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SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K

|           |  |                                                                                     
|---------- |  | ------------------------------------------------------------------------------------
|(Mark One)
|X          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the fiscal year ended December 31, 2002                                         

or

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

| |  |                                                  
| |  | -------------------------------------------------
| |  | For the transition period from   
             to

Commission file no. 0-22616

NTL Incorporated

(On January 10, 2003, the
name of the registrant was changed from NTL Communications Corp. to
NTL Incorporated.)(Exact name of registrant as specified in its charter)

|                                                                                                                                                      |  |                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------
|Delaware(State or other jurisdiction of
incorporation or organization)110 East 59th Street,
New York, New York(Address of Principal Executive Office) |  | 52-1822078(I.R.S. Employer
Identification No.)10022(Zip Code)

(212) 906-8440(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01 per share
Warrants to purchase shares of Common Stock
Stockholder Rights accompanying each share of Common Stock

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  X  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K.

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

In
reliance on Rule 12b-25 of the Securities Exchange Act of 1934,
as amended, this Annual Report on Form 10-K does not include
(i) the certifications required by section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 13a-14 of the Exchange Act,
or (ii) in Item 15 the financial statements and related
notes and financial statement schedules of NTL Europe, Inc. and NTL
(Delaware), Inc. as of December 31, 2002 and 2001, and for the
three years ended December 31, 2002 required by Rule 3-10
of Regulation S-X.





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Until the consummation of its restructuring on January 10, 2003, the
Registrant was a indirect wholly-owned subsidiary of NTL Incorporated (now NTL
Europe, Inc.) and there was no market for the Companys common stock. Upon
completion of the restructuring, the Registrants common stock and Series A
warrants were listed and currently trade on the Nasdaq National Market under
the symbols NTLI and NTLIW, respectively.

As of March 28, 2003, there were 50,500,969 shares of the Registrants
common stock, par value $0.01 per share, issued and outstanding, excluding
shares of the Registrants common stock issuable upon the exercise of Series A
warrants to purchase 8,750,496 shares of the Registrants common stock and an
aggregate of 83,245 shares of the Registrants common stock issued in escrow to
certain of the Registrants executive officers pursuant to their employment
agreements.

The aggregate market value of the Registrants voting stock held by
non-affiliates as of March 27, 2003, based on the closing price for the Registrants common stock
on the Nasdaq National Market on such date, was approximately $371.8
million.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.   Yes   X   No



---

DOCUMENTS INCORPORATED BY REFERENCE

The definitive proxy statement for the 2003 Annual Meeting of Stockholders
of NTL Incorporated is incorporated by reference into Items 10, 11, 12 and 13
of Part III of this annual report.





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IMPORTANT EXPLANATORY NOTE REGARDING THE OMISSION FROM THIS REPORT PURSUANT TO
RULE 12B-25 OF CERTIFICATIONS AND CERTAIN FINANCIAL STATEMENTS REQUIRED BY RULE 3-10 OF REGULATION S-X

Pursuant to Rule 12b-25 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), we are omitting certain information within the control of
third parties from this Form 10-K for the year ended December 31, 2002 which is
intended to be filed by amendment when such information is available.

During the period ended December 31, 2002, we had outstanding two series of
registered convertible notes, our 7% Convertible Subordinated Notes due 2008
(the 7% Notes) and our 6-3/4% Convertible Senior Notes due 2008 (the 6-3/4%
Notes and, together with the 7% Notes, the Convertible Notes). The
Convertible Notes were cancelled under our joint plan of reorganization (the
Plan), which was consummated on January 10, 2003, and are thus no longer
outstanding. The 7% Notes were co-obligations of NTL Europe, Inc. and NTL
(Delaware), Inc. and the 6-3/4% Notes were co-obligations of NTL Europe, Inc.
NTL (Delaware), Inc. is a wholly owned subsidiary of NTL (Europe), Inc. and is
not a subsidiary of ours.

Because the Convertible Notes were outstanding as of December 31, 2002, Rule
3-10 of Regulation S-X requires our Annual Report on Form 10-K for
the period ended December 31, 2002 to include consolidated balance sheets for
each of NTL Europe, Inc. and NTL (Delaware), Inc. as of December 31, 2002 and
2001 and consolidated statements of operations and cash flows of each of NTL
Europe, Inc. and NTL (Delaware), Inc. for the years ended December 31, 2002,
2001 and 2000 and the related notes and financial statement schedules
(collectively, the Co-obligor Financial Statements).

Since the consummation of the Plan, we are no longer affiliated with NTL
Europe, Inc. or NTL (Delaware), Inc. As a consequence, we must rely on these
two unaffiliated companies to cooperate in the preparation, audit and filing of
the Co-obligor Financial Statements for this Form 10-K. We have formally
requested such cooperation from NTL Europe, Inc. and NTL (Delaware), Inc.
Although those companies have informed us that they intend to
cooperate in the provision of the Co-obligor Financial Statements, they informed us that
they would be unable to provide the relevant information in time to enable us
to include the Co-obligor Financial Statements in this Form 10-K, which was due
to be filed by March 31, 2003.

As a result, it has not been possible without unreasonable effort or expense
for us to include the Co-obligor Financial Statements in this Form 10-K and
still file in a timely manner. Accordingly, that information has been omitted
from this filing in accordance with Rule 12b-25 of the Exchange Act. Solely
because of the omission of the Co-obligor Financial Statements, this Form 10-K
is not accompanied by the certifications required by section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 13a-14 of the Exchange Act.
However, the appropriate executive officers of the registrant have
established disclosure controls and procedures (as defined in Rules
13a-14 and 15d-14 of the Exchange Act) and we have, under the
supervision of such officers, evaluated the effectiveness of those
disclosure controls and procedures as of a date within 90 days prior
to the filing of this Form 10-K. Those executive officers have
disclosed the results of their evaluation to the registrant's
auditors and audit committee and we have disclosed in this Form 10-K,
as required by Item 14 of Form 10-K, such officers' conclusions about
the effectiveness of the disclosure controls and procedures based on
their evaluation and any significant changes in or affecting our
internal controls. Upon our
obtaining the necessary information from NTL Europe, Inc. and NTL (Delaware),
Inc. to enable us to file the Co-obligor Financial Statements, we will file an
amendment to this Form 10-K to include such financial statements at which time
we will also include the required certifications.





