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 MARCH 31, 2003

                                       OR

      | |   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: 000-27927

                          [CHARTER COMMUNICATIONS LOGO]

                          CHARTER COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)

                DELAWARE                                 43-1857213
    (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                 Identification Number)

                             12405 POWERSCOURT DRIVE
                            ST. LOUIS, MISSOURI 63131
           (Address of principal executive offices including zip code)

                                 (314) 965-0555
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file reports), and (2) has been subject to such filing requirements
for the past 90 days. YES |X| NO | |

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES |X| NO | |

      Number of shares of Class A common stock outstanding as of May 12, 2003:
      294,527,595

      Number of shares of Class B common stock outstanding as of May 12, 2003:
      50,000

                          [CHARTER COMMUNICATIONS LOGO]

                          CHARTER COMMUNICATIONS, INC.
        QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2003

                                TABLE OF CONTENTS



                                                                                                             PAGE
                                                                                                             ----
                                                                                                          
PART I. FINANCIAL INFORMATION

      Item 1.    Independent Accountant's Review Report.................................................        4
                 Financial Statements - Charter Communications, Inc. and Subsidiaries
                 Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002.................        5
                 Consolidated Statements of Operations for the three months ended March 31, 2003........        6
                 Consolidated Statements of Cash Flows for the three months ended March 31, 2003........        7
                 Notes to Consolidated Financial Statements.............................................        8

      Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations..       21

      Item 3.    Quantitative and Qualitative Disclosures About Market Risk.............................       40

      Item 4.    Controls and Procedures................................................................       40

PART II. OTHER INFORMATION

      Item 1.    Legal Proceedings......................................................................       42

      Item 2.    Changes in Securities and Use of Proceeds..............................................       45

      Item 3.    Defaults Upon Senior Securities........................................................       45

      Item 6.    Exhibits and Reports on Form 8-K.......................................................       45

SIGNATURES .............................................................................................       47

CERTIFICATIONS .......................................................................................         48


           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:

This Quarterly Report includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended, regarding, among other things, our plans,
strategies and prospects, both business and financial, including, without
limitation, the forward-looking statements set forth in the "Liquidity and
Capital Resources" section 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 United States Securities and Exchange Commission, or the SEC,
and include, but are not limited to:

      -     our ability to sustain and grow revenues and cash flows from
            operating activities by offering video and data services and to
            maintain a stable customer base, particularly in the face of
            increasingly aggressive competition from other service providers;

      -     our ability to comply with all covenants in our credit facilities
            and indentures, any violation of which would result in a violation
            of the applicable facility or indenture and could trigger a default
            of other obligations under cross default provisions;

      -     availability of funds to meet interest payment obligations under our
            debt and to fund our operations and necessary capital expenditures,
            either through cash from operations, further borrowings or other
            sources;

      -     any adverse consequences arising out of the recent restatement of
            our financial statements;

      -     the results of the pending grand jury investigation by the United
            States Attorney's Office for the Eastern District of Missouri, the
            pending SEC investigation and the putative class action and
            derivative shareholders litigation against us;

      -     the cost and availability of funding to refinance the existing debt
            that becomes due commencing in 2005;

      -     our ability to achieve free cash flow;

      -     our ability to obtain programming at reasonable prices;

      -     general business conditions, economic uncertainty or slowdown and
            potential international conflict;

      -     the impact of any armed conflict, including loss of customers in
            areas with large numbers of military personnel; and

      -     the effects of governmental regulation on our business.

All forward-looking statements attributable to us or a person acting on our
behalf are expressly qualified in their entirety by this cautionary statement.
We are under no obligation to update any of the forward-looking statements after
the date of this Quarterly Report to conform these statements to actual results
or to changes in our expectations.


                                       3

                         PART I. FINANCIAL INFORMATION.
                          ITEM 1. FINANCIAL STATEMENTS.

                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT

The Board of Directors and Shareholders
Charter Communications, Inc.:

We have reviewed the accompanying interim consolidated balance sheet of Charter
Communications, Inc., and subsidiaries as of March 31, 2003, and the related
consolidated statements of operations and cash flows for the three-month period
ended March 31, 2003 and 2002. These interim consolidated financial statements
are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying interim consolidated financial statements referred
to above for them to be in conformity with accounting principles generally
accepted in the United States of America.

As discussed in Note 5 to the interim consolidated financial statements,
effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and other Intangible Assets."

As discussed in Note 16 to the interim consolidated financial statements,
effective January 1, 2003, the Company adopted Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure."


/s/ KPMG LLP

St. Louis, Missouri
May 14, 2003


                                       4

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                    (DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
                                    UNAUDITED



                                                                                     MARCH 31,       DECEMBER 31,
                                                                                       2003             2002 *
                                                                                     --------         --------
                                                                                               
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                                          $    446         $    321
  Accounts receivable, less allowance for doubtful accounts of
     $18 and $19, respectively                                                            233              259
  Receivables from related party                                                           --                8
  Prepaid expenses and other current assets                                                46               45
                                                                                     --------         --------
       Total current assets                                                               725              633
                                                                                     --------         --------

INVESTMENT IN CABLE PROPERTIES:
  Property, plant and equipment, net of accumulated
     depreciation of $2,998 and $2,634, respectively                                    7,408            7,679
  Franchises, net of accumulated amortization
     of $3,454 and $3,452, respectively                                                13,725           13,727
                                                                                     --------         --------
        Total investment in cable properties, net                                      21,133           21,406
                                                                                     --------         --------

OTHER ASSETS                                                                              337              345
                                                                                     --------         --------

        Total assets                                                                 $ 22,195         $ 22,384
                                                                                     ========         ========

                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
  Accounts payable and accrued expenses                                              $  1,253         $  1,405
                                                                                     --------         --------
        Total current liabilities                                                       1,253            1,405
                                                                                     --------         --------

LONG-TERM DEBT                                                                         18,961           18,671
                                                                                     --------         --------
DEFERRED MANAGEMENT FEES - RELATED PARTY                                                   14               14
                                                                                     --------         --------
OTHER LONG-TERM LIABILITIES                                                             1,181            1,177
                                                                                     --------         --------
MINORITY INTEREST                                                                         869            1,025
                                                                                     --------         --------
PREFERRED STOCK - REDEEMABLE; $.001 par value; 1 million
   shares authorized; 545,259 and 505,664 shares issued and outstanding,
   respectively                                                                            55               51
                                                                                     --------         --------

SHAREHOLDERS' EQUITY (DEFICIT):
  Class A Common stock; $.001 par value; 1.75 billion shares authorized;
      294,527,595 and 294,620,408 shares issued and outstanding, respectively              --               --
  Class B Common stock; $.001 par value; 750 million
      shares authorized; 50,000 shares issued and outstanding                              --               --
Preferred stock; $.001 par value; 250 million shares
       authorized; no non-redeemable shares issued and outstanding                         --               --
Additional paid-in capital                                                              4,697            4,697
Accumulated deficit                                                                    (4,791)          (4,609)
Accumulated other comprehensive loss                                                      (44)             (47)
                                                                                     --------         --------

      Total shareholders' equity (deficit)                                               (138)              41
                                                                                     --------         --------

      Total liabilities and shareholders' equity (deficit)                           $ 22,195         $ 22,384
                                                                                     ========         ========


      *     Agrees with the audited consolidated balance sheet included in the
            Company's Annual Report on Form 10-K for the year ended December 31,
            2002.

          See accompanying notes to consolidated financial statements.


                                       5

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
                                    UNAUDITED



                                                                                      THREE MONTHS ENDED MARCH 31,
                                                                                   -----------------------------------
                                                                                      2003                  2002
                                                                                   -------------         -------------
                                                                                                          (RESTATED)
                                                                                                   
REVENUES                                                                           $       1,178         $       1,074

COSTS AND EXPENSES:
  Operating (excluding depreciation and amortization and
       other items listed below)                                                             485                   426
  Selling, general and administrative                                                        235                   222
  Depreciation and amortization                                                              370                   326
  Option compensation expense, net                                                            --                     2
  Special charges, net                                                                         2                     1
                                                                                   -------------         -------------

                                                                                           1,092                   977
                                                                                   -------------         -------------

       Income from operations                                                                 86                    97

OTHER INCOME (EXPENSE):
  Interest expense, net                                                                     (390)                 (362)
  Other, net                                                                                   3                    31
                                                                                   -------------         -------------

                                                                                            (387)                 (331)
                                                                                   -------------         -------------

       Loss before minority interest, income taxes and cumulative effect of
         accounting change                                                                  (301)                 (234)

MINORITY INTEREST                                                                            160                   124
                                                                                   -------------         -------------

       Loss before income taxes and cumulative effect of accounting change                  (141)                 (110)

INCOME TAX EXPENSE                                                                           (40)                   --
                                                                                   -------------         -------------

      Loss before cumulative effect of accounting change                                    (181)                 (110)

CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX                                            --                  (206)
                                                                                   -------------         -------------

       Net loss                                                                             (181)                 (316)

       Dividends on preferred stock - redeemable                                              (1)                   (1)
                                                                                   -------------         -------------

       Net loss applicable to common stock                                         $        (182)        $        (317)
                                                                                   =============         =============

LOSS PER COMMON SHARE, basic and diluted                                           $       (0.62)        $       (1.08)
                                                                                   =============         =============

Weighted average common shares outstanding, basic and diluted                        294,466,137           294,394,939
                                                                                   =============         =============


          See accompanying notes to consolidated financial statements.


                                       6

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (DOLLARS IN MILLIONS)
                                    UNAUDITED



                                                                                          THREE MONTHS ENDED
                                                                                               MARCH 31,
                                                                                        ---------------------
                                                                                         2003            2002
                                                                                        -----         -------
                                                                                                     (RESTATED)
                                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                              $(181)        $  (316)
  Adjustments to reconcile net loss to net cash flows from operating activities:
    Minority interest                                                                    (160)           (124)
    Depreciation and amortization                                                         370             326
    Noncash interest expense                                                              106              94
    Gain on derivative instruments and hedging activities, net                            (14)            (33)
    Deferred income taxes                                                                  40              --
    Cumulative effect of accounting change                                                 --             206
    Other, net                                                                             11               4
  Changes in operating assets and liabilities, net of effects from acquisitions:
    Accounts receivable                                                                    26              64
    Prepaid expenses and other assets                                                      (3)             (3)
    Accounts payable and accrued expenses                                                 (41)           (114)
    Receivables from and payables to related party, including deferred
       management fees                                                                      8              (2)
                                                                                        -----         -------

       Net cash flows from operating activities                                           162             102
                                                                                        -----         -------

CASH FLOWS FROM INVESTMENT ACTIVITIES:
  Purchases of property, plant and equipment                                             (104)           (435)
  Change in accounts payable and accrued expenses related to capital                     (124)            (87)
       expenditures
  Payments for acquisitions, net of cash acquired                                          --             (78)
  Purchases of investments                                                                 (3)             (4)
                                                                                        -----         -------

       Net cash flows from investing activities                                          (231)           (604)
                                                                                        -----         -------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt                                                            346           1,868
  Repayments of long-term debt                                                           (152)         (1,311)
  Payments for debt issuance costs                                                         --             (40)
                                                                                        -----         -------

       Net cash flows from financing activities                                           194             517
                                                                                        -----         -------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 125              15
CASH AND CASH EQUIVALENTS, beginning of period                                            321               2
                                                                                        -----         -------

CASH AND CASH EQUIVALENTS, end of period                                                $ 446         $    17
                                                                                        =====         =======

CASH PAID FOR INTEREST                                                                  $ 160         $   144
                                                                                        =====         =======


          See accompanying notes to consolidated financial statements.


                                       7

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. ORGANIZATION

Charter Communications, Inc. (Charter) is a holding company whose primary asset
at March 31, 2003 is a 46.5% controlling common equity interest in Charter
Communications Holding Company, LLC (Charter Holdco), which, in turn, is the
sole owner of Charter Communications Holdings, LLC (Charter Holdings). Charter,
Charter Holdco, Charter Holdings and its subsidiaries are collectively referred
to herein as the "Company." The Company owns and operates cable systems that
provide a full range of video, data, telephony and other advanced broadband
services. The Company also provides commercial high-speed data, video, telephony
and Internet services as well as advertising sales and production services.

2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS

The accompanying 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. Accordingly, certain information and
footnote disclosures typically included in the Company's Annual Report on Form
10-K have been condensed or omitted for this Quarterly Report. The accompanying
consolidated financial statements are unaudited and are subject to review by
regulatory authorities. However, in the opinion of management, such 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.

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. 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 other
contingencies. Actual results could differ from those estimates.

Reclassifications

Certain 2002 amounts have been reclassified to conform with the 2003
presentation.

3. LIQUIDITY AND CAPITAL RESOURCES

The Company has incurred net losses of $181 million and $316 million for the
three months ended March 31, 2003 and 2002, respectively. The Company's net cash
flows from operating activities were $162 million and $102 million for the three
months ended March 31, 2003 and 2002, respectively. In addition, the Company has
historically required significant cash to fund capital expenditures.
Historically, the Company has funded capital requirements through cash flows
from operating activities, borrowings under the credit facilities of the
Company's subsidiaries, and by issuances of debt and equity securities. The mix
of funding sources changes from period to period, but for the three months ended
March 31, 2003, approximately 70% of the Company's capital funding requirements
were from cash flows from operating activities and approximately 30% was from
borrowings under the credit facilities of the Company's subsidiaries. For the
three months ended March 31, 2003, the Company increased its borrowings under
its subsidiaries' credit facilities by $194 million and increased cash on hand
by $125 million.

The Company expects that cash on hand, cash flows from operating activities and
the funds available under the bank facilities and borrowings under the Vulcan
Inc. commitment described below will be adequate to meet its 2003 cash needs.
However, the bank facilities are subject to certain restrictive covenants,
portions of which are subject to the operating results of the Company's
subsidiaries. The Company's 2003 operating plan anticipates maintaining
compliance with these covenants. If the Company's actual operating results do
not maintain compliance with these covenants, or if other events of
noncompliance occur, funding under the bank facilities may not be available and
defaults on some or potentially all debt obligations could occur. In addition,
no assurances can be given that the Company may not experience liquidity
problems because of adverse market conditions or other unfavorable events or if
the Company does not obtain sufficient additional financing on a


                                        8

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

timely basis. In that regard, effective April 14, 2003, the Company's subsidiary
entered into a commitment letter with Vulcan Inc., which is an affiliate of Paul
Allen. Pursuant to the letter, Vulcan Inc. agreed to lend, or cause an affiliate
to lend, initially to Charter Communications VII, LLC an aggregate amount of up
to $300 million, which amount includes a subfacility of up to $100 million for
the issuance of letters of credit, subject to negotiation and execution of
definitive documentation. The facility does not commit any party to provide
funding to the Company. Under certain circumstances, the Company could utilize
(or cause a subsidiary to utilize) the facility to provide funding to the
Company to the extent necessary to comply with leverage ratio covenants of its
subsidiary's credit facilities in future quarters. However, there can be no
assurance that the Company or its subsidiary will have the ability to do so or
will choose to do so.

The indentures governing the Charter Holdings notes permit Charter Holdings to
make distributions to Charter Holdco only if, at the time of distribution,
Charter Holdings can meet a leverage ratio of 8.75 to 1.0, there is no default
under the indentures and other specified tests are met. Charter Communications
Holdings did not meet that leverage ratio for the quarter ended March 31, 2003.
The indenture governing the Charter Holdings notes does not prohibit Charter
Holdings and its subsidiaries from making payments on its and their outstanding
unsubordinated intercompany debt to Charter Holdco, which had an aggregate
principal amount of approximately $52 million as of March 31, 2003. That amount
is only sufficient to enable Charter to make interest payments on its
convertible senior notes through December, 2003, and is not sufficient to enable
Charter to make interest payments beginning in April, 2004 or to repay all or
any portion of its convertible senior notes at maturity.

