##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

|       |  |                                                                                                                                     
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------
|(XBOX) |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002

|  
|--
|OR

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|(BOX) |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

|                    |  |        
|------------------- |  | -------
|Commission File No. |  | 0-25691
|                    |  |        

NTL (DELAWARE), INC.

(Exact name of registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 13-4051921                          
|                                                               |  |                                     
|(State or other jurisdiction of incorporation
or organization) |  | (I.R.S. Employer Identification No.)

|                                         |  |  |       |           
|---------------------------------------- |  |  | ----- | ----------
|110 East 59th Street, New York, New York |  |  | 10022 |           
|                                        
|(Address of principal executive offices) |  |  |       | (Zip Code)

(212) 906-8440

(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 such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes     (XBOX)         No     (BOX)

The number of shares outstanding of the issuers common stock as of June 30,
2002 was 11. The Registrant is a wholly-owned subsidiary of NTL Incorporated
and there is no market for the Registrants common stock.





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TABLE OF CONTENTS



|                                      |                                                                                               |                                                                |  |  |  |  |  | 
|------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION        
|                                      | ITEM 1. Financial Statements                                                                 
|                                      |                                                                                               | Condensed Consolidated Balance Sheets                         
|                                      |                                                                                               | Condensed Consolidated Statements of Operations               
|                                      |                                                                                               | Condensed Consolidated Statement of Shareholders (Deficiency)
|                                      |                                                                                               | Condensed Consolidated Statements of Cash Flows               
|                                      |                                                                                               | Notes to Condensed Consolidated Financial Statements          
|                                      | ITEM 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
|                                      | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|Risk Factors                         
|PART II. OTHER INFORMATION           
|                                      | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                      
|                                      | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                           
|EX-99.1: CERTIFICATION OF CEO AND CFO



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries





Index



|                              |  |                                                                                                    |  |    |  |   
|----------------------------- |  | -------------------------------------------------------------------------------------------------- |  | -- |  | --
|PART I. FINANCIAL INFORMATION |  | Page                                                                                               |  |   
|                              |  |                                                                                                    |  |    |  |   
|Item 1.                       |  | Financial Statements                                                                               |  |    |  |   
|                             
|                             
|                             
|                             
|                              |  | Condensed Consolidated Balance Sheets-
June 30, 2002 and December 31, 2001                         |  |    |  | 2 
|                             
|                             
|                             
|                             
|                              |  | Condensed Consolidated Statements of Operations-
Three and six months ended June 30, 2002 and 2001 |  |    |  | 4 
|                             
|                             
|                             
|                             
|                              |  | Condensed Consolidated Statement of Shareholders (Deficiency)-
Six months ended June 30, 2002     |  |    |  | 5 
|                             
|                             
|                             
|                             
|                              |  | Condensed Consolidated Statements of Cash Flows-
Six months ended June 30, 2002 and 2001           |  |    |  | 7 
|                             
|                             
|                             
|                             
|                              |  | Notes to Condensed Consolidated Financial Statements                                               |  |    |  | 8 
|                             
|                             
|                             
|                             
|Item 2.                       |  | Managements Discussion and Analysis of Results of
Operations and Financial Condition              |  |    |  | 38
|                             
|                             
|                             
|                             
|Item 3.                       |  | Quantitative and Qualitative Disclosures about Market Risk                                         |  |    |  | 64
|                             
|                             
|                             
|                             
|Risk Factors                  |  |                                                                                                    |  | 67
|                             
|                             
|                             
|                             
|PART II. OTHER INFORMATION    |  |                                                                                                    |  |   
|                             
|                             
|                             
|                             
|Item 3.                       |  | Defaults Upon Senior Securities                                                                    |  |    |  | 72
|                             
|                             
|                             
|                             
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                   |  |    |  | 76
|                             
|                             
|                             
|                             
|SIGNATURES                    |  |                                                                                                    |  | 77





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##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in millions)

|                                                                                 |                                                                                                      |   |             |       |              |   |          |       | 
|-------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | - | ----------- | ----- | ------------ | - | -------- | ----- | 
|                                                                                 |                                                                                                      |   | June 30,    |       | December 31,
|                                                                                 |                                                                                                      |   | 2002        |       | 2001        
|                                                                                 |                                                                                                      |  
|                                                                                 |                                                                                                      |   | (unaudited) |       | (see note)  
|Assets                                                                           |                                                                                                      |   |             |       |              |   |          |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Current assets:                                                                  |                                                                                                      |   |             |       |              |   |          |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Cash and cash equivalents                                                                            |   | $           | 849.9 |              |   | $        | 344.5 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Marketable securities                                                                                |   |             | 23.0  |              |   |          |      | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Accounts receivable  trade, less allowance for
doubtful accounts of $109.9 (2002) and $133.8 (2001) |   |             | 550.5 |              |   |          | 711.5 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Due from affiliates                                                                                  |   |             | 153.7 |              |   |          | 13.8  | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Other                                                                                                |   |             | 407.9 |              |   |          | 331.9 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | NTL Australia assets                                                                                 |   |             |      |              |   |          | 405.0 | 
|                                                                                 |                                                                                                      |  
|Total current assets                                                             |                                                                                                      |   | 1,985.0     |       |              |   | 1,806.7  |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Fixed assets, net                                                                |                                                                                                      |   | 12,633.0    |       |              |   | 12,337.9 |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Intangible assets, net                                                           |                                                                                                      |   | 1,954.8     |       |              |   | 1,849.6  |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Investments in and loans to affiliates, net                                      |                                                                                                      |   | 184.5       |       |              |   | 220.7    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Other assets, net of accumulated amortization of
$181.2 (2002) and $149.7 (2001) |                                                                                                      |   | 383.3       |       |              |   | 433.4    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Loan to NTL Incorporated                                                         |                                                                                                      |   | 150.0       |       |              |   | 150.0    |      
|                                                                                 |                                                                                                      |  
|Total assets                                                                     |                                                                                                      | $ | 17,290.6    |       |              | $ | 16,798.3 |      
|                                                                                 |                                                                                                      |  

2



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Balance Sheets-continued
(dollars in millions)

|                                                 |                                                                                      |   |             |           |              |   |          |           |  
|------------------------------------------------ | ------------------------------------------------------------------------------------ | - | ----------- | --------- | ------------ | - | -------- | --------- | -
|                                                 |                                                                                      |   | June 30,    |           | December 31,
|                                                 |                                                                                      |   | 2002        |           | 2001        
|                                                 |                                                                                      |  
|                                                 |                                                                                      |   | (unaudited) |           | (see note)  
|Liabilities and shareholders (deficiency)       |                                                                                      |   |             |           |              |   |          |          
|                                                
|                                                
|                                                
|                                                
|Liabilities
not subject to compromise            |                                                                                      |   |             |           |              |   |          |          
|                                                
|                                                
|                                                
|                                                
|Current liabilities:                             |                                                                                      |   |             |           |              |   |          |          
|                                                
|                                                
|                                                
|                                                
|                                                 | Accounts payable                                                                     |   | $           | 356.1     |              |   | $        | 429.6     |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Accrued expenses and other                                                           |   |             | 944.8     |              |   |          | 960.0     |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Accrued construction costs                                                           |   |             | 50.5      |              |   |          | 107.8     |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Interest payable                                                                     |   |             | 227.4     |              |   |          | 300.4     |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Deferred revenue                                                                     |   |             | 478.5     |              |   |          | 481.5     |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Due to affiliates                                                                    |   |             | 10.4      |              |   |          | 40.0      |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Current portion of long-term debt                                                    |   |             | 7,974.0   |              |   |          | 17,566.1  |  
|                                                
|                                                
|                                                
|                                                
|                                                 | NTL Australia liabilities                                                            |   |             |          |              |   |          | 182.9     |  
|                                                 |                                                                                      |  
|Total current liabilities                        |                                                                                      |   | 10,041.7    |           |              |   | 20,068.3 |          
|                                                
|                                                
|                                                
|                                                
|Long-term debt                                   |                                                                                      |   |            |           |              |   |         |          
|                                                
|                                                
|                                                
|                                                
|Other                                            |                                                                                      |   | 162.0       |           |              |   | 134.6    |          
|                                                
|                                                
|                                                
|                                                
|Commitments and contingent liabilities           |                                                                                      |   | 230.2       |           |              |   |          |          
|                                                
|                                                
|                                                
|                                                
|Deferred income taxes                            |                                                                                      |   |             |           |              |   | 259.2    |          
|                                                
|                                                
|                                                
|                                                
|Liabilities subject to compromise                |                                                                                      |   | 11,198.7    |           |              |   |         |          
|                                                
|                                                
|                                                
|                                                
|                                                
|Shareholders (deficiency):                      |                                                                                      |   |             |           |              |   |          |          
|                                                
|                                                
|                                                
|                                                
|                                                 | Common stock-$.01 par value; authorized 100 shares;
issued and outstanding 11 shares |   |             |          |              |   |          |          |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Additional paid-in capital                                                           |   |             | 16,195.7  |              |   |          | 16,070.1  |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Accumulated other comprehensive (loss)                                               |   |             | (788.3    | )            |   |          | (1,072.7  | )
|                                                
|                                                
|                                                
|                                                
|                                                 | (Deficit)                                                                            |   |             | (19,749.4 | )            |   |          | (18,661.2 | )
|                                                 |                                                                                      |  
|                                                 |                                                                                      |   | (4,342.0    | )         |              |   | (3,663.8 | )        
|                                                 |                                                                                      |  
|Total liabilities and shareholders (deficiency) |                                                                                      | $ | 17,290.6    |           |              | $ | 16,798.3 |          
|                                                 |                                                                                      |  

Note: The balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date.

See accompanying notes.

3



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##### Table of Contents






NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
(in millions)

|                                                                               |                                                                                                 |   |                    |      |                  |   |          |      |      |   |          |      |   |   |          |      |  
|------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | - | ------------------ | ---- | ---------------- | - | -------- | ---- | ---- | - | -------- | ---- | - | - | -------- | ---- | -
|                                                                               |                                                                                                 |   | Three Months Ended |      | Six Months Ended
|                                                                               |                                                                                                 |   | June 30,           |      | June 30,        
|                                                                               |                                                                                                 |  
|                                                                               |                                                                                                 |   | 2002               |      | 2001             |   | 2002     |      | 2001
|                                                                               |                                                                                                 |  
|Revenues                                                                       |                                                                                                 |   |                    |      |                  |   |          |      |      |   |          |      |   |   |          |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Consumer telecommunications and television                                     |                                                                                                 | $ | 624.3              |      |                  | $ | 618.4    |      |      | $ | 1,232.7  |      |   | $ | 1,229.3  |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Business telecommunications                                                    |                                                                                                 |   | 214.6              |      |                  |   | 196.6    |      |      |   | 429.3    |      |   |   | 396.8    |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Broadcast transmission and other                                               |                                                                                                 |   | 76.5               |      |                  |   | 68.4     |      |      |   | 146.5    |      |   |   | 136.5    |     
|                                                                               |                                                                                                 |  
|                                                                               |                                                                                                 |   | 915.4              |      |                  |   | 883.4    |      |      |   | 1,808.5  |      |   |   | 1,762.6  |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Costs and expenses                                                             |                                                                                                 |   |                    |      |                  |   |          |      |      |   |          |      |   |   |          |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Operating expenses (exclusive of depreciation shown
separately below)          |                                                                                                 |   | 410.5              |      |                  |   | 432.7    |      |      |   | 843.4    |      |   |   | 870.7    |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Selling, general and administrative expenses                                   |                                                                                                 |   | 250.6              |      |                  |   | 291.0    |      |      |   | 465.5    |      |   |   | 612.2    |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Other charges                                                                  |                                                                                                 |   | 16.7               |      |                  |   | 17.9     |      |      |   | 19.3     |      |   |   | 25.3     |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Corporate expenses                                                             |                                                                                                 |   | 6.1                |      |                  |   | 10.1     |      |      |   | 15.6     |      |   |   | 17.1     |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Depreciation                                                                   |                                                                                                 |   | 385.4              |      |                  |   | 359.2    |      |      |   | 748.3    |      |   |   | 690.5    |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Amortization                                                                   |                                                                                                 |   | 34.4               |      |                  |   | 442.0    |      |      |   | 66.9     |      |   |   | 865.9    |     
|                                                                               |                                                                                                 |  
|                                                                               |                                                                                                 |   | 1,103.7            |      |                  |   | 1,552.9  |      |      |   | 2,159.0  |      |   |   | 3,081.7  |     
|                                                                               |                                                                                                 |  
|Operating (loss)                                                               |                                                                                                 |   | (188.3             | )    |                  |   | (669.5   | )    |      |   | (350.5   | )    |   |   | (1,319.1 | )   
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Other income (expense)                                                         |                                                                                                 |   |                    |      |                  |   |          |      |      |   |          |      |   |   |          |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest income and other, net                                                 |                                                                                                 |   | 12.5               |      |                  |   | 3.9      |      |      |   | 32.2     |      |   |   | 12.9     |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest expense (contractual interest of $769.2 (2002))                       |                                                                                                 |   | (268.3             | )    |                  |   | (329.5   | )    |      |   | (637.7   | )    |   |   | (684.6   | )   
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Share of (losses) from equity investments                                      |                                                                                                 |   | (21.7              | )    |                  |   | (52.0    | )    |      |   | (55.0    | )    |   |   | (94.9    | )   
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Foreign currency transaction (losses) gains                                    |                                                                                                 |   | (59.7              | )    |                  |   | 22.6     |      |      |   | (64.6    | )    |   |   | 9.4      |     
|                                                                               |                                                                                                 |  
|(Loss) before recapitalization items, income taxes and
discontinued operations |                                                                                                 |   | (525.5             | )    |                  |   | (1,024.5 | )    |      |   | (1,075.6 | )    |   |   | (2,076.3 | )   
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Recapitalization items, net                                                    |                                                                                                 |   | (32.9              | )    |                  |   |         |      |      |   | (68.7    | )    |   |   |         |     
|                                                                               |                                                                                                 |  
|(Loss) before income taxes and discontinued operations                         |                                                                                                 |   | (558.4             | )    |                  |   | (1,024.5 | )    |      |   | (1,144.3 | )    |   |   | (2,076.3 | )   
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Income tax benefit                                                             |                                                                                                 |   | 26.0               |      |                  |   | 12.3     |      |      |   | 48.0     |      |   |   | 28.4     |     
|                                                                               |                                                                                                 |  
|(Loss) from continuing operations                                              |                                                                                                 |   | (532.4             | )    |                  |   | (1,012.2 | )    |      |   | (1,096.3 | )    |   |   | (2,047.9 | )   
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Discontinued operations:                                                       |                                                                                                 |   |                    |      |                  |   |          |      |      |   |          |      |   |   |          |     
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Loss from operations of NTL Australia, net of income
tax benefit of $0.7 (2002) and $3.3 (2001) |   |                    | (0.5 | )                |   |          | (1.8 | )    |   |          | (0.3 | ) |   |          | (2.3 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Gain on sale of NTL Australia, net of income tax
expense of $4.5                                |   |                    | 8.4  |                  |   |          |     |      |   |          | 8.4  |   |   |          |     |  
|                                                                               |                                                                                                 |  
|Income (loss) from discontinued operations                                     |                                                                                                 |   | 7.9                |      |                  |   | (1.8     | )    |      |   | 8.1      |      |   |   | (2.3     | )   
|                                                                               |                                                                                                 |  
|Net (loss)                                                                     |                                                                                                 | $ | (524.5             | )    |                  | $ | (1,014.0 | )    |      | $ | (1,088.2 | )    |   | $ | (2,050.2 | )   
|                                                                               |                                                                                                 |  

See accompanying notes.

4



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##### Table of Contents






NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Statement of Shareholders (Deficiency)
(unaudited)
(dollars in millions)

|                                                |       |  |                |  |     |   |   |  | 
|----------------------------------------------- | ----- |  | -------------- |  | --- | - | - |  | 
|                                                |       |  | Common Stock  
|                                                |       |  | $.01 Par Value
|                                                |       |  | Shares         |  | Par
|                                                |       | 
|Balance, December 31, 2001                      |       |  | 11             |  |     | $ |  | 
|                                               
|                                               
|                                               
|                                               
|Comprehensive loss:                             |       |  |                |  |     |   |   | 
|                                               
|                                               
|                                               
|                                               
|Net loss for the six months ended June 30, 2002 |       |  |                |  |     |   |   | 
|                                               
|                                               
|                                               
|                                               
|Currency translation adjustment                 |       |  |                |  |     |   |   | 
|                                               
|                                               
|                                               
|                                               
|Unrealized net gains on investments             |       |  |                |  |     |   |   | 
|                                               
|                                               
|                                               
|                                               
|Unrealized net losses on derivatives            |       |  |                |  |     |   |   | 
|                                               
|                                               
|                                               
|                                               
|                                                | Total |  |                |  |     |   |   |  | 
|                                                |       | 
|Balance, June 30, 2002                          |       |  | 11             |  |     | $ |  | 
|                                                |       | 

5



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Statement of Shareholders (Deficiency)
(unaudited)-continued
(dollars in millions)

|                                                |       |   |            |  |               |   |             |        |             |   |                                      |   |           |   |            |   |            |   |       |   |  |   |           |   | 
|----------------------------------------------- | ----- | - | ---------- |  | ------------- | - | ----------- | ------ | ----------- | - | ------------------------------------ | - | --------- | - | ---------- | - | ---------- | - | ----- | - |  | - | --------- | - | 
|                                                |       |   |            |  |               |   |             |        |             |   | Accumulated Other Comprehensive Loss |   |           |   |           
|                                                |       |   |            |  |               |   |             |        |             |   |                                      |   |           |   |           
|                                                |       |   |            |  |               |   |             |        |             |   |                                      |   |           |   | Unrealized |   | Unrealized |   |       |   | 
|                                                |       |   | Additional |  |               |   |             |        | Foreign     |   | Net Losses                           |   | Net       |   |            |   |           
|                                                |       |   | Paid-In    |  | Comprehensive |   | Currency    |        | on          |   | Losses on                            |   |           |   |           
|                                                |       |   | Capital    |  | Loss          |   | Translation |        | Investments |   | Derivatives                          |   | (Deficit)
|                                                |       |  
|Balance, December 31, 2001                      |       | $ | 16,070.1   |  |               |   |             |        |             | $ | (1,042.4                             | ) |           | $ | (15.3      | ) |            | $ | (15.0 | ) |  | $ | (18,661.2 | )
|                                               
|                                               
|                                               
|                                               
|Contribution from NTL Incorporated              |       |   | 125.6      |  |               |   |             |        |             |   |                                      |   |           |   |            |   |            |   |       |   |  |   |           |  
|                                               
|                                               
|                                               
|                                               
|Comprehensive loss:                             |       |   |            |  |               |   |             |        |             |   |                                      |   |           |   |            |   |            |   |       |   |  |   |           |  
|                                               
|                                               
|                                               
|                                               
|Net loss for the six months ended June 30, 2002 |       |   |            |  |               | $ | (1,088.2    | )      |             |   |                                      |   |           |   |            |   |            |   |       |   |  | $ | (1,088.2  | )
|                                               
|                                               
|                                               
|                                               
|Currency translation adjustment                 |       |   |            |  |               |   | 294.6       |        |             |   | 294.6                                |   |           |   |            |   |            |   |       |   |  |   |           |  
|                                               
|                                               
|                                               
|                                               
|Unrealized net gains on investments             |       |   |            |  |               |   | (1.8        | )      |             |   |                                      |   |           |   | (1.8       | ) |            |   |       |   |  |   |           |  
|                                               
|                                               
|                                               
|                                               
|Unrealized net losses on derivatives            |       |   |            |  |               |   | (8.4        | )      |             |   |                                      |   |           |   |            |   |            |   | (8.4  | ) |  |   |           |  
|                                                |       |   |            |  |               |   |             |        |             |   |                                      |   |           |   |            |   |            |   |       |   |  |   |           |  
|                                                | Total |   |            |  |               |   | $           | (803.8 | )           |   |                                      |   |           |   |            |   |            |   |       |   |  |   |           |   | 
|                                                |       |  
|Balance, June 30, 2002                          |       | $ | 16,195.7   |  |               |   |             |        |             | $ | (747.8                               | ) |           | $ | (17.1      | ) |            | $ | (23.4 | ) |  | $ | (19,749.4 | )
|                                                |       |  

See accompanying notes.

6



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##### Table of Contents






NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in millions)

|                                                                          |  |                  |        |      |  |   |          |  
|------------------------------------------------------------------------- |  | ---------------- | ------ | ---- |  | - | -------- | -
|                                                                          |  | Six Months Ended
|                                                                          |  | June 30,        
|                                                                          |  |                 
|                                                                          |  | 2002             |        | 2001
|                                                                          |  |                 
|Net cash provided by (used in) operating activities                       |  | $                | 125.2  |      |  | $ | (184.9   | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Investing activities                                                      |  |                  |        |      |  |   |          |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Purchase of fixed assets                                                  |  |                  | (465.5 | )    |  |   | (1,056.4 | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Proceeds from sale of Australia                                           |  |                  | 428.8  |      |  |   |         |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Investments in and loans to affiliates                                    |  |                  | (15.9  | )    |  |   | (86.7    | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Increase in other assets                                                  |  |                  | (3.9   | )    |  |   | (36.3    | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Proceeds from sales of assets                                             |  |                  | 8.9    |      |  |   |         |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Purchase of marketable securities                                         |  |                  | (28.6  | )    |  |   | (9.9     | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Proceeds from sales of marketable securities                              |  |                  | 5.6    |      |  |   |         |  
|                                                                          |  |                 
|Net cash (used in) investing activities                                   |  |                  | (70.6  | )    |  |   | (1,189.3 | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Financing activities                                                      |  |                  |        |      |  |   |          |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Proceeds from borrowings, net of financing costs                          |  |                  | 536.1  |      |  |   | 2,077.2  |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Principal payments                                                        |  |                  | (4.9   | )    |  |   | (484.4   | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Repayment of the NTL Australia bank loan                                  |  |                  | (121.7 | )    |  |   |         |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Contribution from NTL Incorporated                                        |  |                  |       |      |  |   | 163.0    |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Distribution to NTL Incorporated                                          |  |                  |       |      |  |   | (72.7    | )
|                                                                          |  |                 
|Net cash provided by financing activities                                 |  |                  | 409.5  |      |  |   | 1,683.1  |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Effect of exchange rate changes on cash                                   |  |                  | 41.3   |      |  |   | (16.2    | )
|                                                                          |  |                 
|Increase in cash and cash equivalents                                     |  |                  | 505.4  |      |  |   | 292.7    |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Cash and cash equivalents at beginning of period                          |  |                  | 344.5  |      |  |   | 481.8    |  
|                                                                          |  |                 
|Cash and cash equivalents at end of period                                |  | $                | 849.9  |      |  | $ | 774.5    |  
|                                                                          |  |                 
|Supplemental disclosure of cash flow information                          |  |                  |        |      |  |   |          |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Cash paid during the period for interest exclusive
of amounts capitalized |  | $                | 275.1  |      |  | $ | 428.3    |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Income taxes paid                                                         |  |                  | 1.3    |      |  |   | 3.7      |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Supplemental schedule of non-cash financing
activities                    |  |                  |        |      |  |   |          |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Contribution from NTL Incorporated                                        |  | $                | 125.6  |      |  | $ | 131.2    |  

See accompanying notes.

7



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##### Table of Contents






NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note A  Petition for Relief under Chapter 11

On May 8, 2002, NTL Incorporated (NTL Incorporated) filed a petition for
relief under Chapter 11 of Title 11 of the United States Code in the United
States Bankruptcy Court for the Southern District of New York. NTL
Incorporated filed jointly with its subsidiaries NTL (Delaware), Inc., (the
Company) NTL Communications Corp., Diamond Cable Communications Limited,
Diamond Holdings Limited and Communications Cable Funding Corp. NTL
Incorporated and these subsidiaries are referred to as Debtors. Under Chapter
11, certain claims in existence prior to the filing of the petitions for relief
against the Debtors are stayed while the Debtors continue business operations
as debtor-in-possession. These claims are reflected in the balance sheet as
liabilities subject to compromise. Additional claims (liabilities subject to
compromise) may arise subsequent to the filing date. Claims secured against
the Debtors assets (secured claims) also are stayed, although the holders of
such claims have the right to seek relief from the stay in the Court.

The Debtors received approval from the Bankruptcy Court to pay or otherwise
honor certain of its prepetition obligations.

The Debtors have determined that there is insufficient collateral to cover the
interest portion of scheduled payments on certain of its prepetition debt
obligations. Contractual interest on those obligations amounts to $524.4
million, which is $131.5 million in excess of reported interest expense;
therefore the Debtor has discontinued accruing interest on these obligations.

Note B  Basis of Presentation

Throughout this report, NTL Incorporated together with its consolidated
subsidiaries are referred to as NTL. NTL (Delaware), Inc.
is a wholly-owned
subsidiary of NTL Incorporated.

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information, including AICPA Statement of Position 90-7,
Financial Reporting by Entities in Reorganization Under the Bankruptcy Code,
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and six months ended June 30, 2002 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2001.

As indicated below, substantial doubt exists about the Companys ability to
continue as a going concern. The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability of assets or classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.

Certain prior period amounts have been reclassified to conform to the current
presentation.

Note C  Recapitalization Process and Ability to Continue Operations

On May 8, 2002, NTL Incorporated, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. filed a pre-arranged joint reorganization
plan under Chapter 11 of the United States Bankruptcy Code (referred to as the
proposed recapitalization plan). NTLs operating subsidiaries
were not included in the Chapter 11 filing. Toward the end of 2001, while NTL
continued to have sufficient liquidity to meet its near term obligations, it
recognized the negative impact of the collapsing European and U.S.
telecommunications markets on its ability to service its debt. Accordingly, NTL
began to implement a strategy to preserve and maximize its enterprise value.
This strategy included the implementation of cost-cutting measures and the
commencement of discussions with certain third parties regarding strategic
alternatives for NTLs business.

8



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and
SubsidiariesNotes to Condensed Consolidated Financial Statements
(continued)

The Company historically incurred operating losses and negative operating cash
flow. In addition, the Company has required significant amounts of capital to
finance construction of its networks, connection of customers to the networks,
other capital expenditures and for working capital needs including debt service
requirements. The Company historically met these liquidity requirements through
amounts available under its credit facilities, issuances of high-yield debt
securities in the capital markets and equity contributions from NTL
Incorporated. Both the equity and debt capital markets have experienced periods
of significant volatility, particularly for securities issued by
telecommunications and technology companies. The ability of telecommunications
companies to access those markets as well as their ability to obtain financing
provided by bank lenders and equipment suppliers has become more restricted and
financing costs have increased. During some recent periods, the capital markets
have been largely unavailable to new issues of securities by telecommunications
companies. NTL Incorporateds public equity is no longer trading on the New
York Stock Exchange, and its debt securities are trading at or near all time
lows. These factors, together with NTLs substantial leverage, means the
Company does not currently have access to its historic sources of capital.

In addition, NTLs UK credit facilities are fully drawn. The revolving tranche
of the Cablecom credit facility has been capped at its utilized amount of CHF
1,055.0 million although the availability may be increased with the consent of
the requisite majority of the lenders under that facility. The term tranche of
the Cablecom credit facility is fully drawn. NTL has missed interest
payments totaling $381.5 million beginning on April 1, 2002,
all of which relates to notes issued by the Company and its
subsidiaries. Upon emerging from Chapter 11 proceedings, NTL intends
to make any required interest payments on the notes of Diamond Holdings. In
accordance with the proposed recapitalization plan, NTL does not plan to make
future interest payments on its currently outstanding publicly traded notes
except notes issued by NTL Triangle and, upon emergence from Chapter 11
proceedings, Diamond Holdings Limited.

As of June 30, 2002, the Company had approximately $872.9 million in cash, cash
equivalents and marketable securities on hand. The Company may require additional cash
in the twelve months from July 1, 2002 to June 30, 2003. NTL Incorporated
obtained a Court approved $630 million DIP facility (described below) on July
15, 2002 to meet the potential cash requirements of its and its subsidiaries,
excluding Cablecom. NTL Incorporated expects that the DIP facility will be
replaced with an exit facility for NTL Communications Corp. and its
subsidiaries upon the completion of the recapitalization process, in part
because the DIP facility will mature concurrently with the Debtors emergence
from Chapter 11. The Company estimates that its capital expenditures and debt service
requirements, net of cash from operations, will aggregate up to approximately
$250.0 million from July 1, 2002 to June 30, 2003. Management of the Company
believes that cash, cash equivalents and marketable securities on hand at June
30, 2002, and the cash available from the DIP facility and subsequently the
planned exit facility will be sufficient for its and its subsidiaries cash
requirements during the twelve months from July 1, 2002 to June 30, 2003.

9



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Events Leading to the Proposed Recapitalization and Chapter 11 Filings

Beginning in January 2002, NTL was contacted by an unofficial committee of
bondholders regarding the commencement of a comprehensive and consensual
restructuring process. NTL was informed at that time that the members of the
unofficial steering committee of bondholders owned, in the aggregate, more than
50% of the outstanding principal amount of NTLs notes. In connection with the
restructuring process, the steering committee of the unofficial committee of
bondholders retained advisors to facilitate the negotiations.

On January 31, 2002, NTL announced that it had appointed Credit Suisse First
Boston, JP Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen its balance sheet and reduce debt
and put an appropriate capital structure in place for its business.
Subsequently, NTL evaluated various recapitalization alternatives, and met with
a number of strategic investors, to effect a comprehensive consensual
reorganization in a timely manner to minimize negative effects on its business
operations. Discussions with such strategic investors did not result in a
proposal which NTLs board of directors believed was comparable or
superior to the value provided to its stakeholders by the proposed plan of
reorganization.

Liberty Media Corporation, one of such potential strategic investors, which is
also a significant shareholder in Telewest plc, another British cable and
telephone company, has discussed various transactions with NTL from time to
time over the past several years. In March 2002, Liberty and NTL amended a
previously existing confidentiality agreement between them to cover the
restructuring process and to include a standstill agreement which prohibited
various acquisitions of, or offers, for NTL debt or equity securities by
Liberty and its subsidiaries until June 30, 2002.

On April 17, 2002, Liberty sent a proposal to NTLs board of directors, which
proposed a cash tender offer for 30% of the outstanding bonds of NTL
Communications Corp. at a small premium to the prevailing market price and an
agreement to vote such acquired bonds in favor of the proposed plan of
reorganization, as well as a participation with NTL in a cash infusion of up
to $500 million into Cablecom. After consultation with NTLs board of
directors and the steering committee of bondholders on April 18, 2002, NTL
indicated to Liberty that it did not consider the Liberty proposal to be in the
best interests of NTL and that the best course of action for NTL to maximize
its enterprise value was to promptly consummate the proposed plan of
reorganization. By letter dated June 28, 2002, NTL received notice that Liberty
was ceasing all discussions with NTL concerning its proposals.

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities, in March 2002, NTL commenced negotiations with the steering
committee of the unofficial committee of bondholders and its legal and
financial advisors. The negotiations continued during the latter part of March
and throughout April 2002, and also included France Telecom. On April 16, 2002,
NTL announced that it had reached a comprehensive agreement in principle with
the unofficial committee and France Telecom, a significant holder of NTL
Incorporateds preferred stock, on implementing a recapitalization plan. On May
2, 2002, a steering committee of the lending banks under NTLs credit
facilities gave their approval in principle (on a non-legally binding basis) to
NTLs proposed plan of reorganization.

The reorganization plan, if implemented, will result in the cancellation of all
of NTL Incorporateds outstanding shares of common stock, preferred stock and
redeemable preferred stock, and the cancellation of all of the publicly held
notes of NTL Incorporated, NTL (Delaware), Inc. and NTL Communications Corp.
and the transfer of the publicly held notes of Diamond Cable Communications
Limited to NTL UK and Ireland (one of two new entities to be created under the
plan). In addition, if the plan is implemented, NTL will be discharged from its
obligation to pay dividends accruing on the canceled preferred stock and
interest accruing on the canceled notes. The reorganization plan contemplates
that the UK bank debt will remain in place as part of the recapitalization. NTL
would be split into two companies, one tentatively called NTL UK and Ireland,
holding its main UK and Ireland assets, and one tentatively called NTL Euroco,
holding certain of its continental European and other assets.

To implement the proposed recapitalization, on May 8, 2002, NTL Incorporated,
NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp., which
we refer to as the Debtors, filed cases and a pre-arranged joint reorganization
plan under Chapter 11 of the United States Bankruptcy Code. NTLs operating
subsidiaries were not included in the Chapter 11 filings.

10



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

On June 21, 2002, the United States Trustee appointed an official unsecured
creditors committee. The creditors committee is comprised of the three
indenture trustees for the debt securities of NTL and the ten members of the
steering committee of NTLs bondholders. The members of the creditors
committee are: The Bank of New York; Wilmington Trust Company; Wells Fargo Bank
Minnesota, National Association; Angelo Gordon & Co. LP; Capital Research &
Management Company; Franklin Mutual Advisers, LLC; Oaktree Capital Management
LLC; Salomon Brothers Asset Management; Appaloosa Management, LP; Fidelity
Management & Research Co.; MacKay Shields LLC; SAB Capital Management, L.P.;
and W.R. Huff Asset Management Co., LLC.