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TABLE OF CONTENTS



|                                                  |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                           
|                                                  | Item 1. Business                                                                             
|                                                  | Item 2. Properties                                                                           
|                                                  | Item 3. Legal Proceedings                                                                    
|                                                  | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II                                          
|                                                  | Item 5. Market for the Registrants Common Equity and Related Stockholder Matters            
|                                                  | Item 6. Selected Financial Data                                                              
|                                                  | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                  | Item 7a. Quantitative and Qualitative Disclosures About Market Risk                          
|                                                  | Item 8. Financial Statements and Supplementary Data.                                         
|                                                  | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III                                         
|                                                  | Items 10, 11, 12, and 13.                                                                    
|                                                  | Item 14. Controls and Procedures                                                             
|PART IV                                          
|                                                  | Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                    
|EXHIBIT INDEX                                    
|SIGNATURES                                       
|CERTIFICATIONS                                   
|COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES



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Table of Contents

|                          |  |                                                                                       |    |  |    | 
|------------------------- |  | ------------------------------------------------------------------------------------- | -- |  | -- | 
|PART I                    |  |                                                                                       |    |  | 2  | 
|Item 1.                   |  | Business                                                                              |    |  | 4  | 
|Item 2.                   |  | Properties                                                                            |    |  | 26 | 
|Item 3.                   |  | Legal Proceedings                                                                     |    |  | 27 | 
|Item 4.                   |  | Submission of Matters to a Vote of Security Holders                                   |    |  | 27 | 
|PART II                   |  |                                                                                       |    |  | 27 | 
|Item 5.                   |  | Market for the Registrants Common Equity and Related Stockholder Matters             |    |  | 27 | 
|Item 6.                   |  | Selected Financial Data                                                               |    |  | 28 | 
|Item 7.                   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |    |  | 31 | 
|Item 7a.                  |  | Quantitative and Qualitative Disclosures About Market Risk                            |    |  | 46 | 
|Item 8.                   |  | Financial Statements and Supplementary Data                                           |    |  | 54 | 
|Item 9.                   |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |    |  | 55 | 
|PART III                  |  |                                                                                       |    |  | 55 | 
|Items 10, 11, 12, and 13. |  |                                                                                       | 55 | 
|Item 14.                  |  | Controls and Procedures                                                               |    |  | 55 | 
|PART IV                   |  |                                                                                       |    |  | 55 | 
|Item 15.                  |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |    |  | 55 | 
|SIGNATURES                |  |                                                                                       | 60 | 
|CERTIFICATIONS            |  |                                                                                       | 62 | 





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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 in this Form 10-K, 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 other factors that may cause the actual
results, performance or achievements of the Registrant, or industry results, to
be materially different from those contemplated or 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-K beginning on
page 47, as well as: the
impact of our organizational restructuring and integration actions; our ability
to maintain contracts that are critical to our operations; potential adverse
developments with respect to our liquidity or results of operations; our
ability to fund and execute our business plan; our ability to attract, retain
and compensate key executives and associates; our ability to attract and retain
customers; general economic and business conditions; technological
developments; our 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; assumptions about customer acceptance, churn
rates, overall market penetration and competition from providers of alternative
services; 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.

In this Report on Form 10-K, references to (pound sterling) pounds
sterling, (pound) or pence are to the lawful currency of the UK,
references to (euro) or Euro are to the lawful currency of the European
Monetary Union and references to U.S. dollars, dollars or $ are to the
lawful currency of the United States. Solely for the convenience of the reader,
this Form 10-K contains translations of some foreign currency amounts into U.S.
dollars and some U.S. dollar amounts into foreign currencies. You should not
construe these translations as representations that the foreign currency
amounts actually represent such U.S. dollar amounts or vice versa or could have
been or could be or will be converted into U.S. dollars or foreign currencies,
as the case may be, at the rate indicated or at any other rate. Unless
otherwise indicated, the translations of foreign currencies into U.S. dollars
and U.S. dollars into foreign currencies have been made at $1.6095 per (pound) 1.00 and $1.0485 per (euro) 1.00, the noon buying rates in the City of
New York for cable transfers as certified for customs purposes by the Federal
Reserve Bank of New York (the Noon Buying Rate) on December 31, 2002. On
March 27, 2003, the Noon Buying Rate was $1.5676 per (pound) 1.00 and $1.0708
per (euro) 1.00.





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PART I

NTL CORPORATE STRUCTURE

NTLs Completed Restructuring

On May 8, 2002, NTL Incorporated (then known as NTL Communications Corp.),
NTL Europe, Inc. (then known as NTL Incorporated) and certain of our and NTL
Europe, Inc.s subsidiaries filed a pre-arranged joint reorganization plan,
referred to in this annual report as the Plan, under Chapter 11 of the US
Bankruptcy Code. Our operating subsidiaries and those of NTL Europe, Inc. were
not included in the Chapter 11 filing. The Plan became effective on January 10,
2003, at which time we emerged from Chapter 11 reorganization.

Pursuant to the Plan, the entity formerly known as NTL Incorporated and
its subsidiaries and affiliates were split into two separate groups, and we and
NTL Europe, Inc. each emerged as independent public companies. The entity
formerly known as NTL Communications Corp. (the registrant) was renamed NTL
Incorporated and became the holding company for the former NTL groups
principal UK and Ireland assets. Prior to consummation of the Plan, we were a
wholly-owned subsidiary of the entity then known as NTL Incorporated, which,
pursuant to the Plan, was renamed NTL Europe, Inc. and which became the
holding company for the former NTL groups continental European and certain
other assets. Pursuant to the Plan, all of the outstanding securities of our
former parent company (NTL Europe, Inc.) and certain of its subsidiaries,
including us, were cancelled, and we issued shares of our common stock and
Series A warrants and NTL Europe, Inc. issued shares of its common stock and
preferred stock to various former creditors and stockholders of our former
parent company and certain of its subsidiaries, including us. The precise mix
of new securities received by holders of each particular type of security of
our former parent company and its subsidiaries was set forth in the Plan.