Accordingly, Charter will not be able to make interest payments beginning in
April, 2004, or principal payments at maturity in 2005 and 2006, with respect to
its convertible senior notes unless it can obtain additional financing or it
receives distributions or other payments from its subsidiaries.

The Company's long-term financing structure as of March 31, 2003 includes $8.0
billion of credit facility debt, $9.6 billion of high-yield debt and $1.4
billion of convertible subordinated debentures. Approximately $194 million of
this financing matures during 2003 and the Company expects to fund this through
availability under its credit facilities and cash on hand. Note 7 summarizes the
Company's current availability under its credit facilities and its long-term
debt.

4. RESTATEMENT OF CONSOLIDATED FINANCIAL RESULTS

As discussed in the Company's 2002 Form 10-K, the Company identified a series of
adjustments that have resulted in the restatement of previously announced
quarterly results for the first three quarters of fiscal 2002. In summary, the
adjustments are grouped into the following categories: (i) launch incentives
from programmers; (ii) customer incentives and inducements; (iii) capitalized
labor and overhead costs; (iv) customer acquisition costs; (v) rebuild and
upgrade of cable systems; (vi) deferred tax liabilities/franchise assets; and
(vii) other adjustments. These adjustments have been reflected in the
accompanying consolidated financial statements and reduced revenues for the
three months ended March 31, 2002 by $4 million. The Company's consolidated net
loss increased by $142 million for the three months ended March 31, 2002. In
addition, as a result of certain of these adjustments, the Company's statement
of cash flows for the three months ended March 31, 2002 has been restated. Cash
flows from operating activities for the three months ended March 31, 2002
increased by $56 million. The more significant categories of adjustments relate
to the following as outlined below.

Launch Incentives from Programmers. Amounts previously recognized as advertising
revenue in connection with the launch of new programming channels have been
deferred and recorded in other long-term liabilities in the year such launch
support was provided, and amortized as a reduction of programming costs based
upon the relevant contract term. These adjustments decreased revenue by $2
million for the three months ended March 31, 2002. The corresponding
amortization of such deferred amounts reduced programming expenses by $12
million for the three months ended March 31, 2002.


                                       9

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Customer Incentives and Inducements. Marketing inducements paid to encourage
potential customers to switch from satellite providers to Charter branded
services and enter into multi-period service agreements were previously deferred
and recorded as property, plant and equipment and recognized as depreciation and
amortization expense over the life of customer contracts. These amounts have
been restated as a reduction of revenues of $2 million for the three months
ended March 31, 2002. Substantially all of these amounts are offset by reduced
depreciation and amortization expense.

Capitalized Labor and Overhead Costs. Certain elements of labor costs and
related overhead allocations previously capitalized as property, plant and
equipment as part of the Company's rebuild activities, customer installations
and new service introductions have been expensed in the period incurred. Such
adjustments increased operating expenses by $1 million for the three months
ended March 31, 2002.

Customer Acquisition Costs. Certain customer acquisition campaigns were
conducted through third-party contractors in portions of 2002. The costs of
these campaigns were originally deferred and recorded as other assets and
recognized as amortization expense over the average customer contract life.
These amounts have been reported as marketing expense in the period incurred and
totaled $9 million for the three months ended March 31, 2002. The Company
discontinued this program in the third quarter of 2002 as contracts for
third-party vendors expired. Substantially all of these amounts are offset by
reduced depreciation and amortization expense.

Rebuild and Upgrade of Cable Systems. In 2000, the Company initiated a
three-year program to replace and upgrade a substantial portion of its network.
In connection with this plan, the Company assessed the carrying value of, and
the associated depreciable lives of, various assets to be replaced. It was
determined that $1 billion of cable distribution system assets, originally
treated as subject to replacement, were not part of the original replacement
plan but were to be upgraded and have remained in service. The Company also
determined that certain assets subject to replacement during the upgrade program
were misstated in the allocation of the purchase price of the acquisition. This
adjustment reduced property, plant and equipment and increased franchise costs
by $627 million. In addition, the depreciation period for the assets subject to
replacement was adjusted to more closely align with the intended service period
of these assets rather than the three-year straight-line life originally
assigned. As a result, adjustments were recorded to reduce depreciation expense
by $120 million for the three months ended March 31, 2002.

Deferred Tax Liabilities/Franchise Assets. Adjustments were made to record
deferred tax liabilities associated with the acquisition of various cable
television businesses. These adjustments increased amounts assigned to franchise
assets by $1.4 billion with a corresponding increase in deferred tax liabilities
of $1.2 billion. The balance of the entry was recorded to equity and minority
interest. In addition, as described above, a correction was made to reduce
amounts assigned in purchase accounting to assets identified for replacement
over the three-year period of the Company's rebuild and upgrade of its network.
This reduced the amount assigned to the network assets to be retained and
increased the amount assigned to franchise assets by $627 million with a
resulting increase in amortization expense for the years restated. Such
adjustments increased the cumulative effect of accounting change recorded upon
adoption of Statement of Financial Accounting Standards (SFAS) No. 142 by $199
million before minority interest and tax effects for the three months ended
March 31, 2002.

Other Adjustments. In addition to the items described above, other adjustments
of expenses include additional amounts charged to special charges related to the
2001 restructuring plan, certain tax reclassifications from tax expense to
operating costs and other miscellaneous adjustments. The net impact of these
adjustments to net loss is an increase of $2 million for the three months ended
March 31, 2002.


                                       10

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

The following tables summarize the effects of the adjustments on the
consolidated statements of operations and cash flows for the three-month period
ended March 31, 2002 (dollars in millions, except share data).

                      CONSOLIDATED STATEMENT OF OPERATIONS



                                                                                 THREE MONTHS ENDED
                                                                                   MARCH 31, 2002
                                                                          ---------------------------------
                                                                          AS PREVIOUSLY
                                                                            REPORTED               RESTATED
                                                                          -------------            --------
                                                                                              
      Revenue                                                             $ 1,078                   $ 1,074
      Income (loss) from operations                                           (38)                       97
      Minority interest                                                       197                       124
      Cumulative effect of accounting change, net of tax                       --                      (206)
      Net loss applicable to common stock                                    (175)                     (317)
      Loss per common share                                                 (0.59)                    (1.08)


                      CONSOLIDATED STATEMENT OF CASH FLOWS



                                                                                 THREE MONTHS ENDED
                                                                                   MARCH 31, 2002
                                                                          ---------------------------------
                                                                          AS PREVIOUSLY
                                                                            REPORTED               RESTATED
                                                                          -------------            --------
                                                                                              
      Net cash flows from operating activities                            $    46                   $   102
      Net cash flows from investing activities                               (553)                     (604)
      Net cash flows from financing activities                                522                       517


5. FRANCHISES AND GOODWILL

On January 1, 2002, the Company adopted SFAS No. 142, which eliminates 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 will be tested
for impairment annually, or more frequently as warranted by events or changes in
circumstances. During the first quarter of 2002, the Company had an independent
appraiser perform valuations of its franchises as of January 1, 2002. 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 were aggregated into essentially inseparable asset groups to
conduct the valuations. The asset groups generally represent geographic clusters
of the Company's cable systems, which management believes represents the highest
and best use of those assets. Fair value was determined based on estimated
discounted future cash flows using reasonable and appropriate assumptions that
are consistent with internal forecasts. As a result, the Company determined that
franchises were impaired and recorded the cumulative effect of a change in
accounting principle of $206 million (approximately $572 million before minority
interest effects of $306 million and tax effects of $60 million). The effect of
adoption was to increase net loss and loss per share by $206 million and $0.70,
respectively. SFAS No. 142 does not permit the recognition of the customer
relationship asset not previously recognized. Accordingly, the impairment
included approximately $373 million before minority interest and tax effects
attributable to customer relationship values as of January 1, 2002.

In determining whether its franchises have an indefinite life, the Company
considered the exclusivity of the franchise, its expected costs of franchise
renewals, and the technological state of the associated cable systems with a
view to whether or not the Company is in compliance with any technology
upgrading requirements. Certain franchises did not qualify for indefinite-life
treatment due to technological or operational factors that limit their lives.
These franchise costs will be amortized on a straight-line basis over 10 years.

The effect of the adoption of SFAS No. 142 as of March 31, 2003 and December 31,
2002 is presented in the


                                       11

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

following table (dollars in millions):



                                           MARCH 31, 2003                                DECEMBER 31, 2002
                              ---------------------------------------         ---------------------------------------
                               GROSS                           NET            GROSS                            NET
                             CARRYING        ACCUMULATED     CARRYING        CARRYING       ACCUMULATED      CARRYING
                              AMOUNT        AMORTIZATION      AMOUNT          AMOUNT       AMORTIZATION       AMOUNT
                             --------       ------------     --------        --------      ------------      --------
                                                                                           
INDEFINITE-LIVED
INTANGIBLE ASSETS:
   Franchise with
     indefinite lives         $17,076         $ 3,428         $13,648         $17,076         $ 3,428         $13,648
   Goodwill                        54              --              54              54              --              54
                              -------         -------         -------         -------         -------         -------
                              $17,130         $ 3,428         $13,702         $17,130         $ 3,428         $13,702
                              =======         =======         =======         =======         =======         =======
FINITE-LIVED
INTANGIBLE ASSETS:
   Franchises with
     finite lives             $   103         $    26         $    77         $   103         $    24         $    79
                              =======         =======         =======         =======         =======         =======


Franchise amortization expense for each of the three months ended March 31, 2003
and 2002 was $2 million, 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. For each of the next
five years, amortization expense relating to these franchises is expected to be
approximately $9 million.

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following as of March 31,
2003 and December 31, 2002 (dollars in millions):



                                          MARCH 31,    DECEMBER 31,
                                            2003           2002
                                          ---------    ------------
                                                 
Accounts payable                           $  162         $  290
Capital expenditures                           17            141
Accrued interest                              368            243
Programming costs                             253            237
Accrued general and administrative            132            126
Franchise fees                                 41             68
State sales tax                                66             67
Other accrued expenses                        214            233
                                           ------         ------
                                           $1,253         $1,405
                                           ======         ======



                                       12

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

7. LONG-TERM DEBT

Long-term debt consists of the following as of March 31, 2003 and December 31,
2002 (dollars in millions):



                                                            MARCH 31, 2003               DECEMBER 31, 2002
                                                        ----------------------        ----------------------
                                                         FACE         ACCRETED         FACE         ACCRETED
                                                         VALUE          VALUE          VALUE          VALUE
                                                        -------        -------        -------        -------
                                                                                         
      LONG-TERM DEBT
       Charter Communications, Inc.:
        October and November 2000
         5.75% convertible senior notes due 2005        $   750        $   750        $   750        $   750
        May 2001
         4.75% convertible senior notes due 2006            633            633            633            633
       Charter Holdings:
        March 1999
         8.250% senior notes due 2007                       600            599            600            599
         8.625% senior notes due 2009                     1,500          1,497          1,500          1,497
         9.920% senior discount notes due 2011            1,475          1,339          1,475          1,307
        January 2000
         10.000% senior notes due 2009                      675            675            675            675
         10.250% senior notes due 2010                      325            325            325            325
         11.750% senior discount notes due 2010             532            434            532            421
        January 2001
         10.750% senior notes due 2009                      900            900            900            900
         11.125% senior notes due 2011                      500            500            500            500
         13.500% senior discount notes due 2011             675            468            675            454
        May 2001
        9.625% senior notes due 2009                        350            350            350            350
        10.000% senior notes due 2011                       575            575            575            575
        11.750% senior discount notes due 2011            1,018            713          1,018            693
        January 2002
        9.625% senior notes due 2009                        350            348            350            348
        10.000% senior notes due 2011                       300            298            300            298
        12.125% senior discount notes due 2012              450            288            450            280
       Renaissance:
         10.00% senior discount notes due 2008              114            116            114            113
       CC V Holdings:
         11.875% senior discount notes due 2008             180            167            180            163
       Other long-term debt                                   1              1              1              1

      CREDIT FACILITIES
       Charter Operating                                  4,641          4,641          4,542          4,542
       CC VI                                                944            944            926            926
       Falcon Cable                                       1,209          1,209          1,155          1,155
       CC VIII Operating                                  1,191          1,191          1,166          1,166
                                                        -------        -------        -------        -------
                                                        $19,888        $18,961        $19,692        $18,671
                                                        =======        =======        =======        =======


For additional information regarding the Company's long-term debt, refer to Note
10 of the Notes to the Consolidated Financial Statements included in the
Company's 2002 Annual Report on Form 10-K.


                                       13

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

The table below presents the unused total potential availability under each of
the Company's credit facilities and the availability as limited by financial
covenants as of March 31, 2003, which become more restrictive over the term of
each facility before becoming fixed (dollars in millions):



                                         UNUSED TOTAL            AVAILABILITY AS
                                          POTENTIAL            LIMITED BY FINANCIAL
                                         AVAILABILITY               COVENANTS
                                         ------------          --------------------
                                                         
       Charter Operating                    $  526                    $182
       CC VI                                   244                     122
       Falcon Cable                            114                      67
       CC VIII Operating                       281                     281
                                            ------                    ----

      Total                                 $1,165                    $652
                                            ======                    ====


8. MINORITY INTEREST AND EQUITY INTEREST OF CHARTER HOLDCO

The Company is a holding company whose primary asset is a controlling equity
interest in Charter Holdco, the indirect owner of the Company's cable systems.
Minority interest on the Company's consolidated balance sheets represents the
ownership percentages of Charter Holdco not owned by the Company, or 53.5% of
total members' equity of Charter Holdco, plus $671 million and $668 million of
preferred membership interests in CC VIII, LLC (CC VIII), an indirect subsidiary
of Charter Holdco, as of March 31, 2003 and December 31, 2002, respectively. As
more fully described in Note 17, this preferred interest arises from the
approximately $630 million of preferred units issued by CC VIII in connection
with the Bresnan acquisition in February, 2000. Members' equity of Charter
Holdco was $363 million and $662 million as of March 31, 2003 and December 31,
2002, respectively. Gains and losses arising from the issuance by Charter Holdco
of its membership units are recorded as capital transactions, thereby increasing
or decreasing shareholders' equity and decreasing or increasing minority
interest on the accompanying consolidated balance sheets. Changes to minority
interest consist of the following for the periods presented (dollars in
millions):



                                                                 MINORITY
                                                                 INTEREST
                                                                 --------
                                                              
Balance, December 31, 2002                                        $ 1,025
  Minority interest in loss of a subsidiary                          (160)
  Changes in fair value of interest rate agreements                     4
                                                                  -------
Balance, March 31, 2003                                           $   869
                                                                  =======


9. COMPREHENSIVE LOSS

Certain marketable equity securities are classified as available-for-sale and
reported at market value with unrealized gains and losses recorded as
accumulated other comprehensive loss on the accompanying consolidated balance
sheets. The Company reports changes in the fair value of interest rate
agreements designated as hedging instruments of the variability of cash flows
associated with floating-rate debt obligations, that meet the effectiveness
criteria of SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," in accumulated other comprehensive loss. Comprehensive loss for the
three months ended March 31, 2003 and 2002 was $178 million and $309 million,
respectively.


                                       14

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

10. ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company uses interest rate risk management derivative instruments, such as
interest rate swap agreements and interest rate collar agreements (collectively
referred to herein as interest rate agreements) as required under the terms of
its credit facilities. 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 agrees 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.

The Company has certain interest rate derivative instruments that have been
designated as cash flow hedging instruments. Such instruments are those that
effectively convert variable interest payments on certain debt instruments into
fixed payments. For qualifying hedges, SFAS No. 133 allows derivative gains and
losses to offset related results on hedged items in the consolidated statement
of operations. The Company has formally documented, designated and assessed the
effectiveness of transactions that receive hedge accounting. For the three
months ended March 31, 2003 and 2002, other expense includes gains of $9 million
and losses of $2 million, respectively, which represent cash flow hedge
ineffectiveness on interest rate hedge agreements arising from differences
between the critical terms of the agreements and the related hedged obligations.
Changes in the fair value of interest rate agreements designated as hedging
instruments of the variability of cash flows associated with floating-rate debt
obligations are reported in accumulated other comprehensive loss. For the three
months ended March 31, 2003 and 2002, a gain of $7 million and a loss of $17
million, respectively, related to derivative instruments designated as cash flow
hedges was recorded in accumulated other comprehensive loss and minority
interest. The amounts are subsequently reclassified into interest expense as a
yield adjustment in the same period in which the related interest on the
floating-rate debt obligations affects earnings (losses).