On May 24, 2002, the Debtors filed an amended joint reorganization plan and
disclosure statement. The Bankruptcy Court approved the disclosure statement on
July 12, 2002 as containing information of a kind and in sufficient detail to
enable the holders of claims against or interests in the debtors to make an
informed judgment with respect to the reorganization plan prior to exercising
their right to vote to accept or reject the reorganization plan. At that time
the Court set September 5, 2002 as the date for the hearing to consider
confirmation of the amended joint reorganization plan as subsequently amended.
On July 15, 2002, NTL Incorporated and its debtor subsidiaries filed an amended
disclosure statement and a second amended joint reorganization plan. A copy of
the second amended joint reorganization plan and the related disclosure
statement are included as exhibits to NTL Incorporateds Current Report on Form
8-K filed on July 16, 2002.

The filing of the petitions seeking relief filed under Chapter 11 constituted
an event of default under the indentures of each of the entities which filed
Chapter 11 petitions and amounts outstanding under these indentures became
immediately due and payable. No action has been taken to date in respect of
those defaults and any such action likely would be barred by the automatic stay
that exists by virtue of the Chapter 11 filings. The filing of the Debtors
Chapter 11 petitions also constituted an event of default under NTLs UK credit
facilities and the Cablecom credit facility, allowing the lenders thereunder to
declare amounts outstanding to be immediately payable. Those lenders have not
taken any action to date in respect of those defaults, and a steering committee
of those lenders has agreed in principle (in a non-legally binding manner) to
the proposed recapitalization.

Recapitalization Expense

Recapitalization items, net of $68.7 million in the six months ended June 30,
2002 includes $18.8 million for employee retention related to substantially all
of our UK employees and $51.0 million for financial advisor, legal, accounting
and consulting costs. These costs are net of $1.1 million of interest earned on
accumulated cash since the Chapter 11 filing on May 8,
2002. NTL expects to incur
approximately $50.0 million in additional recapitalization costs until we
complete the process. The proposed joint reorganization plan provides that
recapitalization costs will be allocated between NTL UK and Ireland and NTL
Euroco.

Recapitalization items, net consist of the following:

|                                                               |  |                    |       |                  |  |      |   |      |  |   |       |   |  |   |   | 
|-------------------------------------------------------------- |  | ------------------ | ----- | ---------------- |  | ---- | - | ---- |  | - | ----- | - |  | - | - | 
|                                                               |  | Three Months Ended |       | Six Months Ended
|                                                               |  | June 30,           |       | June 30,        
|                                                               |  |                    |       |                 
|                                                               |  | 2002               |       | 2001             |  | 2002 |   | 2001
|                                                               |  |                    |       |                  |  |      |   |     
|                                                               |  | (in millions)     
|Payroll and related                                            |  | $                  | (10.0 | )                |  | $    |  |      |  | $ | (18.8 | ) |  | $ |  | 
|                                                              
|                                                              
|                                                              
|                                                              
|Professional fees                                              |  |                    | (24.0 | )                |  |      |  |      |  |   | (51.0 | ) |  |   |  | 
|                                                              
|                                                              
|                                                              
|                                                              
|Interest earned on accumulated cash from
Chapter 11 proceeding |  |                    | 1.1   |                  |  |      |  |      |  |   | 1.1   |   |  |   |  | 
|                                                               |  |                    |       |                  |  |      |   |      |  |   |       |   |  |   |   | 
|                                                               |  | $                  | (32.9 | )                |  | $    |  |      |  | $ | (68.7 | ) |  | $ |  | 
|                                                               |  |                    |       |                  |  |      |   |      |  |   |       |   |  |   |   | 

11



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Details of operating cash receipts and payments resulting from the
recapitalization are as follows:

|                                                     |  |                |      |  
|---------------------------------------------------- |  | -------------- | ---- | -
|                                                     |  | For the period
|                                                     |  | May 8, 2002  
|                                                     |  | June 30, 2002 
|                                                     |  |               
|                                                     |  | (in millions) 
|Interest income                                      |  | $              | 0.6  |  
|                                                    
|                                                    
|                                                    
|                                                    
|Payroll and related costs paid                       |  |                | (0.3 | )
|                                                    
|                                                    
|                                                    
|                                                    
|Professional fees                                    |  |                | (1.9 | )
|                                                     |  |                |      |  
|Net operating cash flows from recapitalization items |  | $              | (1.6 | )
|                                                     |  |                |      |  

DIP facility

In connection with the proposed joint reorganization plan, some members of the
official unsecured creditors committee of bondholders committed to provide up
to $500 million of new debt financing to NTL Incorporated and some of its
subsidiaries, during the Chapter 11 process. The new financing ensures that
NTLs business operations have access to sufficient liquidity to continue
ordinary operations. GE Capital, an affiliate of GE Capital Structured Finance
Group Limited, one of the lenders under the Senior Credit Facility, and
Wilmington Trust Company, the trustee under the Indentures governing certain of
the NTL Incorporated subordinated notes, filed objections to the DIP facility.
The Bankruptcy Court approved the DIP facility in the principal amount of $630
million (including a $130 million commitment from NTL (Delaware), Inc. and the
$500 million from certain members of the creditors committee) over such
objections in an order issued on July 3, 2002. On July 15, 2002, the various
lenders under the DIP facility and NTL (Delaware), Inc., entered into the DIP
facility agreement with Communications Cable Funding Corp., a wholly-owned
subsidiary of NTL Communications Corp., to provide $630 million in financing to
Communications Cable Funding Corp.

In connection with the commitment, NTL Incorporated and its debtor subsidiaries
were to pay a commitment fee to the bondholder DIP lenders equal to 2% of the
$500 million commitment (i.e., $10 million). Accordingly, on May 6, 2002, and
May 7, 2002, NTL delivered to its bank written instructions to pay by wire
transfer to each lender under the DIP facility such lenders pro rata portion
of the commitment fee. Due to administrative difficulties, however, some of the
lenders under the DIP facility did not receive their pro rata portion of the
commitment fee prior to the commencement of the Chapter 11 cases. In total, as
of May 8, 2002, $428,000 of the $10 million commitment fee had not been paid to
the applicable lenders under the DIP facility. Pursuant to an order of the
court dated May 31, 2002, the remaining $428,000 of the commitment fee was paid
to the applicable lenders under the DIP facility.

Each term loan under the DIP facility will bear interest on the unpaid
principal amount for three months from July 15, 2002 at the rate of 11% per
annum. With respect to each successive three month period following that date,
the rate per annum will increase incrementally by 1% over the immediately
preceding three month period but will not exceed 18% per annum for any three
month period.

NTL (Delaware), Inc. is also a lender under the DIP facility and will lend up
to $130 million. NTL (Delaware), Inc. has cash on hand and, because the Chapter
11 cases are not substantively consolidated, NTL Incorporated and its debtor
subsidiaries and the steering committee of bondholders have concluded that the
cash at NTL (Delaware), Inc. is to be used to partially fund the reorganization
of all of the debtors. NTL (Delaware), Inc. will receive interest and is
entitled to the same protections as the other bondholder DIP lenders.

Under the DIP facility agreement, Communications Cable Funding is the borrower,
and the other debtors (other than Diamond Cable and Diamond Holdings) are
guarantors, except that NTL Communications Corp. is also a co-obligor of the
loans from NTL (Delaware), Inc. Under the DIP facility agreement, the cash
(except for the DIP facility proceeds) of the borrower and the guarantors will
be cash collateral for the DIP facility and will not be used or transferred for
any purpose whatsoever without the consent of the bondholder DIP lenders. All
funding needs of the Debtors will be funded through the proceeds of the DIP
facility, in accordance with a budget and the terms of the DIP facility
agreement.

12



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Under the DIP facility agreement, the loan structure contains three tranches
that rank equally with each other. All amounts owed under the DIP facility
agreement are required to be paid in full no later than the earlier of (i) the
consummation of the reorganization plan, (ii) December 1, 2002, and (iii) the
date on which all of the term loans become due and payable in full under the
DIP facility agreement, whether by acceleration or otherwise.

On July 17, 2002, NTL drew the first tranche available under the facility in
the amount of $229.0 million.

A copy of the DIP facility agreement was attached as an exhibit to Form 8-K
filed by NTL Incorporated with the Commission on July 19, 2002.

Exit Facility

Because of the short maturity of the DIP facility and the longer term liquidity
needs of NTL, as well as the requirements under the Bankruptcy Code for
confirmation of and the conditions to consummation of NTLs proposed plan, NTL
will require the reorganized NTL to enter into an exit financing facility. The
exit financing or any alternative financing would refinance (at least in part)
the DIP facility and may be used as consideration for the refinancing of a £90
million note payable to NTL (Delaware), Inc. from NTL (UK) Group Inc. Because
of the present market conditions which are unfavorable to telecommunications
companies generally, there can be no assurance that NTL will successfully
obtain an acceptable exit facility, although NTL is presently in discussions
with various parties about alternatives.

NTL expects that the exit facility may be secured by various assets of the
reorganized NTL, including those which secure the DIP facility, would rank
senior to all current and future subordinated debt of the reorganized NTL.

NTL also expects that the exit facility would impose operating and financial
restrictions on the reorganized NTL and its subsidiaries. These restrictions
would significantly limit or prohibit, among other things, the reorganized
NTLs ability to incur additional indebtedness, pay dividends, or make
distributions in respect of capital stock, make other restricted payments,
enter into sale and leaseback transactions, create liens upon assets, enter
into transactions with affiliates or related persons, sell assets, or
consolidate, merge, or sell all or substantially all of their assets. The exit
facility also likely would require the reorganized NTL to satisfy financial
covenants on an ongoing basis. NTL cannot determine at this time whether these
financial covenants would have a material impact on the reorganized NTLs
ability to finance future operations or capital needs or to engage in other
business activities.

The terms, covenants, and conditions of an exit facility have not been
finalized and remain subject to negotiation and final documentation.

Proposed Recapitalization Plan

Under the proposed recapitalization plan, NTL would be split into two
companies, one tentatively called NTL UK and Ireland and holding substantially
all of NTLs UK and Ireland assets, and one tentatively called NTL Euroco and
holding substantially all of NTLs continental European and other assets.

Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), NTL Communications Corp. and
Diamond Cable Communications Limited would in the aggregate receive 100% of the
initial common stock of NTL UK and Ireland (excluding shares issuable in the
rights offerings and upon the exercise of warrants (discussed below) and upon
the exercise of options which will be granted to certain employees of NTL UK
and Ireland). Holders of notes of NTL Incorporated (other than France Telecom),
NTL (Delaware), Inc. (other than France Telecom) and NTL Communications Corp.
would in the aggregate receive (i) 100% of the preferred stock of NTL Euroco
and (ii) a certain amount of cash as specified in the amended joint
reorganization plan. Holders of the subordinated notes of NTL Incorporated
(other than France Telecom), NTL (Delaware), Inc. (other than France Telecom)
and NTL Communications Corp. would in the aggregate receive 86.5% of the
initial common stock of NTL Euroco (excluding shares issuable upon the exercise
of options which will be granted to certain employees of NTL Euroco). Holders
of senior notes of NTL Communications Corp. would receive the value of a
specified number of shares of common stock of NTL Euroco pursuant to the
amended joint reorganization plan. Notes of the Companys subsidiaries Diamond
Holdings Limited and NTL (Triangle) LLC would remain outstanding and interest
payments will be made.

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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Current preferred and common stockholders of NTL Incorporated, including France
Telecom, would receive warrants to purchase common stock of NTL UK and Ireland
and rights entitling them to purchase common stock of NTL UK and Ireland. For
each share of common stock purchased upon exercise of rights, the person
exercising such rights will receive a warrant to purchase one share of common
stock of NTL UK and Ireland. The rights will be exercisable, on an
oversubscription basis, for the 20-business day period after the entry of the
confirmation order, as such period may be extended, and the warrants will be
exercisable for a period of eight years at an exercise price of $77.47 per
share. The number of shares to be received upon exercise of the warrants is
subject to customary adjustments for stock splits, stock recapitalizations and
distributions of property (other than cash) to holders of NTL UK and Ireland
Common Stock. If fully exercised, the rights and warrants would entitle the
current preferred stockholders of NTL Incorporated to acquire approximately
23.6% and the current common stockholders of NTL Incorporated to acquire
approximately 8.9% of NTL UK and Irelands primary common stock on the
effective date of the recapitalization. Holders of the subordinated notes of
NTL Incorporated (other than France Telecom), NTL (Delaware), Inc. (other than
France Telecom), and NTL Communications Corp. would have the right to purchase
any shares of NTL UK and Ireland common stock and warrants not subscribed for
in the rights offering by the preferred and common stockholders of NTL
Incorporated. It is expected that the warrants will be listed or quoted on the
same exchange or inter-dealer quotation system as the shares of common stock of
the reorganized NTL. NTL has had preliminary conversations with the New York
Stock Exchange regarding the listing of the common stock of NTL UK and Ireland
on the Exchange following the effective date of its plan of reorganization.
Based on these preliminary conversations there has been no indication from the
New York Stock Exchange that NTL UK and Ireland will qualify for listing on the
Exchange. There can be no assurance that shares of NTL UK and Ireland common
stock and/or Series A warrants will be listed on an exchange or be eligible for
trading on an inter-dealer quotation system on the effective date of the
bankruptcy or at any time thereafter or that an orderly trading market will
develop for these securities.

Current preferred stockholders of NTL Incorporated, other than France Telecom, would receive
approximately 3.2% and current common stockholders of NTL Incorporated, other than France Telecom,
would receive approximately 10.3% of the primary equity of NTL Euroco. It is
contemplated that, subject to the consummation of the recapitalization, France
Telecom would also receive NTL Incorporateds 27% interest in Noos, pursuant to
a pledge of such interest to France Telecom given at the time of its
acquisition.

During the recapitalization process, NTL has maintained normal and regular
trade terms with its suppliers and customers. There can be no assurance that
NTLs suppliers will continue to provide normal trade credit or credit on
acceptable terms, if at all, or that customers will continue to do business or
enter into new business with NTL. See also Risk Factors for a summary of
risks related to NTLs business in general and the recapitalization process in
particular.

Section 1129 of the United States Bankruptcy Code requires, among other things,
a showing that confirmation of the proposed recapitalization plan will not be
followed by liquidation or the need for further financial reorganization of NTL
Incorporated, NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications Limited or Diamond Holdings Limited, and that the value of
distributions to dissenting holders of claims and interests may not be less
than the value such holders would receive in a liquidation under Chapter 7 of
the United States Bankruptcy Code. Although NTL believes that the proposed
recapitalization plan will meet these tests, there can be no assurance that the
Bankruptcy Court will reach the same conclusion.

The United States Bankruptcy Code also requires that a plan must provide the
same treatment for each claim or interest in a particular class, unless a
holder agrees to a less favorable treatment of its particular claim or
interest. NTL believes that the proposed recapitalization plan complies with
this requirement of the United States Bankruptcy Code. However, if a member of
a class objects to its treatment, or if the Bankruptcy Court finds that the
proposed recapitalization plan does not comply with the requirements of the
United States Bankruptcy Code, confirmation of the plan could be delayed or
prevented. In addition, each class of impaired claims and interests that will
(or may) be entitled to receive property under the plan will have the
opportunity to vote to accept or reject the plan. If an impaired class of
claims or interests rejects the plan, the Company may request confirmation of
the plan pursuant to the cramdown provisions of the United States Bankruptcy
Code. Even if the requirements for cramdown are met, the Bankruptcy Court,
which, as a court of equity may exercise substantial discretion, may choose not
to confirm the plan. These can be no assurance that the proposed
recapitalization plan will be confirmed.

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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Bank Waivers

Before NTL could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under NTLs
credit facilities. Effective March 8, 2002, these lenders granted waivers
which, until March 29, 2002, provided that the commencement of negotiations
with bondholders with a view to rescheduling its debt would not constitute an
event of default under the credit facilities. Such initial waivers did not
permit NTL to make to any of its bondholders an exchange or similar offer for
NTLs outstanding public notes or to enter into a legally binding agreement
with the unofficial steering committee of bondholders, subject to some
exceptions, without the consent of the lenders under the credit facilities. But
for the initial waivers, the commencement of negotiations with bondholders
would have been an event of default under the credit facilities.

Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14, 2002 in the case of the Cablecom credit facility, unless
the interest payments missed by NTL Communications Corp. on April 1, 2002 were
remedied or a sufficient number of bondholders agreed to forbear in respect of
such non-payment, in which case, the UK credit facilities waivers were to be
extended to May 14, 2002. As a condition to the amendment to the initial
waivers, the UK lenders required NTL (Delaware), Inc. to loan £90 million to
NTL (UK) Group, Inc. following receipt of the proceeds from the sale of NTL
Australia. Such loan was actually made (with the approval of the lenders under
the UK credit facilities) to NTL (UK) Group, Inc. and then on-lent to certain
subsidiaries of NTL (UK) Group, Inc. This loan, which was made on April 5,
2002, is structurally senior to the outstanding public notes issued by NTL
Communications Corp. and contractually senior to intra-group debt owed by NTL
(UK) Group, Inc. to NTL Communications Corp. but contractually subordinated to
the UK credit facilities. In connection with the amendments to the waivers, NTL
affirmed the provisions of the initial waivers and agreed, among other things,
not to commence voluntary dissolution proceedings, including proceedings under
Chapter 11 of the United States Bankruptcy Code, without the consent of these
lenders.

As of the date of this Form 10-Q, there are no current waivers from NTLs
secured lenders and NTL is therefore in default under its UK credit facilities
and the Cablecom credit facility. In connection with the proposed
recapitalization plan, it is intended that the existing events of default under
the credit facilities will be cured by amendment with effect from the effective
date of the recapitalization, if it is approved by creditors and the Bankruptcy
Court. On May 2, 2002, a memorandum was executed by NTL, a steering committee
of its lending banks and the unofficial committee of its public bondholders
indicating the parties agreement in principle (on a non-legally binding basis)
to the terms of the proposed recapitalization and the terms on which the
Companys UK credit facilities should be amended and restated and with respect
to certain matters relating to the sale of, or investment in, Cablecom.

Cablecom GmbH, an indirect wholly-owned subsidiary of NTL (Delaware), Inc., is
the principal trading company of NTLs Swiss group. There were a number of
technical defaults under the Swiss credit facility made available to Cablecom
and various of its subsidiaries. In addition, as of December 31, 2001,
Cablecoms and six of its direct and indirect subsidiaries liabilities
exceeded their respective assets. As a consequence, under Swiss law, those
entities were deemed to be overindebted. This also constituted an event of
default under the Cablecom credit facility, which entitled the lenders to
accelerate repayment. Such an acceleration would have resulted in an event of
default under NTL Incorporateds and NTL (Delaware), Inc.s 5.75% convertible
subordinated notes due 2011 and 5.75% convertible subordinated notes due 2009.

Under Swiss law, the board of directors of an overindebted company is generally
obliged to notify a judge of overindebtedness so that the judge may either
institute insolvency proceedings or postpone such adjudication and take
appropriate measures to preserve the value of the assets. An overindebted
company is not required to notify a judge if the creditors of the overindebted
entity subordinate their claims in the amount of the overindebtedness.

The problem of overindebtedness was resolved on June 26 and June 27, 2002 in
certain of the overindebted subsidiaries when they were merged into Cablecom
and other members of the Cablecom group. The remaining overindebted
subsidiaries were not merged but the overindebtedness issue was resolved in
those subsidiaries by way of subordination agreements which obviated any
requirement to institute insolvency proceedings in respect of these companies.

15



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

At the end of April 2002 the defaults subsisting at that time were remedied or
were waived by the restatement of the credit agreement and the grant of a
waiver letter. However, conditions subsequent such as the grant of new security
and the deposit of share certificates relating to minority shareholdings
pledged to the banks were imposed by these documents and other new finance
documents executed pursuant to the restatement.

Since the end of April 2002 the following defaults have occurred under the
Cablecom finance documents: (1) The indentures issued by NTL (Delaware), Inc.
and NTL Incorporated have become payable and have not been paid; (2) NTL
(Delaware), Inc. has commenced negotiations with its creditors with a view to
the general rescheduling of its indebtedness and has commenced proceedings
under Chapter 11 of the United States Bankruptcy Code pursuant to which it intends to
reorganize its debt; (3) NTL (Delaware), Inc. has liabilities which exceed the
value of its assets and is unable to pay its debts as they fall due; (4)
Cablecom was unable to satisfy the conditions to allow it to rollover revolving
advances maturing in early July 2002. The revolving advances remained unpaid
for several days until Cablecom was able to obtain the consent of the banks to
waive the conditions to their rollover; (5) Certain of the conditions
subsequent imposed by the restated credit agreement, the waiver letter and
other finance documents executed pursuant to the restated credit agreement have
yet to be fulfilled.

The outstanding defaults under the Cablecom finance documents entitle the
facility agent to demand repayment of the loan and enforce the security granted
to secure that loan. The facility agent has discretion to take those steps and
can be compelled to take those steps by a group of banks holding at least
66-2/3% in aggregate of the loan.

Future developments in Cablecoms business, as well as external factors, could
result in a reemergence of the over indebtedness issue under Swiss law.

Interest Payments on Public Notes

NTL has substantial interest payment obligations under its existing
indebtedness. NTL did not make its scheduled interest payments on the
respective due dates as follows:

|                                                    |  |                        |  |              
|--------------------------------------------------- |  | ---------------------- |  | -------------
|April 1, 2002:                                      |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-1/2% notes due 2008  |  | $8.6 million 
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-1/2% notes due 2008 |  | $35.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-7/8% notes due 2010 |  | $29.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $74.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|April 15, 2002:                                     |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 12-3/4% notes due 2005 |  | $17.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011  |  | $2.5 million 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $20.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|May 15, 2002:                                       |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-1/4% notes due 2006  |  | $10.5 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 6-3/4% notes due 2008  |  | $38.8 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-7/8% notes due 2009  |  | $15.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $65.0 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|June 15, 2002:                                      |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Cable                                       |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|Communications Limited                              |  | 11-3/4% notes due 2005 |  | $31.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 7% notes due 2008      |  | $17.1 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL (Delaware), Inc.                                |  | 5-3/4% notes due 2009  |  | $34.5 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $82.8 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|July 15, 2002:                                      |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011  |  | $2.5 million 

16



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

|                                     |  |                         |  |              
|------------------------------------ |  | ----------------------- |  | -------------
|August 1, 2002:                      |  |                         |  |              
|                                    
|                                    
|                                    
|                                    
|NTL Communications Corp.             |  | 11-1/2% notes due 2006  |  | $60.4 million
|                                    
|                                    
|                                    
|                                    
|NTL Communications Corp.             |  | 12-3/8% notes dues 2008 |  | $18.3 million
|                                    
|                                    
|                                    
|                                    
|Diamond Holdings Limited             |  | 10% notes due 2008      |  | $10.5 million
|                                    
|                                    
|                                    
|                                    
|Diamond Holdings Limited             |  | 9-1/8% notes due 2008   |  | $5.0 million 
|                                    
|                                    
|                                    
|                                    
|                                     |  | Total                   |  | $94.2 million
|                                    
|                                    
|                                    
|                                    
|                                     |  |                         |  |              
|                                    
|                                    
|                                    
|                                    
|August 15, 2002                      |  |                         |  |              
|                                    
|                                    
|                                    
|                                    
|NTL Communications Corp.             |  | 10% notes due 2007      |  | $20.0 million
|                                    
|                                    
|                                    
|                                    
|Diamond Cable Communications Limited |  | 10-3/4% notes due 2007  |  | $22.6 million
|                                    
|                                    
|                                    
|                                    
|                                     |  | Total                   |  | $42.6 million

Interest payments of $18.9 million were made, when due, on April 2, 2002 in
respect of Diamond Cable Communications 13.25% senior discount notes due 2004.
Upon emerging from Chapter 11 proceedings, NTL intends to make any required
interest payments on the notes of Diamond Holdings Limited. In accordance with
the proposed recapitalization plan, NTL does not plan to make future interest
payments on its currently outstanding publicly traded notes except notes issued
by NTL Triangle (a non-debtor) and, upon emergence from Chapter 11 proceedings, Diamond
Holdings Limited.

If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. An event of
default entitles the trustee under the indenture or the holders of 25% of the
outstanding notes to declare the principal amount of those notes to be
immediately due and payable. Even if the maturity of those notes is not
accelerated after the 30 day grace period, such an event of default would also
result in an event of default in respect of other debt (commonly called cross
defaults) under most of our other notes. Therefore, there was an event of
default for failure to pay interest on May 1, 2002 under the indentures
relating to the missed interest payments due April 1, 2002 and on May 16, 2002,
under the indentures relating to the missed interest payments due April 15,
2002. As a result, cross defaults occurred under NTLs other indentures at NTL
Communications Corp., NTL (Delaware), Inc., NTL Incorporated and under our UK
credit facilities and under the Cablecom credit facility. This gave holders of
the outstanding series of debt at these entities the right to accelerate
repayment of those debts by declaring the principal amount of the debts to be
immediately due and payable. As a result of the payment defaults as well as the
Companys voluntary filing under Chapter 11 of the United States Bankruptcy
Code on May 8, 2002, there is an event of default under all of our credit
facilities and the indentures governing all of our publicly traded debt, other
than debt of NTL Triangle. As a result of the Chapter 11 filings, all of our
publicly traded debt, other than the debt of NTL Triangle, became immediately
due and payable, pursuant to the terms of the indentures governing such debt.
The automatic stay of Section 362 of the United States Bankruptcy Code prevents
the holders of such debt from seeking to enforce their collection rights under
the indentures, except within the context of the Chapter 11 cases, and even
then only with the prior approval of the Bankruptcy Court. However, NTL has
received letters from the agents for the lenders under the UK credit facilities
reserving such lenders rights to accelerate repayment of the facilities and to
enforce the security granted in respect of the facilities on account of the
defaults thereunder, actions which would not be prohibited by the automatic
stay.

Credit Rating Downgrades

On April 3, 2002, credit rating agency Standard & Poors lowered the long-term
corporate credit rating on some of NTLs public debt to D from CCC-, citing
NTLs failure to make a bond interest payment due on April 1, 2002.

Delisting of NTL Incorporated Common Stock

On March 28, 2002, the New York Stock Exchange (NYSE) announced that it was
suspending NTL Incorporateds common stock from trading on the NYSE. This
determination was based upon, among other things, the selling price of NTL
Incorporateds common stock, which closed at $0.20 on March 26, 2002. The
continued listing standards of the NYSE, which were applicable to NTL
Incorporated, required maintenance of a minimum share price of $1.00 over a 30
trading day period and average global market capitalization of $100 million
over a 30 trading day period. NTL Incorporateds common stock fell below both
of these continued listing standards. In

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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

addition, on May 9, 2002, Nasdaq Europe halted trading of NTL
Incorporateds common stock pending receipt of information relating to the
restructuring process because of the filing of NTL Incorporateds Chapter 11
cases. NTL has complied with this information request, although there can be no
assurance that Nasdaq Europe will (1) not make additional information requests,
(2) remove the trading halt on shares of NTL Incorporateds common stock or (3)
not delist shares of NTL Incorporateds common stock. NTL Incorporateds common
stock is currently quoted on the Over the Counter Bulletin Board under the
symbol NTLD.

Sale of NTL Australia

On April 2, 2002, NTL announced that it had completed the previously announced
sale of its Australian broadcast business to Macquarie Communications
Infrastructure Holding Pty Limited for A$850 million (US$451.3 million). The
net proceeds from the sale were approximately A$575.3 million (US$304.5
million). At that time, the business bank debt outstanding totaled A$227.3
million (US$121.7 million).

On April 5, 2002, NTL (Delaware), Inc. loaned £90 million to NTL (UK) Group
Inc., which loan was funded by the proceeds of the sale of NTL Australia. This
loan is subordinated to the Companys UK credit facilities. The remaining
proceeds of the sale of NTL Australia remain at NTL (Delaware), Inc., and the
proposed plan of reorganization anticipates that such proceeds will form a
portion of the consideration to be offered to bondholders of NTL (Delaware),
Inc. and NTL Incorporated in satisfaction of their claims against those
companies.

Potential Sale of, or Outside Investment in, Cablecom

It has been agreed to engage UBS Warburg LLC by August 31, 2002 to advise in
connection with an outside investment in, or sale of all or part of, Cablecom.
As part of this process, NTL (Delaware), Inc. and certain of its subsidiaries
have agreed to approve any such outside investment or sale, which is acceptable
to the lenders under the Cablecom credit facility.

It has also been agreed that if such a sale of all or part of Cablecom is
consummated on or before August 31, 2003, the lenders under the Cablecom credit
facility will be entitled to receive additional interest equal to 20% of the
net proceeds of such a sale after repayment of the amounts outstanding under
the Cablecom credit facility and other expenses and taxes of the sale. There
can be no assurance that any outside investment in, or sale of all or part of,
Cablecom pursuant to the Cablecom credit facility will be on terms that are
favorable to NTL and such investment or sale could have a material adverse
effect on NTLs finances and business.

In particular, in the current environment, NTLs shareholding in Cablecom may
have little or no value, which may result in NTL receiving little or no
consideration for its equity interest in Cablecom. Further, if a third party
makes an investment in Cablecom there can be no assurance that NTL will be able
to maintain its ability to direct the management of Cablecom.

Investments in and Loans to Affiliates

On April 15, 2002, a funding request for
$20 million was received by NTL (Delaware), Inc. under
the terms of the investment agreement relating to NTLs investment in B2 in
Sweden, a company which is deploying fiber directly to the home throughout
Scandinavia. NTL has informed B2 and the other principal investors that it is
not in a position to comply with this request for funding at this time. The B2
investment agreement provides that if NTL fails to provide such funding, it may
be sued for non-payment and arguably could lose certain rights under the B2
shareholders arrangements. Pursuant to the applicable documents, if this
occurs the majority remaining shareholders may also elect to terminate the
shareholder arrangements with respect to NTL and exercise a contractual right
to acquire on a pro rata basis NTLs interest in B2 at 25% of fair market
value. If the remaining shareholders elected to exercise these rights, NTL
could be forced to sell its stake in B2 at a loss. On June 25, 2002, B2 and its
remaining shareholders filed a motion in the Bankruptcy Court requesting relief
from the automatic stay provisions of section 362 of the Bankruptcy Code to
exercise their rights under the relevant agreements. Notwithstanding the
arguments raised in the motion, NTL believes that the Bankruptcy Code provides
various defenses and protections of and for NTLs rights under the B2
investment agreement and in respect of its equity interest in B2 and intends to
enforce vigorously its rights and protections.

18



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Premium TV Limited, a wholly-owned subsidiary of NTL (Delaware), Inc., is
obliged to provide funding of up to approximately £62.0 million ($94.5 million)
to fund various of its joint venture interests. Of this amount, the payment of
approximately £50.0 million ($76.2 million) has been guaranteed by NTL
(Delaware), Inc. If Premium TV Limited fails to provide its committed funding
under the relevant shareholder arrangements relating to these joint ventures,
Premium TV Limited and, in respect of the guaranteed amounts, NTL (Delaware),
Inc., may be sued for non-payment. As a result of the recapitalization process,
the relevant joint venture partners may assert that they can compulsorily
acquire Premium TV Limiteds interest in the relevant joint venture at a third
party appraisal valuation. Premium TV Limited is currently in discussions with
certain of these joint venture partners with a view to restructuring the
relevant joint ventures. In the event that these discussions do not reach a
resolution acceptable to Premium TV Limited, Premium TV Limited may seek to
discontinue these joint ventures and terminate their activities, which may also
result in a cessation of substantially all of Premium TV Limiteds activities.
As a result of the restructuring process, the relevant joint venture partners
may assert that they can compulsorily acquire Premium TV Limiteds interest in
the relevant joint venture at a third party appraisal valuation. NTL believes,
however, that it has various defenses and protections under the Bankruptcy Code
against such actions and intends to enforce vigorously its rights and
protections.

Relationships with Suppliers

The uncertainty over NTLs financial condition may adversely affect its
relationships with its suppliers. If NTLs suppliers become increasingly
concerned about its financial condition, they may demand quicker payment terms
or not extend normal trade credit, both of which could further adversely affect
its results of operations, financial condition and cash flows.

Note D  Sale of Australia

On April 2, 2002, NTL announced that it had completed the previously announced
sale of its Australian broadcast business to Macquarie Communications
Infrastructure Holding Pty Limited for A$850 million (US$451.3 million) in an
all cash transaction. The net proceeds from the sale after the repayment of the
outstanding bank credit facility and transaction related costs were
approximately A$575.3 million (US$304.5 million). The Company recognized a gain
on the sale of approximately US$8.4 million, net of income tax expense of
US$4.5 million, in April 2002. NTL Australia is accounted for as a discontinued
operation, and accordingly, NTL Australia is excluded from assets and
liabilities of continuing operations at December 31, 2001 and from results of
continuing operations for the three and six months ended June 30, 2002 and
2001.

