other ~~programming~~providers ~~cost~~of ~~increases on to our customers~~DSL. DSL ~~The~~service ~~inability~~is tocompetitive ~~fully pass~~with ~~these programming cost increases on to our customers would have an adverse~~high-speed ~~impact~~ Internet onservice ~~our~~over ~~cash~~cable ~~flow and operating margins~~systems. In ~~As measured by programming costs~~addition, ~~and~~DBS ~~excluding~~providers ~~premium services (significantly all of which were~~have ~~renegotiated~~ entered ~~and~~into ~~renewed~~joint inmarketing ~~2003),~~arrangements aswith ofInternet ~~June 30,~~access ~~2004,~~providers ~~approximately 36% of our current programming contracts have expired or are scheduled~~ to ~~expire by~~ ~~the~~ offer ~~end~~bundled ofvideo ~~2004,~~ and ~~approximately~~Internet ~~another~~service, ~~12%~~which bycompetes ~~the~~with ~~end~~our ~~of 2005.~~

Notes Price Volatility. The market price of our publicly traded notes has been and is likely to continue to be highly volatile. We expect that the price of our securities may fluctuate in response to various factors, including the factors described throughout this section and various other factors, which may be beyond our control. These factors beyond our control could include: financial forecasts by securities analysts; new conditions or trends in the cable or telecommunications industry; general economic and market conditions and specifically, conditions related to the cable or telecommunications industry; any further downgrade of our debt ratings; announcement of the development of improved or competitive technologies; the use of new products or promotions by us or our competitors; changes in accounting rules; and new regulatory legislation adopted in the United States. 30

~~In addition, the securities market in~~ability ~~general,~~ to ~~and~~provide ~~the~~bundled ~~market~~services ~~for cable television securities in particular, have experienced significant price fluctuations. Volatility in the market price for companies may often be unrelated or disproportionate~~ to ~~the~~our ~~operating performance of those companies~~customers. Moreover, ~~These~~as ~~broad~~we ~~market and industry factors may~~expand ~~seriously harm the market price of~~ our ~~notes,~~telephone ~~regardless of our operating performance. In the past~~offerings, ~~securities~~we ~~litigation~~will ~~has~~face ~~often~~considerable ~~commenced~~competition ~~following periods~~from ~~of volatility in the market price of a company’s securities, and~~established ~~several~~ telephone ~~purported~~companies ~~class action lawsuits were filed against Charter in 2001~~ and ~~2002,~~ ~~following~~other ~~a decline in its stock price~~carriers.

~~Economic~~In order to ~~Slowdown;~~attract ~~Global Conflict.~~new Itcustomers, isfrom ~~difficult~~time to ~~assess~~time ~~the~~we ~~impact~~make ~~that~~promotional ~~the general economic~~offers, ~~slowdown~~ including ~~and~~offers ~~global~~of ~~conflict~~temporarily ~~will~~reduced ~~have~~price onor ~~future~~free ~~operations~~service. These promotional ~~However,~~programs ~~the economic~~result ~~slowdown~~in ~~has~~significant ~~resulted~~advertising, programming and operating ~~could~~expenses, ~~continue~~and toalso ~~result~~require inus ~~reduced~~to ~~spending by~~make ~~customers~~capital ~~and~~expenditures ~~advertisers,~~to ~~which~~acquire customer ~~could~~premise ~~reduce~~equipment. Customers ~~our~~who ~~revenues,~~subscribe ~~and~~to ~~also~~our ~~could~~services ~~affect~~ as ~~our~~a ~~ability~~result toof ~~collect~~these ~~accounts~~offerings ~~receivable~~may ~~and~~not ~~maintain~~remain customers. Iffor any significant we period ~~experience~~of ~~reduced~~time ~~operating~~following ~~revenues,~~the itend ~~could~~of ~~negatively~~the ~~affect~~promotional ~~our ability~~period. A failure to ~~make~~retain ~~expected~~existing ~~capital~~customers ~~expenditures~~ and ~~could~~customers ~~also~~added ~~result~~through inpromotional ~~our~~offerings ~~inability~~ or to ~~meet~~collect ~~our~~the ~~obligations~~amounts ~~under~~they ~~our~~owe ~~financing~~us ~~agreements. These developments~~ could ~~also~~ have a ~~negative~~material ~~impact~~adverse effect on our ~~financing~~business and ~~variable interest~~financial ~~rate agreements through disruptions in the market or negative market conditions~~results.