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 a
gain or loss on interest rate agreements. For the three months ended March 31,
2003 and 2002, the Company recorded other income of $5 million and $35 million,
respectively, for interest rate derivative instruments not designated as
hedges.

At both March 31, 2003 and December 31, 2002, the Company had outstanding $3.4
billion and $520 million in 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.

We do not hold collateral for these instruments and are therefore subject to
credit loss in the event of nonperformance by the counterparty to the interest
rate exchange agreement. However the counterparties are banks and we do not
anticipate nonperformance by any of them on any interest rate exchange
agreement.


                                       15

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

11. REVENUES

Revenues consist of the following for the three months ended March 31, 2003 and
2002 (dollars in millions):



                                             THREE MONTHS
                                           ENDED MARCH 31,
                                       ----------------------
                                         2003            2002
                                       ------          ------
                                                 
            Analog video               $  719          $  691
            Digital video                 179             165
            High-speed data               122              64
            Advertising sales              57              58
            Other                         101              96
                                       ------          ------
                                       $1,178          $1,074
                                       ======          ======


12. OPERATING EXPENSES

Operating expenses consist of the following for the three months ended March 31,
2003 and 2002 (dollars in millions):



                                           THREE MONTHS
                                         ENDED MARCH 31,
                                       ------------------
                                       2003          2002
                                       ----          ----
                                               
            Programming costs          $314          $283
            Advertising sales            21            19
            Service costs               150           124
                                       ----          ----

                                       $485          $426
                                       ====          ====


The Company has various contracts and other arrangements to obtain basic,
premium and digital programming from program suppliers that receive compensation
typically based on a monthly flat fee per customer. The cost of the right to
exhibit network programming under such arrangements is recorded in the month the
programming is available for exhibition.

13. SPECIAL CHARGES

In the fourth quarter of 2002, the Company recorded a special charge of $35
million, of which $31 million was associated with its 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 structure. The remaining $4 million related to legal
and other costs associated with the Company's ongoing grand jury investigation,
shareholder lawsuits and SEC investigation. The $31 million charge related to
realignment activities, included severance costs of $28 million related to
approximately 1,400 employees identified for termination as of December 31, 2002
and lease termination costs of $3 million. In the first quarter of 2003, an
additional 300 employees were identified for termination, and additional
severance costs of $7 million were recorded in special charges. In total,
approximately 1,500 employees were terminated in the first quarter of 2003.
Severance payments are made over a period of up to twelve months with
approximately $7 million paid during the three months ended March 31, 2003. As
of March 31, 2003 and December 31, 2002, a liability of approximately $31
million is recorded on the accompanying consolidated balance sheet related to
the realignment activities. The additional severance costs were offset by a $5
million settlement from the Internet service provider Excite@Home related to the
conversion of approximately 145,000 high-speed data customers to our Charter
Pipeline service in 2001, for which costs of $15 million were recorded in the
fourth quarter of 2001.


                                       16

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

In December 2001, the Company implemented a restructuring plan to reduce its
workforce in certain markets and reorganize its operating divisions from two to
three and operating regions from twelve to ten. The restructuring plan was
completed during the first quarter of 2002, resulting in the termination of
approximately 320 employees and severance costs of $4 million, of which $1
million was recorded in the first quarter of 2002.

14. INCOME TAXES

All operations are held through Charter Holdco and its direct and indirect
subsidiaries. Charter Holdco and the majority of its subsidiaries are not
subject to income tax. However, certain of these subsidiaries are corporations
and are subject to income tax. All of the taxable income, gains, losses,
deductions and credits of Charter Holdco are passed through to its members:
Charter, Charter Investment, Inc., Vulcan Cable III Inc., and certain former
owners of acquired companies. Charter is responsible for its share of taxable
income or loss of Charter Holdco allocated to it in accordance with the Charter
Holdco amended and restated limited liability company agreement and partnership
tax rules and regulations.

As of March 31, 2003 and December 31, 2002, the Company has deferred income tax
liabilities of approximately $539 million and $499 million, respectively.
Approximately $233 million of the deferred tax liabilities recorded in the
financial statements at both March 31, 2003 and December 31, 2002 relate to
certain indirect subsidiaries of Charter Holdco, which file separate income tax
returns.

During the three months ended March 31, 2003, the Company recorded $40 million
of income tax expense. The Company recognized an increase in the deferred tax
liabilities related to Charter's investment in Charter Holdco, as well as the
deferred tax liabilities of certain of Charter's indirect corporate
subsidiaries. The Company recorded a deferred tax asset of a comparable amount
relating to tax loss carryovers but recorded a valuation allowance with respect
to this asset given the uncertainty of its ultimate realization. During the
three months ended March 31, 2002, the Company realized $60 million of income
tax benefit in the cumulative effect of accounting change as a result of a
decrease in the deferred tax liabilities related to the impairment of franchises
recorded upon adoption of SFAS No. 142.

The Company has deferred tax assets of $1.6 billion and $1.5 billion as of March
31, 2003 and December 31, 2002, respectively, which primarily relate to the
excess of cumulative financial statement losses over cumulative tax losses
allocated from Charter Holdco. The deferred tax assets also include $322 million
of tax net operating loss carryforwards as of March 31, 2003 and December 31,
2002 (generally expiring in years 2003 through 2022) of Charter and its indirect
corporate subsidiaries which are subject to separate return limitations.

The total valuation allowance for deferred tax assets is $1.5 billion and $1.4
billion as of March 31, 2003 and December 31, 2002, respectively. In assessing
the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will be
realized. Because of the uncertainties in projecting future taxable income of
Charter Holdco, valuation allowances have been established except for deferred
benefits available to offset deferred tax liabilities.

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

15. CONTINGENCIES

Fourteen putative federal class action lawsuits (the "Federal Class Actions")
have been filed against Charter and certain of its former and present officers
and directors in various jurisdictions allegedly on behalf of all purchasers of
Charter's securities during the period from either November 8 or November 9,
1999 through July 17 or July 18, 2002. Unspecified damages are sought by the
plaintiffs. In general, the lawsuits allege that Charter utilized misleading
accounting practices and failed to disclose these accounting practices and/or
issued false and misleading financial statements and press releases concerning
Charter's operations and prospects.

In October 2002, Charter filed a motion with the Judicial Panel on Multidistrict
Litigation (the "Panel") to transfer


                                       17

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

the Federal Class Actions to the Eastern District of Missouri. On March 12,
2003, the Panel transferred the six Federal Class Actions not filed in the
Eastern District of Missouri to that district for coordinated or consolidated
pretrial proceedings with the eight Federal Class Actions already pending there.
The Panel's transfer order assigned the Federal Class Actions to Judge Charles
A. Shaw. By virtue of a prior court order, StoneRidge Investment Partners LLC
became lead plaintiff upon entry of the Panel's transfer order. The Company has
received a consolidated complaint from lead plaintiff which includes as
defendants several former and present officers of the Company, as well as its
former outside auditors and a vendor/supplier of digital set-top terminals. The
court has not yet permitted the filing of this consolidated complaint. No
response from the Company will be due until after the consolidated complaint has
been filed.

On September 12, 2002, a shareholders derivative suit (the "State Derivative
Action") was filed in Missouri state court against Charter and its current
directors, as well as its former auditors. 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.

Separately, on February 12, 2003, a shareholders derivative suit (the "Federal
Derivative Action"), was filed against Charter and its 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.

In addition to the Federal Class Actions, the State Derivative Action and the
Federal Derivative Action, six putative class action lawsuits have been filed
against Charter and certain of its current directors and officers in the Court
of Chancery of the State of Delaware (the "Delaware Class Actions"). The
Delaware Class Actions are substantively identical and generally allege that the
defendants breached their fiduciary duties by participating or acquiescing in a
purported and threatened attempt by Defendant Paul Allen to purchase shares and
assets of Charter at an unfair price. The lawsuits were brought on behalf of
Charter's securities holders as of July 29, 2002, and seek unspecified damages
and possible injunctive relief. No such proposed transaction by Mr. Allen has
been presented.

The lawsuits discussed above are each in preliminary stages and no dispositive
motions or other responses to any of the complaints have been filed. No reserves
have been established for those matters because the Company believes they are
either not estimable or not probable. Charter intends to vigorously defend the
lawsuits.

In August of 2002, Charter became aware of a grand jury investigation being
conducted by the United States Attorney's Office for the Eastern District of
Missouri into certain of its accounting and reporting practices, focusing on how
Charter reported customer numbers, refunds that Charter sought from programmers
and its reporting of amounts received from digital set-top terminal suppliers
for advertising. Charter has been advised by the U.S. Attorney's Office that no
member of the Board of Directors, including its Chief Executive Officer, is a
target of the investigation. Charter is fully cooperating with the
investigation.

On November 4, 2002, Charter received an informal, non-public inquiry from the
Staff of the Securities and Exchange Commission (SEC). The SEC has subsequently
issued a formal order of investigation dated January 23, 2003, and subsequent
document and testimony subpoenas. The investigation and subpoenas generally
concern Charter's prior reports with respect to its determination of the number
of customers, and various of its other accounting policies and practices
including its capitalization of certain expenses and dealings with certain
vendors, including programmers and digital set-top terminal suppliers. Charter
is actively cooperating with the SEC Staff.

Charter is unable to predict the outcome of the lawsuits and the government
investigations described above. An unfavorable outcome in the lawsuits or the
government investigations described above could have a material adverse effect
on Charter's results of operations and financial condition.

Charter is generally required to indemnify each of the named individual
defendants in connection with these matters


                                       18

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

pursuant to the terms of its Bylaws and (where applicable) such individual
defendants' employment agreements. Pursuant to the terms of certain employment
agreements and in accordance with the Bylaws of Charter, in connection with the
pending grand jury investigation, SEC investigation and the above described
lawsuits, Charter's current directors and its current and former officers have
been advanced certain costs and expenses incurred in connection with their
defense.

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 will not have a
material adverse effect on the Company's consolidated financial position or
results of operations.

Charter has directors' and officers' liability insurance coverage that it
believes is available for these matters, where applicable, and subject to the
terms, conditions and limitations of the respective policies.

16. STOCK-BASED COMPENSATION

The Company has historically accounted for stock-based compensation in
accordance with Accounting Principles Board (APB) Opinion No. 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 will recognize 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 (FIN 28), Accounting
for Stock Appreciation Rights and Other Variable Stock Option or Award Plans.
Adoption of these provisions will result in utilizing a preferable accounting
method, as the 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. 148, the fair value method will
be 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. Management believes the
adoption of these provisions will not have a material impact on the consolidated
results of operations or financial position of the Company. The ongoing effect
on consolidated results of operations or financial position will be dependent
upon future stock based compensation awards granted by the Company. Had the
Company adopted SFAS No. 123 as of January 1, 2002, using the prospective
method, option compensation expense for the three months ended March 31, 2002
would have been approximately $1 million.

SFAS No. 123 requires pro forma disclosure of the impact on earnings as if the
compensation expense for these plans had been determined using the fair value
method. The following table presents the Company's net loss applicable to common
stock and loss per common share as reported and the pro forma amounts that would
have been reported using the fair value method under SFAS 123 for the years
presented (dollars in millions, except share data):



                                                               THREE MONTHS ENDED MARCH 31,
                                                               ---------------------------
                                                                 2003               2002
                                                               --------           --------
                                                                            
            Net loss applicable to common stock:               $   (182)          $   (317)
              Pro forma                                            (184)              (332)
            Loss per common share, basic and diluted:             (0.62)             (1.08)
              Pro forma                                           (0.62)             (1.13)


17. RELATED PARTIES

As part of the Bresnan acquisition in February 2000, CC VIII, an indirect
limited liability company subsidiary of Charter, issued Class A Preferred
Membership Interests (collectively, the CC VIII Interest) with a value and an
initial capital account of $630 million to certain sellers affiliated with AT&T
Broadband, now owned by Comcast


                                       19

                  CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Corporation (the Comcast Sellers). The CC VIII Interest is entitled to a 2%
priority return on its initial capital account, and such priority return is
entitled to preferential distributions from available cash and upon liquidation
of CC VIII. The CC VIII Interest generally does not share in the profits and
losses of CC VIII at present. The Comcast Sellers have the right at their option
to exchange the CC VIII Interest for shares of Charter Class A common stock.
Charter does not have the right to force such an exchange. In connection with
the Bresnan acquisition, Mr. Allen granted the Comcast Sellers the right to sell
to Mr. Allen the CC VIII Interest (or any Charter Class A common stock that the
Comcast Sellers would receive if they exercised their exchange right) for $630
million plus 4.5% interest annually from February 2000 (the Comcast Put Right).
In April 2002, in accordance with such put agreement, the Comcast Sellers
notified Mr. Allen of their exercise of the Comcast Put Right in full, and the
parties agreed to consummate the sale in April 2003, although the parties also
agreed to negotiate in good faith possible alternatives to the closing. The
parties have agreed to extend the closing until May 30, 2003, subject to earlier
closing on three days notice by either party to the other. If the sale to Mr.
Allen is consummated, Mr. Allen would become the holder of the CC VIII Interest
(or, if previously exchanged by the current holders, any Charter Class A common
stock issued to the current holders upon such exchange). If the CC VIII Interest
is transferred to Mr. Allen, then, subject to the matters referenced in the next
paragraph, Mr. Allen generally thereafter would 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 not be entitled
to any priority distributions (except with respect to the 2% priority return, as
to which such priority would continue), and Mr. Allen's share of any remaining
distributions in liquidation would be equal to the initial capital account of
the Comcast Sellers of $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 the date of the transfer of the CC VIII Interest to Mr. Allen.

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. Charter's Board of
Directors has formed a Special Committee comprised of Messrs. Tory, Wangberg and
Nelson to investigate and take any other appropriate action on behalf of the
Company with respect to this matter. Specifically, the Special Committee is
considering whether it should be the position of Charter that Mr. Allen should
be required to contribute the CC VIII Interest to Charter Holdco in exchange for
Charter Holdco membership units, immediately after his acquisition of the CC
VIII Interest upon consummation of the Comcast Put Right. To the extent it is
ultimately determined that Mr. Allen must contribute the CC VIII Interest to
Charter Holdco following consummation of the Comcast Put Right, the Special
Committee may also consider what additional steps, if any, should be taken with
respect to the further disposition of the CC VIII Interest by Charter Holdco. If
necessary, following the completion of the Special Committee's investigation of
the facts and circumstances relating to this matter, the Special Committee and
Mr. Allen have agreed to a non-binding mediation process to resolve any dispute
relating to this matter as soon as practicable, but without any prejudice to any
rights of the parties if such dispute is not resolved as part of the mediation.

For additional information regarding the Company's related parties, refer to
Note 23 of the Notes to the Consolidated Financial Statements included in the
Company's 2002 Annual Report on Form 10-K.


                                       20

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

GENERAL

Charter Communications, Inc. is a holding company whose primary asset as of
March 31, 2003 is a 46.5% controlling common equity interest in Charter
Communications Holding Company, LLC. We own and operate cable systems serving
approximately 6.5 million customers at March 31, 2003. "We," "us" and "our"
refer to Charter Communications, Inc. and its subsidiaries. We own and operate
cable systems that provide a full range of video, data, telephony and other
advanced broadband services. We also provide commercial high-speed data, video,
telephony and Internet services as well as advertising sales and production
services.