19



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

The following is the condensed assets, liabilities and results of operations of
NTL Australia (unaudited except at December 31, 2001):

|                        |                           |   |               |       | 
|----------------------- | ------------------------- | - | ------------- | ----- | 
|                        |                           |   | December 31, 
|                        |                           |   | 2001         
|                        |                           |   |              
|                        |                           |   | (in millions)
|Current assets          |                           | $ | 32.0          |      
|                       
|                       
|                       
|                       
|Fixed assets, net       |                           |   | 235.2         |      
|                       
|                       
|                       
|                       
|Other assets            |                           |   | 137.8         |      
|                        |                           |   |               |      
|                        | NTL Australia assets      |   | $             | 405.0 | 
|                        |                           |   |               |      
|Current liabilities     |                           | $ | 71.0          |      
|                       
|                       
|                       
|                       
|Non current liabilities |                           |   | 111.9         |      
|                        |                           |   |               |      
|                        | NTL Australia liabilities |   | $             | 182.9 | 
|                        |                           |   |               |      

|                        |  |                           |      |      |  |   |      |  
|----------------------- |  | ------------------------- | ---- | ---- |  | - | ---- | -
|                        |  | Six Months Ended June 30,
|                        |  |                          
|                        |  | 2002                      |      | 2001
|                        |  |                           |      |     
|                        |  | (in millions)             |      |      |  |  
|Revenues                |  | $                         | 17.4 |      |  | $ | 29.4 |  
|                       
|                       
|                       
|                       
|Operating income (loss) |  |                           | 0.3  |      |  |   | (5.1 | )
|                       
|                       
|                       
|                       
|Net (loss)              |  |                           | (0.3 | )    |  |   | (2.3 | )

20



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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note E  Recent Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
effective for the Company on January 1, 2002. This Statement supercedes SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of and other related accounting guidance. The adoption
of this new standard had no effect on the results of operations,
financial condition or cash flows of the Company, except that it required the
Company to treat NTL Australia as a discontinued operation beginning in the
first quarter of 2002.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, effective for the Company on January 1, 2003. This Statement
addresses financial accounting and reporting for obligations associated with
the retirement of tangible fixed assets and the associated asset retirement
costs. The Company is in the process of evaluating the financial statement
impact of the adoption of SFAS No. 143.

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also includes guidance on the initial recognition and
measurement of goodwill and other intangible assets acquired in a business
combination that is completed after June 30, 2001.

SFAS No. 142 ends the amortization of goodwill and indefinite-lived intangible
assets. Instead, these assets must be reviewed annually (or more frequently
under certain conditions) for impairment in accordance with this statement.
This impairment test uses a fair value approach rather than the undiscounted
cash flow approach previously required by SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
The Company adopted SFAS No. 142 on January 1, 2002. Primarily due to the
significant impairment charge that the Company recorded in 2001, the adoption
of this new standard did not have a significant effect on the results of
operations, financial condition or cash flows of the Company.

Upon the adoption of SFAS No. 142, the Company performed an analysis of it
intangible assets acquired before July 1, 2001 to determine whether they should
be classified and accounted for as part of or separate from goodwill. The
Company reclassified the carrying value of workforce in place included in other
intangibles to goodwill. The Company determined that license acquisition costs
and customer lists should continue to be classified separate from goodwill.
The Company determined that license acquisition costs would no longer be
subject to amortization since they are deemed to have an indefinite useful
life. The Company also determined that no changes in the remaining useful
lives of the customer lists were required.

The Company also performed an evaluation for impairment of its goodwill and
license acquisition costs as of January 1, 2002 and determined that no
impairment charge was required. The Companys next evaluation of impairment
will be the annual test as of October 1, 2002, unless there are new indicators
of impairment.

Estimated aggregate amortization expense for each of the five succeeding fiscal
years from December 31, 2001 is as follows: $128.4 million
in 2002, $127.2
million in 2003, $79.3 million in 2004, $41.9 million in 2005 and $34.1
million in 2006.

21



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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

The following table shows the Companys loss from continuing operations as
adjusted for the adoption of SFAS No. 142, had SFAS No. 142 been in effect on
January 1, 2001 (unaudited) (in millions).

|                                                |                           |   |                           |   |      |   |          |       | 
|----------------------------------------------- | ------------------------- | - | ------------------------- | - | ---- | - | -------- | ----- | 
|                                                |                           |   | Six Months Ended June 30,
|                                                |                           |   |                          
|                                                |                           |   | 2002                      |   | 2001
|                                                |                           |  
|(Loss) from continuing operations  as reported |                           | $ | (1,096.3                  | ) |      | $ | (2,047.9 | )    
|                                               
|                                               
|                                               
|                                               
|Amortization of:                                |                           |   |                           |   |      |   |          |      
|                                               
|                                               
|                                               
|                                               
|                                                | Goodwill                  |   |                           |  |      |   |          | 757.7 | 
|                                               
|                                               
|                                               
|                                               
|                                                | License acquisition costs |   |                           |  |      |   |          | 35.3  | 
|                                               
|                                               
|                                               
|                                               
|                                                | Other                     |   |                           |  |      |   |          | 1.0   | 
|                                                |                           |  
|                                                |                           |   |                          |   |      |   | 794.0    |      
|                                                |                           |  
|(Loss) from continuing operations  as adjusted |                           | $ | (1,096.3                  | ) |      | $ | (1,253.9 | )    
|                                                |                           |  

Note F  Fixed Assets

Fixed assets consist of:

|                         |  |               |          |              |  |   |          |  
|------------------------ |  | ------------- | -------- | ------------ |  | - | -------- | -
|                         |  | June 30,      |          | December 31,
|                         |  | 2002          |          | 2001        
|                         |  |              
|                         |  | (unaudited)   |          |              |  |  
|                         |  | (in millions)
|Operating equipment      |  | $             | 14,356.1 |              |  | $ | 13,312.2 |  
|                        
|                        
|                        
|                        
|Other equipment          |  |               | 1,060.3  |              |  |   | 997.4    |  
|                        
|                        
|                        
|                        
|Construction-in-progress |  |               | 1,418.3  |              |  |   | 1,270.4  |  
|                         |  |              
|                         |  |               | 16,834.7 |              |  |   | 15,580.0 |  
|                        
|                        
|                        
|                        
|Accumulated depreciation |  |               | (4,201.7 | )            |  |   | (3,242.1 | )
|                         |  |              
|                         |  | $             | 12,633.0 |              |  | $ | 12,337.9 |  
|                         |  |              

Note G  Intangible Assets

Intangible assets consist of:

|                                                                                   |  |               |         |              |  |   |         | 
|---------------------------------------------------------------------------------- |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                                                                   |  | June 30,      |         | December 31,
|                                                                                   |  | 2002          |         | 2001        
|                                                                                   |  |               |         |             
|                                                                                   |  | (unaudited)   |         |              |  |  
|                                                                                   |  | (in millions)
|Intangible assets not subject to amortization:                                     |  |               |         |              |  |   |         | 
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Goodwill                                                                           |  | $             | 1,758.2 |              |  | $ | 1,626.1 | 
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|License acquisition costs                                                          |  |               | 53.7    |              |  |   | 54.7    | 
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Intangible assets subject to amortization:                                         |  |               |         |              |  |   |         | 
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Customer lists, net of accumulated amortization
of $227.8 (2002) and $169.3 (2001) |  |               | 142.9   |              |  |   | 168.8   | 
|                                                                                   |  |              
|                                                                                   |  | $             | 1,954.8 |              |  | $ | 1,849.6 | 
|                                                                                   |  |              

Note H  Investments in and Loans to Affiliates

The Company has investments in various companies and joint ventures which are
accounted for under either the equity method or the cost method. The Companys
significant equity investments include its 34.01% interest in Svenska
Bredbandsbolaget (B2), a company based in Sweden, which provides always on,
low cost access to a high-capacity broadband network that provides
transmission, both to and from the customer, at the same speed and at the same
time, and its 50% interest in eKabel InvestCo, which owns 65% of iesy Hessen
GmbH (iesy), the largest cable television network in the German province of
Hessen.

The companies in which we hold minority investments may require additional
financing. There can be no assurance

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

that iesy will meet the conditions precedent to access additional funds under
its credit facility or that it will be in compliance with the covenants under
its debt agreements. The failure of iesy to obtain required funding or a
default entitling the lenders to accelerate repayment of iesys borrowings
would adversely affect the value of NTLs investment in iesy. In addition iesy
has recently retained advisors to assist it in a restructuring of its
outstanding indebtedness. There can be no assurance that iesy will
successfully achieve a restructuring. If a restructuring is not successfully
achieved, it will likely have a negative impact on the value of NTLs
investment in iesy.

In addition, on April 15, 2002, a funding request for $20 million was received
by NTL (Delaware), Inc. under the terms of the investment agreement relating to NTLs investment
in B2. NTL has informed B2 and the other principal investors that it is not in
a position to comply with this request at this time. The B2 investment
agreement provides that if NTL fails to provide such funding, it may be sued
for non-payment and arguably could lose certain rights under the B2
shareholders arrangements. Pursuant to the applicable documents, if this
occurs the majority remaining shareholders may also elect to terminate the
shareholder arrangements with respect to NTL and exercise a contractual right
to acquire on a pro rata basis NTLs interest in B2 at 25% of fair market
value. If the remaining shareholders elected to exercise these rights, NTL
could be forced to sell its stake in B2 at a loss. On June 25, 2002, B2 and
its remaining shareholders filed a motion in the United States Bankruptcy Court
requesting relief from the automatic stay provisions of Section 362 of the
Bankruptcy Code to exercise certain of their rights under the relevant
documents. Notwithstanding the arguments raised in the motion, NTL believes
that the Bankruptcy Code provides various defenses and protections of and for
NTLs rights under the B2 investment agreement and in respect of its equity
interest in B2 and intends to enforce vigorously its rights and protections.

23



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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note H  Investments in and Loans to Affiliates (continued)

Premium TV Limited, a wholly-owned subsidiary of NTL (Delaware), Inc., is
obliged to provide funding of up to approximately £62.0 million ($94.5 million)
to fund various of its joint venture interests. Of this amount, the payment of
approximately £50.0 million ($76.2 million) has been guaranteed by NTL
(Delaware), Inc. If Premium TV Limited fails to provide its committed funding
under the relevant shareholder arrangements relating to these joint ventures,
Premium TV Limited and, in respect of the guaranteed amounts, NTL (Delaware),
Inc., may be sued for non-payment. As a result of the recapitalization
process, the relevant joint venture partners may assert that they can
compulsorily acquire Premium TV Limiteds interest in the relevant joint
venture at a third party appraisal valuation. Premium TV Limited is currently
in discussions with certain of these joint venture partners with a view to
restructuring the relevant joint ventures. In the event that these discussions
do not reach a resolution acceptable to Premium TV Limited, Premium TV Limited
may seek to discontinue these joint ventures and terminate their activities,
which may also result in a cessation of substantially all of Premium TV
Limiteds activities. As a result of the restructuring process, the relevant
joint venture partners may assert that they can compulsorily acquire Premium TV
Limiteds interest in the relevant joint venture at a third party appraisal
valuation. NTL believes, however, that it has various defenses and protections
under the United States Bankruptcy Code against such actions and intends to
enforce vigorously its rights and protections.

NTL Incorporated has also guaranteed the obligations of one of its subsidiaries
to provide funding of up to approximately £4.2 million ($6.4 million) to a
joint venture whose business is the provision of programming content. If the
relevant subsidiary fails to provide such funding, under the shareholder
arrangements relating to this joint venture, such subsidiary may be sued for
damages. In addition, under the shareholder arrangements relating to this
joint venture, the relevant joint venture partner may have the option to
compulsorily acquire the Companys indirect interest in the relevant joint
venture at 70% of fair market value, resulting in the Company selling its
indirect interest at a potential loss. The Company believes that it has
various defenses and protections under the United States Bankruptcy Code
against such actions and intends to enforce vigorously its rights and
protections. The Company intends to negotiate with this joint venture partners
to address these issues. There can be no guaranty that these negotiations will
be successful and that the Company will be able to retain its current interest
in this joint venture company.

The Companys investments in and loans to affiliates are as follows:

|                         |  |                       |       |                   |  |             |       |         |  |  |       |   |  |   |       | 
|------------------------ |  | --------------------- | ----- | ----------------- |  | ----------- | ----- | ------- |  |  | ----- | - |  | - | ----- | 
|                         |  | June 30, 2002         |       | December 31, 2001
|                         |  |                       |       |                  
|                         |  | Ownership             |       | Balance           |  | Ownership   |       | Balance
|                         |  |                       |       |                   |  | (unaudited) |       |         |  |  |       |   |  |  
|                         |  | (dollars in millions)
|B2                       |  |                       | 34.01 | %                 |  | $           | 76.0  |         |  |  | 34.01 | % |  | $ | 92.5  | 
|                        
|                        
|                        
|                        
|iesy                     |  |                       | 32.50 | %                 |  |             | 49.6  |         |  |  | 32.50 | % |  |   | 73.0  | 
|                        
|                        
|                        
|                        
|Others                   |  |                       |       |                   |  |             | 51.8  |         |  |  |       |   |  |   | 48.6  | 
|                         |  |                       |       |                   |  |             |       |         |  |  |       |   |  |   |       | 
|Total equity investments |  |                       |       |                   |  |             | 177.4 |         |  |  |       |   |  |   | 214.1 | 
|                        
|                        
|                        
|                        
|Total cost investments   |  |                       |       |                   |  |             | 7.1   |         |  |  |       |   |  |   | 6.6   | 
|                         |  |                       |       |                   |  |             |       |         |  |  |       |   |  |   |       | 
|Total                    |  |                       |       |                   |  | $           | 184.5 |         |  |  |       |   |  | $ | 220.7 | 
|                         |  |                       |       |                   |  |             |       |         |  |  |       |   |  |   |       | 

24



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note H  Investments in and Loans to Affiliates (continued)

A summary of combined financial information as reported by the Companys equity
investees is set forth below:

|                                           |  |               |         |              |  |   |         | 
|------------------------------------------ |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                           |  | June 30,      |         | December 31,
|                                           |  | 2002          |         | 2001        
|                                           |  |              
|                                           |  | (unaudited)   |         |              |  |  
|                                           |  | (in millions)
|Current assets                             |  | $             | 257.4   |              |  | $ | 284.9   | 
|                                          
|                                          
|                                          
|                                          
|Fixed assets, net                          |  |               | 399.8   |              |  |   | 391.7   | 
|                                          
|                                          
|                                          
|                                          
|Other assets                               |  |               | 613.7   |              |  |   | 801.4   | 
|                                           |  |              
|Total assets                               |  | $             | 1,270.9 |              |  | $ | 1,478.0 | 
|                                           |  |              
|Current liabilities                        |  | $             | 145.3   |              |  | $ | 185.5   | 
|                                          
|                                          
|                                          
|                                          
|Non current liabilities                    |  |               | 960.7   |              |  |   | 837.6   | 
|                                          
|                                          
|                                          
|                                          
|Total shareholders equity                 |  |               | 164.9   |              |  |   | 454.9   | 
|                                           |  |              
|Total liabilities and shareholders equity |  | $             | 1,270.9 |              |  | $ | 1,478.0 | 
|                                           |  |              

|                 |  |                           |        |      |  |   |        |  
|---------------- |  | ------------------------- | ------ | ---- |  | - | ------ | -
|                 |  | Six Months ended June 30,
|                 |  |                          
|                 |  | 2002                      |        | 2001
|                 |  |                          
|                 |  | (unaudited)              
|                 |  | (in millions)            
|Revenues         |  | $                         | 95.8   |      |  | $ | 94.9   |  
|                
|                
|                
|                
|Operating (loss) |  |                           | (118.7 | )    |  |   | (167.0 | )
|                
|                
|                
|                
|Net (loss)       |  |                           | (114.7 | )    |  |   | (191.3 | )

25



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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note I Liabilities Subject to Compromise

Liabilities subject to compromise consist of the following:

|                       |                     |                                                         |          |               |         | 
|---------------------- | ------------------- | ------------------------------------------------------- | -------- | ------------- | ------- | 
|                       |                     |                                                         |          | June 30,     
|                       |                     |                                                         |          | 2002         
|                       |                     |                                                         |          |              
|                       |                     |                                                         |          | (in millions)
|Accounts payable       |                     | $                                                       | 0.4      |              
|                      
|                      
|                      
|                      
|Interest payable       |                     |                                                         | 314.8    |              
|                      
|                      
|                      
|                      
|Payables to affiliates |                     |                                                         | 0.1      |              
|                      
|                      
|                      
|                      
|Accrued expenses       |                     |                                                         | 4.6      |              
|                      
|                      
|                      
|                      
|Long-term debt:        |                     |                                                         |          |              
|                      
|                      
|                      
|                      
|                       | NTL Delaware:       |                                                         |          |               |        
|                      
|                      
|                      
|                      
|                       |                     | 5 3/4% Convertible Subordinated Notes                   |          |               | 1,200.0 | 
|                      
|                      
|                      
|                      
|                       | NTL Communications: |                                                         |          |               |        
|                      
|                      
|                      
|                      
|                       |                     | 12 3/4% Senior Deferred Coupon Notes                    |          |               | 277.8   | 
|                      
|                      
|                      
|                      
|                       |                     | 11 1/2% Senior Deferred Coupon Notes                    |          |               | 1,050.0 | 
|                      
|                      
|                      
|                      
|                       |                     | 10% Senior Notes                                        |          |               | 400.0   | 
|                      
|                      
|                      
|                      
|                       |                     | 9 1/2% Senior Sterling Notes, less unamortized discount |          |               | 190.2   | 
|                      
|                      
|                      
|                      
|                       |                     | 10 3/4% Senior Deferred Coupon Sterling Notes           |          |               | 416.1   | 
|                      
|                      
|                      
|                      
|                       |                     | 9 3/4% Senior Deferred Coupon Notes                     |          |               | 1,193.3 | 
|                      
|                      
|                      
|                      
|                       |                     | 9 3/4% Senior Deferred Coupon Sterling Notes            |          |               | 418.4   | 
|                      
|                      
|                      
|                      
|                       |                     | 11 1/2% Senior Notes                                    |          |               | 625.0   | 
|                      
|                      
|                      
|                      
|                       |                     | 12 3/8% Senior Deferred Coupon Notes                    |          |               | 380.6   | 
|                      
|                      
|                      
|                      
|                       |                     | 7% Convertible Subordinated Notes                       |          |               | 489.8   | 
|                      
|                      
|                      
|                      
|                       |                     | 9 1/4% Senior Euro Notes                                |          |               | 246.4   | 
|                      
|                      
|                      
|                      
|                       |                     | 9 7/8% Senior Euro Notes                                |          |               | 345.0   | 
|                      
|                      
|                      
|                      
|                       |                     | 11 1/2% Senior Deferred Coupon Euro Notes               |          |               | 156.1   | 
|                      
|                      
|                      
|                      
|                       |                     | 11 7/8% Senior Notes, less unamortized discount         |          |               | 491.2   | 
|                      
|                      
|                      
|                      
|                       |                     | 12 3/8% Senior Euro Notes, plus unamortized premium     |          |               | 296.5   | 
|                      
|                      
|                      
|                      
|                       |                     | 6 3/4% Convertible Senior Notes                         |          |               | 1,150.0 | 
|                      
|                      
|                      
|                      
|                       | Diamond:            |                                                         |          |               |        
|                      
|                      
|                      
|                      
|                       |                     | 13 1/4% Senior Discount Notes                           |          |               | 285.1   | 
|                      
|                      
|                      
|                      
|                       |                     | 11 3/4% Senior Discount Notes                           |          |               | 531.0   | 
|                      
|                      
|                      
|                      
|                       |                     | 10 3/4% Senior Discount Notes                           |          |               | 420.5   | 
|                      
|                      
|                      
|                      
|                       | Diamond Holdings:   |                                                         |          |               |        
|                      
|                      
|                      
|                      
|                       |                     | 10% Senior Sterling Notes                               |          |               | 205.8   | 
|                      
|                      
|                      
|                      
|                       |                     | 9 1/8% Senior Notes                                     |          |               | 110.0   | 
|                       |                     |                                                         |          |              
|Total                  |                     | $                                                       | 11,198.7 |              
|                       |                     |                                                         |          |              

Pursuant to the proposed plan of reorganization, the Diamond Holding Notes will
remain outstanding upon emergence from the Chapter 11 proceedings.

26



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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note J  Long-Term Debt

Long-term debt, exclusive of amounts subject to compromise, consists of:

|                            |                                                         |   |               |         |              |   |          |         | 
|--------------------------- | ------------------------------------------------------- | - | ------------- | ------- | ------------ | - | -------- | ------- | 
|                            |                                                         |   | June 30,      |         | December 31,
|                            |                                                         |   | 2002          |         | 2001        
|                            |                                                         |  
|                            |                                                         |   | (unaudited)   |         |              |   |         
|                            |                                                         |   | (in millions)
|NTL Delaware:               |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | 5 3/4% Convertible Subordinated Notes                   |   | $             |        |              |   | $        | 1,200.0 | 
|                           
|                           
|                           
|                           
|Cablecom:                   |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | Term Loan Facility                                      |   |               | 1,809.5 |              |   |          | 1,626.8 | 
|                           
|                           
|                           
|                           
|                            | Revolving Facility                                      |   |               | 707.1   |              |   |          | 527.2   | 
|                           
|                           
|                           
|                           
|                            | Other                                                   |   |               | 6.4     |              |   |          | 6.2     | 
|                           
|                           
|                           
|                           
|NTL Communications:         |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | 12 3/4% Senior Deferred Coupon Notes                    |   |               |        |              |   |          | 277.8   | 
|                           
|                           
|                           
|                           
|                            | 11 1/2% Senior Deferred Coupon Notes                    |   |               |        |              |   |          | 1,050.0 | 
|                           
|                           
|                           
|                           
|                            | 10% Senior Notes                                        |   |               |        |              |   |          | 400.0   | 
|                           
|                           
|                           
|                           
|                            | 9 1/2% Senior Sterling Notes, less unamortized discount |   |               |        |              |   |          | 181.4   | 
|                           
|                           
|                           
|                           
|                            | 10 3/4% % Senior Deferred Coupon Sterling Notes         |   |               |        |              |   |          | 382.3   | 
|                           
|                           
|                           
|                           
|                            | 9 3/4% Senior Deferred Coupon Notes                     |   |               |        |              |   |          | 1,153.8 | 
|                           
|                           
|                           
|                           
|                            | 9 3/4% Senior Deferred Coupon Sterling Notes            |   |               |        |              |   |          | 385.9   | 
|                           
|                           
|                           
|                           
|                            | 11 1/2%Senior Notes                                     |   |               |        |              |   |          | 625.0   | 
|                           
|                           
|                           
|                           
|                            | 12 3/8% Senior Deferred Coupon Notes                    |   |               |        |              |   |          | 364.9   | 
|                           
|                           
|                           
|                           
|                            | 7% Convertible Subordinated Notes                       |   |               |        |              |   |          | 489.8   | 
|                           
|                           
|                           
|                           
|                            | 9 1/4% Senior Euro Notes                                |   |               |        |              |   |          | 222.5   | 
|                           
|                           
|                           
|                           
|                            | 9 7/8% Senior Euro Notes                                |   |               |        |              |   |          | 311.5   | 
|                           
|                           
|                           
|                           
|                            | 11 1/2% Senior Deferred Coupon Euro Notes               |   |               |        |              |   |          | 135.6   | 
|                           
|                           
|                           
|                           
|                            | 11 7/8% Senior Notes, less unamortized discount         |   |               |        |              |   |          | 490.7   | 
|                           
|                           
|                           
|                           
|                            | 12 3/8% Senior Euro Notes, plus unamortized premium     |   |               |        |              |   |          | 267.8   | 
|                           
|                           
|                           
|                           
|                            | 6 3/4% Convertible Senior Notes                         |   |               |        |              |   |          | 1,150.0 | 
|                           
|                           
|                           
|                           
|NTL Communications Limited: |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | Senior Credit Facility                                  |   |               | 4,245.4 |              |   |          | 4,050.0 | 
|                           
|                           
|                           
|                           
|                            | Working Capital Facility                                |   |               | 622.4   |              |   |          | 145.4   | 
|                           
|                           
|                           
|                           
|                            | Other                                                   |   |               | 58.4    |              |   |          | 58.6    | 
|                           
|                           
|                           
|                           
|NTL Triangle:               |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | 11.2% Senior Discount Debentures                        |   |               | 517.3   |              |   |          | 517.3   | 
|                           
|                           
|                           
|                           
|                            | Other                                                   |   |               | 3.8     |              |   |          | 4.5     | 
|                           
|                           
|                           
|                           
|Diamond:                    |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | 13 1/4% Senior Discount Notes                           |   |               |        |              |   |          | 285.1   | 
|                           
|                           
|                           
|                           
|                            | 11 3/4% Senior Discount Notes                           |   |               |        |              |   |          | 531.0   | 
|                           
|                           
|                           
|                           
|                            | 10 3/4% Senior Discount Notes                           |   |               |        |              |   |          | 415.1   | 
|                           
|                           
|                           
|                           
|                            | 10% Senior Sterling Notes                               |   |               |        |              |   |          | 196.3   | 
|                           
|                           
|                           
|                           
|                            | 9 1/8% Senior Notes                                     |   |               |        |              |   |          | 110.0   | 
|                           
|                           
|                           
|                           
|                            | Other                                                   |   |               | 3.7     |              |   |          | 3.6     | 
|                            |                                                         |  
|                            |                                                         |   | 7,974.0       |         |              |   | 17,566.1 |        
|                           
|                           
|                           
|                           
|Less current portion        |                                                         |   | 7,974.0       |         |              |   | 17,566.1 |        
|                            |                                                         |  
|                            |                                                         | $ |              |         |              | $ |         |        
|                            |                                                         |  

27



---



##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note J  Long-Term Debt (continued)

See Note C for discussion of the events of default and uncertainties about
compliance with the terms and conditions of the Companys debt. The holders of
the debt have the right to accelerate repayment, or may have such right, which
has caused all of the Companys long-term debt to be classified as current.
The automatic stay of Section 362 of the United States Bankruptcy Code prevents
the holders of such debt from seeking to enforce their collection rights under
the indentures, except within the context of the Chapter 11 cases, and even
then only with the prior approval of the Bankruptcy Court. However, NTL has
received letters from the agents for the lenders under the UK credit facilities
reserving such lenders rights to accelerate repayment of the facilities and to
enforce the security granted in respect of the facilities on account of the
defaults thereunder, actions which would not be prohibited by the automatic
stay.

The effective interest rates on the Companys variable interest rate debt were
as follows:

|                            |                          |  |          |       |              |  |  |      |  
|--------------------------- | ------------------------ |  | -------- | ----- | ------------ |  |  | ---- | -
|                            |                          |  | June 30, |       | December 31,
|                            |                          |  | 2002     |       | 2001        
|                            |                          | 
|Cablecom:                   |                          |  |          |       |              |  |  |     
|                           
|                           
|                           
|                           
|                            | Term Loan Facility       |  |          | 4.30  | %            |  |  | 5.27 | %
|                           
|                           
|                           
|                           
|                            | Revolving Facility       |  |          | 4.21  | %            |  |  | 5.49 | %
|                           
|                           
|                           
|                           
|NTL Communications Limited: |                          |  |          |       |              |  |  |     
|                           
|                           
|                           
|                           
|                            | Senior Credit Facility   |  |          | 6.16  | %            |  |  | 6.73 | %
|                           
|                           
|                           
|                           
|                            | Term Facility            |  |          | 7.66  | %            |  |  | 8.06 | %
|                           
|                           
|                           
|                           
|                            | Working Capital Facility |  |          | 10.65 | %            |  |  | 9.57 | %

On April 30, 2002, the Cablecom Term Loan Facility and Revolving Facility were
restated. In May 2002, Cablecom borrowed an additional CHF 180.0 million
($120.6 million) under the Revolving Facility. The maturity date for both
facilities was changed to April 30, 2003 in the restatement. The interest and
commitment fee provisions were not changed. The Revolving Facility has been
capped at its utilized amount of CHF 1,055.0 million, although the availability
may be increased with the consent of the requisite majority of the lenders
under that facility.

Note K  Other Charges including Restructuring Charges

Other charges of $19.3 million in the six
months ended June 30, 2002 include asset impairment charges of
$12.9 million, restructuring charges of $3.7 million and costs incurred for
information technology integration and for business rationalization consulting
of $2.7 million. Other charges of $25.3 million in the six
months ended June 30, 2001 were for information
technology integration and for business rationalization consulting.

The Company recorded restructuring charges in the fourth quarter of 2001 as a
result of actions to reorganize, re-size and reduce operating costs and create
greater efficiency in various areas of the Company. These charges included
employee severance and related costs for approximately 5,400 employees to be
terminated, of which approximately 200 employees were still employed by the
Company as of June 30, 2002.

The following table summarizes the restructuring charges incurred and utilized
in 2002 and 2001:

|                           |  |               |       |       |  |               |      |       |  |       |       |   |  |   |      |   |  |   |       |  
|-------------------------- |  | ------------- | ----- | ----- |  | ------------- | ---- | ----- |  | ----- | ----- | - |  | - | ---- | - |  | - | ----- | -
|                           |  | Employee      |       |       |  |               |      |       |  |       |       |   |  |   |      |   |  |  
|                           |  | Severance     |       | Lease |  |               |      |       |  |       |       |   |  |   |      |  
|                           |  | and Related   |       | Exit  |  | Agreement     |      |       |  |       |       |   |  |  
|                           |  | Costs         |       | Costs |  | Modifications |      | Other |  | Total
|                           |  |              
|                           |  | (in millions)
|Balance, December 31, 2001 |  | $             | 79.2  |       |  | $             | 33.5 |       |  | $     | 27.7  |   |  | $ |     |   |  | $ | 140.4 |  
|                          
|                          
|                          
|                          
|Charged to expense         |  |               | 2.7   |       |  |               |     |       |  |       |      |   |  |   | 1.0  |   |  |   | 3.7   |  
|                          
|                          
|                          
|                          
|Utilized                   |  |               | (73.8 | )     |  |               | (8.5 | )     |  |       | (10.6 | ) |  |   | (1.0 | ) |  |   | (93.9 | )
|                           |  |              
|Balance, June 30, 2002     |  | $             | 8.1   |       |  | $             | 25.0 |       |  | $     | 17.1  |   |  | $ |     |   |  | $ | 50.2  |  
|                           |  |              

28



---



##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note L  Related Party Transactions

Due from affiliates at June 30, 2002 of
$153.7 million includes $128.6 million in amounts due from
NTL Incorporated which is payable to United Kingdom subsidiaries of
the Company. In addition, it includes $22.8 million in amounts
due from NTL Incorporated which is payable to NTL (Delaware), Inc.
and NTL Communications Corp.

On September 28, 2001, NTL Communications Corp. loaned NTL Incorporated $150.0
million in cash and received 15.0% Promissory Notes due September 30, 2004.
Interest is payable monthly in cash at a rate of 15.0% per annum beginning on
October 31, 2001.

On April 5, 2002, following receipt of the proceeds from the sale of NTL
Australia, the Company loaned £90.0 million to NTL (UK) Group, Inc. Such loan
was actually made (with the approval of the lenders under the UK credit
facilities) to NTL (UK) Group, Inc. and then on-lent to certain subsidiaries of
NTL (UK) Group, Inc. This loan is structurally senior to the outstanding
public notes issued by NTL Communications Corp. and contractually senior to
intra-group debt owed by NTL (UK) Group, Inc. to NTL Communications Corp. but
contractually subordinated to the UK credit facilities. The loan is due on
April 1, 2006 and is redeemable at the option of the Company. Interest on the
note is at 23% per annum, compounded semiannually, and is payable, in cash, on
the earlier of April 1, 2006 or the redemption date of the
notes. In connection with the DIP facility, the current interest rate
on this loan has been reduced from 23% per annum to 11% per annum.

Pursuant to the proposed plan of reorganization,
generally all intercompany claims owed by any parent Debtor, directly
or indirectly, to any of its Debtor subsidiaries will be distributed
by such Debtor subsidiary up to its corporate parent in exchange for
one share of such Debtor subsidiarys common stock. In addition, generally all intercompany claims owed
by any Debtor subsidiary, directly or indirectly, to any parent
Debtor will be contributed by the parent Debtor down to such Debtor
subsidiary, in exchange for one additional share of common stock from
such Debtor subsidiary. Debtors include NTL Incorporated, NTL
(Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications Limited, Diamond Holdings Limited and Communications
Cable Funding Corp.

Note M  Comprehensive Loss

The Companys comprehensive loss for the three months ended June 30, 2002 and
2001 was $164.3 million and $1,068.4 million, respectively.

The Companys comprehensive loss for the six months ended June 30, 2002 and
2001 was $803.8 million and $2,396.1 million, respectively.

Note N  Commitments and Contingent Liabilities

At June 30, 2002, the Company was committed to pay approximately $1,543.6
million for equipment and services and for investments in and loans to
affiliates. This amount includes approximately $1,160.3 million for operations
and maintenance contracts and other commitments from July 1, 2003 to 2013.

The Company has agreed to provide funds to its unconsolidated affiliates
generally if and when requested to do so and only upon the satisfaction of
certain conditions. The estimated aggregate amount as of June 30, 2002 was
$40.4 million. These unconsolidated affiliates include the media partnerships
with the Football League and with various UK football clubs for Internet
marketing and sponsorships. The Companys wholly-owned indirect subsidiary,
Premium TV Limited, has entered into these football related partnerships.

NTL Incorporated and certain of its officers have been named as defendants in a
number of purported securities class actions lawsuits. The complaints in those
cases generally allege that NTL failed to accurately disclose its financial
condition, finances and future prospects in press releases and other
communications with investors prior to filing its Chapter 11 case in federal
court. NTL does not know of any facts that would support these allegations,
and intends to defend the lawsuits vigorously.

The Company is involved in certain disputes and litigation arising in the
ordinary course of its business. None of these matters are expected to have a
material adverse effect on the Companys financial position, results of
operations or cash flows.