Historical Structure of the Company

We were incorporated in 1993 as a Delaware corporation and continued as a
publicly-traded holding company until February 1999. From February 1999 until
the Effective Date, we were a wholly-owned subsidiary of NTL (Delaware), Inc.,
a Delaware corporation, which was incorporated in February 1999, to effect a
reorganization into a holding company structure under Section 251(g) of the
Delaware General Corporation Law. The holding company structure was implemented
to pursue opportunities outside of the UK and Ireland, and was accomplished
through a merger. Our stockholders at the time became stockholders of the new
holding company, NTL (Delaware), Inc., and we became a wholly-owned subsidiary
of the new holding company. The new holding company took the name NTL
Incorporated until May 2000 when it was changed to NTL (Delaware), Inc., its
current name.

In May 2000 another new holding company structure was implemented in
connection with the acquisition of the residential assets of Cable & Wireless
Communications plc, referred to in this annual report as CWC (the operations
acquired from CWC are called ConsumerCo), and was similarly accomplished
through a merger. The stockholders of NTL (Delaware), Inc. became stockholders
of the new holding company, and NTL (Delaware), Inc. became a subsidiary of the
new holding company, and we remained a subsidiary of NTL (Delaware), Inc.,
referred to in this annual report as NTL Delaware. The new holding company then
took the name NTL Incorporated, which remained its name until the Effective
Date of the Plan (January 10, 2003), at which time its name was changed to NTL
Europe, Inc., referred to in this annual report as NTL Europe.

On February 21, 2001, our former parent company contributed the assets of
ConsumerCo to us and NTL Delaware contributed the assets of NTL Business
Limited (formerly Workplace Technologies plc and referred to in this annual
report as NTL Business) to us. NTL Group Limited, a wholly-owned indirect
subsidiary of ours, which was acquired in 1996, has a 30-year history in the UK
as a provider of reliable communications services.

We remained a subsidiary of NTL Incorporated (now NTL Europe) and NTL
Delaware until the Effective Date, at which time NTL Europe and its wholly
owned subsidiary NTL Delaware were separated from us pursuant to the Plan and
we took the name NTL Incorporated.

We conduct our operations through direct and indirect wholly-owned
subsidiaries. Our principal executive office is located at 110 East 59th
Street, 26th Floor, New York, New York 10022, and our telephone number is (212)
906-8440.

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Summary Corporate Structure

The following chart shows on a condensed basis the corporate structure of
NTL through which our operations are conducted, as of January 10, 2003. This
chart does not show our operating or other intermediate companies.

(Summary Corporate Structure Chart)

|    |  |                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   |  | Includes
Diamond Holdings Limited, the issuer of the 10% Senior Notes due 2008
and 9-1/8% Senior Notes due 2008, and Diamond Cable Communications
Limited, the guarantor of those series of notes and the parent
company of Diamond Holdings Limited
|**  |  | Includes the
subsidiaries which secure our Senior Credit Facility and Working
Capital Credit Facility                                                                                                                                               
|*** |  | Includes NTL
(Triangle) LLC, the issuer of the 11.2% Senior Discount Debentures
due 2007                                                                                                                                                            

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Item 1. Business

RECENT DEVELOPMENTS

NTLs Completed Restructuring

As described above, on January 10, 2003, the Plan became effective and we
changed our name to NTL Incorporated and became an independent publicly
traded company.

Vodafone Dispute Settled

The previously disclosed dispute relating to contracts for the provision
by us of mobile network transmission services to Vodafone Limited has been
settled on terms acceptable to both parties.

Appointment of Non-Executive Chairman

On March 12, 2003, we announced the appointment of James F. Mooney as our
Non-Executive Chairman, replacing William R. Huff as Chairman of our board of
directors. Mr. Huff will remain a Director of the Company.

Appointment of Chief Financial Officer

On March 5, 2003, we announced the appointment of Scott Schubert as our
Chief Financial Officer.

Appointment of Chief Operating Officer

On March 20, 2003, we announced the appointment of Simon Duffy as our
Chief Operating Officer.

ABOUT NTL INCORPORATED

We are a leading broadband communications company in the UK and the
Republic of Ireland based on aggregate subscriber numbers as of December 31,
2002.

The following description of our principal lines of business reflects
certain organizational changes that became fully effective for the year
commencing January 1, 2003. Our results of operations elsewhere
in this annual report reflect our business segments up to December 31,
2002:



| |  |  | CONSUMER SERVICES, including residential telephony, cable television,
Internet access and interactive services and wholesale Internet access
solutions for UK Internet service providers, known as ISPs;                                                      
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | BUSINESS SERVICES, including data, voice and Internet services;                                                                                                                                                                                               
|
| |  |  | BROADCAST TRANSMISSION AND TOWER SERVICES, including digital and
analog television and radio broadcasting, wireless network management,
tower and site leasing, satellite distribution services and radio
communications services to the public safety sector;
|
| |  |  | NETWORK SERVICES, including the management of our UK national network infrastructure; and                                                                                                                                                                     
|
| |  |  | CARRIER SERVICES AND MOBILE, including national and international carrier telecommunications services.                                                                                                                                                        

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In addition to these communications operations, we have investments in a
virtual ISP, Virgin.net, a pay-per-view content provider, Front Row and joint
ventures relating to UK digital television and radio and a calling card
business.

For the year ended December 31, 2002, prior to our internal organizational
restructuring, Consumer Services accounted for 63.5% of our consolidated
revenues, Business Services accounted for 27.0% of our consolidated revenues
and Broadcast Transmission and Tower Services accounted for 9.5% of our
revenues. Prior to this restructuring, our national and international carrier
telecommunications services and certain of our managed network services, which
are now separate groups, were part of Business Services, and our public safety
line of business, which is now part of Broadcast Transmission and Tower
Services, was part of Business Services. For the year ended December 31, 2002,
97.3% of our consolidated revenues were generated from our operations in the UK
and 2.7% of our consolidated revenues were generated from our operations in
Ireland.