The following table presents various operating statistics as of March 31, 2003,
December 31, 2002 and March 31, 2002:



                                                                                       APPROXIMATE AS OF
                                                                         ----------------------------------------------
                                                                          MARCH 31,        DECEMBER 31,       MARCH 31,
                                                                          2003 (a)          2002 (a)          2002 (a)
                                                                         ----------        ----------        ----------
                                                                                                    
VIDEO SERVICES:
  ANALOG VIDEO:
    Estimated homes passed (b)                                           11,925,300        11,925,000        11,777,300
    Residential (non-bulk) analog video customers (c)                     6,277,300         6,328,900         6,540,800
    Multi-dwelling (bulk) and commercial unit customers (c)                 250,900           249,900           237,900
                                                                         ----------        ----------        ----------
       Total analog video customers (c)                                   6,528,200         6,578,800         6,778,700
                                                                         ==========        ==========        ==========

    Estimated penetration of analog video homes passed (b)(c)(d)                 55%               55%               58%

 DIGITAL VIDEO:
    Estimated digital homes passed (b)                                   11,547,000        11,547,000        10,894,000
    Digital customers (e)                                                 2,651,100         2,682,800         2,208,900
    Estimated penetration of digital homes passed (b)(d)(e)                      23%               23%               20%
    Digital percentage of analog video customers (c)(e)(f)                       41%               41%               33%
    Digital set-top terminals deployed                                    3,749,400         3,772,600         3,055,900
    Estimated video-on-demand homes passed (b)                            3,279,000         3,195,000         1,994,700
 HIGH-SPEED DATA SERVICES:
    Estimated cable modem homes passed (b)                                9,970,000         9,826,000         8,180,300
    Residential cable modem customers (g) (h)                             1,272,300         1,138,100           657,900
    Estimated penetration of cable modem homes passed (b)(d)(g)(h)               13%               12%                8%
    Dial-up customers                                                        12,700            14,200            32,500
 REVENUE GENERATING UNITS (I):
    Analog video customers (c)                                            6,528,200         6,578,800         6,778,700
    Digital customers (e)                                                 2,651,100         2,682,800         2,208,900
    Cable modem customers (g) (h)                                         1,272,300         1,138,100           657,900
    Telephony customers (j)                                                  22,800            22,800            15,700
                                                                         ----------        ----------        ----------

       Total revenue generating units (i)                                10,474,400        10,422,500         9,661,200
                                                                         ==========        ==========        ==========

    Customer relationships (k)                                            6,584,900         6,634,700         6,804,800


      (a)   "Customers" include all persons corporate billing records show as
            receiving service, regardless of their payment status, except for
            complimentary accounts (such as our employees). The adequacy of
            previously

                                       21

            reported customer reductions, our disconnect policies, the
            application of those policies and their effect on the customer
            totals reported by us during 2001 and prior periods are currently
            under investigation by the United States Attorney's Office for the
            Eastern District of Missouri and the Securities and Exchange
            Commission. Those investigations are not complete. Upon the
            completion of such investigations, and depending on their outcome,
            we may make additional adjustments in the 2001 or prior periods
            customer numbers if such adjustments are appropriate. When we
            publicly announced our 2001 results on February 11, 2002, we also
            announced that we expected the number of customers to decline by
            120,000 during the first quarter of 2002. We ultimately reported a
            loss of 145,000 customers in that quarter. The customer reduction
            was primarily the result of eliminating non-paying or delinquent
            customers from the customer totals.

      (b)   Homes passed represents the estimated number of living units, such
            as single family homes, apartment units and condominium units passed
            by the cable distribution network in a given area to which we offer
            the service indicated. Homes passed excludes commercial units passed
            by the cable distribution network.

      (c)   Analog video customers include all customers who purchase video
            services (including those who also purchase data and telephony
            services), but excludes approximately 56,700, 55,900 and 26,100
            customer relationships, respectively, who pay for cable modem
            service only and who are only counted as cable modem customers. This
            represents a change in our methodology from prior reports through
            September 30, 2002, in which cable modem only customer relationships
            were included within our analog video customers. We made this change
            because we determined that most of these customers were unable to
            receive our most basic level of analog service because this service
            was physically secured or blocked, was unavailable in certain areas
            or the customers were unaware that this service was available to
            them. Commercial and multi-dwelling structures 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 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.
            Our policy is not to count complimentary accounts (such as our
            employees) as customers.

      (d)   Penetration represents customers as a percentage of homes passed.

      (e)   Digital video customers include all households that have one or more
            digital set-top terminals. Included in digital video customers at
            March 31, 2003, December 31, 2002 and March 31, 2002 are
            approximately 15,000, 27,500 and 31,000 customers, respectively,
            that receive digital video service directly through satellite
            transmission.

      (f)   Represents the number of digital video customers as a percentage of
            analog video customers.

      (g)   As noted above, all of these customers also receive video service
            and are included in the video statistics above, except that the
            video statistics do not include approximately 56,700, 55,900 and
            26,100 customers at March 31, 2003, December 31, 2002 and March 31,
            2002, respectively, who were cable modem only customers.

      (h)   During the first three quarters of 2002, commercial cable modem or
            data customers were calculated on an Equivalent Modem Unit or EMU
            basis, which involves converting commercial revenues to residential
            customer counts. Given the growth plans for our commercial data
            business, we do not believe that converting commercial revenues to
            residential customer counts is the most meaningful way to disclose
            or describe this growing business. We, therefore, excluded 63,700
            EMUs that were previously reported in our March 31, 2002 customer
            totals for comparative purposes.

      (i)   Revenue generating units represent the sum total of all primary
            analog video, digital video, high-speed data and telephony
            customers, not counting additional outlets within one household. For
            example, a customer who receives two types of services (such as
            analog video and digital video) would be treated as two revenue


                                       22

            generating units, and if that customer added on data service, the
            customer would be treated as three revenue generating units. This
            statistic is computed in accordance with the guidelines of the
            National Cable & Telecommunications Association that have been
            adopted by eleven publicly traded cable operators (including Charter
            Communications, Inc.) as an industry standard.

      (j)   Telephony customers include all households purchasing telephone
            service.

      (k)   Customer relationships include the number of customers that receive
            at least one level of service encompassing video, data and telephony
            services, without regard to which service(s) such customers
            purchase. This statistic is computed in accordance with the
            guidelines of the National Cable & Telecommunications Association
            that have been adopted by eleven publicly traded cable operators
            (including Charter Communications, Inc.) as an industry standard.

RESTATEMENT OF CONSOLIDATED FINANCIAL RESULTS

As discussed in our 2002 Form 10-K, we identified a series of adjustments that
have resulted in the restatement of previously announced quarterly results for
the first three quarters of fiscal 2002. In summary, the adjustments are grouped
into the following categories: (i) launch incentives from programmers; (ii)
customer incentives and inducements; (iii) capitalized labor and overhead costs;
(iv) customer acquisition costs; (v) rebuild and upgrade of cable systems; (vi)
deferred tax liabilities/franchise assets; and (vii) other adjustments. These
adjustments have been reflected in the accompanying consolidated financial
statements and reduced revenues for the three months ended March 31, 2002 by $4
million. Our consolidated net loss increased by $142 million for the three
months ended March 31, 2002. In addition, as a result of certain of these
adjustments, our statement of cash flows for the three months ended March 31,
2002 has been restated. Cash flows from operating activities for the three
months ended March 31, 2002 increased by $56 million. The more significant
categories of adjustments relate to the following as outlined below.

Launch Incentives from Programmers. Amounts previously recognized as advertising
revenue in connection with the launch of new programming channels have been
deferred and recorded in other long-term liabilities in the year such launch
support was provided, and amortized as a reduction of programming costs based
upon the relevant contract term. These adjustments decreased revenue by $2
million for the three months ended March 31, 2002. The corresponding
amortization of such deferred amounts reduced programming expenses by $12
million for the three months ended March 31, 2002.

Customer Incentives and Inducements. Marketing inducements paid to encourage
potential customers to switch from satellite providers to Charter branded
services and enter into multi-period service agreements were previously deferred
and recorded as property, plant and equipment and recognized as depreciation and
amortization expense over the life of customer contracts. These amounts have
been restated as a reduction of revenues of $2 million for the three months
ended March 31, 2002. Substantially all of these amounts are offset by reduced
depreciation and amortization expense.

Capitalized Labor and Overhead Costs. Certain elements of labor costs and
related overhead allocations previously capitalized as property, plant and
equipment as part of our rebuild activities, customer installations and new
service introductions have been expensed in the period incurred. Such
adjustments increased operating expenses by $1 million for the three months
ended March 31, 2002.

Customer Acquisition Costs. Certain customer acquisition campaigns were
conducted through third-party contractors in portions of 2002. The costs of
these campaigns were originally deferred and recorded as other assets and
recognized as amortization expense over the average customer contract life.
These amounts have been reported as marketing expense in the period incurred and
totaled $9 million for the three months ended March 31, 2002. We discontinued
this program in the third quarter of 2002 as contracts for third-party vendors
expired. Substantially all of these amounts are offset by reduced depreciation
and amortization expense.

Rebuild and Upgrade of Cable Systems. In 2000, we initiated a three-year program
to replace and upgrade a substantial portion of our network. In connection with
this plan, we assessed the carrying value of, and the


                                       23

associated depreciable lives of, various assets to be replaced. It was
determined that $1 billion of cable distribution system assets, originally
treated as subject to replacement, were not part of the original replacement
plan but were to be upgraded and have remained in service. We also determined
that certain assets subject to replacement during the upgrade program were
misstated in the allocation of the purchase price of the acquisition. This
adjustment reduced property, plant and equipment and increased franchise costs
by $627 million. In addition, the depreciation period for the assets subject to
replacement was adjusted to more closely align with the intended service period
of these assets rather than the three-year straight-line life originally
assigned. As a result, adjustments were recorded to reduce depreciation expense
by $120 million for the three months ended March 31, 2002.

Deferred Tax Liabilities/Franchise Assets. Adjustments were made to record
deferred tax liabilities associated with the acquisition of various cable
television businesses. These adjustments increased amounts assigned to franchise
assets by $1.4 billion with a corresponding increase in deferred tax liabilities
of $1.2 billion. The balance of the entry was recorded to equity and minority
interest. In addition, as described above, a correction was made to reduce
amounts assigned in purchase accounting to assets identified for replacement
over the three-year period of our rebuild and upgrade of its network. This
reduced the amount assigned to the network assets to be retained and increased
the amount assigned to franchise assets by $627 million with a resulting
increase in amortization expense for the years restated. Such adjustments
increased the cumulative effect of accounting change recorded upon adoption of
Statement of Financial Accounting Standards No. 142 by $199 million, before
minority interest and tax effects, for the three months ended March 31, 2002.

Other Adjustments. In addition to the items described above, other adjustments
of expenses include additional amounts charged to special charges related to the
2001 restructuring plan, certain tax reclassifications from tax expense to
operating costs and other miscellaneous adjustments. The net impact of these
adjustments to net loss is an increase of $2 million for the three months ended
March 31, 2002.

The following tables summarize the effects of the adjustments on the
consolidated statements of operations and cash flows for the three-month period
ended March 31, 2002 (dollars in millions, except per share data).

                      CONSOLIDATED STATEMENT OF OPERATIONS



                                                                             THREE MONTHS ENDED
                                                                              MARCH 31, 2002
                                                                    ---------------------------------
                                                                    AS PREVIOUSLY
                                                                       REPORTED               RESTATED
                                                                    -------------             -------
                                                                                        
      Revenue                                                          $ 1,078                $ 1,074
      Income (loss) from operations                                        (38)                    97
      Minority interest                                                    197                    124
      Cumulative effect of accounting change, net of tax                    --                   (206)
      Net loss applicable to common stock                                 (175)                  (317)
      Loss per common share                                              (0.59)                 (1.08)


                      CONSOLIDATED STATEMENT OF CASH FLOWS



                                                                             THREE MONTHS ENDED
                                                                              MARCH 31, 2002
                                                                    ---------------------------------
                                                                    AS PREVIOUSLY
                                                                       REPORTED               RESTATED
                                                                    -------------             -------
                                                                                        
      Net cash flows from operating activities                         $    46                $   102
      Net cash flows from investing activities                            (553)                  (604)
      Net cash flows from financing activities                             522                    517



                                       24

OVERVIEW

We have had a history of net losses. Further, we expect to continue to report
net losses for the foreseeable future. The principal reasons for our prior net
losses include our depreciation and amortization expenses and interest costs on
borrowed money, which increased in the aggregate by $72 million for the three
months ended March 31, 2003 as compared to March 31, 2002. Continued net losses
could have a material adverse impact on our ability to access necessary capital,
including under our existing credit facilities.

For the three months ended March 31, 2003 and 2002, our income from operations,
which includes depreciation and amortization expense but excludes interest
expense, was $86 million and $97 million, respectively. These operating margins
decreased from 9% for the three months ended March 31, 2002 to 7% for the three
months ended March 31, 2003, principally due to an increase in depreciation and
amortization of $44 million primarily as a result of our rebuild and upgrade
program.

Since our inception and currently, our ability to conduct operations is
dependent on our continued access to credit pursuant to our subsidiaries' credit
facilities. The occurrence of an event of default under our subsidiaries' credit
facilities could result in borrowings from these facilities being unavailable to
us and could, in the event of a payment default or acceleration, also trigger
events of default under our outstanding public notes and would have a material
adverse effect on us. In addition, approximately $194 million of our financing
matures during 2003, which we expect to fund through availability under our
subsidiaries credit facilities and cash on hand.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We disclosed our critical accounting policies and the means by which we develop
estimates therefor in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our 2002 Annual Report on Form 10-K.


                                       25

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS ENDED MARCH 31, 2002

The following table sets forth the percentages of revenues that items in the
accompanying consolidated statements of operations constitute for the periods
presented (dollars in millions, except share data):



                                                                            THREE MONTHS ENDED MARCH 31,
                                                                   ----------------------------------------------
                                                                            2003                   2002
                                                                   ----------------------   ---------------------
                                                                                                 
Revenues                                                           $       1,178      100%  $       1,074     100%
                                                                   -------------     ----   -------------    ----

Costs and expenses:
   Operating (excluding depreciation and amortization and other
     items listed below)                                                     485       41%            426      40%
   Selling, general and administrative                                       235       20%            222      21%
   Depreciation and amortization                                             370       31%            326      30%
   Option compensation expense, net                                           --       --               2      --
   Special charges, net                                                        2        1%              1      --
                                                                   -------------     ----   -------------    ----

                                                                           1,092       93%            977      91%
                                                                   -------------     ----   -------------    ----

         Income from operations                                               86        7%             97       9%
                                                                   -------------            -------------

   Interest expense, net                                                    (390)                    (362)
   Other, net                                                                  3                       31
                                                                   -------------            -------------

                                                                            (387)                    (331)
                                                                   -------------            -------------

         Loss before minority interest, income taxes and
           cumulative effect of accounting change                           (301)                    (234)

Minority interest                                                            160                      124
                                                                   -------------            -------------

         Loss before income tax benefit and cumulative effect of
           accounting change
                                                                            (141)                    (110)

Income tax expense                                                           (40)                      --
                                                                   -------------            -------------

         Loss before cumulative effect of accounting change
                                                                            (181)                    (110)

Cumulative effect of accounting change, net of tax                            --                     (206)
                                                                   -------------            -------------

         Net loss                                                           (181)                    (316)

Dividends on preferred stock - redeemable                                     (1)                      (1)
                                                                   -------------            -------------

         Net loss applicable to common stock                       $        (182)           $        (317)
                                                                   =============            =============

Loss per common share, basic and diluted                           $       (0.62)           $       (1.08)
                                                                   =============            =============

Weighted average common shares outstanding, basic and diluted        294,466,137              294,394,939
                                                                   =============            =============



                                       26

REVENUES. Revenues increased by $104 million, or 10%, from $1.1 billion for the
three months ended March 31, 2002 to $1.2 billion for the three months ended
March 31, 2003. This increase is principally the result of increases in the
number of digital video and high-speed data customers as well as price
increases.

Average monthly revenue per customer relationship increased from $52 for the
three months ended March 31, 2002 to $59 for the three months ended March 31,
2003. Average monthly revenue per customer relationship represents total revenue
for the three months ended March 31, divided by three, divided by the average
number of customer relationships.