~~Long-Term Indebtedness — Change of Control Payments. We and our parent~~Mergers, ~~companies~~ joint ~~may~~ventures, ~~not have the ability to raise the funds necessary to fulfill the obligations under our~~ and ~~our~~alliances ~~parent~~among ~~companies’~~franchised, ~~notes~~wireless, ~~and~~or ~~our~~private ~~credit facilities~~cable ~~following a change of control. Under the indentures governing our parent companies’ notes~~ operators, ~~upon~~DBS ~~the occurrence of specified change of control events~~providers, ~~including~~ ~~certain~~local ~~specified~~exchange ~~dispositions of stock by Mr. Allen~~carriers, ~~each~~and ~~such issuer is required to offer to repurchase all of its outstanding notes. However~~others, ~~our parent companies~~ may ~~not have sufficient funds at the time of the~~provide ~~change~~ additional ofbenefits ~~control event~~ to ~~make~~some ~~the required repurchase~~ of ~~the~~our ~~applicable notes~~competitors, ~~and~~either ~~all~~through ofaccess ~~the note issuers are limited in their ability~~ to ~~make~~ ~~distributions~~ financing, ~~to their respective parent companies to fund any required repurchase. In addition~~resources, aor ~~change~~efficiencies of ~~control~~scale, ~~under~~or ~~our credit facilities and~~ the ~~indentures~~ability ~~governing our notes would require the repayment of borrowings under those credit facilities and indentures. These credit facilities and notes would have~~ to ~~be repaid by CCH II’s subsidiaries before assets could be~~provide ~~available~~ multiple toservices ~~CCH II or its parent companies to repurchase CCH II’s and its parents’ notes. Any failure to make or complete a change of control offer would place the applicable issuer or borrower~~ in ~~default~~direct ~~under~~competition ~~its~~with ~~notes or credit facilities, which could in turn result in a default under its and its parent companies indentures and other instruments of indebtedness~~us.

~~Regulation~~In addition to the various competitive factors discussed above, our business is subject to risks relating to increasing competition for the leisure and entertainment ~~Legislation~~time of consumers. ~~Cable~~Our ~~system~~business ~~operations~~competes ~~are~~with ~~extensively~~all ~~regulated~~other atsources of entertainment ~~the~~and information delivery, including broadcast television, movies, ~~federal~~ live events, ~~state~~radio broadcasts, home video products, console games, print media, and ~~local~~the ~~level~~Internet. Technological advancements, ~~including~~such ~~rate~~as ~~regulation~~video-on-demand, ofnew video ~~basic~~formats, ~~service~~and Internet streaming and downloading, have increased the ~~equipment~~ number of entertainment and ~~municipal~~information ~~approval~~delivery ofchoices ~~franchise~~available ~~agreements~~to consumers, and intensified ~~their~~the ~~terms,~~challenges ~~such~~posed by audience fragmentation. The increasing as number ~~franchise~~of ~~requirements~~choices available to ~~upgrade~~audiences ~~cable~~could ~~plant~~negatively impact not only consumer demand for our products and ~~meet~~services, ~~specified~~but ~~customer~~also advertisers’ willingness ~~service~~ to ~~standards~~purchase advertising from us. If we do not respond appropriately to further increases in the leisure and entertainment choices available to consumers, our competitive position could deteriorate, and our financial results could suffer.

37We cannot assure you that our cable systems will allow us to compete effectively. Additionally, as we expand our offerings to include other telecommunications services, and to introduce new and enhanced services, we will be subject to competition from other providers of the services we offer. We cannot predict the extent to which competition may affect our business and operations in the future.

~~Table~~Risks Related ofto ~~Contents~~Regulatory and Legislative Matters

~~Additional~~Our cable ~~legislation~~system ~~and~~franchises ~~regulation~~are ~~is always possible~~non-exclusive. ~~For example~~Accordingly, ~~there~~local franchising ~~has~~ authorities ~~been~~can ~~considerable~~grant ~~legislative~~additional ~~interest~~franchises ~~recently~~and increate ~~requiring~~competition ~~cable~~in market ~~operators~~ areas towhere ~~offer~~none ~~historically~~existed ~~bundled~~previously, ~~programming~~resulting ~~services~~in onoverbuilds, anwhich àcould adversely laaffect ~~carte basis~~results of operations.