Our business is underpinned by the approximately $14.7 billion investment
as of December 31, 2002 that we, and companies we have acquired, have made in
our network infrastructure. We provide our broad range of services over local,
national and international networks. This network infrastructure, as of January
1, 2003, consists of:



| |  |  | Broadband Communications Networksin the UK that currently pass
approximately 8.4 million homes. These high-capacity two-way local
broadband fiber networks serve entire communities throughout these
regional franchise areas. Our fiber optic cables pass a significant
number of businesses in these areas and are connected to distribution
points, or nodes. Approximately 80% of our nodes serve approximately
500 to 600 homes with each home typically no more than 500 meters from
the node. Approximately 20% of our nodes serve between approximately
2,000 and 2,400 homes. Each serviced home is then connected by a cable
allowing us to deliver telephone, cable television and Internet services
over a single integrated network.                                    
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | Additionally, we have cable networks in the Republic of Ireland that
currently pass approximately 475,000 homes. Digital television service is
currently available to approximately 90% of our customer base in the
Republic of Ireland and we are currently conducting trials for broadband
services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | A National/International Synchronous Digital Hierarchy (SDH) and
Wavelength Division Multiplex (WDM) Fiber Optic Telecommunications
Networkin the UK, which connects all of the major population centers in
the UK and Ireland. SDH allows high-speed data transmission and
redirects transmissions in the event of a problem to prevent any
disruption. This backbone network utilizes Asynchronous Transfer Mode
(ATM) and Internet protocol (or IP) technology. The duct network was
built with sufficient duct capacity to accommodate up to 2,300 fibers on
the majority of the network. This network was designed to enable the
placement of active components, such as routing devices, close to our
customers, allowing us to offer a broad range of voice and data
services.
|
| |   |  | This backbone transmission network connects all our voice switches and
broadband IP network.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |   |  | We do not insure the underground portion of our cable network nor the
street cabinets. As substantially all of our entire cable network is
constructed underground, any catastrophe that affects our underground
cable network and street cabinets could result in substantial uninsured
losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  |  | National Broadcast Transmission and Tower Network Infrastructurein
the UK, which provide national, regional and local broadcast and
wireless communications coverage. We own, lease, manage or have access
to over 2,300 multi-user sites and land opportunities in the UK. Our
fixed line and tower networks in the UK are interconnected at numerous
sites.                                                                                                                                                                                                                                                                                                                                                                                                                        

NTLs Businesses in the UK

Our UK operations made steady progress during 2002 in improving the
products and services we offer in the UK, continued with the decentralization
of our business structure and made substantial progress in reducing our churn
rate. We spent 2001 restructuring and integrating our UK operations following
several years of acquisition and growth. Between 1998 and 2000, we expanded our
UK operations significantly, predominantly through acquisitions. Between June
1998 and July 1999, we acquired the UK broadband operations of Comcast UK Cable
Partners, Diamond Cable and ComTel as well as the Westminster and Milton Keynes
cable franchises of British Telecommunications, or BT. In December 1998, we
acquired Eastern Group Telecoms Limited, which owned a

5



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fiber optic network across portions of England and a radio sites service
serving mobile phone operators, and in September 1999, NTL Delaware acquired
Workplace Technologies plc, a data network service integrator in the UK and
Ireland which has since been integrated with NTL Business. In May 2000, we
further increased our UK operations by completing our acquisition of the
residential broadband and business cable operations of Cable & Wireless
Communications plc, also known as ConsumerCo.

In the UK, we provide a broad range of communication services:



| |  |  | ntl: home, delivering broadband services to residential markets
comprising residential telephone, analog and digital cable television,
narrowband and broadband Internet access and interactive services, as
well as wholesale Internet access solutions to UK ISPs;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | ntl: business, comprising business data, voice and Internet services;                                                                                                                                                                                               
|
| |  |  | ntl: broadcast, delivering digital and analog television and radio
broadcast transmission services, wireless network management, tower site
rental and satellite and media services and radio communications to the
public safety sector;                           
|
| |  |  | ntl: networks, managing our UK national network infrastructure;                                                                                                                                                                                                     
|
| |  |  | ntl: carrier services and mobile, delivering national and international carrier telecommunications services.                                                                                                                                                        

I. ntl: home

Our ntl: home division provides residential cable television, Internet and
telephony services, as well as wholesale Internet access solutions to UK ISPs.
We are the largest direct provider of broadband services in the UK. As of
December 31, 2002, we had approximately 2.69 million residential cable
television, Internet and telephony customers, including 987,000
broadband,
narrowband and DTV access Internet customers and approximately 5 million revenue generating
units, which we refer to as RGUs. At such date, our penetration rates were
approximately 32.1% telephone penetration, 26.6% cable television penetration
and over 34.7% overall customer penetration.

Throughout 2002, our primary objective was to conserve capital, reduce
customer churn, focus on customer upsell and complete the decentralization of
our consumer business. As we entered 2002, we decided to preserve capital and
curtailed our sales and marketing activities, which yielded a decline in our
gross activation rate from 112,000 additions in the fourth quarter of 2001 to
105,800 additions in the fourth quarter of 2002. The reduction in activity
surrounding new customers permitted us to focus on existing customers and
subsequently our churn rate declined from 21.3% in the fourth quarter of 2001
to 15.9% in the fourth quarter of 2002. In addition to providing our customers
with better service, we also continued our efforts to upsell customers with
Internet and Digital TV packages, ending the fourth quarter of 2002 with over
517,000 broadband Internet subscribers and over 70% of our digital TV customers
taking our Family Pack bundle, which consists of over 100 TV channels for
£25.50 per month including telephone line rental. The decentralization of our
consumer business has given ownership of the customer back to the local level
managers and is predominantly responsible for the improvements in churn
reduction and customer experience. Our six regional business units are; London,
East South East, South, North East, North West and Celtic (Wales, Scotland and
Northern Ireland).

Broadband Internet (which refers to Internet access at speeds at or
greater than 128 kilobytes per second (Kb/s)) usage by residential customers is
a relatively new and undeveloped market. However, we believe the most effective
strategy to maximize revenues and penetration for our residential offerings is
to bundle together telephone, cable television and Internet services, which
includes broadband Internet services. Our product and pricing strategies
emphasize choice, value and quality and are designed to encourage subscription
to multiple services to maximize customer retention and average revenue per
customer.

Our core local access network typically consists of optical fiber
connected to distribution points, or nodes, from which we provide coaxial cable
and two copper pair telephone wires into each home. Approximately 80% of our
nodes serve approximately 500 to 600 homes with each home typically no more
than 500 meters from the node. Approximately 20% of our nodes serve between
approximately 2,000 and 2,400 homes. This cabling enables the provision of two
telephone lines, an analog or digital television service and a high-speed cable
modem service to each customers home.

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When we first started building our network in the early-1990s, the UK
became the first country in the world where TV, phone and Internet could all be
connected to the home via a single cable. Almost a decade later, that same
network design is being used to service todays growth in broadband services.