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



                                               THREE MONTHS ENDED MARCH 31,
                         -----------------------------------------------------------------------------
                                  2003                        2002                   2003 OVER 2002
                         ----------------------        ---------------------       -------------------
                                         % OF                        % OF                          %
                         AMOUNT        REVENUES        AMOUNT       REVENUES       CHANGE       CHANGE
                         ------        --------        ------       --------       ------       ------
                                                                              
Analog video             $  719             61%        $  691           64%        $  28            4%
Digital  video              179             15%           165           15%           14            8%
High-speed data             122             10%            64            6%           58           91%
Advertising sales            57              5%            58            6%           (1)          (2)%
Other                       101              9%            96            9%            5            5%
                         ------         ------         ------         ----         -----
                         $1,178            100%        $1,074          100%        $ 104           10%
                         ======         ======         ======         ====         =====


Analog video revenues consist primarily of revenues from basic services. Analog
video revenues increased by $28 million, or 4%, to $719 million for the three
months ended March 31, 2003 as compared to $691 million for the three months
ended March 31, 2002. The increase was primarily due to general price increases,
offset somewhat by the decline in analog video customers. We do not expect an
increase in analog video customers; however, our goal is to sustain revenues by
reducing analog customer losses and to grow revenues through price increases on
certain services and packages as well as the sale of data services and digital
video services.

All of our digital video customers also receive basic analog video service, and
digital video revenues consist of the portion of revenues from digital video
customers in excess of the amount paid by these customers for analog video
service. Additionally, included within digital video revenues are revenues from
premium services and pay-per-view services. Digital video revenues increased by
$14 million, or 8%, to $179 million for the three months ended March 31, 2003 as
compared to $165 million for the three months ended March 31, 2002. The majority
of the increase resulted from the addition of approximately 442,200 digital
customers. While we expect to increase digital customers as a result of various
marketing plans we expect to initiate in upcoming periods, we experienced a loss
of digital customers since December 31, 2002. We expect any increase in digital
customers and service penetration will be less than levels experienced in prior
periods.

High-speed data revenues increased $58 million, or 91%, from $64 million for the
three months ended March 31, 2002 to $122 million for the three months ended
March 31, 2003. The majority of the increase was primarily due to the addition
of 614,400 high-speed data customers. We were able to offer this service to more
of our customers, as the estimated percentage of homes passed that could receive
high-speed data service increased from 69% for the three months ended March 31,
2002 to 84% for the three months ended March 31, 2003 as a result of our ongoing
system upgrades.

Advertising sales revenues consist primarily of revenues from commercial
advertising customers, programmers and other vendors. Advertising sales
decreased $1 million, or 2%, from $58 million for the three months ended March
31, 2002 to $57 million for the three months ended March 31, 2003. For the three
months ended March 31, 2003 and 2002, we received $4 million and $12 million,
respectively, in advertising revenue from programmers. We expect that
advertising provided to programmers will decline substantially in the future.
Such advertising purchases are made pursuant to written agreements that are
generally consistent with other third-party commercial advertising agreements
and at prices that we believe approximate fair value.


                                       27

Other revenues consist primarily of revenues from franchise fees, commercial
high-speed data revenues, late payment fees, customer installations, wire
maintenance fees, home shopping, equipment rental, dial-up Internet service and
other miscellaneous revenues. Other revenues increased $5 million, or 5%, from
$96 million for the three months ended March 31, 2002 to $101 million for the
three months ended March 31, 2003. The increase was primarily due to an increase
in commercial high-speed data revenues as a result of our internal growth in
advanced services offset by decreases in late payment fees charged to customers
and other miscellaneous revenues.

OPERATING EXPENSES. Operating expenses increased $59 million, or 14%, from $426
million for the three months ended March 31, 2002 to $485 million for the three
months ended March 31, 2003. Total programming costs paid to programmers were
$314 million and $283 million, representing 29% of total costs and expenses for
the three months ended March 31, 2003 and 2002, respectively. Key expense
components as a percentage of revenues are as follows (dollars in millions):



                                               THREE MONTHS ENDED MARCH 31,
                         -----------------------------------------------------------------------------
                                  2003                        2002                   2003 OVER 2002
                         ----------------------        ---------------------       -------------------
                                         % OF                        % OF                          %
                         AMOUNT        REVENUES        AMOUNT       REVENUES       CHANGE       CHANGE
                         ------        --------        ------       --------       ------       ------
                                                                              
Programming costs         $314            26%           $283           26%           $31          11%
Advertising sales           21             2%             19            2%             2          11%
Service costs              150            13%            124           12%            26          21%
                          ----          ----            ----          ---            ---
                          $485            41%           $426           40%           $59          14%
                          ====          ====            ====          ===            ===


Programming costs consist primarily of costs paid to programmers for the
provision of basic, premium and digital channels and pay-per-view programs. The
increase in programming costs of $31 million, or 11%, was primarily due to price
increases, particularly in sports programming, an increased number of channels
carried on our systems and an increase in digital customers. The costs were
offset by the amortization of launch support against programming costs of $16
million and $13 million for the three months ended March 31, 2003 and 2002,
respectively.

Our cable programming costs have increased, in every year we have operated, in
excess of customary inflationary and cost-of-living type increases, and they are
expected to continue to increase due to a variety of factors, including
additional programming being provided to customers as a result of system
rebuilds that increase channel capacity, increased costs to produce or purchase
cable programming, increased costs from certain previously discounted
programming, and inflationary or negotiated annual increases. Our increasing
programming costs will result in declining video product margins to the extent
we are unable to pass on cost increases to our customers. We expect to partially
offset any resulting margin compression through increased incremental high-speed
data revenues.

Advertising sales expenses consist of costs related to traditional advertising
services, including salaries and benefits and commissions. Advertising sales
expenses increased $2 million, or 11%, primarily due to increased sales
commissions. Service costs consist primarily of service personnel salaries and
benefits, franchise fees, system utilities, internet service provider fees,
maintenance and pole rent expense. The increase in service costs of $26 million,
or 21%, resulted primarily from an increase in labor costs related to personnel
who had previously spent a majority of their time on capitalizable activities,
who now as a result of the decrease in rebuild and upgrade activities, are
spending their time on non-capitalizable activities.


                                       28

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $13 million, or 6%, from $222 million for
the three months ended March 31, 2002 to $235 million for the three months ended
March 31, 2003. Key components of expense as a percentage of revenues are as
follows (dollars in millions):



                                                     THREE MONTHS ENDED MARCH 31,
                               -----------------------------------------------------------------------------
                                        2003                        2002                   2003 OVER 2002
                               ----------------------        ---------------------       -------------------
                                               % OF                        % OF                          %
                               AMOUNT        REVENUES        AMOUNT       REVENUES       CHANGE       CHANGE
                               ------        --------        ------       --------       ------       ------
                                                                                    
General and administrative       $215           18%           $194            18%         $ 21           11%
Marketing                          20            2%             28             3%           (8)         (29)%
                                 ----         ----            ----           ---          ----
                                 $235           20%           $222            21%         $ 13            6%
                                 ====         ====            ====           ===          ====


General and administrative expenses consist primarily of salaries and benefits,
rent expense, billing costs, bad debt expense and property taxes. The increase
in general and administrative expenses of $21 million, or 11%, resulted
primarily from increases in salaries and benefits of $9 million, professional
fees of $6 million and insurance of $4 million. These increases were partially
offset by a decrease in bad debt expense of $10 million as we continue to
realize benefits from our strengthened credit policies.

Marketing expenses decreased $8 million, or 29%, due to reduced promotional
activity related to our service offerings including advertising, telemarketing
and direct sales. However, we expect marketing expenses to increase in
subsequent quarters over the first quarter of 2003.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense increased
by $44 million, or 13%, from $326 million for the three months ended March 31,
2002 to $370 million for the three months ended March 31, 2003. This increase
was due primarily to an increase in depreciation expense related to additional
capital expenditures in 2003 and 2002.

OPTION COMPENSATION EXPENSE, NET. Option compensation expense decreased by
approximately $2 million for the three months ended March 31, 2003 as compared
to the three months ended March 31, 2002. Option compensation expense represents
expense related to exercise prices on certain options that were issued prior to
our initial public offering in 1999 that were less than the estimated fair
values of our common stock at the time of grant. Compensation expense is being
accrued over the vesting period of such options and will continue to be recorded
until the last vesting period lapses in April 2004. On January 1, 2003, we
adopted SFAS No. 123 "Accounting for Stock-Based Compensation" using the
prospective method under which we will recognize 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. No new options were granted during the quarter
ended March 31, 2003, although we expect to grant options to some of our
officers and employees in 2003.

SPECIAL CHARGES, NET. Special charges of $2 million for the three months ended
March 31, 2003 represents $7 million of severance and related costs of our
on-going initiative to reduce our workforce, partially offset by a $5 million
credit from a settlement from the Internet service provider Excite@Home related
to the conversion of about 145,000 high-speed data customers to our Charter
Pipeline service in 2001. We expect to continue to record additional special
charges in 2003 related to the continued reorganization of our operations and
costs of litigation.

INTEREST EXPENSE, NET. Net interest expense increased by $28 million, or 8%,
from $362 million for the three months ended March 31, 2002 to $390 million for
the three months ended March 31, 2003. The increase in net interest expense was
a result of a $1.8 billion increase in average debt outstanding to $18.6 billion
for the first quarter of 2003 compared to $16.8 billion for the first quarter of
2002, partially offset by a decrease in our average borrowing rate from 8.2% in
the first quarter of 2002 to 7.9% in the first quarter of 2003. The increased
debt was primarily used for capital expenditures.

OTHER, NET. Other income decreased by $28 million from $31 million for the three
months ended March 31, 2002 to $3 million for the three months ended March 31,
2003. This decrease is primarily due to a decrease in gains on


                                       29

interest rate agreements which do not qualify for hedge accounting under SFAS
No. 133, which decreased from $33 million for the three months ended March 31,
2002 to $14 million for the three months ended March 31, 2003.


INCOME TAX EXPENSE. Income tax expense of $40 million was recognized for the
three months ended March 31, 2003. The income tax expense is realized through
increases in deferred tax liabilities related to our investment in Charter
Communications Holding Company, as well as the change in the deferred tax
liabilities of certain of our indirect corporate subsidiaries.

MINORITY INTEREST. Minority interest increased by $36 million, from $124 million
for the three months ended March 31, 2002 to $160 million for the three months
ended March 31, 2003. Minority interest represents the allocation of losses to
the minority interest based on ownership of Charter Communications Holding
Company and the 2% accretion of the preferred membership interests in CC VIII
issued to certain former owners of the Bresnan systems acquired by CC VIII in
February 2000. The increase is a result of an increase in loss before minority
interest.

CUMULATIVE EFFECT OF ACCOUNTING CHANGE. Cumulative effect of accounting change
in 2002 represents the impairment charge recorded as a result of adopting SFAS
No. 142.

NET LOSS. Net loss decreased by $135 million, or 43%, from $316 million for the
three months ended March 31, 2002 to $181 million for the three months ended
March 31, 2003 as a result of the factors described above.

LOSS PER COMMON SHARE. The loss per common share decreased by $0.46, from $1.08
per common share for the three months ended March 31, 2002 to $0.62 per common
share for the three months ended March 31, 2003 as a result of the factors
described above.

LIQUIDITY AND CAPITAL RESOURCES

INTRODUCTION

This section contains a discussion of our liquidity and capital resources,
including a discussion of our cash position, sources and uses of cash, access to
debt facilities and other financing sources, historical financing activities,
cash needs, capital expenditures and outstanding debt. The first part of this
section, entitled "Overview" provides an overview of these topics. The second
part of this section, entitled "Long-Term Debt" provides an overview of
long-term debt. The third part of this section, entitled "Historical Operating,
Financing and Investing Activities" provides information regarding the cash
provided from or used in our operating, financing and investing activities
during the three months ended March 31, 2003 and 2002. The fourth part of this
section, entitled "Capital Expenditures" provides more detailed information
regarding our historical capital expenditures and our planned capital
expenditures going forward.

OVERVIEW

Our business requires significant cash to fund capital expenditures, debt
service costs and ongoing operations. We have historically funded our operating
activities through cash flows from operating activities. We have funded capital
requirements through cash flows from operating activities, borrowings under the
credit facilities of our subsidiaries, issuances of debt securities by us and
our subsidiaries and our issuances of equity securities. The mix of funding
sources changes from period to period, but for the three months ended March 31,
2003, approximately 70% of our capital funding requirements were from cash flows
from operating activities and approximately 30% was from borrowings under the
credit facilities of our subsidiaries. We expect that our mix of sources of
funds will continue to change in the future based on our overall capital needs
relative to our cash flow and on the availability under the credit facilities of
our subsidiaries, our access to the bond and equity markets and our ability to
generate free cash flows. We define free cash flows as net cash flows from
operating activities plus net cash flows from investing activities less cost
associated with obtaining financing.


                                       30

We believe that as a result of our significant level of debt, current market
conditions and recent downgrades to our debt securities, we have limited access
to the debt and equity markets at this time. Accordingly, during 2003, we expect
to fund our liquidity and capital requirements principally through cash on hand,
cash flows from operating activities, and through borrowings under the credit
facilities of our subsidiaries and, subject to negotiation and execution of
definitive documentation, the Vulcan Inc. commitment, as discussed more fully in
Item 7. "Management's Discussion and Analysis of Financial Condition and Results
of Operations" in our 2002 Annual Report on Form 10-K. As of March 31, 2003, we
held $446 million in cash and cash equivalents and we had total potential unused
availability of $1.2 billion under the credit facilities of our subsidiaries,
although the actual availability at that time was only $652 million because of
limits imposed under covenant restrictions. However, continued access to these
credit facilities is subject to our remaining in compliance with the applicable
covenants of these credit facilities.

As the principal amounts owing under our various debt obligations become due,
sustaining our liquidity and access to capital will become more difficult over
time. In the fourth quarter of 2003, our subsidiary, CC V Holdings, LLC, will be
required to repay approximately $66 million in principal amount of the CC V
bonds. In 2005, $750 million of Charter Communications Inc.'s outstanding
convertible notes will mature. In subsequent years, substantial additional
amounts will become due under our remaining obligations. In addition, a default
under the covenants governing 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 other debt obligations.

We expect to remain in compliance with the covenants under the credit facilities
of our subsidiaries and indentures, and we expect that our cash on hand, cash
flows from operating activities and the amounts available under the credit
facilities should be sufficient to satisfy our liquidity needs through the end
of 2003. However, it is unclear whether we will have access to sufficient
capital to satisfy our principal repayment obligations, which are scheduled to
come due in 2005 and thereafter. We do not expect that cash flows from operating
activities will be sufficient, on their own, to permit us to satisfy these
obligations. Our substantial debt levels and the depressed price of our equity
securities limit our access to the debt and equity markets on reasonable terms
at this time and for the foreseeable future. In addition, the maximum allowable
leverage ratios under our credit facilities will decline over time and the total
potential borrowing available under our subsidiaries' current credit facilities
(subject to covenant restrictions and limitations) will decrease from
approximately $9.0 billion as of the end of 2003 to $8.7 billion and $7.7
billion by the end of 2004 and 2005, respectively. Although Mr. Allen and his
affiliates have purchased equity from us and our subsidiaries in the past,
except for the commitment of Vulcan Inc., an affiliate of Mr. Allen, described
above, there is no obligation for Mr. Allen or his affiliates to purchase equity
from or contribute or loan funds to us or to our subsidiaries in the future. We
recognize the interim nature of this facility and continue to evaluate our
options and to consider steps to address our leverage. We have hired a financial
advisor to assist us in evaluating alternatives.