~~Cable~~Our cable system ~~operators~~franchises ~~also~~are ~~face~~non-exclusive. Consequently, ~~significant~~local ~~regulation of their channel carriage.~~franchising ~~They~~ authorities ~~currently~~ can begrant ~~required~~additional franchises to ~~devote~~competitors ~~significant~~in ~~capacity to~~ the ~~carriage~~same of geographic ~~programming~~area ~~that~~or ~~they~~operate ~~would~~their ~~not~~own ~~carry~~cable ~~voluntarily~~systems. In addition, ~~including~~ certain ~~local~~ ~~broadcast~~ telephone ~~signals,~~companies ~~local~~are ~~public,~~seeking ~~educational~~authority ~~and~~to ~~government~~operate ~~access programming, and unaffiliated commercial leased access programming. This carriage burden could increase~~ in ~~the~~communities ~~future, particularly if the FCC were to require cable~~without ~~systems~~ first toobtaining ~~carry~~a ~~both the analog and digital versions of~~ local ~~broadcast signals~~franchise. As ora ~~multiple~~result, ~~channels~~competing ~~added~~operators ~~by digital broadcasters. The FCC is~~may ~~currently~~ build ~~conducting~~systems ain ~~proceeding~~areas in which itwe ishold ~~considering this channel usage possibility, although it previously issued a tentative decision against such dual carriage~~franchises. In ~~addition~~some cases, ~~the carriage of new high definition broadcast and~~municipal ~~satellite~~ utilities ~~programming services over the next few years~~ may ~~consume~~legally ~~significant amounts~~compete ofwith ~~system~~us ~~capacity~~ without ~~contributing~~obtaining toa ~~proportionate~~franchise ~~increases~~from inthe ~~system~~ local ~~revenue~~franchising authority.

~~There~~Legislative proposals ishave ~~also~~been ~~uncertainty~~introduced ~~whether~~in ~~local~~many ~~franchising authorities,~~ state ~~regulators,~~legislatures ~~the~~that ~~FCC,~~would orgreatly streamline ~~the~~cable Ufranchising.S. This ~~Congress~~legislation ~~will~~is ~~impose obligations~~intended onto ~~cable~~facilitate entry ~~operators~~by tonew ~~provide~~competitors, ~~unaffiliated~~particularly ~~Internet~~local ~~service~~telephone companies. Such ~~providers~~ legislation ~~with~~has ~~regulated~~passed ~~access~~in tonumerous ~~cable~~states, ~~plant.~~including Ifstates ~~they~~where ~~were~~we tohave significant dooperations. Although ~~so,~~most ~~and~~of ~~the~~these states have provided some ~~obligations~~ regulatory ~~were~~relief ~~found~~for toincumbent becable ~~lawful~~operators, itsome ~~could~~of ~~complicate~~these ~~our~~proposals ~~operations in~~are ~~general,~~ viewed ~~and~~as ~~our~~being ~~Internet~~more ~~operations~~favorable into ~~particular,~~new ~~from~~entrants due to a ~~technical~~number ~~and~~of factors, ~~marketing~~ including ~~standpoint.~~efforts ~~These~~to ~~open~~withhold ~~access~~streamlined ~~obligations~~cable ~~could~~franchising ~~adversely~~from ~~impact our~~incumbents ~~profitability~~ until ~~and~~after ~~discourage~~the ~~system~~expiration ~~upgrades~~of ~~and~~their ~~the~~existing ~~introduction~~franchises, ofand ~~new~~the potential ~~products~~ for new ~~and~~entrants ~~services.~~to ~~The~~serve ~~United~~only ~~States~~higher-income ~~Court~~areas of ~~Appeals~~a ~~for~~particular ~~the Ninth~~community. ~~Circuit~~ To ~~recently~~the ~~vacated~~extent inwe ~~part~~are annot ~~FCC~~able ~~ruling~~to ~~defining~~avail ~~cable~~ourselves ~~modem~~of ~~service~~this asstreamlined an franchising ~~“information~~process, ~~service”~~we ~~and~~may ~~remanded~~continue ~~for~~to ~~further~~be ~~proceedings.~~subject ~~The~~to ~~Ninth~~more onerous franchise ~~Circuit~~ requirements ~~held~~at ~~that~~the ~~cable~~local ~~modem~~level ~~service~~than isnew ~~not~~entrants. ~~“cable~~In ~~service”~~March ~~but~~2007, isthe ~~part~~FCC ~~“telecommunications~~ released ~~service”~~a ~~and~~ruling ~~part~~designed ~~“information~~to ~~service.”~~streamline ~~The~~competitive ~~decision will~~cable ~~likely~~ franchising. Among beother ~~appealed~~things, ~~but~~the itFCC ~~may~~prohibited ~~possibly~~local ~~lead~~franchising authorities tofrom ~~cable~~imposing ~~operators~~“unreasonable” ~~having~~build-out torequirements and established ~~contribute~~ a tomechanism ~~the~~whereby ~~federal~~competing ~~government’s~~providers ~~universal~~can ~~service~~secure ~~fund,~~“interim authority” to ~~open access~~offer ~~requirements,~~ cable ~~and~~service toif ~~other~~the ~~common~~local ~~carrier~~franchising ~~regulations.~~authority Ashas wenot ~~offer~~acted ~~other advanced~~on ~~services~~a ~~over~~franchise application ~~our~~within ~~cable~~90 ~~system,~~days we(in ~~are~~the ~~likely~~case toof ~~face~~competitors ~~additional~~with ~~calls~~existing right ~~for~~ of way ~~regulation~~authority) ofor ~~our~~180 ~~capacity~~days ~~and~~(in ~~operation.~~the ~~These~~case ~~regulations,~~of ifcompetitors ~~adopted,~~without existing right ~~could~~ of way ~~adversely~~authority). Local ~~affect~~regulators ~~our~~have ~~operations.~~appealed the FCC’s ruling.