Note O  Condensed Consolidating Financial Statements of Entities in
Reorganization and Entities Not in Reorganization

The following condensed consolidating financial statements of the Company as of
June 30, 2002 and December 31, 2001 and for the three and six months ended June
30, 2002 have been provided pursuant to AICPA Statement of Position 90-7,
Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.
NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp. are
included in Entities in Reorganization. All other wholly-owned direct and
indirect subsidiaries of NTL (Delaware), Inc. are included in Entities Not in
Reorganization.

29



---



##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note O  Condensed Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)



|                                                                               |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|------------------------------------------------------------------------------ |  | ------------------------------ | ------ | -------------- |  | ------------ | ------- | ------------ |  | - | ------ | - |  | - | -------- | -
|                                                                               |  | Six Months Ended June 30, 2002
|                                                                               |  |                               
|                                                                               |  |                                |        |                |  | Entities Not |         |              |  |   |        |   |  |  
|                                                                               |  | Entities in                    |        | in             |  |              |         |              |  |   |        |  
|Statements of Operations                                                       |  | Reorganization                 |        | Reorganization |  | Adjustments  |         | Consolidated
|                                                                               |  |                                |        |                |  |              |         |             
|Revenue                                                                        |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Consumer telecommunications and television                                     |  | $                              |       |                |  | $            | 1,232.7 |              |  |   |        |   |  | $ | 1,232.7  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Business telecommunications                                                    |  |                                |       |                |  |              | 429.3   |              |  |   |        |   |  |   | 429.3    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Broadcast transmission and other                                               |  |                                |       |                |  |              | 146.5   |              |  |   |        |   |  |   | 146.5    |  
|                                                                               |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|                                                                               |  |                                |       |                |  |              | 1,808.5 |              |  |   |        |   |  |   | 1,808.5  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Costs and expenses                                                             |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Operating expenses (exclusive of
depreciation shown separately below)          |  |                                |       |                |  |              | 843.4   |              |  |   |        |   |  |   | 843.4    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Selling, general and administrative expenses                                   |  |                                | 3.3    |                |  |              | 462.2   |              |  |   |        |   |  |   | 465.5    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Other charges                                                                  |  |                                |       |                |  |              | 19.3    |              |  |   |        |   |  |   | 19.3     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Corporate charges                                                              |  |                                | 15.0   |                |  |              | 0.6     |              |  |   |        |   |  |   | 15.6     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Depreciation                                                                   |  |                                | 2.7    |                |  |              | 745.6   |              |  |   |        |   |  |   | 748.3    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Amortization                                                                   |  |                                | 23.5   |                |  |              | 43.4    |              |  |   |        |   |  |   | 66.9     |  
|                                                                               |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|                                                                               |  |                                | 44.5   |                |  |              | 2,114.5 |              |  |   |        |   |  |   | 2,159.0  |  
|                                                                               |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|Operating (loss)                                                               |  |                                | (44.5  | )              |  |              | (306.0  | )            |  |   |        |   |  |   | (350.5   | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Other
income (expense)                                                         |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest income and other, net                                                 |  |                                | 122.1  |                |  |              | 17.2    |              |  | $ | (107.1 | ) |  |   | 32.2     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest expense (contractual interest of
$769.2 (2002))                       |  |                                | (392.9 | )              |  |              | (353.8  | )            |  |   | 109.0  |   |  |   | (637.7   | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Share of (losses) from equity investments                                      |  |                                | (45.2  | )              |  |              | (9.8    | )            |  |   |       |   |  |   | (55.0    | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Foreign currency transactions (losses) gains                                   |  |                                | (156.4 | )              |  |              | 91.8    |              |  |   |       |   |  |   | (64.6    | )
|                                                                               |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|(Loss) before recapitalization items,
income taxes and discontinued operations |  |                                | (516.9 | )              |  |              | (560.6  | )            |  |   | 1.9    |   |  |   | (1,075.6 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Recapitalization items, net                                                    |  |                                | (34.0  | )              |  |              | (34.7   | )            |  |   |       |   |  |   | (68.7    | )
|                                                                               |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|(Loss) before income taxes and discontinued
operations                         |  |                                | (550.9 | )              |  |              | (595.3  | )            |  |   | 1.9    |   |  |   | (1,144.3 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Income tax benefit                                                             |  |                                | 4.5    |                |  |              | 43.5    |              |  |   |       |   |  |   | 48.0     |  
|                                                                               |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|(Loss) from continuing operations                                              |  |                                | (546.4 | )              |  |              | (551.8  | )            |  |   | 1.9    |   |  |   | (1,096.3 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Discontinued operations:                                                       |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Loss from operations of NTL Australia, net
of taxes                            |  |                                |       |                |  |              | (0.3    | )            |  |   |       |   |  |   | (0.3     | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Gain on sale of NTL Australia, net of taxes                                    |  |                                |       |                |  |              | 8.4     |              |  |   |       |   |  |   | 8.4      |  
|                                                                               |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|Income (loss) from discontinued operations                                     |  |                                |       |                |  |              | 8.1     |              |  |   |       |   |  |   | 8.1      |  
|                                                                               |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  
|Net (loss)                                                                     |  | $                              | (546.4 | )              |  | $            | (543.7  | )            |  | $ | 1.9    |   |  | $ | (1,088.2 | )
|                                                                               |  |                                |        |                |  |              |         |              |  |   |        |   |  |   |          |  

[Additional columns below]

30



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note O  Condensed Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

[Continued from above table, first column(s) repeated]

|                                                                               |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|------------------------------------------------------------------------------ |  | ------------------------------ | ------ | -------------- |  | ------------ | -------- | ------------ |  | - | ------ | - |  | - | -------- | -
|                                                                               |  | Six Months Ended June 30, 2001
|                                                                               |  |                               
|                                                                               |  |                                |        |                |  | Entities Not |          |              |  |   |        |   |  |  
|                                                                               |  | Entities in                    |        | in             |  |              |          |              |  |   |        |  
|Statements of Operations                                                       |  | Reorganization                 |        | Reorganization |  | Adjustments  |          | Consolidated
|                                                                               |  |                                |        |                |  |              |          |             
|Revenue                                                                        |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Consumer telecommunications and television                                     |  | $                              |       |                |  | $            | 1,229.3  |              |  |   |        |   |  | $ | 1,229.3  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Business telecommunications                                                    |  |                                |       |                |  |              | 396.8    |              |  |   |        |   |  |   | 396.8    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Broadcast transmission and other                                               |  |                                |       |                |  |              | 136.5    |              |  |   |        |   |  |   | 136.5    |  
|                                                                               |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|                                                                               |  |                                |       |                |  |              | 1,762.6  |              |  |   |        |   |  |   | 1,762.6  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Costs and expenses                                                             |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Operating expenses (exclusive of
depreciation shown separately below)          |  |                                |       |                |  |              | 870.7    |              |  |   |        |   |  |   | 870.7    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Selling, general and administrative expenses                                   |  |                                | 2.5    |                |  |              | 609.7    |              |  |   |        |   |  |   | 612.2    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Other charges                                                                  |  |                                |       |                |  |              | 25.3     |              |  |   |        |   |  |   | 25.3     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Corporate charges                                                              |  |                                | 17.1   |                |  |              |         |              |  |   |        |   |  |   | 17.1     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Depreciation                                                                   |  |                                | 3.3    |                |  |              | 687.2    |              |  |   |        |   |  |   | 690.5    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Amortization                                                                   |  |                                | 382.2  |                |  |              | 483.7    |              |  |   |        |   |  |   | 865.9    |  
|                                                                               |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|                                                                               |  |                                | 405.1  |                |  |              | 2,676.6  |              |  |   |        |   |  |   | 3,081.7  |  
|                                                                               |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|Operating (loss)                                                               |  |                                | (405.1 | )              |  |              | (914.0   | )            |  |   |        |   |  |   | (1,319.1 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Other
income (expense)                                                         |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest income and other, net                                                 |  |                                | 371.1  |                |  |              | 2.6      |              |  | $ | (360.8 | ) |  |   | 12.9     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest expense (contractual interest of
$769.1 (2002))                       |  |                                | (492.4 | )              |  |              | (576.2   | )            |  |   | 384.0  |   |  |   | (684.6   | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Share of (losses) from equity investments                                      |  |                                | (69.5  | )              |  |              | (25.4    | )            |  |   |       |   |  |   | (94.9    | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Foreign currency transactions (losses) gains                                   |  |                                | 125.4  |                |  |              | (116.0   | )            |  |   |       |   |  |   | 9.4      |  
|                                                                               |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|(Loss) before recapitalization items,
income taxes and discontinued operations |  |                                | (470.5 | )              |  |              | (1,629.0 | )            |  |   | 23.2   |   |  |   | (2,076.3 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Recapitalization items, net                                                    |  |                                |       |                |  |              |         |              |  |   |       |   |  |   |         |  
|                                                                               |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|(Loss) before income taxes and discontinued
operations                         |  |                                | (470.5 | )              |  |              | (1,629.0 | )            |  |   | 23.2   |   |  |   | (2,076.3 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Income tax benefit                                                             |  |                                |       |                |  |              | 28.4     |              |  |   |       |   |  |   | 28.4     |  
|                                                                               |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|(Loss) from continuing operations                                              |  |                                | (470.5 | )              |  |              | (1,600.6 | )            |  |   | 23.2   |   |  |   | (2,047.9 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Discontinued operations:                                                       |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Loss from operations of NTL Australia, net
of taxes                            |  |                                |       |                |  |              | (2.3     | )            |  |   |       |   |  |   | (2.3     | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Gain on sale of NTL Australia, net of taxes                                    |  |                                |       |                |  |              |         |              |  |   |       |   |  |   |         |  
|                                                                               |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|Income (loss) from discontinued operations                                     |  |                                |       |                |  |              | (2.3     | )            |  |   |       |   |  |   | (2.3     | )
|                                                                               |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  
|Net (loss)                                                                     |  | $                              | (470.5 | )              |  | $            | (1,602.9 | )            |  | $ | 23.2   |   |  | $ | (2,050.2 | )
|                                                                               |  |                                |        |                |  |              |          |              |  |   |        |   |  |   |          |  

31



---



##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note O  Condensed Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)



|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|------------------------------------------------------------------------------ | -------------------------------- | -------------- | ------ | -------------- |  | ------------ | ------- | ------------ |  | - | ----- | - |  | - | ------- | -
|                                                                               | Three Months Ended June 30, 2002
|                                                                               |                                  |               
|                                                                               |                                  |                |        |                |  | Entities Not |         |              |  |   |       |   |  |  
|                                                                               |                                  | Entities in    |        | in             |  |              |         |              |  |   |       |  
|Statements of Operations                                                       |                                  | Reorganization |        | Reorganization |  | Adjustments  |         | Consolidated
|                                                                               |                                  |                |        |                |  |              |         |             
|Revenue                                                                        |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Consumer telecommunications and television                                     |                                  | $              |       |                |  | $            | 624.3   |              |  |   |       |   |  | $ | 624.3   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Business telecommunications                                                    |                                  |                |       |                |  |              | 214.6   |              |  |   |       |   |  |   | 214.6   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Broadcast transmission and other                                               |                                  |                |       |                |  |              | 76.5    |              |  |   |       |   |  |   | 76.5    |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|                                                                               |                                  |                |       |                |  |              | 915.4   |              |  |   |       |   |  |   | 915.4   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Costs
and expenses                                                             |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Operating expenses (exclusive of
depreciation shown separately below)          |                                  |                |       |                |  |              | 410.5   |              |  |   |       |   |  |   | 410.5   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Selling, general and administrative expenses                                   |                                  |                | 1.5    |                |  |              | 249.1   |              |  |   |       |   |  |   | 250.6   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Other charges                                                                  |                                  |                |       |                |  |              | 16.7    |              |  |   |       |   |  |   | 16.7    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Corporate charges                                                              |                                  |                | 5.5    |                |  |              | 0.6     |              |  |   |       |   |  |   | 6.1     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Depreciation                                                                   |                                  |                | 1.1    |                |  |              | 384.3   |              |  |   |       |   |  |   | 385.4   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Amortization                                                                   |                                  |                | 11.8   |                |  |              | 22.6    |              |  |   |       |   |  |   | 34.4    |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|                                                                               |                                  |                | 19.9   |                |  |              | 1,083.8 |              |  |   |       |   |  |   | 1,103.7 |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|Operating (loss)                                                               |                                  |                | (19.9  | )              |  |              | (168.4  | )            |  |   |       |   |  |   | (188.3  | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Other
income (expense)                                                         |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest income and other, net                                                 |                                  |                | 60.9   |                |  |              | 7.8     |              |  | $ | (56.2 | ) |  |   | 12.5    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest expense (contractual interest of
$399.8 (2002))                       |                                  |                | (133.3 | )              |  |              | (192.1  | )            |  |   | 57.1  |   |  |   | (268.3  | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Share of (losses) from equity investments                                      |                                  |                | (16.9  | )              |  |              | (4.8    | )            |  |   |      |   |  |   | (21.7   | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Foreign currency transactions (losses) gains                                   |                                  |                | (190.7 | )              |  |              | 131.0   |              |  |   |      |   |  |   | (59.7   | )
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|(Loss) before recapitalization items,
income taxes and discontinued operations |                                  |                | (299.9 | )              |  |              | (226.5  | )            |  |   | 0.9   |   |  |   | (525.5  | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Recapitalizations items, net                                                   |                                  |                | (12.1  | )              |  |              | (20.8   | )            |  |   |      |   |  |   | (32.9   | )
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|(Loss) before income taxes and discontinued
operations                         |                                  |                | (312.0 | )              |  |              | (247.3  | )            |  |   | 0.9   |   |  |   | (558.4  | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Income tax benefit                                                             |                                  |                | 4.5    |                |  |              | 21.5    |              |  |   |      |   |  |   | 26.0    |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|(Loss) from continuing operations                                              |                                  |                | (307.5 | )              |  |              | (225.8  | )            |  |   | 0.9   |   |  |   | (532.4  | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Discontinued operations:                                                       |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Loss from operations of
NTL Australia, net of taxes                            |                                  |                |       |                |  |              | (0.5    | )            |  |   |      |   |  |   | (0.5    | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Gain on sale of NTL Australia, net of taxes                                    |                                  |                |       |                |  |              | 8.4     |              |  |   |       |   |  |   | 8.4     |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|Income (loss) from discontinued operations                                     |                                  |                |       |                |  |              | 7.9     |              |  |   |      |   |  |   | 7.9     |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  
|Net (loss)                                                                     |                                  | $              | (307.5 | )              |  | $            | (217.9  | )            |  | $ | 0.9   |   |  | $ | (524.5  | )
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |         |  

[Additional columns below]

32



---



##### Table of Contents



Note O  Condensed Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

[Continued from above table, first column(s) repeated]

(in millions)

|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|------------------------------------------------------------------------------ | -------------------------------- | -------------- | ------ | -------------- |  | ------------ | ------- | ------------ |  | - | ----- | - |  | - | -------- | -
|                                                                               | Three Months Ended June 30, 2001
|                                                                               |                                  |               
|                                                                               |                                  |                |        |                |  | Entities Not |         |              |  |   |       |   |  |  
|                                                                               |                                  | Entities in    |        | in             |  |              |         |              |  |   |       |  
|Statements of Operations                                                       |                                  | Reorganization |        | Reorganization |  | Adjustments  |         | Consolidated
|                                                                               |                                  |                |        |                |  |              |         |             
|Revenue                                                                        |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Consumer telecommunications and television                                     |                                  | $              |       |                |  | $            | 618.4   |              |  |   |       |   |  | $ | 618.4    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Business telecommunications                                                    |                                  |                |       |                |  |              | 196.6   |              |  |   |       |   |  |   | 196.6    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Broadcast transmission and other                                               |                                  |                |       |                |  |              | 68.4    |              |  |   |       |   |  |   | 68.4     |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|                                                                               |                                  |                |       |                |  |              | 883.4   |              |  |   |       |   |  |   | 883.4    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Costs
and expenses                                                             |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Operating expenses (exclusive of
depreciation shown separately below)          |                                  |                |       |                |  |              | 432.7   |              |  |   |       |   |  |   | 432.7    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Selling, general and administrative expenses                                   |                                  |                | 1.0    |                |  |              | 290.0   |              |  |   |       |   |  |   | 291.0    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Other charges                                                                  |                                  |                |       |                |  |              | 17.9    |              |  |   |       |   |  |   | 17.9     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Corporate charges                                                              |                                  |                | 10.1   |                |  |              |        |              |  |   |       |   |  |   | 10.1     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Depreciation                                                                   |                                  |                | 1.9    |                |  |              | 357.3   |              |  |   |       |   |  |   | 359.2    |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Amortization                                                                   |                                  |                | 192.7  |                |  |              | 249.3   |              |  |   |       |   |  |   | 442.0    |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|                                                                               |                                  |                | 205.7  |                |  |              | 1,347.2 |              |  |   |       |   |  |   | 1,552.9  |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|Operating (loss)                                                               |                                  |                | (205.7 | )              |  |              | (463.8  | )            |  |   |       |   |  |   | (669.5   | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Other
income (expense)                                                         |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest income and other, net                                                 |                                  |                | 55.6   |                |  |              | (2.8    | )            |  | $ | (48.9 | ) |  |   | 3.9      |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest expense (contractual interest of
$399.8 (2002))                       |                                  |                | (242.7 | )              |  |              | (131.0  | )            |  |   | 44.2  |   |  |   | (329.5   | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Share of (losses) from equity investments                                      |                                  |                | (45.9  | )              |  |              | (6.1    | )            |  |   |       |   |  |   | (52.0    | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Foreign currency transactions (losses) gains                                   |                                  |                | 36.2   |                |  |              | (13.6   | )            |  |   |       |   |  |   | 22.6     |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|(Loss) before recapitalization items,
income taxes and discontinued operations |                                  |                | (402.5 | )              |  |              | (617.3  | )            |  |   | (4.7  | ) |  |   | (1,024.5 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Recapitalizations items, net                                                   |                                  |                |       |                |  |              |        |              |  |   |       |   |  |   |         |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|(Loss) before income taxes and discontinued
operations                         |                                  |                | (402.5 | )              |  |              | (617.3  | )            |  |   | (4.7  | ) |  |   | (1,024.5 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Income tax benefit                                                             |                                  |                |       |                |  |              | 12.3    |              |  |   |      |   |  |   | 12.3     |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|(Loss) from continuing operations                                              |                                  |                | (402.5 | )              |  |              | (605.0  | )            |  |   | (4.7  | ) |  |   | (1,012.2 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Discontinued operations:                                                       |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Loss from operations of
NTL Australia, net of taxes                            |                                  |                |       |                |  |              | (1.8    | )            |  |   |      |   |  |   | (1.8     | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Gain on sale of NTL Australia, net of taxes                                    |                                  |                |       |                |  |              |        |              |  |   |       |   |  |   |         |  
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|Income (loss) from discontinued operations                                     |                                  |                |       |                |  |              | (1.8    | )            |  |   |      |   |  |   | (1.8     | )
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  
|Net (loss)                                                                     |                                  | $              | (402.5 | )              |  | $            | (606.8  | )            |  | $ | (4.7  | ) |  | $ | (1,014.0 | )
|                                                                               |                                  |                |        |                |  |              |         |              |  |   |       |   |  |   |          |  

33



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note O  Condensed Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)



|                                                        |  |                |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|------------------------------------------------------- |  | -------------- | -------- | -------------- |  | ------------ | -------- | ------------ |  | - | --------- | - |  | - | -------- | -
|                                                        |  | June 30, 2002 
|                                                        |  |               
|                                                        |  |                |          |                |  | Entities Not |          |              |  |   |           |   |  |  
|                                                        |  | Entities in    |          | in             |  |              |          |              |  |   |           |  
|Balance Sheets                                          |  | Reorganization |          | Reorganization |  | Adjustments  |          | Consolidated
|                                                        |  |                |          |                |  |              |          |             
|Current assets                                          |  | $              | 376.5    |                |  | $            | 1,768.8  |              |  | $ | (160.3    | ) |  | $ | 1,985.0  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Investments in and loans to
affiliates, net             |  |                | 15,516.0 |                |  |              | (798.9   | )            |  |   | (14,532.6 | ) |  |   | 184.5    |  
|                                                       
|                                                       
|                                                       
|                                                       
|Fixed and noncurrent assets                             |  |                | 6,869.7  |                |  |              | 14,487.0 |              |  |   | (6,235.6  | ) |  |   | 15,121.1 |  
|                                                        |  |                |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Total assets                                            |  | $              | 22,762.2 |                |  | $            | 15,456.9 |              |  | $ | (20,928.5 | ) |  | $ | 17,290.6 |  
|                                                        |  |                |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Current
liabilities                                     |  | $              | 45.2     |                |  | $            | 12,382.0 |              |  | $ | (2,385.5  | ) |  | $ | 10,041.7 |  
|                                                       
|                                                       
|                                                       
|                                                       
|Noncurrent liabilities                                  |  |                | 3.2      |                |  |              | 6,443.7  |              |  |   | (6,054.7  | ) |  |   | 392.2    |  
|                                                       
|                                                       
|                                                       
|                                                       
|Liabilities subject to compromise                       |  |                | 11,198.7 |                |  |              |         |              |  |   |          |   |  |   | 11,198.7 |  
|                                                       
|                                                       
|                                                       
|                                                       
|Shareholders equity (deficiency)                       |  |                | 11,515.1 |                |  |              | (3,368.8 | )            |  |   | (12,488.3 | ) |  |   | (4,342.0 | )
|                                                        |  |                |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Total liabilities and
shareholders equity (deficiency) |  | $              | 22,762.2 |                |  | $            | 15,456.9 |              |  | $ | (20,928.5 | ) |  | $ | 17,290.6 |  
|                                                        |  |                |          |                |  |              |          |              |  |   |           |   |  |   |          |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                        |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|------------------------------------------------------- |  | ----------------- | -------- | -------------- |  | ------------ | -------- | ------------ |  | - | --------- | - |  | - | -------- | -
|                                                        |  | December 31, 2001
|                                                        |  |                  
|                                                        |  |                   |          |                |  | Entities Not |          |              |  |   |           |   |  |  
|                                                        |  | Entities in       |          | in             |  |              |          |              |  |   |           |  
|Balance Sheets                                          |  | Reorganization    |          | Reorganization |  | Adjustments  |          | Consolidated
|                                                        |  |                   |          |                |  |              |          |             
|Current assets                                          |  | $                 | 368.3    |                |  | $            | 1,713.0  |              |  | $ | (274.6    | ) |  | $ | 1,806.7  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Investments in and loans to
affiliates, net             |  |                   | 15,754.2 |                |  |              | (793.5   | )            |  |   | (14,740.0 | ) |  |   | 220.7    |  
|                                                       
|                                                       
|                                                       
|                                                       
|Fixed and noncurrent assets                             |  |                   | 6,186.7  |                |  |              | 14,096.9 |              |  |   | (5,512.7  | ) |  |   | 14,770.9 |  
|                                                        |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Total assets                                            |  | $                 | 22,309.2 |                |  | $            | 15,016.4 |              |  | $ | (20,527.3 | ) |  | $ | 16,798.3 |  
|                                                        |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Current
liabilities                                     |  | $                 | 10,840.5 |                |  | $            | 11,626.0 |              |  | $ | (2,398.2  | ) |  | $ | 20,068.3 |  
|                                                       
|                                                       
|                                                       
|                                                       
|Noncurrent liabilities                                  |  |                   |         |                |  |              | 6,039.7  |              |  |   | (5,645.9  | ) |  |   | 393.8    |  
|                                                       
|                                                       
|                                                       
|                                                       
|Liabilities subject to compromise                       |  |                   |         |                |  |              |         |              |  |   |          |   |  |   |         |  
|                                                       
|                                                       
|                                                       
|                                                       
|Shareholders equity (deficiency)                       |  |                   | 11,468.7 |                |  |              | (2,649.3 | )            |  |   | (12,483.2 | ) |  |   | (3,663.8 | )
|                                                        |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Total liabilities and
shareholders equity (deficiency) |  | $                 | 22,309.2 |                |  | $            | 15,016.4 |              |  | $ | (20,527.3 | ) |  | $ | 16,798.3 |  
|                                                        |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  

34



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Note O  Condensed Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)



|                                                             |  |                                |        |                |  |              |        |              |  |   |   |  |  |   |       |  
|------------------------------------------------------------ |  | ------------------------------ | ------ | -------------- |  | ------------ | ------ | ------------ |  | - | - |  |  | - | ----- | -
|                                                             |  | Six Months Ended June 30, 2002
|                                                             |  |                               
|                                                             |  |                                |        |                |  | Entities Not |        |              |  |   |   |  |  |  
|                                                             |  | Entities in                    |        | in             |  |              |        |              |  |   |   | 
|Statements of Cash Flows                                     |  | Reorganization                 |        | Reorganization |  | Adjustments  |        | Consolidated
|                                                             |  |                                |        |                |  |              |        |             
|Net cash (used in) provided by
operating activities          |  | $                              | (165.3 | )              |  | $            | 290.5  |              |  | $ |  |  |  | $ | 125.2 |  
|                                                            
|                                                            
|                                                            
|                                                            
|Net cash provided by (used in)
investing activities          |  |                                | 387.2  |                |  |              | (457.8 | )            |  |   |  |  |  |   | (70.6 | )
|                                                            
|                                                            
|                                                            
|                                                            
|Net cash (used in) provided by
financing activities          |  |                                | (132.0 | )              |  |              | 541.5  |              |  |   |  |  |  |   | 409.5 |  
|                                                            
|                                                            
|                                                            
|                                                            
|Effect of exchange rate changes
on cash and cash equivalents |  |                                | 0.9    |                |  |              | 40.4   |              |  |   |  |  |  |   | 41.3  |  
|                                                             |  |                                |        |                |  |              |        |              |  |   |   |  |  |   |       |  
|Increase in cash and
cash equivalents                        |  |                                | 90.8   |                |  |              | 414.6  |              |  |   |  |  |  |   | 505.4 |  
|                                                            
|                                                            
|                                                            
|                                                            
|Cash and cash equivalents at
beginning of period             |  |                                | 88.1   |                |  |              | 256.4  |              |  |   |  |  |  |   | 344.5 |  
|                                                             |  |                                |        |                |  |              |        |              |  |   |   |  |  |   |       |  
|Cash and cash equivalents at end
of period                   |  | $                              | 178.9  |                |  | $            | 671.0  |              |  | $ |  |  |  | $ | 849.9 |  
|                                                             |  |                                |        |                |  |              |        |              |  |   |   |  |  |   |       |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                             |  |                                |         |                |  |              |          |              |  |   |      |   |  |   |          |  
|------------------------------------------------------------ |  | ------------------------------ | ------- | -------------- |  | ------------ | -------- | ------------ |  | - | ---- | - |  | - | -------- | -
|                                                             |  | Six Months Ended June 30, 2001
|                                                             |  |                               
|                                                             |  |                                |         |                |  | Entities Not |          |              |  |   |      |   |  |  
|                                                             |  | Entities in                    |         | in             |  |              |          |              |  |   |      |  
|Statements of Cash Flows                                     |  | Reorganization                 |         | Reorganization |  | Adjustments  |          | Consolidated
|                                                             |  |                                |         |                |  |              |          |             
|Net cash (used in) provided by
operating activities          |  | $                              | (831.8  | )              |  | $            | 647.1    |              |  | $ | (0.2 | ) |  | $ | (184.9   | )
|                                                            
|                                                            
|                                                            
|                                                            
|Net cash (used in)
investing activities                      |  |                                | (115.3  | )              |  |              | (1,074.0 | )            |  |   |     |   |  |   | (1,189.3 | )
|                                                            
|                                                            
|                                                            
|                                                            
|Net cash provided by
financing activities                    |  |                                | 1,384.8 |                |  |              | 298.1    |              |  |   | 0.2  |   |  |   | 1,683.1  |  
|                                                            
|                                                            
|                                                            
|                                                            
|Effect of exchange rate changes
on cash and cash equivalents |  |                                | (0.8    | )              |  |              | (15.4    | )            |  |   |     |   |  |   | (16.2    | )
|                                                             |  |                                |         |                |  |              |          |              |  |   |      |   |  |   |          |  
|Increase (decrease) in cash and
cash equivalents             |  |                                | 436.9   |                |  |              | (144.2   | )            |  |   |     |   |  |   | 292.7    |  
|                                                            
|                                                            
|                                                            
|                                                            
|Cash and cash equivalents at
beginning of period             |  |                                | 182.9   |                |  |              | 298.9    |              |  |   |     |   |  |   | 481.8    |  
|                                                             |  |                                |         |                |  |              |          |              |  |   |      |   |  |   |          |  
|Cash and cash equivalents at end
of period                   |  | $                              | 619.8   |                |  | $            | 154.7    |              |  | $ |     |   |  | $ | 774.5    |  
|                                                             |  |                                |         |                |  |              |          |              |  |   |      |   |  |   |          |  

35



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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note P  Segment Data

The Companys primary measure of profit or loss for each reportable segment is
EBITDA as defined below. The Company considers EBITDA an important indicator
of the operational strength and performance of its reportable segments,
including the ability to provide cash flows to service debt and fund capital
expenditures. EBITDA excludes the impact of costs and expenses that do not
directly effect cash flows such as depreciation, amortization and share of
(losses) from equity investments. The Company also excludes costs and expenses
that are not directly related to the performance of a single reportable segment
from EBITDA rather than allocating these costs and expenses to multiple
reportable segments. Other charges, corporate expenses and foreign currency
transactions are not directly related to a single segment. EBITDA should be
considered in addition to, not as a substitute for, operating (loss), net
(loss) and other measures of financial performance reported in accordance with
generally accepted accounted principles.

|                               |  |               |         |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|------------------------------ |  | ------------- | ------- | -------- |  | -------- | -------- | ------ |  | ----- | ------- |  |  | - | ------- | - |  | - | -------- | 
|                               |  | Broadcast     |         | Consumer |  | Business |          | Shared |  | Total
|                               |  |               |         |          |  |          |          |        |  |      
|                               |  | (in millions)
|                              
|                              
|                              
|                              
|Six Months Ended June 30, 2002 |  |               |         |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|                              
|                              
|                              
|                              
|Revenues                       |  | $             | 146.5   |          |  | $        | 1,232.7  |        |  | $     | 429.3   |  |  | $ |        |   |  | $ | 1,808.5  | 
|                              
|                              
|                              
|                              
|EBITDA(1)                      |  |               | 77.2    |          |  |          | 437.0    |        |  |       | 167.3   |  |  |   | (181.9  | ) |  |   | 499.6    | 
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|Six
Months Ended June 30, 2001 |  |               |         |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|                              
|                              
|                              
|                              
|Revenues                       |  | $             | 136.5   |          |  | $        | 1,229.3  |        |  | $     | 396.8   |  |  | $ |        |   |  | $ | 1,762.6  | 
|                              
|                              
|                              
|                              
|EBITDA(1)                      |  |               | 67.9    |          |  |          | 300.9    |        |  |       | 123.8   |  |  |   | (212.9  | ) |  |   | 279.7    | 
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|Total
assets                   |  |               |         |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|                              
|                              
|                              
|                              
|June 30, 2002 (2)              |  | $             | 833.0   |          |  | $        | 11,522.9 |        |  | $     | 3,345.8 |  |  | $ | 1,588.9 |   |  | $ | 17,290.6 | 
|                              
|                              
|                              
|                              
|December 31, 2001 (3)          |  |               | 1,206.3 |          |  |          | 11,334.8 |        |  |       | 3,287.0 |  |  |   | 970.2   |   |  |   | 16,798.3 | 



|(1) |  | Represents earnings before interest, taxes, depreciation, amortization,
other charges, corporate expenses, share of (losses) from equity
investments, foreign currency transaction (losses) gains, recapitalization
items, net and income (loss) from discontinued operations. Segment EBITDA
in 2001 has been reclassified to conform to the current year presentation.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | At June 30, 2002, shared assets included $631.3 million of cash, cash
equivalents and marketable securities and $957.6 million of other assets.                                                                                                                                                                                                                         
|   
|   
|   
|   
|(3) |  | At December 31, 2001, shared assets included $192.8 million of cash and
cash equivalents and $777.4 million of other assets.                                                                                                                                                                                                                                            

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Note P  Segment Data (continued)