In addition, because of our corporate structure, Charter Communications, Inc.
has less access to capital than certain of its operating subsidiaries and
therefore Charter Communications, Inc.'s ability to repay its senior notes is
subject to additional uncertainties. Charter Communications, Inc. is a holding
company and its principal assets are its interest in Charter Communications
Holding Company, LLC and the mirror notes payable by Charter Communications
Holding Company, LLC to Charter Communications, Inc., which have the same
principal amount and terms as those of Charter Communications, Inc.'s
convertible senior notes. As a result, Charter Communications, Inc.'s ability to
make interest payments, and, in 2005 and 2006, to repay the outstanding
principal of its convertible senior notes as they mature, is dependent on
Charter Communications, Inc.'s receipt of payments on the mirror notes owing by
Charter Communications Holding Company to Charter Communications, Inc., and
distributions from Charter Communications Holding Company.

Charter Communications Holding Company's ability to make any such payments or
distributions is in turn dependent on its receipt of distributions from, or
payments on intercompany loans owing by, its direct and indirect subsidiaries.
Charter Communications Holding Company and Charter Communications, Inc. are
separate legal entities from these subsidiaries and these subsidiaries are not
required to make payments or distributions to Charter Communications Holding
Company or Charter Communications, Inc.

The indentures governing the Charter Communications Holdings notes permit
Charter Communications Holdings to make distributions to Charter Communications
Holding Company only if, at the time of distribution, Charter Communications
Holdings can meet a leverage ratio of 8.75 to 1.0, there is no default under the
indentures and other specified tests are met. Charter Communications Holdings
did not meet that leverage ratio for the quarter ended March 31, 2003. The
indenture governing the Charter Holdings notes does not prohibit Charter
Holdings and its subsidiaries from making payments on its and their outstanding
unsubordinated intercompany debt to Charter Holdco, which had an


                                       31

aggregate principal amount of approximately $52 million as of March 31, 2003.
That amount is only sufficient to enable Charter Communications, Inc. to make
interest payments on its convertible senior notes through December, 2003, and is
not sufficient to enable Charter Communications, Inc. to make interest payments
beginning in April, 2004 or to repay all or any portion of its convertible
senior notes at maturity.

Accordingly, Charter Communications, Inc. will not be able to make interest
payments beginning in April 2004, or principal payments at maturity in 2005 and
2006, with respect to its convertible senior notes unless it can obtain
additional financing or it receives distributions or other payments from its
subsidiaries.

If, at any time, additional capital or borrowing capacity is required beyond
amounts internally generated or available through existing credit facilities or
in traditional debt or equity financings, we would consider:

            -     requesting waivers or amendments with respect to our credit
                  facilities, the availability and terms of which would be
                  subject to market conditions;

            -     further reducing our expenses and capital expenditures, which
                  would likely impair our ability to increase revenue;

            -     selling assets;

            -     issuing debt securities which may have structural or other
                  priorities over our existing high-yield debt; or

            -     issuing equity securities that would be dilutive to existing
                  shareholders.

Although there are no current plans to do so, we also may consider transactions
to reduce our leverage including seeking to exchange currently outstanding debt
for debt with a lower principal amount or, if opportunities arise, acquiring our
outstanding debt in the market.

If the above strategies were not successful, ultimately, we could be forced to
restructure our obligations or seek protection under the bankruptcy laws. In
addition, if we need to raise additional capital through the issuance of equity
or find it necessary to engage in a recapitalization or other similar
transaction, our shareholders could suffer significant dilution and our
noteholders might not receive all principal and interest payments to which they
are contractually entitled.

As a means of enhancing our liquidity, we are currently attempting to cut costs,
reduce capital expenditures and exploring sales of assets.

LONG-TERM DEBT

As of March 31, 2003 and December 31, 2002, long-term debt totaled approximately
$19.0 billion and $18.7 billion, respectively. This debt was comprised of
approximately $8.0 billion and $7.8 billion of bank debt, $9.6 billion and $9.5
billion of high-yield bonds and $1.4 billion and $1.4 billion of convertible
debt, respectively. As of March 31, 2003 and December 31, 2002, the weighted
average rate on the bank debt was approximately 5.7% and 5.6%, respectively, the
weighted average rate on the high-yield debt was approximately 10.2%, while the
weighted average rate on the convertible debt was approximately 5.3%, resulting
in a blended weighted average rate of 7.9%. Approximately 78% of our debt was
effectively fixed including the effects of our interest rate hedge agreements as
of March 31, 2003 compared to approximately 79% as of December 31, 2002.
Traditionally, we have accessed the high-yield bond market as a source of
capital for our growth. Moody's Investor Services downgraded our outstanding
debt in October, 2002 and again in January, 2003. Moody's also reduced its
liquidity rating of Charter Communications, Inc. to its lowest


                                       32

level. In January 2003, Standard & Poor's downgraded our outstanding debt. We
believe that as a result of our significant level of debt, current market
conditions and these downgrades, we have limited access to the debt market at
this time and we expect to fund our cash needs during 2003 from cash on hand,
cash from operations and borrowings under the existing credit facilities of our
subsidiaries. Effective April 14, 2003, our subsidiary entered into a commitment
letter with Vulcan Inc., which is an affiliate of Paul Allen, pursuant to which
Vulcan Inc. agreed to lend, or cause an affiliate to lend initially to Charter
Communications VII, LLC an aggregate amount of up to $300 million, which amount
includes a subfacility of up to $100 million for the issuance of letters of
credit, subject to negotiation and execution of definitive documentation. The
facility does not commit any party to provide funding to us. Under certain
circumstances, we could utilize (or cause a subsidiary to utilize) that facility
to provide funding to us to the extent necessary to comply with leverage ratio
covenants of our subsidiary's credit facilities in future quarters. However,
there can be no assurance that we or our subsidiary will have the ability to do
so or will choose to do so. We recognize the interim nature of this facility and
continue to evaluate our options and to consider steps to address our leverage.

As noted above, our access to capital from the credit facilities of our
subsidiaries is contingent on compliance with a number of restrictive covenants,
including covenants tied to our operating performance. We may not be able to
comply with all of these restrictive covenants. If there is an event of default
under our subsidiaries' 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 to make 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.

Our significant amount of debt and the significant interest charges incurred to
service debt may adversely affect our ability to obtain financing in the future
and react to changes in our business. We may need additional capital if we do
not achieve our projected revenues, or if our operating expenses increase. If we
are not able to obtain such capital from increases in our cash flows from
operating activities, additional borrowings or other sources, we may not be able
to fund customer demand for digital video, data or telephony services, offer
certain services in certain of our markets or compete effectively. Consequently,
our financial condition and results of operations could suffer materially. See
the section "Liquidity and Capital Resources" of "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in our 2002 Annual Report on Form 10-K for a description of our credit
facilities and other long-term debt, including certain terms, restrictions and
covenants.

HISTORICAL OPERATING, FINANCING AND INVESTING ACTIVITIES

We held $446 million in cash and cash equivalents as of March 31, 2003 compared
to $321 million as of December 31, 2002. The increase in cash and cash
equivalents is primarily a result of our desire to increase our liquid assets.

OPERATING ACTIVITIES. Net cash provided by operating activities for the three
months ended March 31, 2003 and 2002 was $162 million and $102 million,
respectively. For the three months ended March 31, 2003, net cash provided by
operating activities increased primarily due to increased revenues of $104
million and changes in operating assets and liabilities that used $45 million
less cash during the three months ended March 31, 2003 compared to the
corresponding period in 2002.

INVESTING ACTIVITIES. Net cash used in investing activities for the three months
ended March 31, 2003 and 2002 was $231 million and $604 million, respectively.
Investing activities used $373 million less cash during the three months ended
March 31, 2003 than the corresponding period in 2002 primarily as a result of
reductions in capital expenditures and acquisitions. Purchases of property,
plant and equipment used $294 million less cash during the three months ended
March 31, 2003 than the corresponding period in 2002 as a result of our efforts
to reduce capital expenditures. Payments for acquisitions used $78 million less
cash during the three months ended March 31, 2003 than the corresponding period
in 2002.

FINANCING ACTIVITIES. Net cash provided by financing activities for the three
months ended March 31, 2003 and 2002 was $194 million and $517 million,
respectively. Financing activities provided $323 million less cash during the


                                       33

three months ended March 31, 2003 than the corresponding period in 2002. The
decrease in cash provided during the three months ended March 31, 2003 as
compared to the corresponding period in 2002 was primarily due to a decrease in
issuances of long-term debt.


                                       34

CAPITAL EXPENDITURES

We have substantial ongoing capital expenditure requirements. We made purchases
of property, plant and equipment, excluding acquisitions of cable systems, of
$104 million and $435 million for the three months ended March 31, 2003 and
2002, respectively. The majority of the capital expenditures relates to our
customer premise equipment and rebuild and upgrade program. Upgrading our cable
systems has enabled us to offer digital television, cable modem high-speed
Internet access, video-on-demand, 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
three months ended March 31, 2003 and 2002, our liabilities related to capital
expenditures decreased $124 million and $87 million, respectively.

During 2003, we expect to spend approximately $1.0 billion to $1.1 billion in
the aggregate on capital expenditures. We expect our capital expenditures in
2003 will be lower than 2002 levels because our rebuild and upgrade plans are
largely completed.

As first reported in our Form 10-Q for the third quarter of 2002, we adopted
capital expenditure disclosure guidance which was recently developed by eleven
publicly traded cable system operators, including Charter Communications, Inc.,
with the support of the National Cable & Telecommunications Association
("NCTA"). The new disclosure is intended to provide more consistency in the
reporting of operating statistics in capital expenditures and customer
relationships among 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.

The following table presents our major capital expenditures categories in
accordance with NCTA disclosure guidelines for the three months ended March 31,
2003 and 2002 (dollars in millions):



                                              THREE MONTHS ENDED MARCH 31,
                                              ----------------------------
                                                  2003         2002
                                                  ----         ----
                                                         
Customer premise equipment (a)                    $ 64         $206
Scalable infrastructure (b)                          8           44
Line extensions (c)                                  8           17
Upgrade/Rebuild (d)                                 15          126
Support capital (e)                                  9           42
                                                  ----         ----

           Total capital expenditures (f)         $104         $435
                                                  ====         ====


      (a)   Customer premise equipment includes costs incurred at the customer
            residence to secure new customers, revenue units and additional
            bandwidth revenues. It also includes customer installation costs in
            accordance with SFAS 51 and customer premise equipment (e.g.,
            set-top terminals and cable modems, etc.).

      (b)   Scalable infrastructure includes costs, not related to customer
            premise equipment or our network, to secure growth of new customers,
            revenue units and additional bandwidth revenues or provide service
            enhancements (e.g., headend equipment).

      (c)   Line extensions include network costs associated with entering new
            service areas (e.g., fiber/coaxial cable, amplifiers, electronic
            equipment, make-ready and design engineering).

      (d)   Upgrade/rebuild includes costs to modify or replace existing
            fiber/coaxial cable networks, including betterments.

      (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).

      (f)   Represents all capital purchases made during the three months ended
            March 31, 2003 and 2002, respectively.


                                       35

CERTAIN TRENDS AND UNCERTAINTIES

The following discussion highlights a number of trends and uncertainties, in
addition to those discussed elsewhere in this Quarterly Report and in the
Critical Accounting Policies and Estimates section of Item 7. "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in our
2002 Annual Report on Form 10-K, that could materially impact our business,
results of operations and financial condition.

LIQUIDITY. Our business requires significant cash to fund capital expenditures,
debt service costs and ongoing operations. Our ongoing operations will depend on
our ability to generate cash and to secure financing in the future. We have
historically funded liquidity and capital requirements through cash flows from
operating activities, borrowings under the credit facilities of our
subsidiaries, issuances of debt securities by us and our subsidiaries and our
issuances of equity securities. We believe, however, that we have limited access
to the debt or equity markets at this time in light of general economic
conditions, our substantial leverage, the business condition of the cable,
telecommunications and technology industry, our current credit rating and recent
downgrades of our outstanding debt and liquidity ratings, and pending litigation
and investigations. See "-Substantial Leverage" below.

Our ability to conduct operations is dependent on our continued access to credit
pursuant to our subsidiaries' credit facilities. Our total potential borrowing
availability under the current credit facilities of our subsidiaries totaled
$1.2 billion as of March 31, 2003, although the actual availability at that time
was only $652 million because of limits imposed by covenant restrictions. Our
access to those funds is subject to our satisfaction of the covenants in those
credit facilities and the indentures governing our and our subsidiaries' public
debt. We may not be able to comply with all of the financial ratios and
restrictive covenants in our subsidiaries' credit facilities. If there is an
event of default under our subsidiaries' 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 to make payments under our debt
instruments. In addition, an event of default under our credit facilities and
indentures, if not waived, could result in the acceleration of those debt
obligations, which would 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.

In addition, as the principal amounts owing under our various debt obligations
become due, sustaining our liquidity and access to capital will become more
difficult over time. It is unclear whether we will have access to sufficient
capital to satisfy our principal repayment obligations which are scheduled to
come due in 2005 and thereafter. We do not expect that cash flows from operating
activities will be sufficient, on their own, to permit us to satisfy these
obligations. In addition, because of our corporate structure, Charter
Communications, Inc., a holding company, has less access to capital than certain
of its operating subsidiaries and therefore Charter Communications, Inc.'s
ability to repay its senior notes is subject to additional uncertainties.

If our business does not generate sufficient cash flow from operating
activities, and sufficient future distributions are not available to us from
borrowings under our credit facilities or from other sources of financing, we
may not be able to repay our debt, grow our business, respond to competitive
challenges, or to fund our other liquidity and capital needs. As a means of
enhancing our liquidity, we are currently attempting to cut costs, reduce
capital expenditures and are exploring sales of assets.

If we need to seek alternative sources of financing, there can be no assurance
that we will be able to obtain the requisite financing or that such financing,
if available, would not have terms that are materially disadvantageous to our
existing debt and equity holders. Although Mr. Allen and his affiliates have
purchased equity from us and our subsidiaries in the past, there is no
obligation for Mr. Allen or his affiliates to purchase equity or, except as
described in Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of our 2002 Annual Report on Form 10-K
under "Funding Commitment of Vulcan Inc.," with respect to the $300 million
back-up credit facility commitment, contribute or lend funds to us or to our
subsidiaries in the future. We recognize the interim nature of this facility and
continue to evaluate our options and to consider steps to address our leverage.
We have hired a financial advisor to assist us in evaluating alternatives.

If, at any time, additional capital or capacity is required beyond amounts
internally generated or available through existing credit facilities or in
traditional debt or equity financings, we would consider:


                                       36

- -     requesting waivers or amendments with respect to our credit facilities,
      which might not be granted on terms favorable to us or at all;

- -     further reducing our expenses and capital expenditures, which would likely
      impair our ability to increase revenue;

- -     selling assets;

- -     issuing debt securities which may have structural or other priorities over
      our existing high-yield debt; or

- -     issuing equity securities that would be dilutive to existing shareholders.

Although there are no current plans to do so, we also may consider transactions
to reduce our leverage, including seeking to exchange currently outstanding debt
for debt with a lower principal amount or, if opportunities arise, acquiring our
outstanding debt in the market.

If the above strategies were not successful, ultimately, we could be forced to
restructure our obligations or seek protection under the bankruptcy laws. In
addition, if we need to raise additional capital through the issuance of equity
or find it necessary to engage in a recapitalization or other similar
transaction, our shareholders could suffer significant dilution and our
noteholders might not receive all principal and interest payments to which they
are contractually entitled. For more information, see the section entitled
"Liquidity and Capital Resources."

SUBSTANTIAL LEVERAGE. We and our subsidiaries have a significant amount of debt.
As of March 31, 2003, our total debt was approximately $19.0 billion. Our
long-term debt begins to mature in the fourth quarter of 2003, when
approximately $66 million of principal is due on the CC V bonds, and
subsequently in October 2005 when Charter Communications, Inc.'s $750 million of
5.75% convertible senior notes will mature. In subsequent years, substantial
additional amounts will become due under our remaining obligations. If current
debt levels increase, the related risks that we now face will intensify,
including a potential further deterioration of our existing credit ratings.
Moody's downgraded our debt once in October 2002, and again in January 2003.
Standard & Poor's also downgraded our debt in January 2003. We believe that as a
result of our significant levels of debt, current market conditions and recent
downgrades to our debt securities, we have limited access to the debt and equity
markets at this time. Our difficulty in accessing these markets will impact our
ability to obtain future financing for operations, to fund our planned capital
expenditures and to react to changes in our business. If our business does not
generate sufficient cash flow from operating activities, and sufficient future
distributions are not available to us from borrowings under our credit
facilities or from other sources of financing, we may not be able to repay our
debt, grow our business, respond to competitive challenges, or to fund our other
liquidity and capital needs. If we need to raise additional capital through the
issuance of equity or find it necessary to engage in a recapitalization or other
similar transaction, our shareholders could suffer significant dilution and our
noteholders might not receive all principal and interest payments to which they
are contractually entitled. For more information, see the section above entitled
"Liquidity and Capital Resources."