~~CONTINGENCIES~~ 31

~~Securities Class Actions and Derivative Suits Against Charter. Fourteen~~We ~~putative~~ may ~~federal~~be ~~class~~required ~~action~~to ~~lawsuits~~provide ~~(the~~access ~~“Federal~~to ~~Class Actions”)~~our ~~have~~network ~~been filed~~to ~~against~~other ~~Charter~~Internet ~~and certain of its former and present officers and~~service ~~directors in various jurisdictions allegedly on behalf of all purchasers of Charter’s securities during the period from either November 8 or November 9~~ providers, ~~1999~~ ~~through~~which ~~July 17~~could orsignificantly ~~July 18,~~increase ~~2002.~~our ~~Unspecified~~competition ~~damages~~and ~~are sought by the~~adversely ~~plaintiffs.~~ affect Inour ~~general,~~ability ~~the lawsuits allege that Charter utilized misleading accounting practices and failed~~ to ~~disclose~~provide ~~these~~new ~~accounting~~products ~~practices~~ and~~/or~~ ~~issued false and misleading financial statements and press releases concerning Charter’s operations and prospects~~ services. ~~The Federal Class Actions were specifically and individually identified in public filings made by Charter prior to the date of this quarterly report.~~

InA number of ~~October 2002~~companies, ~~Charter~~including ~~filed~~independent aInternet ~~motion~~service ~~with~~providers, ~~the~~or ~~Judicial~~ISPs, ~~Panel on~~have ~~Multidistrict~~ requested ~~Litigation~~local (authorities and the ~~''Panel’’)~~FCC to ~~transfer~~require ~~the~~cable ~~Federal~~operators ~~Class Actions~~ to ~~the~~provide non-discriminatory ~~Eastern~~access ~~District~~to ofcable’s ~~Missouri.~~broadband ~~On March 12~~infrastructure, ~~2003,~~so ~~the~~that ~~Panel transferred~~these ~~the~~ companies ~~six~~may ~~Federal~~deliver ~~Class Actions~~Internet ~~not~~services ~~filed~~directly into ~~the~~customers ~~Eastern~~over ~~District of Missouri to~~cable ~~that~~ facilities. In ~~district~~a ~~for~~2005 ~~coordinated~~ruling, orcommonly ~~consolidated~~referred ~~pretrial~~to ~~proceedings~~as ~~with~~Brand X, the ~~eight~~ ~~Federal~~Supreme ~~Class Actions~~Court ~~already~~upheld ~~pending~~an ~~there.~~FCC ~~The~~decision ~~Panel’s~~making ~~transfer~~it ~~order assigned~~less ~~the~~likely ~~Federal~~that any nondiscriminatory ~~Class Actions~~“open toaccess” ~~Judge~~requirements ~~Charles~~(which A.are ~~Shaw.~~generally ~~By virtue of a~~associated ~~prior~~ with ~~court~~common ~~order,~~carrier ~~StoneRidge~~regulation ~~Investment~~of ~~Partners~~“telecommunications ~~LLC~~services”) ~~became~~will ~~lead~~be ~~plaintiff~~imposed ~~upon~~ on ~~entry of~~ the ~~Panel’s~~cable ~~transfer~~industry ~~order.~~by ~~StoneRidge~~local, ~~subsequently~~state ~~filed~~or ~~a Consolidated~~federal ~~Amended Complaint~~authorities. The Supreme Court ~~subsequently~~held ~~consolidated~~that the ~~Federal~~ ~~Class Actions~~FCC ~~into~~was acorrect ~~single~~in ~~consolidated~~classifying ~~action~~cable ~~(the ''Consolidated~~provided ~~Federal~~ Internet ~~Class Action’’)~~service ~~for~~as ~~pretrial~~an ~~purposes.~~“information ~~On June 19~~service,” ~~2003,~~rather ~~following~~than a “telecommunications ~~status~~ service.” Notwithstanding ~~and~~Brand ~~scheduling~~X, ~~conference~~there ~~with~~has ~~the~~been ~~parties,~~continued advocacy ~~the~~by ~~Court~~certain ~~issued~~Internet acontent ~~Case~~providers and consumer groups for new ~~Management~~ federal ~~Order~~laws ~~setting~~or ~~forth~~regulations ato ~~schedule~~adopt ~~for~~so-called ~~the~~“net ~~pretrial~~neutrality” ~~phase~~principles limiting the ability of ~~the Consolidated~~broadband ~~Federal~~network ~~Class Action.~~owners ~~Motions~~(like us) to ~~dismiss~~manage ~~the~~and ~~Consolidated Amended~~control ~~Complaint~~ their ~~were~~own ~~filed~~networks. The Onproposals ~~February 10~~might prevent network owners, ~~2004~~for example, infrom ~~response~~charging tobandwidth aintensive ~~joint~~content ~~motion~~providers, ~~made by~~such ~~StoneRidge~~as ~~and~~certain online ~~defendants~~gaming, ~~Charter~~music, ~~Vogel~~ and ~~Allen~~video service providers, ~~the~~an ~~Court~~additional ~~entered~~fee anto ensure ~~order~~ quality ~~providing,~~delivery ~~among~~of ~~other~~the ~~things,~~services ~~that:~~to ~~(1) the~~consumers. If ~~parties~~we ~~who~~were ~~filed~~required ~~such~~to ~~motion,~~ allocate ~~engage~~a inportion aof ~~mediation~~our ~~within~~bandwidth ~~ninety~~capacity ~~(90) days;~~to ~~and~~other ~~(2) all~~Internet ~~proceedings~~service in providers, ~~the~~or ~~Consolidated~~were ~~Federal~~prohibited ~~Class Actions~~from ~~were~~charging ~~stayed~~heavy ~~until~~bandwidth ~~May 10,~~intensive ~~2004. On~~services ~~May 11,~~ a fee ~~2004,~~for ~~the~~use ~~Court~~of ~~extended~~our ~~the~~networks, ~~stay~~we inbelieve ~~the~~that ~~Consolidated~~it ~~Federal~~could ~~Class~~impair our ability to ~~Action~~ use our ~~for~~bandwidth anin ~~additional~~ways ~~sixty~~that ~~(60) days.~~would Ongenerate ~~July 12,~~maximum ~~2004~~revenues. In April 2007, the ~~parties submitted~~FCC issued a ~~joint~~notice ~~motion~~of toinquiry ~~again~~regarding ~~extend~~ the ~~stay,~~marketing ~~this~~practices of broadband ~~time~~providers ~~until~~as ~~September 10,~~a ~~2004.~~precursor ~~The~~to ~~Court~~considering ~~granted~~the ~~that~~need ~~extension~~for onany ~~July 20,~~FCC regulation ~~2004~~of internet service providers.