Our fiber network has the capability to carry telephone services as well
as high-speed data services. Although this is not a service that we provide, or
have any current plans to provide, our fiber network is capable of supporting
digital subscriber lines, or DSL, which consist of a bi-directional 2
megabytes per second (Mb/s) connection
capable of supporting 30 voice channels and enable the provision of higher
capacity services to business customers. We are able to support digital and
interactive services as well as advanced video services over our network
through cable modems that enable Internet access at almost 20 times the speed
of conventional dial up access.

Our cable modem broadband Internet service has been engineered to provide
high quality residential high speed Internet access service. It is therefore
able to support small businesses and people who work from home, including
enabling a link to a companys local area network, or LAN. We have in place the
next generation of network technology using IP over optic fiber cable
technology in our core backbone network. This technology, in which data is
broken up into discrete packets for transmission, enables more efficient use of
network capacity, resulting in growth at lower unit cost and positioning us to
provide high speed broadband access on a mass scale.

Internet access

In March 2000, we launched a free, unmetered Internet access service for
residential customers to supplement our existing, metered (1 pence/minute)
dial-up access service offering. Both products were marketed under the name
ntl World. The free unmetered service proved popular and over 650,000
customers subscribed for this service.

Throughout 2001, Internet penetration and usage (hours online/week) both
increased and customers have continued to migrate to flat-rate, unlimited
access packages, demonstrating a willingness to pay more for superior access
services.

In January 2002 we announced the replacement of our free, unmetered
service with a flat-rate, unmetered package called ntl Unlimited, which
offers Internet access at any time for a flat monthly fee of £10. In the
fourth quarter of 2002, we launched a dual package called Phone & Surf,
offering Internet access at any time combined with unlimited local and national
calls at anytime for £19 per month (in addition to standard line
rental). Our
metered Internet service ntl pay as you go continues to be offered at a fee
of 1 pence per minute.

From February to December 2002, we migrated over 440,000 customers from
the free unmetered service to the paid-for metered or unmetered or broadband
packages, with approximately 172,000 customers of the free unmetered service
discontinuing service in December 2002. As of December 31, 2002, we had
approximately 123,000 customers for our metered Pay as you Go dial-up
Internet service, and approximately 320,000 customers for our unmetered
Unlimited service.

Broadband Internet access

In 1999, we were the first communications provider in the UK to launch a
high-speed cable modem Internet service, which links customers of our local
cable franchise networks to the Internet at up to twenty times the speed
possible over standard telephone lines.

As of December 31, 2002, we had 517,000 broadband customers. Approximately
85% of our networks are currently able to provide this service to our
customers.

When we launched our broadband Internet service, we offered a single tier
of service: 512 Kb/s. We have since added two additional tiers: a competitively
priced 128Kb/s tier and a 1024Kb/s (1Mb/s), the fastest Internet access
available to residential UK customers. We also upgraded our 512Kb/s service to
600Kb/s, to provide a distinct advantage over competing DSL services, which are
generally limited to speeds in the region of 512Kb/s. The service is an always
on service, eliminating logging-on delays and the need to log off while using
the telephone. It uses the hybrid fiber coaxial cable portion of our broadband
network, which allows customers who also subscribe to a telephony service to
simultaneously make or receive telephone calls while accessing the Internet.
The 128Kb/s and 600Kb/s services are currently offered at flat rates of £14.99
and £24.99 per month, respectively, including the rental of a cable modem. This
compares with the current prices a 512Kb/s ADSL service from Freeserve (£27.99
per month) and BT Broadband (£27 per month), each of which require the customer
to purchase a DSL modem at a cost of approximately £85. In the first

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quarter of 2002, we were the first to launch a 1Mb/s service at a price of
£49.99 per month. On January 1, 2003, this price was reduced to £34.99 per
month.

Franchise customers

We first introduced a bundled cable service to our franchise customers in
1996, when we implemented a promotional pricing and packaging structure called
Choices. Since then, we have continued to refine and enhance our offerings.
The packages we currently offer to the majority of our UK residential franchise
customers, comprise:



| |  |  | telephone service, including a second telephone line for an
additional charge unless the customer decides not to take television;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | narrowband Internet access service, if the customer takes a telephone service;
 broadband Internet access service;              
|
| |  |  | broadband Internet access service;                                                                                               
|
| |  |  | all of the current terrestrial television channels and access to
multi-channel television, including pay per view; and           
|
| |  |  | interactive television services.                                                                                                 

Our packaging and pricing are designed to encourage our customers to use
multiple services such as dual telephone and broadband Internet access, dual
telephone and narrowband Internet access, dual telephone and TV, or triple
telephone, TV and Internet access. Among other telecommunications
companies in the UK, only
Telewest, which does not offer its cable services in our service areas, is able
to offer the full range of services we provide (see table below). Unlike our
telephone service, which allows customers to connect directly to our network,
BSkyBs telephone service Sky Talk, is a service reselling BTs telephone
service, and requires BSkyBs customers to retain and separately pay for their
BT line rental.

|         |  |          |   |    |  |           |   |  |  |  |   | 
|-------- |  | -------- | - | -- |  | --------- | - |  |  |  | - | 
|         |  | Internet |   | TV |  | Telephone
|         |  |          |   |    |  |          
|NTL      |  |          | ü |    |  |           | ü |  |  |  | ü | 
|BT       |  |          | ü |    |  |           | X |  |  |  | ü | 
|BSkyB    |  |          | X |    |  |           | ü |  |  |  | X | 
|Telewest |  |          | ü |    |  |           | ü |  |  |  | ü | 

Cable television

The selection of analog cable channels that we currently offer to our
customers varies based on the particular network area. This variation is a
result of the different channel offerings we have inherited as a result of our
acquisitions of various cable networks over the past several years. Variations
between network areas will increasingly be removed as digital cable television
is rolled out offering the same channels, subject to regional programming
variations. In addition to offering many of the popular channels available on
BSkyBs satellite platform, we also offer to all of our customers, through our
joint venture with Telewest, a cable-only movie, sport and special events pay
per view television service called Front Row that we rolled out to our
customers beginning in March 1998. Our joint venture with Telewest represented
the first ever alternative in the UK to BSkyB in the provision of films and
sports events through pay television. Front Row has signed content output
contracts with major Hollywood studios, including Warner Brothers, Sony
Pictures Entertainment (Columbia/Tri-Star), the Walt Disney Company (Walt
Disney Studios, Miramax, Hollywood Pictures and Touchstone), Dreamworks, MGM
and Universal.