RESTRICTIVE COVENANTS. The credit facilities of our subsidiaries and the
indentures governing the publicly held notes of our subsidiaries contain a
number of significant covenants that could adversely impact our business. In
particular, the credit facilities and indentures of our subsidiaries restrict
our subsidiaries' ability to:

      -     pay dividends or make other distributions;

      -     make certain investments or acquisitions;

      -     enter into related party transactions unless certain conditions are
            met;

      -     dispose of assets or merge;

      -     incur additional debt;

      -     issue equity;

      -     repurchase or redeem equity interests and debt;

      -     grant liens; and

      -     pledge assets.


                                       37

Furthermore, in accordance with our subsidiaries' credit facilities, a number of
our subsidiaries are required to maintain specified financial ratios and meet
financial tests. These financial ratios decrease over time and will become more
difficult to maintain during the latter half of 2003 and thereafter. The ability
to comply with these provisions may be affected by events beyond our control.
The breach of any of these covenants will result in a default under the
applicable debt agreement or instrument and could trigger acceleration of the
debt under the applicable agreement, and in certain cases under other agreements
governing our long-term indebtedness. Any default under our credit facilities or
indentures governing our outstanding debt might adversely affect our growth, our
financial condition and our results of operations and the ability to make
payments on the publicly held notes of Charter Communications, Inc. and our
subsidiaries and the credit facilities of our subsidiaries.

ACCELERATION OF INDEBTEDNESS OF OUR SUBSIDIARIES. In the event of a default
under our subsidiaries' credit facilities or public notes, our subsidiaries'
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, our
subsidiaries' credit facilities and indentures will not permit our subsidiaries
to distribute funds to Charter Communications Holding Company or Charter
Communications, Inc. to pay interest or principal on our public notes. If the
amounts outstanding under such credit facilities or public notes are
accelerated, all of our subsidiaries' debt and liabilities would be payable from
our subsidiaries' assets, prior to any distribution of our subsidiaries' assets
to pay the interest and principal amounts on our public notes. In addition, the
lenders under our credit facilities could foreclose on their collateral, which
includes equity interests in our subsidiaries, and exercise other rights of
secured creditors. In any such case, we might not be able to repay or make any
payments on our public notes. Additionally, an acceleration or payment default
under our credit facilities would cause a cross-default in the indentures
governing the Charter Holdings notes and our convertible senior notes and would
trigger the cross-default provision of the Charter Operating Credit Agreement.
Any default under any of our subsidiaries' credit facilities or public notes
might adversely affect the holders of our public notes and our growth, financial
condition and results of operations and could force us to examine all options,
including seeking the protection of the bankruptcy laws.

CHARTER COMMUNICATIONS, INC.'S PUBLIC NOTES ARE STRUCTURALLY SUBORDINATED TO ALL
LIABILITIES OF OUR SUBSIDIARIES. The borrowers and guarantors under the Charter
Operating credit facilities, the CC VI Operating credit facilities, the Falcon
credit facilities and the CC VIII Operating credit facilities are our indirect
subsidiaries. A number of our subsidiaries are also obligors under other debt
instruments, including Charter Holdings, which is a co-issuer of senior notes
and senior discount notes issued in March 1999, January 2000, January 2001, May
2001 and January 2002. As of March 31, 2003, our total debt was approximately
$19.0 billion, $17.6 billion of which would have been structurally senior to the
Charter Communications, Inc. public notes. In a liquidation, the lenders under
all of our subsidiaries' credit facilities and the holders of the other debt
instruments and all other creditors of our subsidiaries will have the right to
be paid before us from any of our subsidiaries' assets.

If we caused a subsidiary to make a distribution to enable us to make payments
in respect of our public notes, and such transfer were deemed a fraudulent
transfer or an unlawful distribution, the holders of our public notes could be
required to return the payment to (or for the benefit of) the creditors of our
subsidiaries. In the event of the bankruptcy, liquidation or dissolution of a
subsidiary, following payment by such subsidiary of its liabilities, such
subsidiary may not have sufficient assets remaining to make any payments to us
as an equity holder or otherwise and may be restricted by bankruptcy and
insolvency laws from making any such payments. This adversely affects our
ability to make payments to the holders of our public notes.

SECURITIES LITIGATION AND GOVERNMENT INVESTIGATIONS. As previously reported, a
number of Federal Class Actions were filed against us and certain of our former
and present officers and directors alleging violations of securities laws. In
addition, a number of other lawsuits have been filed against us in other
jurisdictions. A shareholders derivative suit was filed in the United States
District Court for the Eastern District of Missouri, and several class action
lawsuits were filed in Delaware state court against us and certain of our
directors and officers. Finally, two derivative suits were filed in Missouri
state court against us, our current directors and our former independent
auditor; these actions were consolidated during the fourth quarter of 2002. The
federal derivative suit, the Delaware class actions and the consolidated
derivative suit each allege that the defendants breached their fiduciary duties.


                                       38

In August of 2002, we became aware of a grand jury investigation being conducted
by the United States Attorney's Office for the Eastern District of Missouri into
certain of our accounting and reporting practices focusing on how we reported
customer numbers, refunds that we sought from programmers and our reporting of
amounts received from digital set-top terminal manufacturers for advertising. We
have been advised by the U.S. Attorney's Office that no member of the Board of
Directors, including our Chief Executive Officer, is a target of the
investigation. We are fully cooperating with the investigation. In November
2002, we received an informal, non-public inquiry from the Staff of the
Securities and Exchange Commission (SEC). The SEC has subsequently issued a
formal order of investigation dated January 23, 2003, and subsequent document
and testimony subpoenas. The investigation and subpoenas generally concern our
prior reports with respect to the determination of the number of our customers,
and various of our other accounting policies and practices, including our
capitalization of certain expenses and dealings with certain vendors, including
programmers and digital set-top terminal suppliers. We are actively cooperating
with the SEC staff.

Due to the inherent uncertainties of litigation and investigations, we cannot
predict the ultimate outcome of these proceedings. In addition, our restatement
may lead to additional allegations in the pending securities class and
derivative actions against us, or to additional claims being filed or to
investigations being expanded or commenced. These proceedings, and our actions
in response to these proceedings, could result in substantial costs, substantial
potential liabilities and the diversion of management's attention, all of which
could affect adversely the market price of our Class A common stock and our
publicly-traded notes, as well as our ability to meet future operating and
financial estimates and to execute our business and financial strategies.

COMPETITION. The industry in which we operate is highly competitive. In some
instances, we compete against companies with fewer regulatory burdens, easier
access to financing, greater personnel resources, greater brand name recognition
and long-standing relationships with regulatory authorities and customers.
Increasing consolidation in the cable industry and the repeal of certain
ownership rules may provide additional benefits to certain of our competitors,
either through access to financing, resources or efficiencies of scale.

In particular, we face competition within the subscription television industry,
which includes providers of paid television service employing technologies other
than cable, such as direct broadcast satellite, also known as DBS. Competition
from DBS, including intensive marketing efforts and aggressive pricing, has had
an adverse impact on our ability to retain customers. Local telephone companies
and electric utilities can compete in this area, and they increasingly may do so
in the future. The subscription television industry also faces competition from
broadcast companies distributing television broadcast signals without assessing
a subscription fee and from other communications and entertainment media,
including conventional radio broadcasting services, newspapers, movie theaters,
the Internet, live sports events and home video products. With respect to our
Internet access services, we face competition, including intensive marketing
efforts and aggressive pricing, from telephone companies and other providers of
"dial-up" and digital subscriber 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.

VARIABLE INTEREST RATES. At March 31, 2003, excluding the effects of hedging,
approximately 42% of our debt bears interest at variable rates that are linked
to short-term 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 March 31, 2003 and December 31, 2002, the weighted average
rate on the bank debt was approximately 5.7% and 5.6%, respectively, the
weighted average rate on the high-yield debt was approximately 10.2%, while the
weighted average rate on the convertible debt was approximately 5.3%, resulting
in a blended weighted average rate of 7.9%. Approximately 78% of our debt was
effectively fixed including the effects of our interest rate hedge agreements as
of March 31, 2003 as compared to approximately 79% at December 31, 2002.

INTEGRATION OF OPERATIONS. In the past, we experienced rapid growth from
acquisitions of a number of smaller cable operators and the rapid rebuild and
rollout of advanced services. This activity has placed and is expected to
continue to place a significant strain on our management, operations and other
resources. Our future success will depend in part on our ability to successfully
integrate the operations acquired. The failure to implement management,
operating or financial systems necessary to successfully integrate acquired
operations, including headend and call center consolidation, completion of
planned upgrades and standardization of operating procedures, could have a


                                       39

material adverse effect on our business, results of operations and financial
condition. In addition, our ability to properly manage our operations will be
impacted by our ability to attract, retain and incentivize experienced,
qualified, professional management.

SERVICES. We expect that a substantial portion of our near term growth will be
achieved through revenues from high-speed data services, digital video, bundled
service packages, and to a lesser extent other services that take advantage of
cable's broadband capacity. The technology involved in our product and service
offerings generally requires that we have permission to use intellectual
property and that such property not infringe on rights claimed by others. We may
not be able to offer these advanced services successfully to our customers or
provide adequate customer service and these advanced services may not generate
adequate revenues. Also, if the vendors we use for these services are not
financially viable over time, we may experience disruption of service and incur
costs to find alternative vendors. In addition, if it is determined that the
product being utilized infringes on the rights of others, we may be sued or be
precluded from using the technology.

INCREASING PROGRAMMING COSTS. Programming has been, and is expected to continue
to be, our largest operating expense item. In recent years, the cable industry
has experienced a rapid escalation in the cost of programming, particularly
sports programming. This escalation may continue, and we may not be able to pass
programming cost increases on to our customers. The inability to pass these
programming cost increases on to our customers would have an adverse impact on
our cash flow and operating margins.

CLASS A COMMON STOCK AND PUBLIC NOTES PRICE VOLATILITY. The market price of our
Class A common stock and the publicly-traded notes issued by us and our
subsidiaries 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; new regulatory
legislation adopted in the United States; and any action taken or requirements
imposed by Nasdaq if our Class A common stock trades below $1.00 per share for
over 30 consecutive trading days.

In addition, the securities market in general, and the Nasdaq National Market
and the market 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 operating performance of those
companies. These broad market and industry factors may seriously harm the market
price of our Class A common stock and our subsidiaries' public notes, regardless
of our operating performance. In the past, securities litigation has often
commenced following periods of volatility in the market price of a company's
securities, and recently such purported class action lawsuits were filed against
us.

ECONOMIC SLOWDOWN; GLOBAL CONFLICT. It is difficult to assess the impact that
the general economic slowdown and global conflict will have on future
operations. However, the economic slowdown has resulted and the slowdown and the
war could continue to result in reduced spending by customers and advertisers,
which could reduce our revenues and operating cash flow, and also could affect
our ability to collect accounts receivable and maintain customers. In addition,
any prolonged military conflict would materially and adversely affect our
revenues from our systems providing services to military installations. If we
experience reduced operating revenues, it could negatively affect our ability to
make expected capital expenditures and could also result in our inability to
meet our obligations under our financing agreements. These developments could
also have a negative impact on our financing and variable interest rate
agreements through disruptions in the market or negative market conditions.

LONG-TERM INDEBTEDNESS -- CHANGE OF CONTROL PAYMENTS. We may not have the
ability to raise the funds necessary to fulfill our obligations under the
Charter Communications, Inc. convertible senior notes or the public notes and
credit facilities of our subsidiaries following a change of control. Under the
indentures governing the Charter Communications, Inc. convertible senior notes,
upon the occurrence of specified change of control events, including certain
specified dispositions of our stock by Mr. Allen, we are required to offer to
repurchase all of the outstanding Charter Communications, Inc. convertible
senior notes. However, we may not have sufficient funds at the time of


                                       40

the change of control event to make the required repurchase of the Charter
Communications, Inc. convertible senior notes and our subsidiaries are limited
in their ability to make distributions or other payments to us to fund any
required repurchase. In addition, a change of control under our subsidiaries'
credit facilities and indentures governing their public notes would require the
repayment of borrowings under those credit facilities and indentures. Because
such credit facilities and public notes are obligations of our subsidiaries, the
credit facilities and the public notes would have to be repaid by our
subsidiaries before their assets could be available to us to repurchase the
Charter Communications, Inc. convertible senior notes. Our failure to make or
complete a change of control offer would place us in default under the Charter
Communications, Inc. convertible senior notes. The failure of our subsidiaries
to make a change of control offer or repay the amounts outstanding under their
credit facilities would place them in default of these agreements and could
result in a default under the indentures governing the Charter Communications,
Inc. convertible senior notes.

REGULATION AND LEGISLATION. Cable systems are extensively regulated at the
federal, state, and local level, including rate regulation of basic service and
equipment and municipal approval of franchise agreements and their terms, such
as franchise requirements to upgrade cable plant and meet specified customer
service standards. Cable operators also face significant regulation of their
channel carriage. They currently can be required to devote substantial capacity
to the carriage of programming that they would not carry voluntarily, including
certain local broadcast signals, local public, educational and government access
programming, and unaffiliated commercial leased access programming. This
carriage burden could increase in the future, particularly if the Federal
Communications Commission were to require cable systems to carry both the analog
and digital versions of local broadcast signals or multiple channels added by
digital broadcasters. The Federal Communications Commission is currently
conducting a proceeding in which it is considering this channel usage
possibility, although it recently issued a tentative decision against such dual
carriage. In addition, the carriage of new high-definition broadcast and
satellite programming services over the next few years may consume significant
amounts of system capacity without contributing to proportionate increases in
system revenue.

There is also uncertainty whether local franchising authorities, state
regulators, the Federal Communications Commission, or the U.S. Congress will
impose obligations on cable operators to provide unaffiliated Internet service
providers with regulated access to cable plant. If they were to do so, and the
obligations were found to be lawful, it could complicate our operations in
general, and our Internet operations in particular, from a technical and
marketing standpoint. These access obligations could adversely impact our
profitability and discourage system upgrades and the introduction of new
products and services. Multiple federal courts have now struck down open-access
requirements imposed by several different franchising authorities as unlawful.
In March 2002, the Federal Communications Commission officially classified
cable's provision of high-speed Internet service in a manner that makes open
access requirements unlikely. At the same time, the Federal Communications
Commission initiated a rulemaking proceeding that leaves open the possibility
that the Commission may assert regulatory control in the future. As we offer
other advanced services over our cable system, we are likely to face additional
calls for regulation of our capacity and operation. These regulations, if
adopted, could adversely affect our operations.

The Federal Communications Commission's March 2002 ruling also held that
Internet access service provided by cable operators was not subject to franchise
fees assessed by local franchising authorities. A number of local franchise
authorities and Internet service providers have appealed this decision. The
matter is scheduled to be argued in May 2003. As a result of this ruling, we
have stopped collecting franchise fees for cable modem service.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

No material changes in reported market risks have occurred since the filing of
our December 31, 2002 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES.

Within 90 days prior to the filing date of this report, management, including
our Chief Executive Officer and interim 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 interim Chief Financial Officer concluded that the
disclosure controls


                                       41

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 were no significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation.

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, Charter
Communications, Inc.'s management believes that its controls do provide such
reasonable assurances.


                                       42

                           PART II. OTHER INFORMATION.