38Changes in channel carriage regulations could impose significant additional costs on us.

~~Table~~Cable operators also face significant regulation of ~~Contents~~their channel carriage. We can be required to devote substantial capacity to the carriage of programming that we might not carry voluntarily, including certain local broadcast signals, local public, educational and government access programming, and unaffiliated commercial leased access programming. This carriage burden could increase in the future, particularly if we are required to carry both an analog and digital versions of local broadcast signals (dual carriage) or to carry multiple program streams included with a single digital broadcast transmission (multicast carriage). Additional government-mandated broadcast carriage obligations could disrupt existing programming commitments, interfere with our preferred use of limited channel capacity, and limit our ability to offer services that would maximize our revenue potential. The FCC recently initiated a new rulemaking to explore the cable industry’s carriage obligations once the broadcast industry transition from analog to digital transmission is completed in February 2009. The FCC is considering new carriage obligations in an effort to facilitate that transition that could increase the capacity cable operators must devote to the retransmission of broadcast signals.

~~On September 12, 2002, a shareholders derivative suit (the ''State Derivative~~Item ~~Action’’) was filed in the Circuit Court of the City of St~~ 6. ~~Louis, State of Missouri (the “Missouri State Court”), against Charter and its then current directors, as well as its former auditors~~ Exhibits. A substantively identical derivative action was later filed and consolidated into the State Derivative Action. The plaintiffs allege that the individual defendants breached their fiduciary duties by failing to establish and maintain adequate internal controls and procedures. Unspecified damages, allegedly on Charter’s behalf, are sought by the plaintiffs.

On March 12, 2004, an action substantively identical to the State Derivative Action was filed in the Missouri State Court, against Charter and certain of its current and former directors, as well as its former auditors. The ~~plaintiffs allege that the individual defendants breached their fiduciary~~ index ~~duties by failing~~ to ~~establish~~the ~~and~~exhibits ~~maintain~~begins ~~adequate internal controls and procedures. Unspecified damages, allegedly~~ on ~~Charter’s~~page ~~behalf,~~E-1 ~~are~~of ~~sought by plaintiffs. On July 14, 2004, the Court consolidated~~ this ~~case~~quarterly ~~with the State Derivative Action~~report.