Interactive services

We have moved rapidly to take advantage of the convergence between the
Internet and television and the advent of digital cable television. We are
currently aggregating a broad range of interactive content into a service that
can be deployed as part of our interactive television offering to our
residential customers. Our interactive offering comprises a free television
e-mail service and a walled garden of partner websites that have been
specially redesigned for television.

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We have established relationships with over 75 content providers to
deliver a wide range of interactive services, including education, shopping and
banking, finance, travel, entertainment, games, news, weather, sports and local
content. Interactive content is organized into channels, including news &
weather, sport, travel, lifestyle, money, entertainment and shopping. Our
partners include Sainsburys, Iceland, eBay, WHSmith PC World and Bloomberg.
The travel channel includes content partners such as Thomascook.com, ebookers,
Lastminute.com and British Airways and the money channel features content
partners such as Abbey National, The Halifax and MX Moneyextra.

We also offer additional channels providing up to date news and weather
information, games and educational content. Where appropriate, our contracts
with content providers require the payment of tenancy fees as well as
commissions on e-commerce transactions. We also derive revenues from the
advertising opportunities that exist across our interactive service offering.

Telephony

In 1999, we launched the NTL 3-2-1 call plan for our residential
franchise customers pursuant to which national and local calls cost only three
pence per minute during the day, evening calls cost two pence per minute and
weekend calls cost one pence per minute. A five pence connection charge is
payable with each call under the NTL 3-2-1 plan. We are able to offer this
plan by using our national telecommunications and local networks and bypassing
a portion of the wholesale long distance fees which would otherwise be charged
by BT and other carriers for carrying calls to and from our local franchise
networks. In 2002, we launched our new Talk plans, which include Talk
Unlimited with unlimited local and national calls on evenings and weekends for
£9 per month and Talk Unlimited 24 which includes unlimited local and
national calls at anytime for £15.50 per month. The price of our Talk plans is
in addition to standard line rental. Although the number of calls is unlimited
under these plans, the duration of each call must be 60 minutes or less to
qualify.

Wholesale Internet

Our wholesale Internet access group provides solutions including network
services, call center operations and customer provisioning and billing to
leading UK ISPs, including AOL, Virgin.net and Tesco.net. We initially launched
this service with a dial-up Internet offering in 1995 and in December 2002 we
added wholesale cable modem services to the line-up via an arrangement with
AOL.

Indirect access

As of December 31, 2002, we had approximately 91,000 off-net customers
(customers who are not directly connected to NTLs network) of which
approximately 69,000 were also customers of our ntlworld Internet service.

Customer management systems

For most of our franchise areas, we use billing and customer management
systems that enable us to control all aspects of a customers account for both
telecommunication and television products. We currently operate a number of
billing systems inherited from the different operations we have acquired. We
are in the process of merging these different systems onto a single
Internet-based platform, which we expect will reduce costs, improve customer
call center efficiencies, provide customers with on-line access to their
accounts and improve overall customer satisfaction.

II. ntl: business

The primary objective of our business services division, ntl: business,
is to provide a comprehensive range of voice, data and application based
communications services for our business customers.

Our existing customer base includes both private and public sector
organizations such as TXU, HSS, EDS, Cambridge County Council, Hertfordshire
County Council, London Borough of Lambeth and Brighton & Hove Council.

Our business strategy is to fully exploit our superior network capability
and place an increasing emphasis on broadband products and services. Rather
than simply offering our customers a lower price for their existing service, we
offer a package of standard services designed to address all their
communications needs at a price which offers good value. For our smaller
business customers, we provide a range of bundled packages based on our
standard services and standard terms and conditions. For our larger customers,
we offer services that are tailored for their specific needs.

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ntl: business has developed a diverse portfolio of skills and services
through both product development and a number of significant acquisitions.
Beginning in 2000, we commenced a program to integrate the skills and abilities
of employees from ntl: business, X-Tant and ConsumerCos small business team
with those of the existing business telecom operations, to create a single
integrated portfolio and customer support organization. Another example of this
strategy is our acquisition in the third quarter of 2001 of the UK assets and
contracts of Viatel UK. Viatel was a provider of managed data and voice
services to UK based corporate companies and also provided voice services to
resellers, voice and Internet services to wholesalers and managed data services
to other European managed service providers.

During 2002, we continued to focus on customer service improvement,
developing customer support systems, and enhancing our product line-up. In
addition, we are increasingly focusing specific sales and marketing efforts on
winning business customers in our franchise areas and increasing revenue from
our existing customers.

Our network already passes within approximately 200 meters of more than
570,000 business premises in the UK. We believe that the architecture and reach
of our network infrastructure has positioned ntl: business to play a leading
role in the delivery of broadband services to UK businesses going forward. We
plan to exploit demand for broadband services primarily through our broadband
cable modem product, which was launched in the second quarter of 2001, and our
E-1 Direct Internet Access Service. We will continue to market our standard
products and services ranging from telephony and Internet access to data and
managed services. We will deliver these services via copper wire, coaxial
cable, fiber and wireless.

In 2003 we intend to implement a new strategy in which there will be an
ever increasing focus on cash generation and the exploitation of the local
network. The business is currently being re-structured into four regions,
centered on existing franchise networks, which will be Northern, London and the
South-East, Southern and Celtic.

In October 2000, we opened a new small business call center which uses
telephone account management techniques to sell and service a range of simple
business bundles for smaller businesses across the UK. Under this business
model, we have developed sophisticated marketing programs for our target
customer base. In the second quarter of 2001, we added broadband services to
the business bundle. In December 2001 we launched our new web site allowing
customers to self provision a range of products and view their bills on-line.
In 2002, we continued to expand the reach of our broadband services and
launched three important new products:



| |  |  | Carrier Pre-Select allowing access to our network for off-net
business customers;                                                                                                                                                                                        
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Business Essentials Advance a package of fast voice and data
connections and high speed Internet access for medium to large
businesses, allowing a combined installation of primary rate access,
also known as ISDN30, and Direct Internet Access, also known as DIA; and
|
| |  |  | Intelligent Contact Management allowing business customers to
create intelligent call or contact centers.                                                                                                                                                              

We will continue to utilize our national capabilities and the expertise of
our locally focused account management and technical support teams to target
on-net customers and increase penetration.