ITEM 1. LEGAL PROCEEDINGS.

SECURITIES CLASS ACTIONS AND DERIVATIVE SUITS.

Fourteen putative federal class action lawsuits (the "Federal Class Actions")
have been filed against Charter Communications, Inc. and certain of its former
and present officers and directors in various jurisdictions allegedly on behalf
of all purchasers of Charter Communications, Inc.'s securities during the period
from either November 8 or November 9, 1999 through July 17 or July 18, 2002.
Unspecified damages are sought by the plaintiffs. In general, the lawsuits
allege that Charter Communications, Inc. utilized misleading accounting
practices and failed to disclose these accounting practices and/or issued false
and misleading financial statements and press releases concerning Charter
Communications, Inc.'s operations and prospects.

The Federal Class Actions consist of:

In the United States District Court for the Eastern District of Missouri:

      -     Carmen Rodriguez, on behalf of herself and all others similarly
            situated, v. Charter Communications, Inc., Jerald L. Kent, Carl E.
            Vogel and Kent D. Kalkwarf, filed on August 5, 2002;

      -     Andrew Budman and Krupa Budman, together and on behalf of all others
            similarly situated, v. Charter Communications, Inc., Paul G. Allen,
            Jerald L. Kent and Carl Vogel, filed on August 7, 2002;

      -     Jill D. Martin, on behalf of herself and all others similarly
            situated, v. Charter Communications, Inc., Jerald L. Kent, Carl E.
            Vogel and Kent D. Kalkwarf, filed on August 9, 2002;

      -     James L. Gessford, on behalf of himself and all others similarly
            situated, v. Charter Communications, Inc., Jerald L. Kent, Carl E.
            Vogel and Kent D. Kalkwarf, filed on August 13, 2002;

      -     Lee Posner, on behalf of himself and all others similarly situated,
            v. Charter Communications, Inc., Carl E. Vogel and Kent Kalkwarf,
            filed on September 9, 2002;

      -     Laurence Balfus, on behalf of himself and all others similarly
            situated, v. Charter Communications, Inc., Paul Allen, Jerald L.
            Kent, Carl E. Vogel and Kent Kalkwarf, filed on September 12, 2002;

      -     John Dortch, on behalf of himself and all others similarly situated,
            v. Charter Communications, Inc., Jerald L. Kent, Carl E. Vogel and
            Kent D. Kalkwarf, filed on September 12, 2002; and

      -     StoneRidge Investment Partners LLC, by itself and on behalf of all
            others similarly situated, v. Charter Communications, Inc., Paul G.
            Allen, Jerald L. Kent, Carl E. Vogel and Kent Kalkwarf, filed on
            September 30, 2002

            In the United States District Court for the Central District of
            California

      -     Mytien Ngo, individually and on behalf of all others similarly
            situated, v. Charter Communications, Inc., Carl E. Vogel and Kent
            Kalkwarf, filed on July 31, 2002;

      -     David Birnbaum, individually and on behalf of all others similarly
            situated, v. Charter Communications, Inc., Carl E. Vogel and Kent
            Kalkwarf, filed on August 6, 2002;

      -     Fred B. Storey, individually and on behalf of all others similarly
            situated, v. Charter Communications, Inc., Carl E. Vogel and Kent
            Kalkwarf, filed on August 12, 2002; and


                                       43

      -     Patricia Morrow, individually and on behalf of all others similarly
            situated, v. Charter Communications, Inc., Carl E. Vogel and Kent
            Kalkwarf, filed on August 13, 2002

            In the United States District Court for the Southern District of
            Illinois

      -     George Pike, for himself and on behalf of all others similarly
            situated, v. Charter Communications, Inc., Paul G. Allen, Jerald L.
            Kent and Carl E. Vogel, filed on August 15, 2002

            In the United States District Court for the District of Columbia

      -     Evelyn Gadol, individually and on behalf of all others similarly
            situated, v. Charter Communications, Inc., Carl E. Vogel and Kent
            Kalkwarf, filed on August 27, 2002

In October 2002, Charter Communications, Inc. filed a motion with the Judicial
Panel on Multidistrict Litigation (the "Panel") to transfer the Federal Class
Actions to the Eastern District of Missouri. On March 12, 2003, the Panel
transferred the six Federal Class Actions not filed in the Eastern District of
Missouri to that district for coordinated or consolidated pretrial proceedings
with the eight Federal Class Actions already pending there. The Panel's transfer
order assigned the Federal Class Actions to Judge Charles A. Shaw. By virtue of
a prior court order, StoneRidge Investment Partners LLC became lead plaintiff
upon entry of the Panel's transfer order. We have received a consolidated
complaint from lead plaintiff which includes as defendants several former and
present officers of the Company, as well as our former outside auditors and a
vendor/supplier of digital set-top terminals. The court has not yet permitted
the filing of this consolidated complaint. No response from us will be due until
after the consolidated complaint has been filed.

On September 12, 2002, a shareholders derivative suit (the "State Derivative
Action") was filed in Missouri state court against Charter Communications, Inc.
and its current directors, as well as its former auditors. 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 our behalf, are
sought by the plaintiffs.

The State Derivative Action is entitled:

      -     Kenneth Stacey, Derivatively on behalf of Nominal Defendant Charter
            Communications, Inc., v. Ronald L. Nelson, Paul G. Allen, Marc B.
            Nathanson, Nancy B. Peretsman, William Savoy, John H. Tory, Carl E.
            Vogel, Larry W. Wangberg, and Charter Communications, Inc.

Separately, on February 12, 2003, a shareholders derivative suit (the "Federal
Derivative Action"), was filed against Charter Communications, Inc. and its
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 Communications, Inc. by failing
to establish and maintain adequate internal controls and procedures. Unspecified
damages, allegedly on our behalf, are sought by the plaintiffs.

The Federal Derivative Action is entitled:

      -     Arthur Cohn, Derivatively on behalf of Nominal Defendant Charter
            Communications, Inc., v. Ronald L. Nelson, Paul G. Allen, Marc B.
            Nathanson, Nancy B. Peretsman, William Savoy, John H. Tory, Carl E.
            Vogel, Larry W. Wangberg, and Charter Communications, Inc.

In addition to the Federal Class Actions, the State Derivative Action and the
Federal Derivative Action, six putative class action lawsuits have been filed
against Charter Communications, Inc. and certain of its current directors and
officers in the Court of Chancery of the State of Delaware (the "Delaware Class
Actions"). The Delaware Class Actions are substantively identical and generally
allege that the defendants breached their fiduciary duties by participating or
acquiescing in a purported and threatened attempt by Defendant Paul Allen to
purchase shares and assets of Charter Communications, Inc. at an unfair price.
The lawsuits were brought on behalf of Charter


                                       44

Communications, Inc.'s securities holders as of July 29, 2002, and seek
unspecified damages and possible injunctive relief. No such purported or
threatened transaction by Mr. Allen has been presented.

The Delaware Class Actions consist of:

      -     Eleanor Leonard, v. Paul G. Allen, Larry W. Wangberg, John H. Tory,
            Carl E. Vogel, Marc B. Nathanson, Nancy B. Peretsman, Ronald L.
            Nelson, William Savoy, and Charter Communications, Inc., filed on
            August 12, 2002;

      -     Helene Giarraputo, on behalf of herself and all others similarly
            situated, v. Paul G. Allen, Carl E. Vogel, Marc B. Nathanson, Ronald
            L. Nelson, Nancy B. Peretsman, William Savoy, John H. Tory, Larry W.
            Wangberg, and Charter Communications, Inc., filed on August 13,
            2002;

      -     Ronald D. Wells, Whitney Counsil and Manny Varghese, on behalf of
            themselves and all others similarly situated, v. Charter
            Communications, Inc., Ronald L. Nelson, Paul G. Allen, Marc B.
            Nathanson, Nancy B. Peretsman, William Savoy, John H. Tory, Carl E.
            Vogel, Larry W. Wangberg, filed on August 13, 2002;

      -     Gilbert Herman, on behalf of himself and all others similarly
            situated, v. Paul G. Allen, Larry W. Wangberg, John H. Tory, Carl E.
            Vogel, Marc B. Nathanson, Nancy B. Peretsman, Ronald L. Nelson,
            William Savoy, and Charter Communications, Inc., filed on August 14,
            2002;

      -     Stephen Noteboom, on behalf of himself and all others similarly
            situated, v. Paul G. Allen, Larry W. Wangberg, John H. Tory, Carl E.
            Vogel, Marc B. Nathanson, Nancy B. Peretsman, Ronald L. Nelson,
            William Savoy, and Charter Communications, Inc., filed on August 16,
            2002; and

      -     John Fillmore on behalf of himself and all others similarly
            situated, v. Paul G. Allen, Larry W. Wangberg, John H. Tory, Carl E.
            Vogel, Marc B. Nathanson, Nancy B. Peretsman, Ronald L. Nelson,
            William Savoy, and Charter Communications, Inc., filed on October
            18, 2002.

All of the lawsuits discussed above are each in preliminary stages, and no
dispositive motions or other responses to any of the complaints have been filed.
Charter Communications, Inc. intends to vigorously defend the lawsuits.

GOVERNMENT INVESTIGATIONS. In August of 2002, Charter Communications, Inc.
became aware of a grand jury investigation being conducted by the United States
Attorney's Office for the Eastern District of Missouri into certain of its
accounting and reporting practices, focusing on how Charter Communications, Inc.
reported customer numbers, refunds that Charter Communications, Inc. sought from
programmers and its reporting of amounts received from digital set-top terminal
suppliers for advertising. We have been advised by the U.S. Attorney's Office
that no member of the Board of Directors, including our Chief Executive Officer,
is a target of the investigation. We are fully cooperating with the
investigation.

On November 4, 2002, Charter Communications, Inc. received an informal,
non-public inquiry from the Staff of the Securities and Exchange Commission. The
SEC has subsequently issued a formal order of investigation dated January 23,
2003, and subsequent document and testimony subpoenas. The investigation and
subpoenas generally concern Charter Communications, Inc.'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. We are actively cooperating with the SEC Staff.

OUTCOME. We are unable to predict the outcome of the lawsuits and the government
investigations described above. An unfavorable outcome in the lawsuits or the
government investigations described above could have a material adverse effect
on our results of operations and financial condition.

INDEMNIFICATION. We are generally required to indemnify each of the named
individual defendants in connection with these matters pursuant to the terms of
our Bylaws and (where applicable) such individual defendants' employment
agreements. Pursuant to the terms of certain employment agreements and in
accordance with the


                                       45

Bylaws of Charter Communications, Inc., in connection with the pending grand
jury investigation, SEC investigation and the above described lawsuits, our
current directors and our current and former officers have been advanced certain
costs and expenses incurred in connection with their defense.

INSURANCE. Charter Communications, Inc. has directors' and officers' liability
insurance coverage that it believes is available for these matters, where
applicable, and subject to the terms, conditions and limitations of the
respective policies.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

As previously reported, on August 31, 2001, in connection with Charter's
acquisition of Cable USA, Inc. and certain cable system assets from affiliates
of Cable USA, Inc., Charter issued 505,664 shares of Series A Convertible
Redeemable Preferred Stock (Preferred Stock) valued at $50.6 million as a
portion of the merger consideration and asset purchase price consideration for
the acquisition of such assets. On February 28, 2003, Charter issued and
released the 39,595 shares of Preferred Stock that then remained subject to
indemnity holdback provisions under the transaction documents, which shares have
an aggregate liquidation preference of $3,959,500. At March 31, 2003, there were
545,259 shares of Preferred Stock outstanding with an aggregate liquidation
preference of $54,525,900. Each share of Preferred Stock is convertible into
approximately 4.047 shares of Class A common stock.

Charter did not receive any cash in exchange for the issuance of the Preferred
Stock. In issuing the Preferred Stock, Charter relied on the exemption from
registration under the Securities Act of 1933 pursuant to Section 4(2), based in
part on the representations made to Charter in investment representation letters
from each of the stockholders of Cable USA, Inc. receiving Charter common stock
in the transaction and each of the sellers receiving Charter common stock as
asset purchase consideration and the limited number of stockholders and sellers
receiving Charter common stock. Charter had reasonable grounds to believe that
the stockholders and sellers were accredited investors, capable of evaluating
the merits and risks of the investment and were acquiring the securities for
investment purposes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Shares of our Series A Convertible Redeemable Preferred Stock are to receive
dividends, "when, as and if" declared by our board of directors, at a rate per
annum of 5.75% of the liquidation preference. Such dividends are payable
quarterly in arrears on each March 31, June 30, September 30 and December 31 of
each year with respect to each share of Preferred Stock then outstanding. If for
any reason we fail to make payment of all then accrued dividends on any such
dividend payment date, the dividend rate with respect to dividends accruing from
and after such dividend payment date are increased to 7.75% until such prior
dividend payment has been made. Our board did not declare, and we therefore did
not pay, the dividends for the quarter ended March 31, 2003 totaling $0.7
million (which represented accruals commencing January 1, 2003 with respect to
the 505,664 shares then outstanding and from and after February 28, 2003 with
respect to the 39,595 newly issued shares described in Item 2 above).
Accordingly, dividends on these shares are accruing at a rate of 7.75% of the
liquidation preference per annum for the period from and after March 31, 2003
until the March 31 dividend is declared and paid in full.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) EXHIBITS



     Exhibit
     Number       Description of Document
     ------       -----------------------
               
      3.1(a)      Restated Certificate of Incorporation of Charter
                  Communications, Inc. (Originally incorporated July 22, 1999)
                  (Incorporated by reference to Exhibit 3.1 to Amendment No. 3
                  to the registration statement on Form S-1 of Charter
                  Communications, Inc. filed on October 18, 1999 (File No.
                  333-83887)).

      3.1(b)      Certificate of Amendment of Restated Certificate of
                  Incorporation of Charter Communications, Inc. filed May 10,
                  2001 (Incorporated by reference to Exhibit 3.1(b) to the
                  annual report on Form 10-K filed by Charter Communications,
                  Inc. on March 29, 2002 (File No. 000-27927)).

      3.2         Amended and Restated By-laws of Charter Communications, Inc.
                  as of June 6, 2001 (Incorporated by reference to Exhibit 3.2
                  to the quarterly report on Form 10-Q filed by Charter
                  Communications, Inc. on November 14, 2001 (File No.
                  000-27927)).



                                       46


               
      15.1        Letter re Unaudited Interim Financial Statements. *

      99.1        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). *

      99.2        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). *


* filed herewith


                                       47

(b) REPORTS ON FORM 8-K

      On March 18, 2003, the registrant filed a current report on Form 8-K dated
March 14, 2003 to announce the resignation of Ralph G. Kelly, Senior Vice
President and Treasurer.

      On April 1, 2003, the registrant filed a current report on Form 8-K dated
March 31, 2003 to furnish 2002 operating results and the restated financial
results for 2001 and 2000.

      On May 7, 2003, the registrant filed a current report on Form 8-K dated
May 7, 2003 to furnish 2003 first quarter results.


                                       48

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, Charter Communications, Inc. has duly caused this Quarterly Report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                  CHARTER COMMUNICATIONS, INC.,
                                  Registrant


Dated: May 14, 2003               By: /s/ STEVEN A. SCHUMM
                                      ----------------------------------------
                                      Name:  Steven A. Schumm
                                      Title: Executive Vice President and
                                             Chief Administrative Officer and
                                             Interim 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)


                                       49

                                 CERTIFICATIONS

I, Carl E. Vogel, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Charter
      Communications, Inc.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6.    The registrant's other certifying officers and I have indicated in this
      quarterly report whether there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date: May 14, 2003


/s/ Carl E. Vogel

- -----------------------
Carl E. Vogel
Chief Executive Officer


                                       50

I, Steven A Schumm, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Charter
      Communications, Inc.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6.    The registrant's other certifying officers and I have indicated in this
      quarterly report whether there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.


Date: May 14, 2003


/s/ Steven A. Schumm

- --------------------------------
Steven A. Schumm
Chief Administrative Officer and
interim Chief Financial Officer


                                       51