Separately, on February 12, 2003, a shareholders derivative suit (the ''Federal Derivative Action’’), was filed against Charter and its then current directors in the United States District Court for the Eastern District of Missouri. The plaintiff alleges that the individual defendants breached their fiduciary duties and grossly mismanaged Charter by failing to establish and maintain adequate internal controls and procedures. Unspecified damages, allegedly on Charter’s behalf, are sought by the plaintiffs. 32

On August 5, 2004, Charter entered into Memoranda of Understanding setting forth agreements in principle regarding settlement of the consolidated Federal Class Action and the Federal Derivative Action (the “Actions”). In exchange for a release of all claims by plaintiffs against Charter and its former and present officers and directors named in the Actions, Charter will pay to the plaintiffs a combination of cash and equity collectively valued at $144 million, which will include the fees and expenses of plaintiffs’ counsel. Of this amount, $64 million will be paid in cash (by Charter’s insurance carriers) and the balance will be paid in shares of Charter Class A common stock having an aggregate value of $40 million and ten-year warrants to purchase shares of Charter Class A common stock having an aggregate warrant value of $40 million. The warrants would have an exercise price equal to 150% of the fair market value (as defined) of Charter Class A common stock as of the date of the entry of the order of final judgment approving the settlement. In addition, Charter expects to issue additional shares of its Class A common stock to its insurance carrier having an aggregate value of $5 million. As part of the settlements, Charter will also commit to a variety of corporate governance changes, internal practices and public disclosures, some of which have already been undertaken and none of which are inconsistent with measures Charter is taking in connection with the recent conclusion of the SEC investigation described below. The settlement of each of the lawsuits is conditioned upon, among other things, the parties’ approval and execution of definitive settlement agreements with respect to the matters described above, judicial approval of the settlements by the Court following notice to the class, and dismissal of the consolidated derivative actions now pending in Missouri State Court, which are related to the Federal Derivative Action. SIGNATURES

~~In addition~~ Pursuant to the ~~Federal~~requirements ~~Class Actions,~~of the ~~State~~Securities ~~Derivative~~Exchange ~~Action,~~Act ~~the~~of ~~new Missouri~~1934, ~~State~~as ~~Court derivative action and the Federal Derivative Action~~amended, ~~six~~CCH ~~putative class action lawsuits were filed against Charter and certain of its~~ II, ~~then~~ LLC ~~current directors~~ and ~~officers~~CCH inII ~~the~~Capital ~~Court of Chancery of the State of Delaware (the ''Delaware Class Actions’’)~~Corp. The lawsuits were filed after the filing of a Schedule 13D amendment by Mr. Allen indicating that he was exploring a number of possible alternatives with respect to restructuring or expanding his ownership interest in Charter. Charter believes that the plaintiffs speculated that Mr. Allen might have ~~been~~duly ~~contemplating~~caused anthis ~~unfair bid~~quarterly ~~for~~report ~~shares of Charter or some other sort of going private transaction on unfair terms and generally alleged that the defendants breached their fiduciary duties by participating in or acquiescing~~ to ~~such~~be ~~a transaction. The lawsuits,~~signed ~~which are substantively identical, were brought~~ on its behalf ~~of Charter’s securities holders as of July 29, 2002, and sought unspecified damages and possible injunctive relief. However, Charter has informed us that no such transaction~~ by ~~Mr. Allen~~the ~~has been presented. On April 30~~undersigned, ~~2004,~~thereunto ~~orders~~duly ~~of dismissal without prejudice were entered in each of the Delaware Class Actions~~authorized.

~~Government Investigations. In August 2002, Charter became aware of a grand jury~~ CCH ~~investigation being conducted by the U.S. Attorney’s Office for the Eastern District of Missouri into certain of its accounting and reporting practices~~ II, ~~focusing on how Charter reported customer numbers, and its reporting of amounts received from digital~~ LLC

39 Registrant

~~Table~~ By: CHARTER COMMUNICATIONS ofINC., ~~Contents~~Sole Manager

set-top terminal suppliers for advertising. The U.S. Attorney’s Office has publicly stated that Charter is not a target of the investigation. Charter has also been advised by the U. S. Attorney’s office that no member of its board of directors, including its Chief Executive Officer, is a target of the investigation. On July 24, 2003, a federal grand jury charged four former officers of Charter with conspiracy and mail and wire fraud, alleging improper accounting and reporting practices focusing on revenue from digital set-top terminal suppliers and inflated customer account numbers. On July 25, 2003, one of the former officers who was indicted entered a guilty plea. Charter has advised us that it is fully cooperating with the investigation.