The reconciliation of segment combined EBITDA to loss before income taxes and
discontinued operation is as follows:

|                                                     |  |                           |          |      |  |   |          |  
|---------------------------------------------------- |  | ------------------------- | -------- | ---- |  | - | -------- | -
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Six Months Ended June 30,
|                                                     |  |                          
|                                                     |  | 2002                      |          | 2001
|                                                     |  |                           |          |     
|                                                     |  | (in millions)            
|Segment combined EBITDA                              |  | $                         | 499.6    |      |  | $ | 279.7    |  
|                                                    
|                                                    
|                                                    
|                                                    
|(Add) deduct:                                        |  |                           |          |      |  |   |          |  
|                                                    
|                                                    
|                                                    
|                                                    
|Other charges                                        |  |                           | 19.3     |      |  |   | 25.3     |  
|                                                    
|                                                    
|                                                    
|                                                    
|Corporate expenses                                   |  |                           | 15.6     |      |  |   | 17.1     |  
|                                                    
|                                                    
|                                                    
|                                                    
|Depreciation                                         |  |                           | 748.3    |      |  |   | 690.5    |  
|                                                    
|                                                    
|                                                    
|                                                    
|Amortization                                         |  |                           | 66.9     |      |  |   | 865.9    |  
|                                                    
|                                                    
|                                                    
|                                                    
|Interest income and other, net                       |  |                           | (32.2    | )    |  |   | (12.9    | )
|                                                    
|                                                    
|                                                    
|                                                    
|Interest expense                                     |  |                           | 637.7    |      |  |   | 684.6    |  
|                                                    
|                                                    
|                                                    
|                                                    
|Share of losses from equity investments              |  |                           | 55.0     |      |  |   | 94.9     |  
|                                                    
|                                                    
|                                                    
|                                                    
|Foreign currency transaction losses (gains)          |  |                           | 64.6     |      |  |   | (9.4     | )
|                                                    
|                                                    
|                                                    
|                                                    
|Recapitalization items, net                          |  |                           | 68.7     |      |  |   |         |  
|                                                     |  |                           |          |      |  |   |          |  
|                                                     |  |                           | 1,643.9  |      |  |   | 2,356.0  |  
|                                                     |  |                           |          |      |  |   |          |  
|Loss before income taxes and discontinued operations |  | $                         | (1,144.3 | )    |  | $ | (2,076.3 | )
|                                                     |  |                           |          |      |  |   |          |  

37



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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries




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

Key points concerning our current financial condition and our planned
recapitalization include:

Financial Condition



| |  | NTL Incorporated and its subsidiaries have issued and
outstanding approximately $11.5 billion in senior and
subordinated notes and debentures.                                                                                                                             
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | NTLs UK credit facilities are fully drawn and the revolving
tranche of the Cablecom facility has been capped at its
utilized amount of CHF 1,055.0 million. The term tranche of
the Cablecom facility is fully drawn.                                                     
| 
| 
| |  | NTL has missed interest
payments totaling $381.5 million beginning on April 1, 2002, all of
which relates to notes issued by the Company and its subsidiaries.                                                                                                             
| 
| |  | In accordance with the proposed recapitalization plan, NTL
does not plan to make future interest payments on its
currently outstanding publicly traded notes except notes
issued by NTL Triangle and, upon emergence from Chapter 11
proceedings, Diamond Holdings Limited.
| 
| |  | As of May 8, 2002, the date of its Chapter 11 filing, NTL was
in default of $95.4 million in interest in respect of $1,693.4
million in principal amount of its indebtedness.                                                                                              

Recapitalization Plan



| |  | On May 8, 2002, NTL Incorporated and a number of its
subsidiaries, namely, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings
Limited and Communications Cable Funding Corp., filed a
pre-arranged joint reorganization plan under Chapter 11 of the
United States Bankruptcy Code.                                                                                                                                                                                                                    
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Under the proposed reorganization plan, NTL will be split into
two companies, one holding all of its main UK and Ireland
assets (tentatively referred to as NTL UK and Ireland), and
the other holding various continental European and other
assets (tentatively referred to as NTL Euroco).                                                                                                                                                                                                                                                              
| 
| |  | Holders of notes of NTL Incorporated, NTL (Delaware), Inc.,
NTL Communications Corp. and Diamond Cable Communications
would receive 100% of the initial common stock of NTL UK and
Ireland and approximately 86.5% of NTL Euroco.                                                                                                                                                                                                                                                                                                                          
| 
| |  | Holders of notes of NTL (Delaware), Inc. would have the option
to reinvest all or a portion of NTL (Delaware), Inc. cash in
additional shares of common stock or to receive such cash in
the recapitalization.                                                                                                                                                                                                                                                                                                                                             
| 
| |  | Common and preferred stockholders, including France Telecom,
would participate in a package of rights (to be priced at a
$10.5 billion enterprise value) and warrants entitling them to
purchase primary common stock of NTL UK and Ireland. If fully
exercised, those rights and warrants would entitle the current
preferred stockholders to acquire approximately 23.6% and the
current common stockholders to acquire approximately 8.9% of
NTL UK and Irelands common stock. Current preferred
stockholders, other than France Telecom, would receive

38



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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries



|  |  | approximately 3.2% and current common stockholders, other than France
Telecom, would receive approximately 10.3% of the primary equity of NTL
Euroco.                                                                                                                                                                                                                                                                                                       
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Under the reorganization plan,
NTL will convert approximately $10.9 billion of debt to equity, thereby reducing NTL UK and
Irelands debt to approximately $5.8 billion (projected pro forma net debt as of September 1, 2002 as per the amended
disclosure statement filed on July 15, 2002) which will consist of mortgage notes, amounts owed under the UK credit
facilities and Diamond Holdings and NTL Triangle notes and the projected exit facility.
| 
| |  | Under the reorganization plan, NTL Eurocos debt will consist of the Cablecom credit facility of CHF 1,055.0 million.                                                                                                                                                                                                                                                                                                                                       
| 
| |  | The Bankruptcy Court approved the proposed debtor in possession financing in the principal amount of $630 million in an
order dated July 3, 2002. The DIP facility was entered into on July 15, 2002.                                                                                                                                                                                                                                                       
| 
| |  | At a hearing on July 12, 2002, the Bankruptcy Court approved the Debtors amended disclosure statement.                                                                                                                                                                                                                                                                                                                                                     
| 
| |  | The confirmation hearing in respect of the Debtors second amended joint reorganization plan, filed with the Bankruptcy
Court on July 15, 2002, has been scheduled for September 5, 2002.                                                                                                                                                                                                                                                                   

Liquidity and Capital Resources

Recapitalization Process and Ability to Continue Operations

On May 8, 2002, NTL Incorporated, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. filed a pre-arranged joint reorganization
plan under Chapter 11 of the United States Bankruptcy Code (referred to as the
proposed recapitalization plan). NTLs operating subsidiaries
were not included in the Chapter 11 filing. Toward the end of 2001, while NTL
continued to have sufficient liquidity to meet its near term obligations, it
recognized the negative impact of the collapsing European and U.S.
telecommunications markets on its ability to service its debt. Accordingly, NTL
began to implement a strategy to preserve and maximize its enterprise value.
This strategy included the implementation of cost-cutting measures and the
commencement of discussions with certain third parties regarding strategic
alternatives for NTLs business.

The Company historically incurred operating losses and negative operating cash
flow. In addition, the Company has required significant amounts of capital to
finance construction of its networks, connection of customers to the networks,
other capital expenditures and for working capital needs including debt service
requirements. The Company historically met these liquidity requirements through
amounts available under its credit facilities, issuances of high-yield debt
securities in the capital markets and equity contributions from NTL
Incorporated. Both the equity and debt capital markets have experienced periods
of significant volatility, particularly for securities issued by
telecommunications and technology companies. The ability of telecommunications
companies to access those markets as well as their ability to obtain financing
provided by bank lenders and equipment suppliers has become more restricted and
financing costs have increased. During some recent periods, the capital markets
have been largely unavailable to new issues of securities by telecommunications
companies. NTL Incorporateds public equity is no longer trading on the New
York Stock Exchange, and its debt securities are trading at or near all time
lows. These factors, together with NTLs substantial leverage, means the
Company does not currently have access to its historic sources of capital.

In addition, NTLs UK credit facilities are fully drawn. The revolving tranche
of the Cablecom credit facility has been capped at its utilized amount of CHF
1,055.0 million although the availability may be increased with the consent of
the requisite majority of the lenders under that facility. The term tranche of
the Cablecom credit facility is fully drawn. NTL has missed interest
payments totaling $381.5 million beginning on April 1, 2002, all of
which relates to notes issued by the Company and its Subsidiaries.

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Upon emerging from Chapter 11 proceedings, NTL intends to make any
required interest payments on the notes of Diamond Holdings. In accordance with
the proposed recapitalization plan, NTL does not plan to make future interest
payments on its currently outstanding publicly traded notes except notes issued
by NTL Triangle and, upon emergence from Chapter 11 proceedings, Diamond
Holdings Limited.

As of June 30, 2002, the Company had approximately $872.9 million in cash, cash
equivalents and marketable securities on hand. The Company may require
additional cash in the twelve months from July 1, 2002 to June 30, 2003. NTL
Incorporated obtained a Court approved $630 million DIP facility (described
below) on July 15, 2002 to meet the potential cash requirements of its and its
subsidiaries, excluding Cablecom. NTL Incorporated expects that the DIP
facility will be replaced with an exit facility for NTL Communications Corp.
and its subsidiaries upon the completion of the recapitalization process, in
part because the DIP facility will mature concurrently with the Debtors
emergence from Chapter 11. The Company estimates that its capital expenditures and debt
service requirements, net of cash from operations, will aggregate up to
approximately $250.0 million from July 1, 2002 to June 30, 2003. Management of
the Company believes that cash, cash equivalents and marketable securities on
hand at June 30, 2002, and the cash available from the DIP facility and
subsequently the planned exit facility will be sufficient for its and its
subsidiaries cash requirements during the twelve months from July 1, 2002 to
June 30, 2003.

Events Leading to the Proposed Recapitalization and Chapter 11 Filings

Beginning in January 2002, NTL was contacted by an unofficial committee of
bondholders regarding the commencement of a comprehensive and consensual
restructuring process. NTL was informed at that time that the members of the
unofficial steering committee of bondholders owned, in the aggregate, more than
50% of the outstanding principal amount of NTLs notes. In connection with the
restructuring process, the steering committee of the unofficial committee of
bondholders retained advisors to facilitate the negotiations.

On January 31, 2002, NTL announced that it had appointed Credit Suisse First
Boston, JP Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen its balance sheet and reduce debt
and put an appropriate capital structure in place for its business.
Subsequently, NTL evaluated various recapitalization alternatives, and met with
a number of strategic investors, to effect a comprehensive consensual
reorganization in a timely manner to minimize negative effects on its business
operations. Discussions with such strategic investors did not result in a
proposal which NTLs board of directors believed was comparable or
superior to the value provided to its stakeholders by the proposed plan of
reorganization.

Liberty Media Corporation, one of such potential strategic investors, which is
also a significant shareholder in Telewest plc, another British cable and
telephone company, has discussed various transactions with NTL from time to
time over the past several years. In March 2002, Liberty and NTL amended a
previously existing confidentiality agreement between them to cover the
restructuring process and to include a standstill agreement which prohibited
various acquisitions of, or offers, for NTL debt or equity securities by
Liberty and its subsidiaries until June 30, 2002.

On April 17, 2002, Liberty sent a proposal to NTLs board of directors, which
proposed a cash tender offer for 30% of the outstanding bonds of NTL
Communications Corp. at a small premium to the prevailing market price and an
agreement to vote such acquired bonds in favor of the proposed plan of
reorganization, as well as a participation with NTL in a cash infusion of up
to $500 million into Cablecom. After consultation with NTLs board of
directors and the steering committee of bondholders on April 18, 2002, NTL
indicated to Liberty that it did not consider the Liberty proposal to be in the
best interests of NTL and that the best course of action for NTL to maximize
its enterprise value was to promptly consummate the proposed plan of
reorganization. By letter dated June 28, 2002, NTL received notice that Liberty
was ceasing all discussions with NTL concerning its proposals.

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities, in March 2002, NTL commenced negotiations with the steering
committee of the unofficial committee of bondholders and its legal and
financial advisors. The negotiations continued during the latter part of March
and throughout April 2002, and also included France Telecom. On April 16, 2002,
NTL announced that it had reached a comprehensive agreement in principle with
the unofficial committee and France Telecom, a significant holder of NTL
Incorporateds preferred stock, on implementing a recapitalization plan. On May
2, 2002, a steering committee of the lending banks under

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NTLs credit facilities gave their approval in principle (on a non-legally
binding basis) to NTLs proposed plan of reorganization.

The reorganization plan, if implemented, will result in the cancellation of all
of NTL Incorporateds outstanding shares of common stock, preferred stock and
redeemable preferred stock, and the cancellation of all of the publicly held
notes of NTL Incorporated, NTL (Delaware), Inc. and NTL Communications Corp.
and the transfer of the publicly held notes of Diamond Cable Communications
Limited to NTL UK and Ireland (one of two new entities to be created under the
plan). In addition, if the plan is implemented, NTL will be discharged from its
obligation to pay dividends accruing on the canceled preferred stock and
interest accruing on the canceled notes. The reorganization plan contemplates
that the UK bank debt will remain in place as part of the recapitalization. NTL
would be split into two companies, one tentatively called NTL UK and Ireland,
holding its main UK and Ireland assets, and one tentatively called NTL Euroco,
holding certain of its continental European and other assets.

To implement the proposed recapitalization, on May 8, 2002, NTL Incorporated,
NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp., which
we refer to as the Debtors, filed cases and a pre-arranged joint reorganization
plan under Chapter 11 of the United States Bankruptcy Code. NTLs operating
subsidiaries were not included in the Chapter 11 filings.

On June 21, 2002, the United States Trustee appointed an official unsecured
creditors committee. The creditors committee is comprised of the three
indenture trustees for the debt securities of NTL and the ten members of the
steering committee of NTLs bondholders. The members of the creditors
committee are: The Bank of New York; Wilmington Trust Company; Wells Fargo Bank
Minnesota, National Association; Angelo Gordon & Co. LP; Capital Research &
Management Company; Franklin Mutual Advisers, LLC; Oaktree Capital Management
LLC; Salomon Brothers Asset Management; Appaloosa Management, LP; Fidelity
Management & Research Co.; MacKay Shields LLC; SAB Capital Management, L.P.;
and W.R. Huff Asset Management Co., LLC.

On May 24, 2002, the Debtors filed an amended joint reorganization plan and
disclosure statement. The Bankruptcy Court approved the disclosure statement on
July 12, 2002 as containing information of a kind and in sufficient detail to
enable the holders of claims against or interests in the debtors to make an
informed judgment with respect to the reorganization plan prior to exercising
their right to vote to accept or reject the reorganization plan. At that time
the Court set September 5, 2002 as the date for the hearing to consider
confirmation of the amended joint reorganization plan as subsequently amended.
On July 15, 2002, NTL Incorporated and its debtor subsidiaries filed an amended
disclosure statement and a second amended joint reorganization plan. A copy of
the second amended joint reorganization plan and the related disclosure
statement are included as exhibits to NTL Incorporateds Current Report on Form
8-K filed on July 16, 2002.

The filing of the petitions seeking relief filed under Chapter 11 constituted
an event of default under the indentures of each of the entities which filed
Chapter 11 petitions and amounts outstanding under these indentures became
immediately due and payable. No action has been taken to date in respect of
those defaults and any such action likely would be barred by the automatic stay
that exists by virtue of the Chapter 11 filings. The filing of the Debtors
Chapter 11 petitions also constituted an event of default under NTLs UK credit
facilities and the Cablecom credit facility, allowing the lenders thereunder to
declare amounts outstanding to be immediately payable. Those lenders have not
taken any action to date in respect of those defaults, and a steering committee
of those lenders has agreed in principle (in a non-legally binding manner) to
the proposed recapitalization.

Recapitalization Expense

Recapitalization items, net of $68.7 million in the six months ended June 30,
2002 includes $18.8 million for employee retention related to substantially all
of our UK employees and $51.0 million for financial advisor, legal, accounting
and consulting costs. These costs are net of $1.1 million of interest earned on
accumulated cash since the Chapter 11 filing on May 8,
2002. NTL expects to incur
approximately $50.0 million in additional recapitalization costs until we
complete the process. The proposed joint reorganization plan provides that
recapitalization costs will be allocated between NTL UK and Ireland and NTL
Euroco.

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Recapitalization items, net consist of the following:

|                                         |                       |   |                    |     |                  |   |      |   |      |   |       |     |  |   |   |   | 
|---------------------------------------- | --------------------- | - | ------------------ | --- | ---------------- | - | ---- | - | ---- | - | ----- | --- |  | - | - | - | 
|                                         |                       |   | Three Months Ended |     | Six Months Ended
|                                         |                       |   | June 30,           |     | June 30,        
|                                         |                       |   |                    |     |                 
|                                         |                       |   | 2002               |     | 2001             |   | 2002 |   | 2001
|                                         |                       |   |                    |     |                  |   |      |   |     
|                                         |                       |   | (in millions)      |     |                  |   |      |   |      |   |       |     |  |   |  
|Payroll and related                      |                       | $ | (10.0              | )   |                  | $ |     |   |      | $ | (18.8 | )   |  | $ |  |  
|                                        
|                                        
|                                        
|                                        
|Professional fees                        |                       |   | (24.0              | )   |                  |   |     |   |      |   | (51.0 | )   |  |   |  |  
|                                        
|                                        
|                                        
|                                        
|Interest earned on accumulated cash from |                       |   |                    |     |                  |   |      |   |      |   |       |     |  |   |   |  
|                                        
|                                        
|                                        
|                                        
|                                         | Chapter 11 proceeding |   |                    | 1.1 |                  |   |      |  |      |   |       | 1.1 |  |   |   |  | 
|                                         |                       |   |                    |     |                  |   |      |   |      |   |       |     |  |   |   |  
|                                         |                       | $ | (32.9              | )   |                  | $ |     |   |      | $ | (68.7 | )   |  | $ |  |  
|                                         |                       |   |                    |     |                  |   |      |   |      |   |       |     |  |   |   |  

Details of operating cash receipts and payments resulting from the
recapitalization are as follows:

|                                                     |  |                |      |  
|---------------------------------------------------- |  | -------------- | ---- | -
|                                                     |  | For the period
|                                                     |  | May 8, 2002  
|                                                     |  | June 30, 2002 
|                                                     |  |               
|                                                     |  | (in millions) 
|Interest income                                      |  | $              | 0.6  |  
|                                                    
|                                                    
|                                                    
|                                                    
|Payroll and related costs paid                       |  |                | (0.3 | )
|                                                    
|                                                    
|                                                    
|                                                    
|Professional fees                                    |  |                | (1.9 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                |      |  
|Net operating cash flows from recapitalization items |  | $              | (1.6 | )
|                                                     |  |                |      |  

DIP facility

In connection with the proposed joint reorganization plan, some members of the
official unsecured creditors committee of bondholders committed to provide up
to $500 million of new debt financing to NTL Incorporated and some of its
subsidiaries, during the Chapter 11 process. The new financing ensures that
NTLs business operations have access to sufficient liquidity to continue
ordinary operations. GE Capital, an affiliate of GE Capital Structured Finance
Group Limited, one of the lenders under the Senior Credit Facility, and
Wilmington Trust Company, the trustee under the Indentures governing certain of
the NTL Incorporated subordinated notes, filed objections to the DIP facility.
The Bankruptcy Court approved the DIP facility in the principal amount of $630
million (including a $130 million commitment from NTL (Delaware), Inc. and the
$500 million from certain members of the creditors committee) over such
objections in an order issued on July 3, 2002. On July 15, 2002, the various
lenders under the DIP facility and NTL (Delaware), Inc., entered into the DIP
facility agreement with Communications Cable Funding Corp., a wholly-owned
subsidiary of NTL Communications Corp., to provide $630 million in financing to
Communications Cable Funding Corp.

In connection with the commitment, NTL Incorporated and its debtor subsidiaries
were to pay a commitment fee to the bondholder DIP lenders equal to 2% of the
$500 million commitment (i.e., $10 million). Accordingly, on May 6, 2002, and
May 7, 2002, NTL delivered to its bank written instructions to pay by wire
transfer to each lender under the DIP facility such lenders pro rata portion
of the commitment fee. Due to administrative difficulties, however, some of the
lenders under the DIP facility did not receive their pro rata portion of the
commitment fee prior to the commencement of the Chapter 11 cases. In total, as
of May 8, 2002, $428,000 of the $10 million commitment fee had not been paid to
the applicable lenders under the DIP facility. Pursuant to an order of the
court dated May 31, 2002, the remaining $428,000 of the commitment fee was paid
to the applicable lenders under the DIP facility.

Each term loan under the DIP facility will bear interest on the unpaid
principal amount for three months from July 15, 2002 at the rate of 11% per
annum. With respect to each successive three month period following that date,
the rate per annum will increase incrementally by 1% over the immediately
preceding three month period but will not exceed 18% per annum for any three
month period.

NTL (Delaware), Inc. is also a lender under the DIP facility and will lend up
to $130 million. NTL (Delaware), Inc. has cash on hand and, because the Chapter
11 cases are not substantively consolidated, NTL Incorporated and its debtor
subsidiaries and the steering committee of bondholders have concluded that the
cash at NTL (Delaware), Inc.

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is to be used to partially fund the reorganization of all of the debtors. NTL
(Delaware), Inc. will receive interest and is entitled to the same protections
as the other bondholder DIP lenders.

Under the DIP facility agreement, Communications Cable Funding is the borrower,
and the other debtors (other than Diamond Cable and Diamond Holdings) are
guarantors, except that NTL Communications Corp. is also a co-obligor of the
loans from NTL (Delaware), Inc. Under the DIP facility agreement, the cash
(except for the DIP facility proceeds) of the borrower and the guarantors will
be cash collateral for the DIP facility and will not be used or transferred for
any purpose whatsoever without the consent of the bondholder DIP lenders. All
funding needs of the Debtors will be funded through the proceeds of the DIP
facility, in accordance with a budget and the terms of the DIP facility
agreement.

Under the DIP facility agreement, the loan structure contains three tranches
that rank equally with each other. All amounts owed under the DIP facility
agreement are required to be paid in full no later than the earlier of (i) the
consummation of the reorganization plan, (ii) December 1, 2002, and (iii) the
date on which all of the term loans become due and payable in full under the
DIP facility agreement, whether by acceleration or otherwise.

On July 17, 2002, NTL drew the first tranche available under the facility in
the amount of $229.0 million.

A copy of the DIP facility agreement was attached as an exhibit to Form 8-K
filed by NTL Incorporated with the Commission on July 19, 2002.

Exit Facility

Because of the short maturity of the DIP facility and the longer term liquidity
needs of NTL, as well as the requirements under the Bankruptcy Code for
confirmation of and the conditions to consummation of NTLs proposed plan, NTL
will require the reorganized NTL to enter into an exit financing facility. The
exit financing or any alternative financing would refinance (at least in part)
the DIP facility and may be used as consideration for the refinancing of a £90
million note payable to NTL (Delaware), Inc. from NTL (UK) Group Inc. Because
of the present market conditions which are unfavorable to telecommunications
companies generally, there can be no assurance that NTL will successfully
obtain an acceptable exit facility, although NTL is presently in discussions
with various parties about alternatives.

NTL expects that the exit facility may be secured by various assets of the
reorganized NTL, including those which secure the DIP facility, would rank
senior to all current and future subordinated debt of the reorganized NTL.

NTL also expects that the exit facility would impose operating and financial
restrictions on the reorganized NTL and its subsidiaries. These restrictions
would significantly limit or prohibit, among other things, the reorganized
NTLs ability to incur additional indebtedness, pay dividends, or make
distributions in respect of capital stock, make other restricted payments,
enter into sale and leaseback transactions, create liens upon assets, enter
into transactions with affiliates or related persons, sell assets, or
consolidate, merge, or sell all or substantially all of their assets. The exit
facility also likely would require the reorganized NTL to satisfy financial
covenants on an ongoing basis. NTL cannot determine at this time whether these
financial covenants would have a material impact on the reorganized NTLs
ability to finance future operations or capital needs or to engage in other
business activities.

The terms, covenants, and conditions of an exit facility have not been
finalized and remain subject to negotiation and final documentation.

Proposed Recapitalization Plan

Under the proposed recapitalization plan, NTL would be split into two
companies, one tentatively called NTL UK and Ireland and holding substantially
all of NTLs UK and Ireland assets, and one tentatively called NTL Euroco and
holding substantially all of NTLs continental European and other assets.

Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), NTL Communications Corp. and
Diamond Cable Communications Limited would in the aggregate receive 100% of the
initial common stock of NTL UK and Ireland (excluding shares issuable in the
rights offerings

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and upon the exercise of warrants (discussed below) and upon
the exercise of options which will be granted to certain employees of NTL UK
and Ireland). Holders of notes of NTL Incorporated (other than France Telecom),
NTL (Delaware), Inc. (other than France Telecom) and NTL Communications Corp.
would in the aggregate receive (i) 100% of the preferred stock of NTL Euroco
and (ii) a certain amount of cash as specified in the amended joint
reorganization plan. Holders of the subordinated notes of NTL Incorporated
(other than France Telecom), NTL (Delaware), Inc. (other than France Telecom)
and NTL Communications Corp. would in the aggregate receive 86.5% of the
initial common stock of NTL Euroco (excluding shares issuable upon the exercise
of options which will be granted to certain employees of NTL Euroco). Holders
of senior notes of NTL Communications Corp. would receive the value of a
specified number of shares of common stock of NTL Euroco pursuant to the
amended joint reorganization plan. Notes of the Companys subsidiaries Diamond
Holdings Limited and NTL (Triangle) LLC would remain outstanding and interest
payments will be made.

Current preferred and common stockholders of NTL Incorporated, including France
Telecom, would receive warrants to purchase common stock of NTL UK and Ireland
and rights entitling them to purchase common stock of NTL UK and Ireland. For
each share of common stock purchased upon exercise of rights, the person
exercising such rights will receive a warrant to purchase one share of common
stock of NTL UK and Ireland. The rights will be exercisable, on an
oversubscription basis, for the 20-business day period after the entry of the
confirmation order, as such period may be extended, and the warrants will be
exercisable for a period of eight years at an exercise price of $77.47 per
share. The number of shares to be received upon exercise of the warrants is
subject to customary adjustments for stock splits, stock recapitalizations and
distributions of property (other than cash) to holders of NTL UK and Ireland
Common Stock. If fully exercised, the rights and warrants would entitle the
current preferred stockholders of NTL Incorporated to acquire approximately
23.6% and the current common stockholders of NTL Incorporated to acquire
approximately 8.9% of NTL UK and Irelands primary common stock on the
effective date of the recapitalization. Holders of the subordinated notes of
NTL Incorporated (other than France Telecom), NTL (Delaware), Inc. (other than
France Telecom), and NTL Communications Corp. would have the right to purchase
any shares of NTL UK and Ireland common stock and warrants not subscribed for
in the rights offering by the preferred and common stockholders of NTL
Incorporated. It is expected that the warrants will be listed or quoted on the
same exchange or inter-dealer quotation system as the shares of common stock of
the reorganized NTL. NTL has had preliminary conversations with the New York
Stock Exchange regarding the listing of the common stock of NTL UK and Ireland
on the Exchange following the effective date of its plan of reorganization.
Based on these preliminary conversations there has been no indication from the
New York Stock Exchange that NTL UK and Ireland will qualify for listing on the
Exchange. There can be no assurance that shares of NTL UK and Ireland common
stock and/or Series A warrants will be listed on an exchange or be eligible for
trading on an inter-dealer quotation system on the effective date of the
bankruptcy or at any time thereafter or that an orderly trading market will
develop for these securities.

Current preferred stockholders of NTL Incorporated, other than France Telecom, would receive
approximately 3.2% and current common stockholders of NTL Incorporated, other than France Telecom,
would receive approximately 10.3% of the primary equity of NTL Euroco. It is
contemplated that, subject to the consummation of the recapitalization, France
Telecom would also receive NTL Incorporateds 27% interest in Noos, pursuant to
a pledge of such interest to France Telecom given at the time of its
acquisition.

During the recapitalization process, NTL has maintained normal and regular
trade terms with its suppliers and customers. There can be no assurance that
NTLs suppliers will continue to provide normal trade credit or credit on
acceptable terms, if at all, or that customers will continue to do business or
enter into new business with NTL. See also Risk Factors for a summary of
risks related to NTLs business in general and the recapitalization process in
particular.

Section 1129 of the United States Bankruptcy Code requires, among other things,
a showing that confirmation of the proposed recapitalization plan will not be
followed by liquidation or the need for further financial reorganization of NTL
Incorporated, NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications Limited or Diamond Holdings Limited, and that the value of
distributions to dissenting holders of claims and interests may not be less
than the value such holders would receive in a liquidation under Chapter 7 of
the United States
Bankruptcy Code. Although NTL believes that the proposed recapitalization plan
will meet these tests, there can be no assurance that the Bankruptcy Court will
reach the same conclusion.

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The United States Bankruptcy Code also requires that a plan must provide the
same treatment for each claim or interest in a particular class, unless a
holder agrees to a less favorable treatment of its particular claim or
interest. NTL believes that the proposed recapitalization plan complies with
this requirement of the United States Bankruptcy Code. However, if a member of
a class objects to its treatment, or if the Bankruptcy Court finds that the
proposed recapitalization plan does not comply with the requirements of the
United States Bankruptcy Code, confirmation of the plan could be delayed or
prevented. In addition, each class of impaired claims and interests that will
(or may) be entitled to receive property under the plan will have the
opportunity to vote to accept or reject the plan. If an impaired class of
claims or interests rejects the plan, the Company may request confirmation of
the plan pursuant to the cramdown provisions of the United States Bankruptcy
Code. Even if the requirements for cramdown are met, the Bankruptcy Court,
which, as a court of equity may exercise substantial discretion, may choose not
to confirm the plan. These can be no assurance that the proposed
recapitalization plan will be confirmed.

Bank Waivers

Before NTL could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under NTLs
credit facilities. Effective March 8, 2002, these lenders granted waivers
which, until March 29, 2002, provided that the commencement of negotiations
with bondholders with a view to rescheduling its debt would not constitute an
event of default under the credit facilities. Such initial waivers did not
permit NTL to make to any of its bondholders an exchange or similar offer for
NTLs outstanding public notes or to enter into a legally binding agreement
with the unofficial steering committee of bondholders, subject to some
exceptions, without the consent of the lenders under the credit facilities. But
for the initial waivers, the commencement of negotiations with bondholders
would have been an event of default under the credit facilities.

Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14, 2002 in the case of the Cablecom credit facility, unless
the interest payments missed by NTL Communications Corp. on April 1, 2002 were
remedied or a sufficient number of bondholders agreed to forbear in respect of
such non-payment, in which case, the UK credit facilities waivers were to be
extended to May 14, 2002. As a condition to the amendment to the initial
waivers, the UK lenders required NTL (Delaware), Inc. to loan £90 million to
NTL (UK) Group, Inc. following receipt of the proceeds from the sale of NTL
Australia. Such loan was actually made (with the approval of the lenders under
the UK credit facilities) to NTL (UK) Group, Inc. and then on-lent to certain
subsidiaries of NTL (UK) Group, Inc. This loan, which was made on April 5,
2002, is structurally senior to the outstanding public notes issued by NTL
Communications Corp. and contractually senior to intra-group debt owed by NTL
(UK) Group, Inc. to NTL Communications Corp. but contractually subordinated to
the UK credit facilities. In connection with the amendments to the waivers, NTL
affirmed the provisions of the initial waivers and agreed, among other things,
not to commence voluntary dissolution proceedings, including proceedings under
Chapter 11 of the United States Bankruptcy Code, without the consent of these
lenders.

As of the date of this Form 10-Q, there are no current waivers from NTLs
secured lenders and NTL is therefore in default under its UK credit facilities
and the Cablecom credit facility. In connection with the proposed
recapitalization plan, it is intended that the existing events of default under
the credit facilities will be cured by amendment with effect from the effective
date of the recapitalization, if it is approved by creditors and the Bankruptcy
Court. On May 2, 2002, a memorandum was executed by NTL, a steering committee
of its lending banks and the unofficial committee of its public bondholders
indicating the parties agreement in principle (on a non-legally binding basis)
to the terms of the proposed recapitalization and the terms on which the
Companys UK credit facilities should be amended and restated and with respect
to certain matters relating to the sale of, or investment in, Cablecom.

Cablecom GmbH, an indirect wholly-owned subsidiary of NTL (Delaware), Inc., is
the principal trading company of NTLs Swiss group. There were a number of
technical defaults under the Swiss credit facility made available to Cablecom
and various of its subsidiaries. In addition, as of December 31, 2001,
Cablecoms and six of its direct and indirect subsidiaries liabilities
exceeded their respective assets. As a consequence, under Swiss law, those
entities were deemed to be overindebted. This also constituted an event of
default under the Cablecom credit facility,
which entitled the lenders to accelerate repayment. Such an acceleration would
have resulted in an event of default under NTL Incorporateds and NTL
(Delaware), Inc.s 5.75% convertible subordinated notes due 2011 and 5.75%
convertible subordinated notes due 2009.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries

Under Swiss law, the board of directors of an overindebted company is generally
obliged to notify a judge of overindebtedness so that the judge may either
institute insolvency proceedings or postpone such adjudication and take
appropriate measures to preserve the value of the assets. An overindebted
company is not required to notify a judge if the creditors of the overindebted
entity subordinate their claims in the amount of the overindebtedness.

The problem of overindebtedness was resolved on June 26 and June 27, 2002 in
certain of the overindebted subsidiaries when they were merged into Cablecom
and other members of the Cablecom group. The remaining overindebted
subsidiaries were not merged but the overindebtedness issue was resolved in
those subsidiaries by way of subordination agreements which obviated any
requirement to institute insolvency proceedings in respect of these companies.

At the end of April 2002 the defaults subsisting at that time were remedied or
were waived by the restatement of the credit agreement and the grant of a
waiver letter. However, conditions subsequent such as the grant of new security
and the deposit of share certificates relating to minority shareholdings
pledged to the banks were imposed by these documents and other new finance
documents executed pursuant to the restatement.