We offer the following business products and services to our business
customers:



| |  |  | Access Servicesthat connect our customers to us for inbound and
outbound voice and data calls. These access services include additional
analog business exchange lines, or BELs, and digital business exchange
lines, or DELs. DEL services include basic rate access, also known as
ISDN2, and primary rate access, also known as ISDN30. We believe these and other
direct and indirect access services are priced competitively and are
often in competition with similar services provided by a number of other
direct and indirect suppliers.             
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Managed Voice Services/Virtual Private Networksthat are best
illustrated by our central exchange Centrex service. Through this
service we provide our customers with business exchange lines configured
as a virtual PABX, where we provide the services normally associated
with a traditional PABX, a device which routes calls through internal
lines located at a customers premises. We provide these services on a
rental basis, which allows our customers to avoid the expense associated
with an outright capital purchase and maintenance costs.

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| |  |  | Managed Data Servicesthat include point to point private circuits at
speeds of multiples of 64Kb/s and individually tailored 100Mb/s and
155Mb/s services. Other services include the provision of inter-site
data services with particular transmission protocols, such as Internet
Protocol also known as TCP/IP, Frame Relay and ATM.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Managed Local Area Networks (LANs), in order to support the
developing needs of our business market, we have established significant
capabilities that enable us to fully manage LANs or to design, project
manage and integrate new LAN platforms for our customers.                                                                   
|
| |  |  | 08xx Servicesthat include free local and national call services
together with a range of other routing features based on our network.
These services enable our customers to manage inbound calls and
establish varying tariffs for their customers to contact them.                                                                    
|
| |  |  | Internet Services, that include E-1 Direct Internet Access and
high-speed cable modems. The range of services we provide also includes
the provision of simple, inexpensive software to enable our customers to
begin doing business over the Internet.                                                                                 

We have a variety of alternative methods to carry our national
telecommunications network over the last mile to the premises of those
customers which are located outside of our franchise area:



| |  |  | Obtaining permits to construct telecommunications networks, and
building out our network to reach our customers. Although this is often
the most costly means of reaching a customer, the expense can be
justified in the case of larger customers or where a significant level
of traffic is obtained from a customer.                                                                              
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Leasing circuits on the local networks of other service providers to
connect to our customers premises. Although this may reduce the
operating margin on a particular account, it requires significantly less
capital expenditure than a direct connection, can often be put in place
relatively quickly and can be replaced with a direct connection at a
later date if traffic volumes justify it.
|
| |  |  | Connecting customers to our national telecommunications network via
our extensive tower infrastructure by implementing point-to-point
microwave radio links between tower sites and our customers.                                                                                                                                                                                                   

III. ntl: broadcast

We own and operate wireless communication and broadcast transmission
infrastructure in the UK. We provide our customers with enhanced products and
services through our broadcast network, state of the art equipment, and
innovative facilities management expertise. Our customer base includes over
1,000 companies, including all of the leading UK mobile wireless operators, all
major commercial (non-BBC) television and radio broadcasters and the Public
Safety services of Police, Fire and Ambulance across the UK.

We have a proven history of developing new products and services to meet
the needs of our customers and drive the growth of our business. These
developments include the implementation of Teletext, a text based data service
transmitted with the analog television signal, the implementation of NICAM (a
standard for stereo reproduction in television broadcasts utilized in the UK
and Europe) in the 1980s enabling the transmission of digital stereo and Dolby
audio over analog television transmissions, and most recently the design and
implementation of the worlds first digital terrestrial television and digital
audio broadcasting networks and services for our UK broadcast customers.

We provide products and services to four distinct market areas:



| |  |  | Site Leasing and Services.We operate the second largest independent
portfolio of wireless towers and sites available for lease in the UK. As
of December 31, 2002, we operated a total of over 2,300 multi-user sites
and land opportunities in the UK up from approximately 600 sites in May
1996. We also offer unique services such as In-Building: a wireless
connectivity that provides enhanced cellular coverage in high-traffic
areas such as shopping malls, office buildings and conference centers,
and CityCell: a distributed street-level antenna system connected to
fiber, providing 2G and 3G cellular coverage in dense urban areas. As of
December 31, 2002, we leased these facilities to nearly 4,500 tenants
including all of the major wireless operators in the UK, of which
approximately 9% of these tenants represented Universal Mobile
Telecommunications System (UMTS), or 3G, providers.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  |  | Broadcast Transmission and Services.We own and operate one of two
television broadcasting infrastructure networks in the UK. Additionally,
we have national, regional, and local radio broadcast infrastructure
networks in the UK. We developed and built the first commercial digital
terrestrial television national infrastructure in 1998 and the first
national network infrastructure for commercial digital radio in 1999.
Because, unlike broadcasters in the United States, we own and operate
not only the towers but also the broadcast transmission infrastructure,
our broadcast customers rely on our network and package of integrated
turn-key services to distribute and broadcast their content. Our
broadcast and wireless customers generally hold long term licenses and
enter into service agreements with us that typically last 8 to 12 years.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Satellite and Media Services.We provide satellite and media
services in the UK and value-added services such as playout, fixed and
mobile satellite up-linking, and a wide range of occasional & outside
broadcast services to generate incremental revenue. Our ability to offer
a full range of services from content gathering, distribution &
transmission is unique in the UK market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  |  | Public Safety.We offer to customers who provide public safety
services a full range of communications services, including the design
and operation of radio networks, voice and data services and the
provision of support, maintenance and facility management services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Site Leasing and Services

We operate an UK wireless infrastructure network of over 2,300 multi-user
tower sites and land opportunities as of December 31, 2002. We own, lease or
manage approximately 1,458 UK tower sites and have options to access or acquire
to approximately 785 undeveloped sites. Our primary business is the leasing of
antenna space on our sites to a diverse range of wireless service providers,
including providers of mobile telephony, paging, specialized mobile radio, or
PMR, and wireless local loop services. We have also developed a range of
complementary services that utilizes our tower expertise, including
infrastructure services, site selection and acquisition, design and
construction, antenna installation, network planning and management, and tower
maintenance.

Our network in the UK is national in scope and includes most of the major
population centers and highways. Our wireless customers currently include all
of the UK mobile telephony operators, including Vodafone AirTouch, O2 (formerly
known as BT Cellnet UK), Orange, T-Mobile (formerly One2One), 3 (formerly
Hutchison 3G) and Airwaves (part of O2), all the major paging companies, and
many of the UKs largest wireless telephony carriers, including BT, Cable &
Wireless, and Thus plc. We also serve several utility companies and emergency
service organizations including British Gas, London Ambulance and Her Majestys
Customs and Excise.