Dated: August 13, 2007	By: /s/ Kevin D. Howard
	Name:	Kevin D. Howard
	Title:	Vice President and
		Chief Accounting Officer

~~On November 4, 2002, Charter received an informal, non-public inquiry from the~~ CCH ~~staff~~ II ~~of the SEC. The SEC issued a formal order of investigation dated January~~CAPITAL ~~23, 2003, and subsequently served document and testimony subpoenas on Charter and a number of its former employees~~ CORP. The investigation and subpoenas generally concerned Charter’s prior reports with respect to its determination of the number of customers, and various of its accounting policies and practices including its capitalization of certain expenses and dealings with certain vendors, including programmers and digital set-top terminal suppliers. On July 27, 2004, the SEC and Charter reached a final agreement to settle the investigation. In the Settlement Agreement and Cease and Desist Order, Charter agreed to entry of an administrative order prohibiting any future violations of United States securities laws and requiring certain other remedial internal practices and public disclosures. Charter neither admitted nor denied any wrongdoing, and the SEC assessed no fine against Charter.

Indemnification. Charter is generally required to indemnify each of the named individual defendants in connection with the matters described above pursuant to the terms of its bylaws and (where applicable) such individual defendants’ employment agreements. In accordance with these documents, in connection with the pending grand jury investigation, the now settled SEC investigation and the above described lawsuits, some of its current and former directors and Charter’s current and former officers have been advanced certain costs and expenses incurred in connection with their defense. Registrant

Insurance. Charter has liability insurance coverage that it believes is available for the matters described above, where applicable, subject to the terms, conditions and limitations of the respective policies. There is no assurance that current coverage will be sufficient for all claims described above or any future claims that may arise.

Dated: August 13, 2007	By: /s/ Kevin D. Howard
	Name:	Kevin D. Howard
	Title:	Vice President and
		Chief Accounting Officer

Other Litigation. In October 2001, two customers, Nikki Nicholls and Geraldine M. Barber, filed a class action suit against Charter Holdco in South Carolina Court of Common Pleas (''South Carolina Class Action’’), purportedly on behalf of a class of Charter Holdco’s customers, alleging that Charter Holdco improperly charged them a wire maintenance fee without request or permission. They also claimed that Charter Holdco improperly required them to rent analog and/or digital set-top terminals even though their television sets were ''cable ready.’’ A substantively identical case was filed in the Superior Court of Athens – Clarke County, Georgia by Emma S. Tobar on March 26, 2002 (the “Georgia Class Action”), alleging a nationwide class for these claims. Charter Holdco removed the South Carolina Class Action to the United States District Court for the District of South Carolina in November 2001, and moved to dismiss the suit in December 2001. The federal judge remanded the case to the South Carolina Court of Common Pleas in August 2002 without ruling on the motion to dismiss. The plaintiffs subsequently moved for a default judgment, arguing that upon return to state court, Charter Holdco should have but did not file a new motion to dismiss. The state court judge granted the plaintiff’s motion over Charter Holdco’s objection in September 2002. Charter Holdco immediately appealed that decision to the South Carolina Court of Appeals and the South Carolina Supreme Court, but those courts have ruled that until a final judgment is entered against Charter Holdco, they lack jurisdiction to hear the appeal. -1

~~In January 2003, the Court of Common Pleas granted the plaintiffs’ motion for~~EXHIBIT class certification. In October and November 2003, Charter Holdco filed motions (a) asking that court to set aside the default judgment, and (b) seeking dismissal of plaintiffs’ suit for failure to state a claim. In January 2004, the Court of Common Pleas granted in part and denied in part Charter Holdco’s motion to dismiss for failure to state a claim. It also took under advisement Charter Holdco’s motion to set aside the default judgment. In April 2004, the parties to both the Georgia and South Carolina Class Actions participated in a mediation. The mediator made a proposal to the parties to settle the lawsuits. In May 2004, the parties accepted the mediator’s proposal and reached a tentative settlement, subject to final documentation and court approval. As a result of the tentative settlement, we recorded a special charge of $9 million in our consolidated statement of operations in the first quarter of 2004. On July 8, 2004, the Superior Court INDEX

Exhibit Number		Description of Document

3.1		Certificate of Formation of CCH II, LLC (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the registration statement on Form S-4 of CCH II, LLC and CCH II Capital Corporation filed on March 24, 2004 (File No. 333-111423)).
3.2		Amended and Restated Limited Liability Company Agreement of CCH II, LLC, dated as of July 10, 2003 (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the registration statement on Form S-4 of CCH II, LLC and CCH II Capital Corporation filed on March 24, 2004 (File No. 333-111423)).
3.3		Certificate of Incorporation of CCH II Capital Corporation (incorporated by reference to Exhibit 3.3 to Amendment No. 1 to the registration statement on Form S-4 of CCH II, LLC and CCH II Capital Corporation filed on March 24, 2004 (File No. 333-111423)).
3.4		Amended and Reinstated By-laws of CCH II Capital Corporation (incorporated by reference to Exhibit 3.4 to Amendment No. 1 to the registration statement on Form S-4 of CCH II, LLC and CCH II Capital Corporation filed on March 24, 2004 (File No. 333-111423)).
12.1*		Computation of Ratio of Earnings to Fixed Charges
31.1*		Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of 1934.
31.2*		Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of 1934.
32.1*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
32.2*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).