Since the end of April 2002 the following defaults have occurred under the
Cablecom finance documents: (1) The indentures issued by NTL (Delaware), Inc.
and NTL Incorporated have become payable and have not been paid; (2) NTL
(Delaware), Inc. has commenced negotiations with its creditors with a view to
the general rescheduling of its indebtedness and has commenced proceedings
under Chapter 11 of the United States Bankruptcy Code pursuant to which it intends to
reorganize its debt; (3) NTL (Delaware), Inc. has liabilities which exceed the
value of its assets and is unable to pay its debts as they fall due; (4)
Cablecom was unable to satisfy the conditions to allow it to rollover revolving
advances maturing in early July 2002. The revolving advances remained unpaid
for several days until Cablecom was able to obtain the consent of the banks to
waive the conditions to their rollover; (5) Certain of the conditions
subsequent imposed by the restated credit agreement, the waiver letter and
other finance documents executed pursuant to the restated credit agreement have
yet to be fulfilled.

The outstanding defaults under the Cablecom finance documents entitle the
facility agent to demand repayment of the loan and enforce the security granted
to secure that loan. The facility agent has discretion to take those steps and
can be compelled to take those steps by a group of banks holding at least
66-2/3% in aggregate of the loan.

Future developments in Cablecoms business, as well as external factors, could
result in a reemergence of the over indebtedness issue under Swiss law.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries

Interest Payments on Public Notes

NTL has substantial interest payment obligations under its existing
indebtedness. NTL did not make its scheduled interest payments on the
respective due dates as follows:

|                                                    |  |                         |  |              
|--------------------------------------------------- |  | ----------------------- |  | -------------
|April 1, 2002:                                      |  |                         |  |              
|NTL Communications Corp.                            |  | 9-1/2% notes due 2008   |  | $8.6 million 
|NTL Communications Corp.                            |  | 11-1/2% notes due 2008  |  | $35.9 million
|NTL Communications Corp.                            |  | 11-7/8% notes due 2010  |  | $29.7 million
|                                                    |  | Total                   |  | $74.2 million
|                                                    |  |                         |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|April 15, 2002:                                     |  |                         |  |              
|NTL Communications Corp.                            |  | 12-3/4% notes due 2005  |  | $17.7 million
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011   |  | $2.5 million 
|                                                    |  | Total                   |  | $20.2 million
|                                                    |  |                         |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|May 15, 2002:                                       |  |                         |  |              
|NTL Communications Corp.                            |  | 9-1/4% notes due 2006   |  | $10.5 million
|NTL Communications Corp.                            |  | 6-3/4% notes due 2008   |  | $38.8 million
|NTL Communications Corp.                            |  | 9-7/8% notes due 2009   |  | $15.7 million
|                                                    |  | Total                   |  | $65.0 million
|                                                    |  |                         |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|June 15, 2002:                                      |  |                         |  |              
|Diamond Cable                                       |  |                         |  |              
|Communications Limited                              |  | 11-3/4% notes due 2005  |  | $31.2 million
|NTL Communications Corp.                            |  | 7% notes due 2008       |  | $17.1 million
|NTL (Delaware), Inc.                                |  | 5-3/4% notes due 2009   |  | $34.5 million
|                                                    |  | Total                   |  | $82.8 million
|                                                    |  |                         |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|July 15, 2002:                                      |  |                         |  |              
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011   |  | $2.5 million 
|                                                    |  |                         |  |              
|August 1, 2002:                                     |  |                         |  |              
|NTL Communications Corp.                            |  | 11-1/2% notes due 2006  |  | $60.4 million
|NTL Communications Corp.                            |  | 12-3/8% notes dues 2008 |  | $18.3 million
|Diamond Holdings Limited                            |  | 10% notes due 2008      |  | $10.5 million
|Diamond Holdings Limited                            |  | 9-1/8% notes due 2008   |  | $5.0 million 
|                                                    |  | Total                   |  | $94.2 million
|                                                    |  |                         |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|August 15, 2002                                     |  |                         |  |              
|NTL Communications Corp.                            |  | 10% notes due 2007      |  | $20.0 million
|Diamond Cable Communications Limited                |  | 10-3/4% notes due 2007  |  | $22.6 million
|                                                    |  | Total                   |  | $42.6 million

Interest payments of $18.9 million were made, when due, on April 2, 2002 in
respect of Diamond Cable Communications 13.25% senior discount notes due 2004.
Upon emerging from Chapter 11 proceedings, NTL intends to make any required
interest payments on the notes of Diamond Holdings Limited. In accordance with
the proposed recapitalization plan, NTL does not plan to make future interest
payments on its currently outstanding publicly traded notes except notes issued
by NTL Triangle (a non-debtor) and, upon emergence from Chapter 11 proceedings, Diamond
Holdings Limited.

If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. An event of
default entitles the trustee under the indenture or the holders of 25% of the
outstanding notes to declare the principal amount of those notes to be
immediately due and payable. Even if the maturity of those notes is not
accelerated after the 30 day grace period, such an event of default would also
result in an event of default in respect of other debt (commonly called cross
defaults) under most of our other notes. Therefore, there was an event of
default for failure

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to pay interest on May 1, 2002 under the indentures relating to the missed
interest payments due April 1, 2002 and on May 16, 2002, under the indentures
relating to the missed interest payments due April 15, 2002. As a result, cross
defaults occurred under NTLs other indentures at NTL Communications Corp., NTL
(Delaware), Inc., NTL Incorporated and under our UK credit facilities and under
the Cablecom credit facility. This gave holders of the outstanding series of
debt at these entities the right to accelerate repayment of those debts by
declaring the principal amount of the debts to be immediately due and payable.
As a result of the payment defaults as well as the Companys voluntary filing
under Chapter 11 of the United States Bankruptcy Code on May 8, 2002, there is
an event of default under all of our credit facilities and the indentures
governing all of our publicly traded debt, other than debt of NTL Triangle. As
a result of the Chapter 11 filings, all of our publicly traded debt, other than
the debt of NTL Triangle, became immediately due and payable, pursuant to the
terms of the indentures governing such debt. The automatic stay of Section 362
of the United States Bankruptcy Code prevents the holders of such debt from
seeking to enforce their collection rights under the indentures, except within
the context of the Chapter 11 cases, and even then only with the prior approval
of the Bankruptcy Court. However, NTL has received letters from the agents for
the lenders under the UK credit facilities reserving such lenders rights to
accelerate repayment of the facilities and to enforce the security granted in
respect of the facilities on account of the defaults thereunder, actions which
would not be prohibited by the automatic stay.

Credit Rating Downgrades

On April 3, 2002, credit rating agency Standard & Poors lowered the long-term
corporate credit rating on some of NTLs public debt to D from CCC-, citing
NTLs failure to make a bond interest payment due on April 1, 2002.

Delisting of NTL Incorporated Common Stock

On March 28, 2002, the New York Stock Exchange (NYSE) announced that it was
suspending NTL Incorporateds common stock from trading on the NYSE. This
determination was based upon, among other things, the selling price of NTL
Incorporateds common stock, which closed at $0.20 on March 26, 2002. The
continued listing standards of the NYSE, which were applicable to NTL
Incorporated, required maintenance of a minimum share price of $1.00 over a 30
trading day period and average global market capitalization of $100 million
over a 30 trading day period. NTL Incorporateds common stock fell below both
of these continued listing standards. In addition, on May 9, 2002, Nasdaq
Europe halted trading of NTL Incorporateds common stock pending receipt of
information relating to the restructuring process because of the filing of NTL
Incorporateds Chapter 11 cases. NTL has complied with this information
request, although there can be no assurance that Nasdaq Europe will (1) not
make additional information requests, (2) remove the trading halt on shares of
NTL Incorporateds common stock or (3) not delist shares of NTL Incorporateds
common stock. NTL Incorporateds common stock is currently quoted on the Over
the Counter Bulletin Board under the symbol NTLD.

Sale of NTL Australia

On April 2, 2002, NTL announced that it had completed the previously announced
sale of its Australian broadcast business to Macquarie Communications
Infrastructure Holding Pty Limited for A$850 million (US$451.3 million). The
net proceeds from the sale were approximately A$575.3 million (US$304.5
million). At that time, the business bank debt outstanding totaled A$227.3
million (US$121.7 million).

On April 5, 2002, NTL (Delaware), Inc. loaned £90 million to NTL (UK) Group
Inc., which loan was funded by the proceeds of the sale of NTL Australia. This
loan is subordinated to the Companys UK credit facilities. The remaining
proceeds of the sale of NTL Australia remain at NTL (Delaware), Inc., and the
proposed plan of reorganization anticipates that such proceeds will form a
portion of the consideration to be offered to bondholders of NTL (Delaware),
Inc. and NTL Incorporated in satisfaction of their claims against those
companies.

Potential Sale of, or Outside Investment in, Cablecom

It has been agreed to engage UBS Warburg LLC by August 31, 2002 to advise in
connection with an outside investment in, or sale of all or part of, Cablecom.
As part of this process, NTL (Delaware), Inc. and certain of its subsidiaries
have agreed to approve any such outside investment or sale, which is acceptable
to the lenders under the Cablecom credit facility.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries

It has also been agreed that if such a sale of all or part of Cablecom is
consummated on or before August 31, 2003, the lenders under the Cablecom credit
facility will be entitled to receive additional interest equal to 20% of the
net proceeds of such a sale after repayment of the amounts outstanding under
the Cablecom credit facility and other expenses and taxes of the sale. There
can be no assurance that any outside investment in, or sale of all or part of,
Cablecom pursuant to the Cablecom credit facility will be on terms that are
favorable to NTL and such investment or sale could have a material adverse
effect on NTLs finances and business.

In particular, in the current environment, NTLs shareholding in Cablecom may
have little or no value, which may result in NTL receiving little or no
consideration for its equity interest in Cablecom. Further, if a third party
makes an investment in Cablecom there can be no assurance that NTL will be able
to maintain its ability to direct the management of Cablecom.

Investments in and Loans to Affiliates

On April 15, 2002, a funding request for
$20 million was received by NTL (Delaware), Inc. under
the terms of the investment agreement relating to NTLs investment in B2 in
Sweden, a company which is deploying fiber directly to the home throughout
Scandinavia. NTL has informed B2 and the other principal investors that it is
not in a position to comply with this request for funding at this time. The B2
investment agreement provides that if NTL fails to provide such funding, it may
be sued for non-payment and arguably could lose certain rights under the B2
shareholders arrangements. Pursuant to the applicable documents, if this
occurs the majority remaining shareholders may also elect to terminate the
shareholder arrangements with respect to NTL and exercise a contractual right
to acquire on a pro rata basis NTLs interest in B2 at 25% of fair market
value. If the remaining shareholders elected to exercise these rights, NTL
could be forced to sell its stake in B2 at a loss. On June 25, 2002, B2 and its
remaining shareholders filed a motion in the Bankruptcy Court requesting relief
from the automatic stay provisions of section 362 of the Bankruptcy Code to
exercise their rights under the relevant agreements. Notwithstanding the
arguments raised in the motion, NTL believes that the Bankruptcy Code provides
various defenses and protections of and for NTLs rights under the B2
investment agreement and in respect of its equity interest in B2 and intends to
enforce vigorously its rights and protections.

Premium TV Limited, a wholly-owned subsidiary of NTL (Delaware), Inc., is
obliged to provide funding of up to approximately £62.0 million ($94.5 million)
to fund various of its joint venture interests. Of this amount, the payment of
approximately £50.0 million ($76.2 million) has been guaranteed by NTL
(Delaware), Inc. If Premium TV Limited fails to provide its committed funding
under the relevant shareholder arrangements relating to these joint ventures,
Premium TV Limited and, in respect of the guaranteed amounts, NTL (Delaware),
Inc., may be sued for non-payment. As a result of the recapitalization process,
the relevant joint venture partners may assert that they can compulsorily
acquire Premium TV Limiteds interest in the relevant joint venture at a third
party appraisal valuation. Premium TV Limited is currently in discussions with
certain of these joint venture partners with a view to restructuring the
relevant joint ventures. In the event that these discussions do not reach a
resolution acceptable to Premium TV Limited, Premium TV Limited may seek to
discontinue these joint ventures and terminate their activities, which may also
result in a cessation of substantially all of Premium TV Limiteds activities.
As a result of the restructuring process, the relevant joint venture partners
may assert that they can compulsorily acquire Premium TV Limiteds interest in
the relevant joint venture at a third party appraisal valuation. NTL believes,
however, that it has various defenses and protections under the Bankruptcy Code
against such actions and intends to enforce vigorously its rights and
protections.

Relationships with Suppliers

The uncertainty over NTLs financial condition may adversely affect its
relationships with its suppliers. If NTLs suppliers become increasingly
concerned about its financial condition, they may demand quicker payment terms
or not extend normal trade credit, both of which could further adversely affect
its results of operations, financial condition and cash flows.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries

Defaults under Indebtedness

Set forth below is a description of defaults, as well as whether such defaults
have led to an event of default or acceleration of indebtedness, with respect
to our bank facilities and our outstanding notes, each as
of May 8, 2002, the date of the Chapter 11 filings of NTL Incorporated and its
debtor subsidiaries. As a consequence of the Chapter 11 filings on May 8, 2002,
all amounts outstanding under the indentures governing the high yield and
convertible debt of the entities having commenced Chapter 11 cases
automatically became immediately due and payable. However, the automatic stay
of Section 362 of the United States Bankruptcy Code serves to prevent the
holders of such debt from seeking to enforce their collection rights under the
indentures, except within the context of the Chapter 11 cases, and even then
only with the prior approval of the Bankruptcy Court.

Credit Facilities

|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|-- |  | ------------------------ |  | ------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------
|  
|   |  |                          |  | Amount                                     |  |                                                                                                                                                                |  |                                                                                     
|   |  |                          |  | available/amount                           |  |                                                                                                                                                                |  |                                                                                     
|   |  |                          |  | outstanding                                |  |                                                                                                                                                                |  | Event of default/                                                                   
|   |  |                          |  | (as of June                                |  | Defaults                                                                                                                                                       |  | acceleration                                                                        
|   |  | NTLCL                    |  | 30, 2002)                                  |  | (as of May 8, 2002)                                                                                                                                            |  | (as of May 8, 2002)                                                                 
|  
|1. |  | Working Capital
Facility |  | Nil available
$622.4 million outstanding   |  | Default
(negotiation with
bondholders with a
view to
rescheduling,
failure to pay
interest on
outstanding notes
after 30-day grace
period, Chapter 11
filings) |  | Event of default with
respect to entire
amount; lenders can
accelerate entire amount
|  
|  
|  
|  
|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|  
|  
|  
|  
|2. |  | Senior Credit
Facility   |  | Nil available
$4,245.4 million
outstanding |  | Default
(negotiation with
bondholders with a
view to
rescheduling,
failure to pay
interest on
outstanding notes
after 30-day grace
period, Chapter 11
filings) |  | Event of default with
respect to entire
amount; lenders can
accelerate entire
amount
|  
|  
|  
|  
|   |  | Cablecom                 |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|  
|  
|  
|  
|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|  
|  
|  
|  
|3. |  | Term Loan Facility       |  | Nil available
$1,809.5 million
outstanding |  | Default
(negotiation with
bondholders with a
view to
rescheduling,
failure to pay
interest on
outstanding notes
after 30-day grace
period, Chapter 11
filings) |  | Event of default with
respect to entire
amount; lenders can
accelerate entire       
|  
|  
|  
|  
|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|  
|  
|  
|  
|4. |  | Revolving Facility       |  | Nil available
$707.1 million outstanding   |  | Default
(negotiation with
bondholders with a
view to
rescheduling,
failure to pay
interest on notes
after 30-day grace
period, Chapter 11
filings)             |  | Event of default with
respect to entire
amount; lenders can
accelerate entire
amount

Outstanding Public Notes

|   |  |                                                             |  |                    |  |                                                                                                                        |  |                                               
|-- |  | ----------------------------------------------------------- |  | ------------------ |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|  
|   |  |                                                             |  | Amount outstanding |  |                                                                                                                        |  | Event of default/                             
|   |  |                                                             |  | (as of June 30,    |  | Defaults                                                                                                               |  | acceleration                                  
|   |  |                                                             |  | 2002)              |  | (as of May 8, 2002)                                                                                                    |  | (as of May 8, 2002)                           
|  
|   |  | NTL Incorporated
(NTL (Delaware), Inc.)
co-obligor          |  |                    |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|   |  |                                                             |  |                    |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|1. |  | 5-3/4% Convertible
Subordinated Notes
due June 22, 2011     |  | $100.0 million     |  | Payment default of
$2.5 million of
interest due April
15, 2002; Chapter
11 filings  entire
amount outstanding         |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  | NTL (Delaware), Inc.                                        |  |                    |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|   |  |                                                             |  |                    |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|2. |  | 5-3/4% Convertible
Subordinated Notes
due December 15,
2009 |  | $1,200.0 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  | NTL Communications
Corp.                                    |  |                    |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|   |  |                                                             |  |                    |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|3. |  | 12-3/4% Senior
Deferred Coupon
Notes due 2005               |  | $277.8 million     |  | Payment default of
$17.7 million of
interest due April
15, 2002; Chapter
11 filings  entire
amount outstanding        |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  |                                                             |  |                    |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|4. |  | 11-1/2% Senior
Deferred Coupon
Notes due 2006               |  | $1,050.0 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries

|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|--- |  | ---------------------------------------------------------------- |  | ---------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|5.  |  | 10% Senior Notes
due 2007                                        |  | $400.0 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|6.  |  | 9-1/2% Senior
Sterling Notes due
2008, less unamortized
discount |  | $190.2 million   |  | Payment default of
$8.6 million of
interest due April
1, 2002; Chapter 11
filings  entire
amount outstanding          |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|7.  |  | 10-3/4% Senior
Deferred Coupon
Sterling Notes due 2008           |  | $416.1 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|8.  |  | 9-3/4% Senior
Deferred Coupon
Notes due 2008                     |  | $1,193.3 million |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|9.  |  | 9-3/4% Senior
Deferred Coupon
Sterling Notes due
2009            |  | $418.4 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|10. |  | 11-1/2% Senior
Notes due 2008                                    |  | $625.0 million   |  | Payment default of
$35.9 million of
interest due April
1, 2002; Chapter 11
filings  entire
amount outstanding         |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|11. |  | 12-3/8% Senior
Deferred Coupon
Notes due 2008                    |  | $380.6 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|12. |  | 7% Convertible
Subordinated Notes
due 2008                       |  | $489.8 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|13. |  | 9-1/4% Senior Euro
Notes due 2006                                |  | $246.4 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|14. |  | 9-7/8% Senior Euro
Notes due 2009                                |  | $345.0 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|15. |  | 11-1/2% Senior
Deferred Coupon
Euro Notes due 2009               |  | $156.1 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|16. |  | 11-7/8% Senior
Notes due 2010,
less unamortized
discount         |  | $491.2 million   |  | Payment default of
$29.7 million of
interest due April
1, 2002; Chapter 11
filings  entire
amount outstanding         |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|17. |  | 12-3/8% Senior Euro
Notes due 2008,
plus unamortized
discount    |  | $296.5 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|18. |  | 6-3/4% Convertible
Senior Notes due
2008                         |  | $1,150.0 million |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  | NTL Triangle                                                     |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|19. |  | 11.2% Senior
Discount Debentures
due November 15,
2007           |  | $517.3 million   |  | None                                                                                                                   |  | None                                          
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|    |  | Diamond                                                          |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|20. |  | 13-1/4% Senior
Discount Notes due
2004                           |  | $285.1 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|21. |  | 11-3/4% Senior
Discount Notes due
2005                           |  | $531.0 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|22. |  | 10-3/4% Senior
Discount Notes due
2007                           |  | $420.5 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries

|    |  |                                                                    |  |                |  |                                                                                                                        |  |                                               
|--- |  | ------------------------------------------------------------------ |  | -------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|23. |  | 10% Senior Sterling
Notes due 2008,
issued by Diamond
Holdings plc |  | $205.8 million |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
amount outstanding                 |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                    |  |                |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|24. |  | 9-1/8% Senior Notes
due 2008, issued by
Diamond Holdings
plc       |  | $110.0 million |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount

Description of Outstanding Notes and Credit Facilities

The following summarizes the terms of the significant notes and credit
facilities issued by the Company and its subsidiaries as of June 30, 2002 . The
holders of the debt have the right to accelerate repayment, or may have such
right, which has caused all of the Companys long-term debt to be classified as
current, except for the long-term debt included in liabilities subject to
compromise. The automatic stay of Section 362 of the United States Bankruptcy
Code prevents the holders of such debt from seeking to enforce their collection
rights under the indentures, except within the context of the Chapter 11 cases,
and even then only with the prior approval of the Bankruptcy Court. However,
NTL has received letters from the agents for the lenders under the UK credit
facilities reserving such lenders rights to accelerate repayment of the
facilities and to enforce the security granted in respect of the facilities on
account of the defaults thereunder, actions which would not be prohibited by
the automatic stay.

NTL Delaware:



|(1) |  | 5 3/4% Convertible Subordinated Notes due December 15, 2009, principal
amount at maturity of $1,200.0 million, interest payable semiannually from
June 15, 2000, redeemable at the Companys option on or after December 18,
2002, convertible into shares of NTL Incorporated stock at a conversion
price of $108.18 per share;
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries

NTLCL:



|(2) |  | Working Capital Facility, originally for £1,300.0 million ($1,981.9
million); following the issuance of new debt beginning in October 2000,
the commitment has been reduced by £882.5 million ($1,345.4 million), of
which £408.3 million ($622.5 million) was outstanding as of June 30, 2002.
Interest payable at least every six months at LIBOR plus a margin rate of
6.50% per annum, which is subject to adjustment; effective interest rate
of 10.65% at June 30, 2002; the unused portion of the commitment is
subject to a commitment fee of 0.75% payable quarterly; principal is due
in full on March 31, 2006; no undrawn amounts are available under this
agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(3) |  | Senior Credit Facility, of which £2,784.8 million ($4,245.4 million) was
outstanding as of June 30, 2002; originally for £2,500.0 million ($3,811.3
million), dated May 30, 2000; interest payable at least every six months
at LIBOR plus a margin rate of 2.00% per annum, which is subject to
adjustment; effective interest rate of 6.16% at June 30, 2002; the unused
portion of the commitment is subject to a commitment fee of 0.75% payable
quarterly, which is reduced to 0.50% when over 50% of the commitment is
utilized; principal is due in six quarterly installments beginning on June
30, 2004; as amended and restated pursuant to a Restatement Amendment
Agreement dated September 26, 2001 which, inter alia, amended such Senior
Credit Facility to make available a £200.0 million ($304.9 million) Term
Facility (interest payable on such Term Facility at least every six months
at LIBOR plus a margin rate of 3.50% per annum, effective interest rate of
7.66% at June 30, 2002, principal is due in eight quarterly installments
beginning on June 30, 2006) and increase the availability of funds under
the Senior Credit Facility by £84.8 million ($129.3 million);

Cablecom:



|(4) |  | Term Loan Facility, of which CHF 2,700.0 million ($1,809.5 million) was
outstanding as of June 30, 2002, interest payable at least every six
months at Swiss LIBOR plus a margin rate of 2.5% per annum, which is
subject to adjustment, effective interest rate of 4.30% at June 30, 2002,
principal is due on April 30, 2003;                                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(5) |  | Revolving Facility of CHF 1,400.0 million ($938.3 million), of which CHF
1,055.0 million ($707.1 million) was outstanding as of June 30, 2002,
interest payable at least every six months at Swiss LIBOR plus a margin
rate of 2.50% per annum, which is subject to adjustment, effective
interest rate of 4.21% at June 30, 2002, the unused portion of the
commitment is subject to a commitment fee of 0.75% payable quarterly,
which is reduced to 0.50% when over 50% of the commitment is utilized,
principal is due on April 30, 2003; the amount available has been capped
at the CHF 1,055.0 million outstanding although the availability may be
increased with the consent of the requisite majority of the lenders;

NTL Communications:



|(6) |  | 12 3/4% Senior Deferred Coupon Notes due April 15, 2005, principal amount
at maturity of $277.8 million, interest payable semiannually from October
15, 2000, redeemable at the Companys option on or after April 15, 2000;      
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(7) |  | 11 1/2% Senior Deferred Coupon Notes due February 1, 2006, principal
amount at maturity of $1,050.0 million, interest payable semiannually from
August 1, 2001, redeemable at the Companys option on or after February 1,
2001;  
|   
|(8) |  | 10% Senior Notes due February 15, 2007, principal amount at maturity of
$400.0 million, interest payable semiannually from August 15, 1997,
redeemable at the Companys option on or after February 15, 2002;                     
|   
|(9) |  | 9 1/2% Senior Sterling Notes due April 1, 2008, principal amount at
maturity of £125.0 million ($190.6 million), interest payable semiannually
from October 1, 1998, redeemable at the Companys option on or after April
1, 2003;

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries



|(10) |  | 10 3/4% Senior Deferred Coupon Sterling Notes due April 1, 2008, principal
amount at maturity of £300.0 million ($457.4 million), interest payable
semiannually beginning on October 1, 2003, redeemable at the Companys
option on or after April 1, 2003;                                                                     
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(11) |  | 9 3/4% Senior Deferred Coupon Notes due April 1, 2008, principal amount
at maturity of $1,300.0 million, interest payable semiannually beginning
on October 1, 2003, redeemable at the Companys option on or after April
1, 2003;                                                                                              
|    
|(12) |  | 9 3/4% Senior Deferred Coupon Sterling Notes due April 15, 2009,
principal amount at maturity of £330.0 million ($503.1 million), interest
payable semiannually beginning on October 15, 2004, redeemable at the
Companys option on or after April 15, 2004;                                                                   
|    
|(13) |  | 11 1/2% Senior Notes due October 1, 2008, principal amount at maturity of
$625.0 million, interest payable semiannually from April 1, 1999,
redeemable at the Companys option on or after October 1, 2003;                                                                                                                     
|    
|(14) |  | 12 3/8% Senior Deferred Coupon Notes due October 1, 2008, principal
amount at maturity of $450.0 million, interest payable semiannually
beginning on April 1, 2004, redeemable at the Companys option on or after
October 1, 2003;                                                                                             
|    
|(15) |  | 7% Convertible Subordinated Notes due December 15, 2008, principal amount
at maturity of $489.8 million, interest payable semiannually from June 15,
1999, convertible into shares of NTL Incorporated common stock at a
conversion price of $39.20 per share, redeemable at the Companys option
on or after December 15, 2001;
|    
|(16) |  | 9 1/4% Senior Euro Notes due November 15, 2006, principal amount at
maturity of 250.0 million ($246.4 million), interest payable semiannually
from May 15, 2000;                                                                                                                                                               
|    
|(17) |  | 9 7/8% Senior Euro Notes due November 15, 2009, principal amount at
maturity of 350.0 million ($345.0 million), interest payable semiannually
from May 15, 2000, redeemable at the Companys option on or after November
15, 2004;                                                                                             
|    
|(18) |  | 11 1/2% Senior Deferred Coupon Euro Notes due November 15, 2009,
principal amount at maturity of 210.0 million ($207.0 million), interest
payable semiannually beginning on May 15, 2005, redeemable at the
Companys option on or after November 15, 2004;                                                                    
|    
|(19) |  | 11 7/8% Senior Notes due October 1, 2010, principal amount at maturity of
$500.0 million, interest payable semiannually from April 1, 2001,
redeemable at the Companys option on or after October 1, 2005;                                                                                                                     
|    
|(20) |  | 12 3/8% Senior Euro Notes due February 1, 2008; principal amount at
maturity of 300.0 million ($295.7 million), interest payable semiannually
from August 1, 2001;                                                                                                                                                             
|    
|(21) |  | 6 3/4% Convertible Senior Notes due May 15, 2008, principal amount at
maturity of $1,150.0 million, interest payable semiannually from November
15, 2001, convertible into shares of NTL Incorporated common stock at a
conversion price of $32.728 per share, redeemable at the Companys option
on or after May 21, 2004;     

NTL Triangle:



|(22) |  | 11.2% Senior Discount Debentures due November 15, 2007, principal amount
at maturity of $517.3 million, interest payable semiannually from May 15,
2001, redeemable at NTL Triangles option after November 15, 2000;
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Diamond:



|(23) |  | 13 1/4% Senior Discount Notes due September 30, 2004, principal amount at
maturity of $285.1 million, interest payable semiannually from March 31,
2000, redeemable at Diamonds option after September 30, 1999;
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries



|(24) |  | 11 3/4% Senior Discount Notes due December 15, 2005, principal amount at
maturity of $531.0 million, interest payable semiannually from June 15,
2001, redeemable at Diamonds option on or after December 15, 2000;                                                                                      
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(25) |  | 10 3/4% Senior Discount Notes due February 15, 2007, principal amount at
maturity of $420.5 million, interest payable semiannually beginning on
August 15, 2002, redeemable at Diamonds option on or after December 15,
2002;                                                                            
|    
|(26) |  | 10% Senior Sterling Notes due February 1, 2008, issued by Diamond
Holdings plc, a wholly-owned subsidiary of Diamond, principal amount at
maturity of £135.0 million ($205.8 million), interest payable semiannually
from August 1, 1998, redeemable at Diamonds option on or after February
1, 2003; and
|    
|(27) |  | 9 1/8% Senior Notes due February 1, 2008, issued by Diamond Holdings plc,
principal amount at maturity of $110.0 million, interest payable
semiannually from August 1, 1998, redeemable at Diamonds option on or
after February 1, 2003.                                                                 

Contractual Obligations and Commercial Commitments

The following table includes aggregate information about the Companys
contractual obligations as of June 30, 2002 and the periods in which payments
are due. The holders of the long-term debt have the right to accelerate
repayment, or may have such right, which has caused all of the Companys
long-term debt to be classified as current, except for the long-term debt
included in liabilities subject to compromise. The automatic stay of Section
362 of the United States Bankruptcy Code prevents the holders of such debt from
seeking to enforce their collection rights under the indentures, except within
the context of the Chapter 11 cases, and even then only with the prior approval
of the Bankruptcy Court. However, NTL has received letters from the agents for
the lenders under the UK credit facilities reserving such lenders rights to
accelerate repayment of the facilities and to enforce the security granted in
respect of the facilities on account of the defaults thereunder, actions which
would not be prohibited by the automatic stay.

Payments Due by Period

|                                   |  |               |          |        |  |           |         |       |  |         |         |       |  |   |         |  |  |   |         | 
|---------------------------------- |  | ------------- | -------- | ------ |  | --------- | ------- | ----- |  | ------- | ------- | ----- |  | - | ------- |  |  | - | ------- | 
|Contractual                        |  |               |          |        |  | Less than |         | 1-3   |  | 4-5     |         | After
|Obligations                        |  | Total         |          | 1 Year |  | Years     |         | Years |  | 5 Years
|                                  
|                                   |  | (in millions)
|Long-Term Debt                     |  | $             | 19,214.3 |        |  | $         | 2,523.5 |       |  | $       | 1,008.4 |       |  | $ | 6,832.4 |  |  | $ | 8,850.0 | 
|                                  
|                                  
|                                  
|                                  
|Capital Lease Obligations          |  |               | 196.0    |        |  |           | 7.2     |       |  |         | 14.1    |       |  |   | 13.3    |  |  |   | 161.4   | 
|                                  
|                                  
|                                  
|                                  
|Operating Leases                   |  |               | 746.9    |        |  |           | 80.5    |       |  |         | 133.1   |       |  |   | 106.5   |  |  |   | 426.8   | 
|                                  
|                                  
|                                  
|                                  
|Unconditional Purchase Obligations |  |               | 1,543.6  |        |  |           | 383.3   |       |  |         | 388.8   |       |  |   | 215.3   |  |  |   | 556.2   | 
|                                  
|                                  
|                                  
|                                  
|Other Long-Term Obligations        |  |               | None     |        |  |           |         |       |  |         |         |       |  |   |         |  |  |   |         | 
|                                  
|                                  
|                                  
|                                  
|Total Contractual Cash Obligations |  | $             | 21,700.8 |        |  | $         | 2,994.5 |       |  | $       | 1,544.4 |       |  | $ | 7,167.5 |  |  | $ | 9,994.4 | 

The following table includes aggregate information about the Companys
commercial commitments as of June 30, 2002. Commercial commitments are items
that the Company could be obligated to pay in the future. They are not required
to be included in the consolidated balance sheet.

Amount of Commitment Expiration Per Period

|                               |  |               |      |           |  |       |     |       |  |         |      |  |  |   |     |  |  |   |      | 
|------------------------------ |  | ------------- | ---- | --------- |  | ----- | --- | ----- |  | ------- | ---- |  |  | - | --- |  |  | - | ---- | 
|Other Commercial               |  | Total Amounts |      | Less than |  | 1-3   |     | 4-5   |  | Over   
|Commitments                    |  | Committed     |      | 1 Year    |  | Years |     | Years |  | 5 Years
|                              
|                               |  | (in millions)
|Guarantees                     |  | $             | 29.9 |           |  | $     | 0.9 |       |  | $       | 13.8 |  |  | $ | 0.2 |  |  | $ | 15.0 | 
|                              
|                              
|                              
|                              
|Lines of Credit                |  | None          |      |           |  |       |     |       |  |         |      |  |  |   |     |  |  |  
|                              
|                              
|                              
|                              
|Standby Letters of Credit      |  | None          |      |           |  |       |     |       |  |         |      |  |  |   |     |  |  |  
|                              
|                              
|                              
|                              
|Standby Repurchase Obligations |  | None          |      |           |  |       |     |       |  |         |      |  |  |   |     |  |  |  
|                              
|                              
|                              
|                              
|Other Commercial Commitments   |  |               | 40.4 |           |  |       | 3.8 |       |  |         | 27.4 |  |  |   | 9.2 |  |  |   |     | 
|                              
|                              
|                              
|                              
|Total Commercial Commitments   |  | $             | 70.3 |           |  | $     | 4.7 |       |  | $       | 41.2 |  |  | $ | 9.4 |  |  | $ | 15.0 | 

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries

Consolidated Statements of Cash Flows

Cash provided by (used in) operating activities was $125.2 million and $(184.9)
million in the six months ended June 30, 2002 and 2001, respectively. Cash paid
for interest exclusive of amounts capitalized in the six months ended June 30,
2002 and 2001 was $275.1 million and $428.3 million, respectively. In addition,
the change in cash used in operating activities is also due to changes in
working capital as a result of the timing of receipts and disbursements.