~~Table~~* Document ~~of Contents~~attached

of Athens – Clarke County, Georgia granted a motion to amend the Tobar complaint to add Nicholls, Barber and April Jones as plaintiffs in the Georgia Class Action and to add any potential class members in South Carolina. The Court also granted preliminary approval of the proposed settlement on that date. A hearing to consider final approval of the settlement is scheduled to occur on November 10, 2004. On August 2, 2004, the parties submitted a joint request to the South Carolina Court of Common Pleas to stay the South Carolina Class Action pending final approval of the settlement. Charter is awaiting a ruling on that request. E-1

Outcome. Charter is unable to predict the outcome of the lawsuits and the government investigation described above. An unfavorable outcome in any of these lawsuits or the government investigation could have a material adverse effect on our consolidated financial condition, results of operations or our liquidity.

In addition to the matters set forth above, Charter is also party to other lawsuits and claims that arose in the ordinary course of conducting its business. In the opinion of management, after taking into account recorded liabilities, the outcome of these other lawsuits and claims are not expected to have a material adverse effect on our consolidated financial condition, results of operations or our liquidity.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures with respect to the information generated for use in this quarterly report. The evaluation was based in part upon reports and affidavits provided by a number of executives. Based upon, and as of the date of that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to provide reasonable assurances that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

There was no change in our internal control over financial reporting during the quarter ended June 30, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon the above evaluation, our management believes that its controls provide such reasonable assurances.

PART II. OTHER INFORMATION.

Item 1. Legal Proceedings.

In addition to those matters disclosed under the heading “Contingencies” of Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, we are involved from time to time in routine legal matters and other claims incidental to our business. We believe that the resolution of such routine matters and other incidental claims, taking into account established reserves and insurance, will not have a material adverse impact on our consolidated financial position or results of operations.

Item 6. Exhibits and Reports on Form 8-K.

(a) EXHIBITS

The index to the exhibits begins on page 44 of this quarterly report.

(b) REPORTS ON FORM 8-K

On June 14, 2004, the registrants furnished a current report on Form 8-K to announce an extension until 5:00 p.m. Eastern Time, on June 17, 2004 of their offer to exchange their outstanding $1,601,375,000 of 10.25% Senior Notes due 2010 for $1,601,375,000 of 10.25% Senior Notes due 2010.

On June 18, 2004, the registrants furnished a current report on Form 8-K to announce an extension until 5:00 P.M. Eastern Time on June 25, 2004 of their offer to exchange their outstanding $1,601,375,000 of 10.25% Senior Notes due 2010 for $1,601,375,000 of 10.25% Senior Notes due 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, CCH II, LLC and CCH II Capital Corp. have duly caused this quarterly report to be signed on their behalf by the undersigned, thereunto duly authorized.

CCH II, LLC Registrant By: CHARTER COMMUNICATIONS, INC., Sole Manager

Dated: August 13, 2004	By:	/s/ MICHAEL P. HUSEBY
		Name:	Michael P. Huseby
		Title:	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

By: /s/ Paul E. Martin Name: Paul E. Martin Title: Senior Vice President and Corporate Controller (Principal Accounting Officer)

CCH II CAPITAL CORP. Registrant

Dated: August 13, 2004	By:	/s/ MICHAEL P. HUSEBY
		Name:	Michael P. Huseby
		Title:	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

By: /s/ Paul E. Martin Name: Paul E. Martin Title: Senior Vice President and Corporate Controller (Principal Accounting Officer)

EXHIBIT INDEX

Exhibit Number		Description of Document
10.1		Amended and Restated Credit Agreement among Charter Communications Operating, LLC, CCO Holdings, LLC and certain lenders and agents named therein dated April 27, 2004 (Incorporated by reference to Exhibit 10.25 to Amendment No. 2 to the registration statement on Form S-4 of CCH II, LLC filed on May 5, 2004 (File No. 333-111423)).
10.2		Indenture relating to the 8% senior second lien notes due 2012 and 8 3/8% senior second lien notes due 2014, dated as of April 27, 2004, by and among Charter Communications Operating, LLC, Charter Communications Operating Capital Corp. and Wells Fargo Bank, N.A. as trustee (Incorporated by reference to Exhibit 10.32 to Amendment No. 2 to the registration statement on Form S-4 of CCH II, LLC filed on May 5, 2004 (File No. 333-111423)).
10.3		Purchase Agreement, da

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