Purchases of fixed assets were $465.5 million in 2002 and $1,056.4 million in
2001 as a result of the continuing fixed asset purchases and construction. The
Company expects to further reduce purchases of fixed assets in 2002 in an
effort to conserve cash.

Proceeds from borrowings, net of financing costs, of $536.1 million in 2002
includes $445.2 million borrowed under the NTLCL working capital
facility, net of costs of $9.4 million and
$110.3 million borrowed under the Cablecom Revolving facility,
net of costs of $10.0 million.

Results of Operations

We provide a broad range of communication services, including: (i) consumer
telecommunications and television, (ii) business telecommunications and (iii)
broadcast transmission and other related services. Our consumer
telecommunications and television services include broadband services to
consumer markets comprising residential telephone, analog and digital cable
television, narrowband and broadband Internet access, and interactive services.
Business telecommunications consist of broadband services to business markets,
comprising business telecommunications, national and international carrier
telecommunications, narrowband and broadband Internet services, and managed
network services. Our broadcast transmission and other services include digital
and analog television and radio broadcast transmission services, satellite and
media services for programmers, news agencies, sports broadcasters and
production companies, and tower site rental and associated services to a
variety of carriers operating wireless networks.

As expected, our growth in 2002 has been curtailed by funding constraints.
Although our current business plan includes a reduction in the number of new
customers and an increase in revenue from existing customers, our cash
constraints present many challenges to the successful execution of the plan.
We are conserving cash through a reduction in capital expenditures including
expenditures to connect new customers to our network. In order to maintain
revenues and cash from operations while reducing the number of new customers,
we must reduce and limit customer churn. We intend to continue to improve our
customer service and increase our service offering to customers in an effort to
curtail and reduce churn. We are in the process of integrating our various
billing systems and customer databases in an effort to improve one of the main
tools we use to provide customer service. This effort is beginning to achieve
results as the first franchise area was successfully migrated to the new
billing platform in June 2002. We expect to substantially complete the project
by the second quarter of 2003. The total project cost is estimated to be
approximately £45.0 million, of which we have incurred approximately £5.0
million through June 30, 2002.

Our plan to reduce churn and to increase ARPU includes an increase in broadband
services to our existing customers. We believe that our triple play offering
of telephony, broadband access to the Internet and digital television will
continue to prove attractive to our existing customer base, which will result
in higher ARPU as revenues per existing customer increase. We may also benefit
from the financial difficulties exhibited by some of the newer companies that
compete with us through churn of their customers. However, there is still
significant competition in our markets, through digital satellite and digital
terrestrial television and through alternative Internet access media, such as
DSL offered by BT. If we are unable to charge the prices for these services in
the future that we anticipate in our business plan in response to competition
or if our competition is able to attract our customers, our results of
operations will be adversely affected.

Media speculation regarding our financial condition and potential outcomes of
the recapitalization process could have an adverse effect on parts of our
business. Similarly, negative press about the financial condition of
alternative telecom carriers in general may effect our reputation. One of the
key strategies in our business plan is to increase our penetration of higher
value small to medium size enterprises (or SMEs) and provide increased retail
services of

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries

bundled voice, data and Internet services for SMEs. However, due to the
negative publicity surrounding our financial condition and the effect of that
publicity on our brand name, we have found it difficult to convince SMEs to
become our customers. We believe our recapitalization process and the general
climate for alternative telecom carriers effected our revenues in the first
quarter of 2002 as prospective customers began deferring orders beginning in
the fourth quarter of 2001. Even if we successfully complete the
recapitalization process, there is no assurance that the negative publicity
will not adversely impact our results of operations or have a long-term
negative effect on our brand.

In addition, this uncertainty may adversely affect our relationships with
suppliers. If suppliers become increasingly concerned about our financial
condition, they may demand faster payments or not extend normal trade credit,
both of which could further adversely affect our cash conservation measures and
our results of operations. However, this did not have any significant effect
on our results of operations or cash flows in the first half of 2002.

There can be no assurance that we will successfully complete the proposed
recapitalization plan in a timely manner in order to sustain our operations.

On April 2, 2002, we announced the completion of the sale of our Australian
broadcast business. NTL Australia is accounted for as a discontinued
operation, and accordingly, NTL Australia is excluded from the results of
continuing operations for the three and six months ended June 30, 2002 and
2001.

Three Months Ended June 30, 2002 and 2001

Consolidated revenues increased by 3.6% to $915.4 million in three months ended
June 30, 2002, as compared to $883.4 million in the three months ended June 30,
2001. Revenue growth was achieved by improving our product offers, increasing
our broadband and digital TV customer base, raising prices and by serving new
customers and signing new contracts in our Broadcast and Business telecoms
divisions. Revenue growth in the Business telecoms division was also the result
of the acquisition of Viatel UK in the third quarter of 2001.

In the three months ended June 30, 2002 and 2001, the United Kingdom accounted
for 86.1% and 87.2%, respectively, Switzerland accounted for 11.5%
and 10.9%, respectively, and other geographic regions accounted for
2.4% and 1.9%, respectively of total consolidated revenues.

In the three months ended June 30, 2002 and 2001, consumer telecommunications
and television revenues were 68.2% and 70.0%, respectively, business
telecommunications revenues were 23.4% and 22.3%, respectively and
broadcast transmission and other revenues were 8.4% and 7.7%,
respectively of total consolidated revenues.

Consumer telecommunications and television revenues increased to $624.3 million
from $618.4 million primarily as a result of changes in foreign currency
exchange rates. These revenues in UK pounds decreased to £427.0 million from
£435.8 million. The decrease in revenues was primarily due to the sale of part
of our indirect access telephony business in October 2001 that accounted for
£13.8 million of consolidated revenues in the three months ended June 30, 2001.
Consumer telecommunications and television revenues have also been affected by
a reduction in the customer base due to disconnects, lower telephony usage and
fewer premium package television customers. This decrease was partially offset
by price increases and upselling new services to customers.

Business telecommunications revenues increased to $214.6 million from $196.6
million. The acquisition of the assets and contracts of Viatel UK in the third
quarter of 2001 accounted for $32.1 million of the revenue in the three months
ended June 30, 2002. The reduction in revenue after excluding the Viatel
revenue primarily results from a lack of major installations and orders and a
decline in carrier revenues.

Broadcast transmission and other revenues increased to $76.5 million from $68.4
million. The increase reflects increases in the number of broadcast television
and FM radio customers and accounts, which exceeded price cap reductions in our
regulated services, and increases in satellite and media services used by
broadcast and media customers. We expect growth in broadcast services to be
driven primarily by contracts related to the increased demand for tower
infrastructure by wireless services operators expanding and upgrading their
networks for wireless broadband, the digitalization of analog television and
radio signals and the further development of programming for

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the European markets requiring satellite and terrestrial distribution services.

Operating expenses (including network expenses) decreased to $410.5 million
from $432.7 million primarily as a result of decreases in telephony
interconnection and television programming costs. The acquisition of the
assets and contracts of Viatel UK in the third quarter of 2001 accounted for
$29.2 million of the operating expenses in the three months ended June 30,
2002. Operating expenses as a percentage of revenues decreased to 44.8% in 2002
from 49.0% in 2001.

Selling, general and administrative expenses decreased to $250.6 million from
$291.0 million, which reflects various cost savings efforts including
restructurings announced in the fourth quarter of 2001. Selling, general and
administrative expenses in the three months ended June 30, 2002 include a
non-cash reserve of $19.6 million for certain assets of Premium TV
Limited (our television programming subsidiary) that reduced their carrying
value to $3.2 million. Selling, general and administrative expenses as a
percentage of revenues decreased to 27.4% (and to 25.2% excluding the
reserve) in 2002 from 32.9% in 2001.

Other charges of $16.7 million in the three months ended June 30, 2002 include
asset impairment charges of $12.9 million, restructuring charges of $2.1
million and costs incurred for information technology integration and for
business rationalization consulting of $1.7 million. Other charges of $17.9
million in the three months ended June 30, 2001 were for information technology
integration and for business rationalization consulting incurred by NTL UK.
Asset impairment charges of $12.9 million in 2002 are non-cash charges to
write-down certain long-lived assets to their estimated fair values based on
our assessment that their carrying value was not recoverable. This charge
includes fixed assets of $1.0 million and other assets of $11.9 million, all of
which relates to our consumer segment. Restructuring charges of $2.1 million in
2002 include severance and related expenses of $1.0 million and costs of $1.1
million to shutdown a non-critical operation in the UK. The information
technology integration and business rationalization consulting costs of $1.7
million were incurred by Cablecom in 2002.

Corporate expenses decreased to $6.1 million from $10.1 million due to a
decrease in legal, accounting, other professional and employee related costs.
In addition, corporate expenses in the three months ended June 30, 2001
included a write-down of certain investments of $1.7 million.

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Depreciation expense increased to $385.4 million from $359.2 million primarily
due to an increase in depreciation of telecommunications and cable television
equipment.

Amortization expense decreased to $34.4 million from $442.0 million due to the
adoption of SFAS No. 142 on January 1, 2002 which ended the amortization of
goodwill and other indefinite lived intangible assets. Amortization expense in
the three months ended June 30, 2001, after deducting the amortization of
goodwill and other indefinite lived intangible assets of $406.1 million,
would have been $35.9 million.

Interest income and other, net increased to $12.5 million from $3.9 million
primarily as a result of an increase in cash available for investment.

Interest expense decreased to $268.3 million from $329.5 million as a result of
our application of AICPA Statement of Position 90-7, Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code (SOP 90-7). Pursuant to
SOP 90-7, interest expense is included in the results of operations only to the
extent that it will be paid during the proceeding or that it is probable that
it will be an allowed priority, secured or unsecured claim. In accordance with
the proposed recapitalization plan, we do not plan to make future interest
payments on our outstanding publicly traded notes, except notes issued by NTL
Triangle (a non-debtor) and, upon emergence from the Chapter 11 proceedings,
Diamond Holdings Limited. Our contractual interest for the three months ended
June 30, 2002 was $399.8 million. The increase in contractual interest
expense in 2002 as compared to 2001 is primarily due to additional borrowings
under credit facilities subsequent to June 30, 2001 and the issuance of
additional notes in May and June 2001. Interest of $59.7 million and $243.7
million was paid in cash in the three months ended June 30, 2002 and 2001,
respectively.

Share of losses from equity investments decreased to $21.7 million from $52.0
million primarily due to a reduction in the net loss of B2 (due to an
adjustment to our estimate of B2s loss in the three months ended June 30,
2001).

Foreign currency transaction (losses) gains were losses of $59.7 million in the
three months ended June 30, 2002 and gains of $22.6 million in the three months
ended June 30, 2001. The change is primarily due to the effect of changes in
exchange rates. We and certain of our subsidiaries have cash, cash equivalents
and debt denominated in non-U.S. dollar currencies that are affected by changes
in exchange rates. In addition, certain of our foreign subsidiaries whose
functional currency is not the U.S. dollar have cash, cash equivalents and debt
denominated in U.S. dollars which are affected by changes in exchange rates.

Recapitalization items, net was $32.9 million in the three months ended June
30, 2002 including $10.0 million for employee retention related to
substantially all of our UK employees and $24.0 million for financial advisor,
legal, accounting and consulting costs. These costs are net of $1.1 million of
interest earned on accumulated cash since the Chapter 11 filing on May 8, 2002.
NTL expects to incur approximately $50.0 million in additional recapitalization
costs until the process is completed.

Gain on sale of NTL Australia of $8.4 million, net of income tax expense of
$4.5 million, is the result of the April 2, 2002 sale of our Australian
broadcast business to Macquarie Communications Infrastructure Holding Pty
Limited for A$850.0 million (US$451.3 million). The net proceeds from the sale
after the repayment of the outstanding bank credit facility and transaction
related costs were A$575.3 million (US$304.5 million).

Net loss was $524.5 million and $1,014.0 million in the three months ended June
30, 2002 and 2001, respectively. This change was the result of the factors
discussed above, particularly the $407.6 million reduction in amortization
expense.

Six Months Ended June 30, 2002 and 2001

Consolidated revenues increased by 2.6% to $1,808.5 million in six months ended
June 30, 2002, as compared to $1,762.6 million in the six months ended June 30,
2001. Revenue growth was achieved by improving our product offers, increasing
our broadband and digital TV customer base, raising prices and by serving new
customers and signing new contracts in our Broadcast and Business telecoms
divisions. Revenue growth in the Business telecoms division was also the result
of the acquisition of Viatel UK in the third quarter of 2001.

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In the six months ended June 30, 2002 and 2001, the United Kingdom accounted
for 86.7% and 86.9%, respectively, Switzerland accounted for 11.0% and
11.1%, respectively, and other geographic regions accounted for 2.3% and
2.0%, respectively of total consolidated revenues.

In the six months ended June 30, 2002 and 2001, consumer telecommunications and
television revenues were 68.2% and 69.7%, respectively, business
telecommunications revenues were 23.7% and 22.5%, respectively and
broadcast transmission and other revenues were 8.1% and 7.8%,
respectively of total consolidated revenues.

Consumer telecommunications and television revenues increased to $1,232.7
million from $1,229.3 million. These revenues in UK pounds decreased to £853.6
million from £854.7 million. The revenue in the six months ended June 30, 2001
includes $44.5 million (£30.8 million) from a part of our indirect access
telephony business that was sold in October 2001. Consumer telecommunications
and television revenues have also been affected by a reduction in the customer
base due to disconnects, lower telephony usage and fewer premium package
television customers. This decrease was partially offset by price increases and
upselling new services to customers.

Business telecommunications revenues increased to $429.3 million from $396.8
million. The acquisition of the assets and contracts of Viatel UK in the third
quarter of 2001 accounted for $63.2 million of the revenue in the six
months ended June 30, 2002. The reduction in revenue after excluding the Viatel
revenue primarily results from a lack of major installations and orders and a
decline in carrier revenues.

Broadcast transmission and other revenues increased to $146.5 million from
$136.5 million. The increase reflects increases in the number of broadcast
television and FM radio customers and accounts, which exceeded price cap
reductions in our regulated services, and increases in satellite and media
services used by broadcast and media customers. We expect growth in broadcast
services to be driven primarily by contracts related to the increased demand
for tower infrastructure by wireless services operators expanding and upgrading
their networks for wireless broadband, the digitalization of analog television
and radio signals and the further development of programming for the European
markets requiring satellite and terrestrial distribution services.

Operating expenses (including network expenses) decreased to $843.4 million
from $870.7 million primarily as a result of decreases in telephony
interconnection and television programming costs. The acquisition of the assets
and contracts of Viatel UK in the third quarter of 2001 accounted for $54.7
million of the operating expenses in the three months ended June 30, 2002.
Operating expenses as a percentage of revenues declined to 46.6% in 2002 from
49.4% in 2001.

Selling, general and administrative expenses decreased to $465.5 million from
$612.2 million, which reflects various cost savings efforts including
restructurings announced in the fourth quarter of 2001. Selling, general and
administrative expenses in the three months ended June 30, 2002 include a
non-cash reserve of $19.6 million for certain assets of Premium TV Limited (our
television programming subsidiary) that reduced their carrying value to $3.2
million. Selling, general and administrative expenses as a percentage of
revenues decreased to 25.7% (and 24.7%, excluding the reserve) in 2002 from
34.7% in 2001.

Other charges of $19.3 million in the six months ended June 30, 2002 include
asset impairment charges of $12.9 million, restructuring charges of $3.7
million and costs incurred for information technology integration and for
business rationalization consulting of $2.7 million. Other charges of $25.3
million in the six months ended June 30, 2001 were for information technology
integration and for business rationalization consulting incurred by NTL UK.
Asset impairment charges of $12.9 million in 2002 are non-cash charges to
write-down certain long-lived assets to their estimated fair values based on
our assessment that their carrying value was not recoverable. This charge
includes fixed assets of $1.0 million and other assets of $11.9 million, all of
which relates to our consumer segment. Restructuring charges of $3.7 million in
2002 include severance and related expenses of $2.6 million incurred by NTL
Ireland and NTL UK and costs of $1.1 million to shutdown a non-critical
operation in the UK. The information technology integration and business
rationalization consulting costs of $2.7 million were incurred by Cablecom in
2002.

Corporate expenses decreased to $15.6 million from $17.1 million due to a
decrease in legal, accounting, other professional and other costs.

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Depreciation expense increased to $748.3 million from $690.5 million primarily
due to an increase in depreciation of telecommunications and cable television
equipment.

Amortization expense decreased to $66.9 million from $865.9 million due to the
adoption of SFAS No. 142 on January 1, 2002 which ended the amortization of
goodwill and other indefinite lived intangible assets. Amortization expense in
the six months ended June 30, 2001, after deducting the amortization of
goodwill and other indefinite lived intangible assets of $794.0 million, would
have been $71.9 million.

Interest income and other, net increased to $32.2 million from $12.9 million
primarily as a result of an increase in cash available for investment.

Interest expense decreased to $637.7 million from $684.6 million as a result of
our application of AICPA Statement of Position 90-7, Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code (SOP 90-7). Pursuant to
SOP 90-7, interest expense is included in the results of operations only to the
extent that it will be paid during the proceeding or that it is probable that
it will be an allowed priority, secured or unsecured claim. In accordance with
the proposed recapitalization plan, we do not plan to make future interest
payments on our outstanding publicly traded notes, except notes issued by NTL
Triangle (a non-debtor) and, upon emergence from the Chapter 11 proceedings,
Diamond Holdings Limited. Our contractual interest for the six months ended
June 30, 2002 was $769.2 million. The increase in contractual interest expense
in 2002 as compared to 2001 is primarily due to additional borrowings under
credit facilities subsequent to June 30, 2001 and the issuance of additional
notes in May and June 2001. Interest of $301.5 million and $468.9 million was
paid in cash in the six months ended June 30, 2002 and 2001, respectively.

Share of losses from equity investments decreased to $55.0 million from $94.9
million primarily due to a reduction in the net losses of various investees
(including our estimates of their net losses, where applicable).

Foreign currency transaction (losses) gains were losses of $64.6 million in the
six months ended June 30, 2002 and gains of $9.4 million in the six months
ended June 30, 2001. The change is primarily due to the effect of changes in
exchange rates. We and certain of our subsidiaries have cash, cash equivalents
and debt denominated in non-U.S. dollar currencies that are affected by changes
in exchange rates. In addition, certain of our foreign subsidiaries whose
functional currency is not the U.S. dollar have cash, cash equivalents and debt
denominated in U.S. dollars which are affected by changes in exchange rates.

Recapitalization items, net was $68.7 million in the six months ended June 30,
2002 including $18.8 million for employee retention related to substantially
all of our UK employees and $51.0 million for financial advisor, legal,
accounting and consulting costs. These costs are net of $1.1 million of
interest earned on accumulated cash since the Chapter 11 filing on May 8, 2002.
NTL expects to incur approximately $50.0 million in additional
recapitalization costs until the process is completed.

Gain on sale of NTL Australia of $8.4 million, net of income tax expense of
$4.5 million, is the result of the April 2, 2002 sale of our Australian
broadcast business to Macquarie Communications Infrastructure Holding Pty
Limited for A$850.0 million (US$451.3 million). The net proceeds from the sale
after the repayment of the outstanding bank credit facility and transaction
related costs were A$575.3 million (US$304.5 million).

Net loss was $1,088.2 million and $2,050.2 million in the six months ended June
30, 2002 and 2001, respectively. This change was the result of the factors
discussed above, particularly the $799.0 million reduction in amortization
expense.

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Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995

Certain statements contained herein constitute forward-looking statements as
that term is defined under the Private Securities Litigation Reform Act of
1995. When used herein, the words, believe, anticipate, should,
intend, plan, will, expects, estimates, projects, positioned,
strategy, and similar expressions identify such forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and the factors that may cause the actual results, performance or achievements
of the Company, or industry results, to be
materially different from those contemplated, projected, forecasted, estimated
or budgeted, whether expressed or implied, by such forward-looking statements.
Such factors include, among others, those set forth under the caption Risk
Factors in this Form 10-Q as well as: the ability of the Company to continue
as a going concern, the ability of the Company to obtain trade credit and
shipments and terms with vendors and service providers for current orders; the
Companys ability to maintain contracts that are critical to its operations;
potential adverse developments with respect to the Companys liquidity or
results of operations; the ability to fund and execute its business plan; the
ability to attract, retain and compensate key executives and associates; the
ability of the Company to attract and retain customers; general economic and
business conditions, technological developments, the Companys ability to
continue to design networks, install facilities, obtain and maintain any
required governmental licenses or approvals and finance construction and
development, all in a timely manner at reasonable costs and on satisfactory
terms and conditions, as well as assumptions about customer acceptance, churn
rates, overall market penetration and competition from providers of alternative
services, the impact of restructuring and integration actions, the impact of
new business opportunities requiring significant up-front investment and
interest rate and currency exchange rate fluctuations. We assume no obligation
to update the forward-looking statements contained herein to reflect actual
results, changes in assumptions or changes in factors affecting such
statements.

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Recent Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board (referred to as the
FASB) issued Statement of Financial Accounting Standards (referred to as SFAS)
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
effective for the Company on January 1, 2002. This Statement superceded SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of and other related accounting guidance. The adoption
of this new standard had no effect on the results of operations,
financial condition or cash flows of the Company, except that it required the
Company to treat NTL Australia as a discontinued operation beginning in the
first quarter of 2002.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, effective for the Company on January 1, 2003. This Statement
addresses financial accounting and reporting for obligations associated with
the retirement of tangible fixed assets and the associated asset retirement
costs. The Company is in the process of evaluating the financial statement
impact of the adoption of SFAS No. 143.

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also includes guidance on the initial recognition and
measurement of goodwill and other intangible assets acquired in a business
combination that is completed after June 30, 2001. SFAS No. 142 ends the
amortization of goodwill and indefinite-lived intangible assets. Instead, these
assets must be reviewed annually (or more frequently under certain conditions)
for impairment in accordance with this statement. This impairment test uses a
fair value approach rather than the undiscounted cash flow approach previously
required by SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of. The Company adopted SFAS No. 142
on January 1, 2002. Primarily due to the significant impairment charge that the
Company recorded in 2001, the adoption of this new standard did not have a
significant effect on the results of operations, financial condition or cash
flows of the Company.

Upon the adoption of SFAS No. 142, the Company performed an analysis of its
intangible assets acquired before July 1, 2001 to determine whether they should
be classified and accounted for as part of or separate from goodwill. The
Company reclassified the carrying value of workforce in place included in other
intangibles to goodwill. The Company determined that license acquisition costs
and customer lists should continue to be classified separate from goodwill. The
Company determined that license acquisition costs would no longer be subject to
amortization since they are deemed to have an indefinite useful life. The
Company also determined that no changes in the remaining useful lives of the
customer lists were required.

The Company also performed an evaluation for impairment of its goodwill and
license acquisition costs as of January 1, 2002 and determined that no
impairment charge was required. The Companys next evaluation of impairment
will be the annual test as of October 1, 2002, unless there are new indicators
of impairment.

Estimated aggregate amortization expense for each of the five succeeding fiscal
years from December 31, 2001 is as follows: $128.4 million
in 2002, $127.2
million in 2003, $79.3 million in 2004, $41.9 million in 2005 and $34.1 million
in 2006.

The following table shows the Companys loss from continuing operations as
adjusted for the adoption of SFAS No. 142, had SFAS No. 142 been in effect on
January 1, 2001 (unaudited) (in millions).

|                                                |                           |   |                           |   |      |   |          |       | 
|----------------------------------------------- | ------------------------- | - | ------------------------- | - | ---- | - | -------- | ----- | 
|                                                |                           |   | Six Months Ended June 30,
|                                                |                           |   |                          
|                                                |                           |   | 2002                      |   | 2001
|                                                |                           |   |                           |   |     
|(Loss) from continuing operations  as reported |                           | $ | (1,096.3                  | ) |      | $ | (2,047.9 | )    
|                                               
|                                               
|                                               
|                                               
|Amortization of:                                |                           |   |                           |   |      |   |          |      
|                                               
|                                               
|                                               
|                                               
|                                                | Goodwill                  |   |                           |  |      |   |          | 757.7 | 
|                                               
|                                               
|                                               
|                                               
|                                                | License acquisition costs |   |                           |  |      |   |          | 35.3  | 
|                                               
|                                               
|                                               
|                                               
|                                                | Other                     |   |                           |  |      |   |          | 1.0   | 
|                                                |                           |   |                           |   |      |   |          |      
|                                               
|                                               
|                                               
|                                               
|                                                |                           |   |                          |   |      |   | 794.0    |      
|                                                |                           |   |                           |   |      |   |          |      
|(Loss) from continuing operations  as adjusted |                           | $ | (1,096.3                  | ) |      | $ | (1,253.9 | )    
|                                                |                           |   |                           |   |      |   |          |      

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

The Company is exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange and interest rates. The Company does not enter into
derivative financial instruments for trading or speculative purposes. The
Company has entered into derivative financial instruments to hedge exposure to
movements in the British pound/U.S. dollar exchange rate and the Euro to
British pound exchange rate, and interest rates related to certain of its
floating interest rate debt. The counterparties are major financial
institutions.

Foreign Exchange Contracts

To the extent the Company obtains financing in U.S. dollars and incurs
construction and operating costs in various other currencies, the Company will
encounter currency exchange rate risks. Furthermore, the Companys revenues are
generated in foreign currencies while its interest and principal obligations
with respect to most of its existing indebtedness are payable in U.S. dollars.

In 2001, the Company entered into a British pound forward exchange agreement
consisting of twenty-six accumulating forward contracts to reduce its exposure
to movement in the British pound/U.S. dollar exchange rate in accordance with
its market risk strategies. In March 2002, this agreement was closed out, and
the Company received cash of £0.5 million.

The Company had cross currency swaps to hedge exposure to movements in the Euro
to British pound exchange rate. In May 2002, the Company closed out its cross
currency swaps for a cash payment of $2.0 million, and recognized a loss of
$2.0 million.

Interest Rates

The fair market value of long-term fixed interest rate debt and the amount of
future interest payments on floating interest rate debt are subject to interest
rate risk. Generally, the fair market value of fixed interest rate debt will
increase as interest rates fall and decrease as interest rates rise.

In 2001, the Company entered into interest rate swaps, with a notional amount
of £100.0 million, to hedge exposure to the floating rate indebtedness incurred
under the NTLCL £200.0 Term Facility. In March 2002, these swaps were sold,
and the Company received cash of £0.2 million.

At June 30, 2002, the Company had zero cost collars, with a notional amount of
CHF 1,200.0 million, to hedge exposure to the floating interest rate
indebtedness incurred under the Cablecom term loan facility and revolving loan
facility.

The following table provides information about the Companys long-term fixed
and floating interest rate debt and derivative financial instruments that are
sensitive to changes in interest rates and foreign currency exchange rates.

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|                                         |                               |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |        |  
|---------------------------------------- | ----------------------------- |  | -------- | - | -------- | ----------- | ---------- | ----- | -------- | --------- | -------- | ------ | --------- |  | - | --------- | - | --------- | - | ------- | --------- |  | - | ------ | -
|                                         |                               |  | Six      |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |  
|                                         |                               |  | Months   |   | Year     |             | Year       |       | Year     |           | Year     |        | Year     
|                                         |                               |  | Ending   |   | Ending   |             | Ending     |       | Ending   |           | Ending   |        | Ending   
|                                         |                               |  | 12/31/02 |   | 12/31/03 |             | 12/31/04   |       | 12/31/05 |           | 12/31/06 |        | 12/31/07 
|                                         |                               | 
|Long-Term Debt Including Current Portion |                               |  |          |   |          |             |            |       |          |           |          |        |           |  |   |          
|                                        
|                                        
|                                        
|                                        
|U.S. Dollars                             |                               |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |  |          |  |          |             |            |      |          |           | $        | 285.1  |           |  | $ | 808.8     |   |           | $ | 1,050.0 |           |  | $ | 820.5  |  
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |  |          |   |          |             |            |       |          |           |          | 13.25  | %         |  |   | 12.09     | % |           |   | 11.50   | %         |  |   | 10.38  | %
|                                        
|                                        
|                                        
|                                        
|U.K. Pound                               |                               |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |  |          |  |          |             |            |      |          |           |          |       |           |  |   |          |   |           |   |        |           |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |        |  
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |        |  
|                                        
|                                        
|                                        
|                                        
|Euro                                     |                               |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |  |          |  |          |             |            |      |          |           |          |       |           |  |   |          |   |           |   | 250.0  |           |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   | 9.25    | %         |  |   |        |  
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   | .9085   |           |  |   |        |  
|                                        
|                                        
|                                        
|                                        
|U.K. Pound                               |                               |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Variable Rate                 |  |          |  |          |             |            |      |          |           |          | £90.0  |           |  |   | £2,494.8  |   |           |   | £408.3  |           |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|                                         |                               |  |          |   |          |             |            |       |          | LIBOR     |          |        | LIBOR     |  |   | LIBOR     |   |           |   |         |          
|                                        
|                                        
|                                        
|                                        
|Average Interest Rate                    |                               |  |          |   |          |             |            |       |          | plus 2.0% |          |        | plus 2.0% |  |   | plus 6.0% |   |           |   |         |          
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |  |          |   |          |             |            |       |          |           |          | 1.4294 |           |  |   | 1.4269    |   |           |   | 1.4282  |           |  |   |        |  
|                                        
|                                        
|                                        
|                                        
|U.K. Pound                               |                               |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Variable Rate                 |  |          |  |          |             |            |      |          |           |          |       |           |  |   |          |   |           |   | £20.0   |           |  |   | £40.0  |  
|                                        
|                                        
|                                        
|                                        
|                                         |                               |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   | LIBOR     |   |         | LIBOR     | 
|                                        
|                                        
|                                        
|                                        
|Average Interest Rate                    |                               |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   | plus 3.5% |   |         | plus 3.5% | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   | 1.4282  |           |  |   | 1.4320 |  
|                                        
|                                        
|                                        
|                                        
|CHF                                      |                               |  |          |   |          |             |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Variable Rate                 |  |          |  |          |             | CHF3,755.0 |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |       
|                                        
|                                        
|                                        
|                                        
|Average Interest Rate                    |                               |  |          |   |          | Swiss LIBOR |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |  
|                                        
|                                        
|                                        
|                                        
|                                         |                               |  |          |   |          | plus 2.5%   |            |       |          |           |          |        |           |  |   |           |   |           |   |         |           |  |  
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |  |          |   |          |             |            | .6305 |          |           |          |        |           |  |   |           |   |           |   |         |           |  |   |        |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                         |                               |           |            |         |       |  |            |          |  |            |       |          | 
|---------------------------------------- | ----------------------------- | --------- | ---------- | ------- | ----- |  | ---------- | -------- |  | ---------- | ----- | -------- | 
|                                         |                               |           |            |         |       |  |            |          |  |            | Fair 
|                                         |                               |           |            |         |       |  |            |          |  |            | Value
|                                         |                               |           | Thereafter |         | Total |  | 06/30/02  
|                                         |                               |           |           
|Long-Term Debt Including Current Portion |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|U.S. Dollars                             |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |           | $          | 6,342.1 |       |  | $          | 9,306.5  |  |            | $     | 3,100.4  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |           |            | 8.87    | %     |  |            |          |  |            |       |          | 
|                                        
|                                        
|                                        
|                                        
|U.K. Pound                               |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |           |            | £890.0  |       |  |            | £890.0   |  |            |       | £329.7   | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |           |            | 10.09   | %     |  |            |          |  |            |       |          | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |           |            | 1.4376  |       |  |            |          |  |            |       |          | 
|                                        
|                                        
|                                        
|                                        
|Euro                                     |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |           |            | 860.0  |       |  |            | 1,110.0 |  |            |       | 345.3   | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |           |            | 11.14   | %     |  |            |          |  |            |       |          | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |           |            | .9181   |       |  |            |          |  |            |       |          | 
|                                        
|                                        
|                                        
|                                        
|U.K. Pound                               |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|                                         | Variable Rate                 |           |            |        |       |  |            | £2,993.1 |  |            |       | £2,993.1 | 
|                                        
|                                        
|                                        
|                                        
|                                         |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|Average Interest Rate                    |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |           |            |         |       |  |            |          |  |            |       |          | 
|                                        
|                                        
|                                        
|                                        
|U.K. Pound                               |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|                                         | Variable Rate                 |           |            | £140.0  |       |  |            | £200.0   |  |            |       | £200.0   | 
|                                        
|                                        
|                                        
|                                        
|                                         |                               | LIBOR     |            |         |       |  |            |          |  |            |      
|                                        
|                                        
|                                        
|                                        
|Average Interest Rate                    |                               | plus 3.5% |            |         |       |  |            |          |  |            |      
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |           |            | 1.4376  |       |  |            |          |  |            |       |          | 
|                                        
|                                        
|                                        
|                                        
|CHF                                      |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|                                         | Variable Rate                 |           |            |         |       |  | CHF3,755.0 |          |  | CHF3,755.0 |      
|                                        
|                                        
|                                        
|                                        
|Average Interest Rate                    |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|                                         |                               |           |            |         |       |  |            |          |  |            |       |         
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |           |            |         |       |  |            |          |  |            |       |          | 

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|                                                                         |                           |  |            |      |          |            |          |      |            |  |          |      |          |  |  |  |   |  |  |  |   |  |  |  | 
|------------------------------------------------------------------------ | ------------------------- |  | ---------- | ---- | -------- | ---------- | -------- | ---- | ---------- |  | -------- | ---- | -------- |  |  |  | - |  |  |  | - |  |  |  | 
|                                                                         |                           |  | Six        |      |          |            |          |      |            |  |          |      |          |  |  |  |   |  |  |  |   |  | 
|                                                                         |                           |  | Months     |      | Year     |            | Year     |      | Year       |  | Year     |      | Year    
|                                                                         |                           |  | Ending     |      | Ending   |            | Ending   |      | Ending     |  | Ending   |      | Ending  
|                                                                         |                           |  | 12/31/02   |      | 12/31/03 |            | 12/31/04 |      | 12/31/05   |  | 12/31/06 |      | 12/31/07
|                                                                         |                           |  |           
|Interest Rate Derivative
Financial Instruments Related to Long-Term Debt |                           |  |            |      |          |            |          |      |            |  |          |      |          | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Interest Rate Swaps                                                      |                           |  |            |      |          |            |          |      |            |  |          |      |          |  |  |  |   |  |  |  |   |  |  | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Notional CHF Amount       |  | CHF1,200.0 |      |          | CHF1,200.0 |          |      | CHF1,200.0 |  |          |      |         |  |  |  |  |  |  |  |  | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Floor Strike Rate |  |            | 3.27 | %        |            |          | 3.27 | %          |  |          | 3.27 | %        |  |  |  |   |  |  |  |   |  |  |  | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Cap Strike Rate   |  |            | 5.15 | %        |            |          | 5.15 | %          |  |          | 5.15 | %        |  |  |  |   |  |  |  |   |  |  |  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                         |                           |  |            |   |       |  |            |  |           |  |       |  | 
|------------------------------------------------------------------------ | ------------------------- |  | ---------- | - | ----- |  | ---------- |  | --------- |  | ----- |  | 
|                                                                         |                           |  |            |   |       |  |            |  |           |  | Fair 
|                                                                         |                           |  |            |   |       |  |            |  |           |  | Value
|                                                                         |                           |  | Thereafter |   | Total |  | 06/30/02  
|                                                                         |                           | 
|Interest Rate Derivative
Financial Instruments Related to Long-Term Debt |                           |  |            |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Interest Rate Swaps                                                      |                           |  |            |   |       |  |            |  |           |  |       | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Notional CHF Amount       |  |            |  |       |  | CHF1,200.0 |  | CHF(35.0)
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Floor Strike Rate |  |            |   |       |  |            |  |           |  |       |  | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Cap Strike Rate   |  |            |   |       |  |            |  |           |  |       |  | 

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries




Risk Factors

We currently have limited liquidity. If NTL is unable to successfully implement
a recapitalization, there is substantial doubt about our ability to continue as
a going concern.

We have limited liquidity. NTL does not currently
have access to its historic
sources of liquidity in the capital markets and NTLs credit facilities are
either fully drawn or we are currently unable to access remaining undrawn
amounts. As a consequence, NTL needs to restructure its outstanding debt and/or
raise new funds. On May 8, 2002 NTL Incorporated and five of its subsidiaries
filed a pre-arranged joint reorganization plan under Chapter 11 of the United
States Bankruptcy Code. On May 24, 2002, NTL filed an amended plan, which sets
forth the joint reorganization plan, subject to court approval, to which NTL,
an unofficial committee of its public bondholders and France Telecom, a
significant holder of NTL Incorporateds preferred stock, have agreed in
principle. On July 15, 2002, NTL Incorporated and its debtor subsidiaries filed
an amended disclosure statement and a second amended joint reorganization plan
which has been distributed to stakeholders of the Company. A steering committee
of the lending banks under NTLs credit facilities has given its agreement in
principle (on a non-legally binding basis) to the terms of the proposed plan of
reorganization. However, the proposed plan of reorganization remains subject to
a favorable vote of NTLs impaired creditors and bankruptcy court
approval. NTL
may also face the possibility of insolvency proceedings in the UK or elsewhere.

The successful implementation of the proposed recapitalization plan is not
assured as it will require the support of NTLs creditors and preferred
stockholders as well as other conditions including Court approval.

The completion of the proposed recapitalization contemplated by the agreement
in principle with the unofficial bondholder committee will require support from
NTLs creditors and holders of NTL Incorporateds preferred stock, including
France Telecom. The proposed recapitalization plan will be implemented pursuant
to the Chapter 11 reorganization plan, once confirmed and consummated.
Consummation of the proposed recapitalization plan will require a favorable
vote by impaired classes of creditors, satisfaction of bankruptcy law
requirements and confirmation by the Bankruptcy Court, which, as a court of
equity, may exercise substantial discretion and choose not to confirm the
proposed recapitalization plan. Even if such a plan receives the necessary
support from many classes of NTLs creditors, there can be no assurance that it
will be completed. If a protracted reorganization were to occur, or a
liquidation would be necessary, there is a risk that the value of NTL would be
eroded to the detriment of some or all NTL stakeholders.

NTL is in default under its credit facilities.

Before NTL could commence negotiations with the unofficial committee of its
bondholders NTL needed to obtain waivers from the lenders under our credit
facilities. These lenders granted waivers which, until April 30, 2002 in the
case of the UK credit facilities, or May 14, 2002 in the case of the Cablecom
facility, provided that NTLs commencement of negotiations with bondholders
with a view to rescheduling of its debt would not constitute an event of
default under its credit facilities.

The UK credit facilities waivers terminated on April 29, 2002, as a result of
which, there was an event of default under each of our credit facilities with
respect to the missed interest payments on April 1, 2002. In addition, the
voluntary filings under Chapter 11 of the United States Bankruptcy Code
constituted an event of default under the UK credit facilities and the Cablecom
credit facility. These events of default entitle the lenders under NTLs credit
facilities to accelerate repayment. NTL does not have sufficient cash
resources to repay its outstanding indebtedness if it is declared immediately
due and payable. In addition, the lenders could also seek to take control over
the assets over which they hold security. Although a steering committee of the
lenders has agreed in principle (on a non-legally binding basis) to the
proposed recapitalization, there can be no assurance that they will not take
such actions.

NTL did not pay interest due on some of its outstanding notes and does not plan
to make future interest payments on most of the currently outstanding notes.

NTL Incorporated, NTL (Delaware), Inc. and NTL Communications Corp. did not
make scheduled interest payments and payments of related fees since prior to
April 1, 2002. Upon emerging from Chapter 11 proceedings, NTL intends to make
any required interest payments on the notes of Diamond Holdings. In accordance
with the

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proposed recapitalization plan, NTL does not plan to make future interest
payments on its currently outstanding publicly traded notes except notes issued
by NTL Triangle and, upon emergence from Chapter 11 proceedings, Diamond
Holdings Limited.

As a result of these payment defaults and as a result of NTLs Chapter 11
bankruptcy filings, there is currently an event of default in respect of all of
NTLs publicly traded notes other than the notes issued by NTL Triangle. As a
result of the Chapter 11 filings, this debt is immediately due and payable.

NTL has no current availability to borrow under its existing credit facilities.

NTL has no current ability to borrow under its existing UK credit facilities,
as it has borrowed the full amounts available. With respect to the Cablecom
credit facility, the term tranche is fully drawn and the revolving tranche has
been capped at its utilized amount of CHF 1,055.0 million although the
availability may be increased with the consent of the requisite percentage of
lenders under the facility. If that facility is not refinanced or Cablecom
cannot be sold, the Cablecom credit facility is due to be repaid on April 30,
2003. Without substantial investment from a third party or further borrowing,
Cablecom would be unable to repay the facility which would have a material
adverse effect on its business.

It is likely NTL will lose its net operating loss carryforwards for U.S. income
tax purposes in connection with the proposed recapitalization plan.

A restructuring of NTLs debt can be expected to give to rise to cancellation
of indebtedness (COD), which if it occurs in the course of a proceeding
pursuant to Chapter 11 of the United States Bankruptcy Code, would be
non-taxable. If the COD is non-taxable, NTL will be required to reduce net
operating loss carryforwards and other attributes such as capital loss
carryforwards and tax basis in assets by an amount equal to the non-recognized
COD. As a result, it is likely that as a result of the successful completion of
the proposed plan of recapitalization, NTL will have no U.S. net operating loss
carryforwards.

Uncertainty over NTLs financial condition may harm our business and our brand
name.

Adverse publicity or news coverage regarding NTLs financial condition, the
Chapter 11 bankruptcy filings and potential outcomes of the recapitalization
process could have an adverse effect on parts of NTLs business. Similarly,
negative press about the financial condition of other cable and pay television
operations and alternative telecom carriers in general may effect our
reputation. For example, one of our key strategies is to increase our
penetration of higher value small to medium size enterprises, or SMEs, and
provide increased retail services of bundled voice, data and Internet services
for SMEs. However, due to the negative publicity surrounding our financial
condition and the potential effect of that publicity on our brand name, we may
find it difficult to convince SMEs to take up our services. Even if we
successfully complete the recapitalization process, there is no assurance that
it will not adversely impact our results of operations or have a long-term
effect on our brand.

In addition, this uncertainty may adversely affect relationships with
suppliers. If suppliers become increasingly concerned about NTLs financial
condition they may demand quicker payment terms or not extend normal trade
credit, both of which could further adversely affect our working capital
position. We may not be successful in obtaining alternative suppliers if the
need arises and this would adversely affect our results of operations.

The recapitalization process has required significant time and resources of
NTLs directors and senior managers, which could adversely affect the operation
of the business.

NTLs senior managers and directors have needed to spend significant amounts of
their time dealing with the negotiations with bondholders, bank lenders and
other stakeholders in connection with the recapitalization process and it is
likely that they will continue to devote significant amounts of their time to
this process for the foreseeable future. This has diverted their time and
resources from managing the operations of NTLs business. If our senior
managers and directors continue to spend significant amounts of their time in
connection with the recapitalization process, this may have a negative impact
on our operations.

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We have historically incurred losses and generated negative cash flows and we
cannot assure you that we will be profitable in the future.

Construction and operating expenditures and interest costs have resulted in
negative cash flow. We also expect to incur substantial additional losses. We
cannot be certain that we will achieve or sustain profitability in the future.
Failure to achieve profitability has and could in the future diminish our
ability to sustain our operations, obtain additional required funds and make
required payments on any indebtedness we have incurred or may incur.

Our growth has been curtailed by funding constraints.

NTL has significantly decreased the amount of spending on capital expenditures
due to liquidity constraints. As a result, we will be unable to increase
subscriber numbers in the short term and revenue may be adversely affected. The
decrease in capital expenditure is the result of our need to divert increasing
amounts of our financial resources to service our debt. The decrease in capital
spending is in line with our current strategy of maximizing revenue from our
existing customers rather than increasing our customer base. In NTLs consumer
business in the UK, we expect subscriber numbers to decrease in 2002. The
revenue we expect to result from our capital expenditure is long-term in
nature. The reduction in capital expenditures for connecting new subscribers to
our network will likely lead to a decrease in the rate of revenue growth in the
future. Difficulties in obtaining additional funding will likely hamper our
ability to connect new subscribers to our network and increase our revenue.

One of our key strategies is to reduce customer churn. However there can be no
assurance that we will successfully accomplish this or that our churn rate will
not increase.

We have experienced rapid growth and development in a relatively short period,
either through acquisitions or connecting customers to our network. One of our
biggest challenges as we have grown has been to limit our customer churn and
the successful implementation of our business plan depends upon a reduction in
the percentage of our customers that stop using our services. Factors
contributing to increase of churn during 2001 included the continued
integration of our ConsumerCo acquisition, the existence of multiple billing
systems, the introduction of digital television and our decision to disconnect
some of our poor paying customers.

In order to reduce churn in the future, we aim to improve our customer service.
This improvement will be difficult to obtain without an integrated billing
system and a customer database across our entire network. We do not as yet have
an integrated billing and operational platform.

Our ability to reduce churn could also be adversely affected by the successful
launch of digital terrestrial television by BskyB and the BBC, who have
recently successfully applied for licenses to furnish such a service.

Another part of our strategy to reduce churn is an increased take up of
broadband services by our existing customers. If this increased level of take
up does not materialize we may have difficulties in reducing churn levels,
thereby adversely impacting our results of operations.

Failure to successfully market broadband to our existing consumer client base
will adversely impact our revenue and results of operations.

A significant component of our strategy to increase our average revenue per
unit is to successfully market broadband products to our existing consumer
client base. We believe that our triple play offering of telephony, broadband
access to the Internet and digital television will prove attractive to our
existing customer base and allow us to increase our average revenue per user.
However, we face significant competition in these markets, through digital
satellite and digital terrestrial television and through alternative Internet
access media, such as DSL offered by BT and some of our competitors have
substantially greater financial and technical resources than we do. If we are
unable to charge prices for broadband services that are anticipated in our
business plan in response to competition or if our competition delivers a
better product to our customers, our average revenue per unit and our results
of operations will be adversely affected.

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NTL Incorporated has granted substantial governance and economic rights in
connection with the France Telecom investment and has entered into transactions
with France Telecom that may impact us and a stockholders investment in NTL
Incorporated.

NTL Incorporated has granted rights to France Telecom, including the right to
appoint directors, preemptive rights and the right to veto some significant
corporate transactions. Exercise by France Telecom of some or all of such
rights may impact us, including our ability to effect a consensual
recapitalization, or the value of NTL Incorporateds stock held by persons
other than France Telecom. France Telecom is a holder of NTL Incorporateds
cumulative convertible preferred stock, Series A, which allows the holders
other than commercial banks and their affiliates to exchange such stock for
stock of an entity holding up to 50% of Cablecom. France Telecom has agreed in
principle to the proposed recapitalization.

The companies in which NTL holds minority investments in continental Europe may
require additional financing to complete their network rollouts  their ability
to obtain such financing will depend on their ability to access the capital
markets and the value of our investment could be reduced or diluted.

NTL holds, directly and indirectly, minority investments in broadband cable
operations in Germany, France and Sweden. Each of those companies may require
substantial amounts of additional capital to complete their network rollouts
and upgrades and their ability to obtain that financing will depend, in part,
on their ability to access the capital markets. The ability of those companies
to access the capital markets will be subject not only to the performance of
their business and prospects, but to conditions in the capital markets
generally. If those companies cannot complete their planned expansions and
upgrades for any reason, the value of NTLs investments could be reduced. If
those companies issue equity securities, it is likely that NTL will not be able
to participate which could lead to substantial dilution of the value of these
investments to NTL.

On April 15, 2002, a funding request for $20 million was received by NTL under
the terms of the investment agreement relating to NTLs investment in B2. NTL
has informed B2 and the other principal investors that it is not in a position
to comply with this request at this time. The B2 investment agreement provides
that if NTL fails to provide such funding, it may be sued for non-payment and
arguably could lose certain rights under the B2 shareholders arrangements.
Pursuant to the applicable documents, if this occurs the majority remaining
shareholders may also elect to terminate the shareholder arrangements with
respect to NTL and exercise a contractual right to acquire on a pro rata basis
NTLs interest in B2 at 25% of fair market value. If the remaining shareholders
elected to exercise these rights, NTL could be forced to sell its stake in B2
at a loss. NTL believes, however, that it has certain defenses and protections
of and for NTLs rights under the B2 investment agreement and in respect of its
equity interest in B2 and intends to vigorously enforce such rights and
protections.

Another company in which NTL holds an investment, iesy Holdings GmbH, formerly
known as eKabel Holdings GmbH, the cable network in the Hessen province of
Germany (which includes Frankfurt), has recently retained advisors to assist it
in a restructuring of its outstanding indebtedness. There can be no assurance
that iesy will successfully achieve a restructuring. If a restructuring is not
successfully achieved, it will likely have a negative impact on the value of
NTLs investment in iesy.

We are dependent upon a small number of key personnel.

A small number of key executive officers manage NTLs businesses. The loss of
one or more of these executive officers could have a material adverse effect on
us. We believe that our future success will depend in large part on our
continued ability to attract and retain highly skilled and qualified personnel.
We have not entered into written employment contracts or non-compete agreements
with, nor have we obtained life insurance policies covering many key executive
officers.

Our principal businesses are subject to government regulation, including
pricing regulation, and changes in current regulations may adversely affect us.

NTLs principal business activities in the UK, the Republic of Ireland and
Switzerland and the activities of the companies in which NTL has investments in
Germany, France and Sweden are regulated and supervised by various governmental
bodies. Changes in laws, regulations or governmental policy or the
interpretations of those laws or

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regulations affecting our activities and those of our competitors, such as
licensing requirements, changes in price regulation and deregulation of
interconnection arrangements, could have a material adverse effect on us.

NTL is also subject to regulatory initiatives of the European Commission.
Changes in EU Directives may reduce our range of programming and increase the
costs of purchasing television programming or require us to provide access to
our cable network infrastructure to other service providers, which could have a
material adverse effect on us.

The telecommunications industry is subject to rapid technological changes and
we cannot predict the effect of any changes on our businesses.

The telecommunications industry is subject to rapid and significant changes in
technology and the effect of technological changes on our businesses cannot be
predicted. Our core offerings may become outdated due to technological
breakthroughs rendering our products out of date. In addition, NTLs business
plan contemplates the introduction of services using new technologies. Cablecom
and the operations in which NTL has an interest in France, Germany and Sweden
intend to introduce voice over Internet protocol, or VoIP, voice telephony
services across their networks. Customer demand for this service is uncertain
as customers may not readily switch from their current telephony service,
especially if the quality of the service is not or is perceived not to be
comparable to other telephony services. Similarly, NTLs investments in other
new services such as those related to the 3G mobile network may prove premature
and we may not realize anticipated returns on these new products. The cost of
implementation for emerging and future technologies could be significant, and
NTLs ability to fund such implementation may depend on NTLs ability to obtain
additional financing. We cannot be certain that NTL would be successful in
obtaining any additional financing required.

We do not insure the underground portion of our cable network.

NTL obtains insurance of the type and in the amounts that we believe are
customary for similar companies. Consistent with this practice, NTL does not
insure the underground portion of our cable network. Substantially all of our
cable network is constructed underground. Any catastrophe that affects our
underground cable network could result in substantial uninsured losses.

We are subject to currency risk because we obtain a substantial amount of
financing in U.S. dollars and Euro but generally generate revenues and incur
expenses in other currencies.

NTL encounters currency exchange rate risks because NTL generates revenues and
incur construction and operating expenses in other currencies, primarily in
pounds sterling while NTL pays interest and principal obligations with respect
to most of its existing indebtedness in U.S. dollars and Euro. We cannot assure
you that the hedging transactions NTL has entered into or any other hedging
transactions NTL might enter into will be successful or that shifts in the
currency exchange rates will not have a material adverse effect on us. For
example, to the extent that the pound sterling declines in value against the
U.S. dollar and, to a lesser extent, the Euro, and NTL has not fully hedged
against such declines, the effective cost of servicing NTLs U.S. dollar and
Euro debt will be higher and will incur currency losses.

The Company, NTL Incorporated, NTL Communications Corp., the Diamond companies
and NTL Triangle are holding companies that are dependent upon receipt of
sufficient funds from their subsidiaries or parent companies to meet their
obligations  their ability to access that cash flow may be limited in some
circumstances.

NTL Incorporated, NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications, Diamond Holdings and NTL Triangle are holding companies with no
independent operations or significant assets other than investments in and
advances to their respective subsidiaries and affiliated joint ventures. Each
of these companies depends upon the receipt of sufficient funds from their
subsidiaries or their respective parent companies to meet their respective
obligations. The terms of existing indebtedness of their respective
subsidiaries and the laws of the jurisdictions under which those subsidiaries
are organized generally limit the payment of dividends, loan repayments and
other distributions to them, subject in some cases to exceptions that allow
them to service indebtedness in the absence of specified defaults.

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Defense of putative class action suits filed against NTL Incorporated and
certain of its officers could have a negative impact on NTLs businesses.

The putative class action lawsuits filed against NTL Incorporated and certain
of its officers which were commenced by seven of its purported shareholders, on
behalf of certain purchasers of NTL Incorporateds securities may have a
negative impact on its results of operations and business. Three of these
lawsuits have been voluntarily dismissed with respect to NTL Incorporated
because they were filed subsequent to the commencement of NTLs Chapter 11
cases. The claims arising out of the remaining suits against NTL Incorporated
will be discharged under the Bankruptcy Code if the proposed recapitalization
plan is confirmed by the Bankruptcy Court. The claims arising out of the suits
against the individual officers remain and will not be discharged under the
Bankruptcy Code if the recapitalization plan is confirmed, but may be released
pursuant to the terms of the plan itself. If, for any reason, the claims
against these officers are not released under the plan, defense of such suits
may divert the officers time and resources from managing the operations of
NTLs business. If these officers spend significant amounts of time defending
these lawsuits, there may be a negative impact on results of operations and
business.




PART II. OTHER INFORMATION




ITEM 3. DEFAULTS UPON SENIOR SECURITIES

DEFAULTS UNDER CREDIT AGREEMENTS

Negotiations with Bondholders

Before NTL could commence negotiations with the unofficial committee of its
bondholders, it was necessary to obtain waivers from the lenders under NTLs UK
credit facilities and the Cablecom credit facility. Effective March 8, 2002,
these lenders granted waivers which, until March 29, 2002, provided that the
commencement of negotiations with bondholders with a view to rescheduling its
debt would not constitute an event of default under the credit facilities. But
for the initial waivers, the commencement of negotiations with bondholders
would have been an event of default under the credit facilities. Effective
March 28, 2002, these lenders agreed to amend the initial waivers to extend the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14, 2002 in the case of the Cablecom credit facility.

In connection with the granting of these waivers, NTL agreed to various
affirmative obligations with respect to the lenders under the credit facilities
and significant restrictions on its conduct. The amended waivers prevented NTL
from making an exchange offer with respect to its outstanding notes or from
entering into an agreement with bondholders without the consent of the lenders
under each of the credit facilities. The amended waivers also prohibited NTL
from commencing voluntary dissolution proceedings, including proceedings under
Chapter 11 of the United States Bankruptcy Code, without the consent of these
lenders.

As of the date of this Form 10-Q, there are no current waivers from the lenders
under the credit facilities. As a consequence, the Chapter 11 filings resulted
in events of default under NTLs UK credit facilities and the Cablecom credit
facility.

Other Material Defaults in respect of the Cablecom Credit Facility

During the six months ended June 30, 2002, there were a number of technical
defaults under the Cablecom credit facility. In addition, as of December 31,
2001, Cablecoms and various of its subsidiaries liabilities exceeded their
respective assets. As a consequence, under Swiss law, those entities were
deemed to be overindebted. This also constituted an event of default under
the Cablecom credit facility which entitled the lenders to accelerate
repayment. Under Swiss law, unless the overindebtedness was rectified, those
entities would have been required to commence an insolvency proceeding in
Switzerland.

The problem of overindebtedness was resolved on June 26 and June 27, 2002 in
certain of the overindebted subsidiaries when they were merged into Cablecom
and other members of the Cablecom group. The remaining overindebted
subsidiaries were not merged but the overindebtedness issue was resolved in
those subsidiaries by way

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of subordination agreements which obviated any requirement to institute
insolvency proceedings in respect of these companies.

At the end of April 2002 the defaults subsisting at that time were remedied or
were waived by the restatement of the credit agreement and the grant of a
waiver letter. However, conditions subsequent such as the grant of new security
and the deposit of share certificates relating to minority shareholdings
pledged to the banks were imposed by these documents and other new finance
documents executed pursuant to the restatement.

Since the end of April 2002 the following defaults have occurred under the
Cablecom finance documents: (1) The indentures issued by NTL (Delaware), Inc.
and NTL Incorporated have become payable and have not been paid; (2) NTL
(Delaware), Inc. has commenced negotiations with its creditors with a view to
the general rescheduling of its indebtedness and has commenced proceedings
under Chapter 11 of the United States Bankruptcy Code pursuant to which it
intends to reorganize its debt; (3) NTL (Delaware), Inc. has liabilities which
exceed the value of its assets and is unable to pay its debts as they fall due;
(4) Cablecom was unable to satisfy the conditions to allow it to rollover
revolving advances maturing in early July 2002. The revolving advances remained
unpaid for several days until Cablecom was able to obtain the consent of the
banks to waive the conditions to their rollover; (5) Certain of the conditions
subsequent imposed by the restated credit agreement, the waiver letter and
other finance documents executed pursuant to the restated credit agreement have
yet to be fulfilled.

The outstanding defaults under the Cablecom finance documents entitle the
facility agent to demand repayment of the loan and enforce the security granted
to secure that loan. The facility agent has a discretion to take those steps
and can be compelled to take those steps by a group of banks holding at least
66-2/3% in aggregate of the loan.

Future developments in Cablecoms business, as well as external factors, could
result in a reemergence of the over indebtedness issue under Swiss law.

Missed Interest Payments on NTLs Public Bonds

As a result of the missed interest payments not cured within the 30 day grace
period with respect to certain of NTLs publicly traded bonds (described
below), as of May 1, 2002, there was an event of default under the UK credit
facilities and as of May 16, 2002, there was an event of default under the
Cablecom credit facility.

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Chapter 11 Bankruptcy Filing

On May 8, 2002, NTL Incorporated, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. filed an arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code. NTLs operating
subsidiaries were not included in the Chapter 11 filing. The Chapter 11 filing
constituted an event of default under NTLs UK credit facilities and the
Cablecom credit facility, allowing the lenders thereunder to declare amounts
outstanding to be immediately payable.

DEFAULTS ON HIGH YIELD AND CONVERTIBLE NOTES

Payment Defaults

NTL Incorporated and its subsidiaries did not make interest payment obligations
under their existing indebtedness. NTL Incorporated and its subsidiaries did not
make their scheduled interest payments on the respective due dates as follows:

|                                                    |  |                        |  |              
|--------------------------------------------------- |  | ---------------------- |  | -------------
|April 1, 2002:                                      |  |                        |  |              
|NTL Communications Corp.                            |  | 9-1/2% notes due 2008  |  | $8.6 million 
|NTL Communications Corp.                            |  | 11-1/2% notes due 2008 |  | $35.9 million
|NTL Communications Corp.                            |  | 11-7/8% noted due 2010 |  | $29.7 million
|                                                    |  | Total                  |  | $74.2 million
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|April 15, 2002:                                     |  |                        |  |              
|NTL Communications Corp.                            |  | 12-3/4% notes due 2005 |  | $17.7 million
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011  |  | $2.5 million 
|                                                    |  | Total                  |  | $20.2 million
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|May 15, 2002:                                       |  |                        |  |              
|NTL Communications Corp.                            |  | 9-1/4% notes due 2006  |  | $10.5 million
|NTL Communications Corp.                            |  | 6-3/4% notes due 2008  |  | $38.8 million
|NTL Communications Corp.                            |  | 9-7/8% notes due 2009  |  | $15.7 million
|                                                    |  | Total                  |  | $65.0 million
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|June 15, 2002:                                      |  |                        |  |              
|Diamond Cable                                       |  |                        |  |              
|Communications Limited                              |  | 11-3/4% notes due 2005 |  | $31.2 million
|NTL Communications Corp.                            |  | 7% notes due 2008      |  | $17.1 million
|NTL (Delaware), Inc.                                |  | 5-3/4% notes due 2009  |  | $34.5 million
|                                                    |  | Total                  |  | $82.8 million
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|July 15, 2002:                                      |  |                        |  |              
|NTL Incorporated (NTL (Delaware), Inc., co-obligor  |  | 5-3/4% notes due 2011  |  | $2.5 million 
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|August 1, 2002:                                     |  |                        |  |              
|NTL Communications Corp.                            |  | 11-1/2% notes due 2006 |  | $60.4 million
|NTL Communications Corp.                            |  | 12-3/8% notes due 2008 |  | $18.3 million
|Diamond Holdings Limited                            |  | 10% notes due 2008     |  | $10.5 million
|Diamond Holdings Limited                            |  | 9-1/8% notes due 2008  |  | $5.0 million 
|                                                    |  | Total                  |  | $94.2 million
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|August 15, 2002                                     |  |                        |  |              
|NTL Communications Corp.                            |  | 10% notes due 2007     |  | $20.0 million
|Diamond Cable Communications Limited                |  | 10-3/4% notes due 2007 |  | $22.6 million
|                                                    |  | Total                  |  | $42.6 million

In accordance with the proposed recapitalization plan, NTL does not plan to
make future interest payments on its outstanding publicly traded notes except
notes issued by NTL Triangle and, upon emergence from Chapter 11
proceedings, Diamond Holdings Limited.

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If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. Therefore, there
was an event of default for failure to pay interest on May 1, 2002 under the
indentures relating to the missed interest payments due April 1, 2002 and on
May 16, 2002, under the indentures relating to the missed interest payments due
April 15, 2002. As a result, cross defaults occurred under the NTLs other
indentures at NTL Communications Corp., NTL (Delaware), Inc. NTL Incorporated
and under the NTLs UK credit facilities and the Cablecom credit facility.

Chapter 11 Bankruptcy Filing

The Chapter 11 bankruptcy filing constituted an event at default under the
indentures of each of the entities which made the Chapter 11 filing and amounts
outstanding under these indentures became immediately due and
payable. The automatic stay of Section 362 of the United States Bankruptcy Code prevents
the holders of such debt from seeking to enforce their collection rights under
the indentures, except within the context of the Chapter 11 cases, and even
then only with the prior approval of the Bankruptcy Court.

AGGREGATE AMOUNT OF DEFAULTS

Interest

As a result of the events of default described above, as of May 8, 2002, the
date of the Chapter 11 filings:



| |  |  | NTL Incorporated (and NTL (Delaware), Inc. co-obligor)
are in default in respect of $2.5 million of interest payments in
respect of its 5 3/4% notes due 2011, including interest accrued
on such missed interest payment up to May 8, 2002, and                                                           
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | NTL Communications Corp. is in default in respect of an
aggregate of $92.9 million of interest payments in respect of its
9 1/2% notes due 2008, 11 1/2% notes due 2008, 11 7/8% notes due
2010 and 12 3/4% notes due 2005 , including interest accrued on
such missed interest payments up to May 8, 2002.

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Principal

As a consequence of the Chapter 11 filings on May 8, 2002, all amounts
outstanding under the indentures governing the high yield and convertible debt
of the entities having commenced Chapter 11 cases automatically became
immediately due and payable. However, the automatic stay of Section 362 of the
United States Bankruptcy Code serves to prevent the holders of such debt from
seeking to enforce their collection rights under the indentures, except within
the context of the Chapter 11 cases, and even then only with the prior approval
of the bankruptcy court. As a result of the default and acceleration resulting
from the Chapter 11 filing, as of June 30, 2002:



| |  |  | NTL Incorporated (and NTL (Delaware), Inc. co-obligor)
are in default in respect of an aggregate of $100.0 million in
principal amount of debt;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | NTL (Delaware), Inc. is in default in respect of an
aggregate of $1,200.0 million in principal amount of debt;                                 
|
| |  |  | NTL Communications Corp. is in default in respect of an
aggregate of $8,173.2 million in principal amount of debt; and                         
|
| |  |  | Diamond Cable Communications and Diamond Holdings are
in default in respect of an aggregate of $1,552.4 million in
principal amount of debt.   




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | Exhibits.                                                                                                                                  
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | 99.1 Certification of CEO and CFO pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
| | (b) |  | Reports on Form 8-K.                                                                                                                       
|
| |     |  | During the quarter ended June 30, 2002, the Company filed the
following Current Reports on Form 8-K:                                       



| | (i)  |  | Report dated May 8, 2002,
reporting under Item 3, Bankruptcy or Receivership,
that NTL Incorporated and certain subsidiaries filed a voluntary
petition for its previously announced prearranged joint plan of
reorganization under Chapter 11.
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii) |  | Report dated May 24, 2002 reporting under Item 5,
Other Events, that NTL Incorporated and certain of its
subsidiaries filed a disclosure statement and an amended joint
reorganization plan with the Bankruptcy Court.                         

No financial statements were filed with this report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                      |  |                      |  |                                                                                                  
|--------------------- |  | -------------------- |  | -------------------------------------------------------------------------------------------------
|                      |  | NTL (DELAWARE), INC.
|                     
|                     
|                     
|                     
|                      |  |                      |  |                                                                                                  
|                     
|                     
|                     
|                     
|Date: August 19, 2002 |  | By:                  |  | /s/ Barclay Knapp

Barclay Knapp
President and Chief Executive Officer                           
|                     
|                     
|                     
|                     
|                      |  |                      |  |                                                                                                  
|                     
|                     
|                     
|                     
|Date: August 19, 2002 |  | By:                  |  | /s/ Gregg N. Gorelick

Gregg N. Gorelick
Vice President-Controller
(Principal Accounting Officer)

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