Second generation wireless services have been the major driver of our
growth to date, but the advent of third generation wireless services is
expected to drive further revenue growth. During 2000, the UK government
awarded five national UMTS licenses each for a duration of 20 years, commencing
January 2002. These licenses have been awarded to four existing operators, all
of whom are existing wireless customers of ours, and to one new entrant. Under
the terms of these licenses, each operator is obligated to provide services to
at least 80% of the UK population by December 2007. Construction of these
networks commenced in 2001 and is expected to generate further demand for
suitable existing and new sites over the next few years. The increased demand
for suitable sites is driven by the greater bandwidth and different range
characteristics of 3G technology, inherently requiring a greater number of
sites than 2G technology.

The dramatic growth of wireless communications necessitates good cellular
coverage in all commercial areas, leading to a requirement for reliable
wireless communications infrastructure inside buildings. We believe this
creates a new type of radio site which, unlike towers, will exist within
commercial buildings, transport hubs, shopping malls and other large buildings.
As of December 31, 2002, we had 51 agreements in place for large public access
buildings, 38 of which have been installed with shared coverage systems. The
remainder are currently under development. Agreements include Bluewater,
Britains largest shopping complex, Excel, a conference center in London, and
Canada Square, part of Londons Canary Wharf complex. There is currently an
average of approximately 1.9 tenants per system, with up to four 2G sharers
occupying prestigious locations such as Canary Wharf.

Building on the technology we developed for In-Building services, we have
developed a system using our franchise fiber network to solve the coverage and
high bandwidth problems associated with 2G and 3G rollout in dense urban areas.
We believe that this solution  utilizing small low-profile antennae,
positioned on buildings and other street level infrastructure and connected via
our fiber network to remote base stations  will improve coverage and service
quality compared to more traditional rooftop sites. This

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system is currently undergoing a pilot activity in the Glasgow Commercial
Business District with an UK mobile telephone operator and which we aim to roll
out in a number of UK cities during 2003.

Broadcast Transmission and Services

We have been involved in broadcast television since the 1950s when we
designed and built the television transmission system for the UKs first
independent commercial television network. Through our national infrastructure
of owned and shared transmission sites and our owned network of transmitters in
the UK, we provide analog broadcast transmission services for the three
commercial national television channels in the UK (ITV1, Channel 4, Channel 5)
and S4C in Wales. In addition, we provide services to a number of more recently
established commercial channels through the UK Digital Broadcast multiplexes,
and many of the UKs independent local, regional and national radio
broadcasters.

An attractive feature of our broadcast contracts is our ownership of both
towers and transmission equipment responsible for generating the broadcast
signal. As a result, the contracts increasingly cover end-to-end solutions
including all technical and service aspects of providing the transmission for
the broadcaster. In essence, TV and radio station owners are programmers and we
provide a significant proportion of the technical infrastructure to enable them
to broadcast their material. We have used this as an opportunity to develop
strong relationships with our customers, which in turn has helped us to better
understand their needs and customize new services for them.

Television broadcasting. We provide digital and analog broadcast
transmission services for national and regional television broadcasters. Our
analog network provides coverage to 99.4% of the UK population, with
approximately 2,300 broadcast transmitters. Our extensive television broadcast
customer base includes all of the UK commercial terrestrial television
broadcast companies consisting of the ITV national network of 15 affiliated
stations, the national services of Channel 4 and Channel 5, as well as the
regional Welsh service S4C.

We provide digital terrestrial broadcast transmission for two commercial
national digital television multiplex operators in the UK. These services carry
up to 12 separate channels, including the ITV network, Channel 4, Channel 5 and
a range of new digital channels. As of December 2002, we were operating 80
digital terrestrial television transmitting stations reaching a significant
proportion of the UK population.

Digital broadcast systems require a more complex engineering design than
their analog predecessors. We have exploited this by extending our range of
services to include tower leasing and transmission services (as with analog)
plus end-to-end system integration and service ranging from studio playout
centers to terrestrial transmission. This has the twin benefits of enlarging
the total market available from broadcasting and further differentiating us as
a unique provider able to offer towers, transmission and system integration
services for digital television.

Radio broadcasting. We are one of two major companies providing
transmission sites and services to the radio industry in the UK. We offer a
range of services to radio broadcasters including: target service area
planning; site location; installation and commissioning; and equipment
selection, procurement, operation, monitoring and maintenance. We are a
supplier of transmission services to a substantial portion of the addressable
market. Our radio broadcast customer base includes the national commercial
station Classic FM, over 200 metropolitan, regional and local stations and the
first national digital radio multiplex operator, Digital One, of which we are a
founding equity partner with a 37% equity interest. We have a contract for the
transmission of Digital One with a lifetime value in excess of $75 million. The
UK government has embarked on a program of licensing a number of new regional
and local digital radio multiplexes. We had secured contracts to build
transmission and supporting network for 33 of the 36 contracts awarded as of
December 31, 2002.

Satellite and Media Services

We own and operate satellite up-linking facilities consisting of over 30
fixed satellite up-link dishes able to access over 50 satellites achieving
global coverage through international partners, a network of mobile and
transportable up-links, management and control systems and all associated
operations and maintenance. We provide our satellite customers with program and
content distribution services for over 180 full-time channels via satellite and
fiber. In addition, we have facilities for playout services, remote satellite
news, and full outside broadcast. Through an alliance with Williams Vyvx, a
Williams Co. company, our customers also have access to 48 cities in the United
States.

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We have expanded our service offerings over time to meet the growing needs
of our customer base as new technologies create new broadcast markets. As a way
to add incremental revenue, we have begun to integrate backwards with our
existing customers by offering value added services. Such service developments
include:



| |  |  | the establishment of playout services, which enable us to take
ownership of the customers transmission needs from the point that it
delivers the program or content and needs a channel to be created. We
then are responsible for all the operational issues related to the
broadcast of that content. We have a state of the art playout facility
outside of London designed to meet expected rising demand from
broadcasters across Europe.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | offering a range of occasional use broadcast services that allow
media content providers to outsource their off-site broadcasting needs,
whether it be for breaking news, sports events or music concerts, while
still delivering the desired content to their customers via our mobile
equipment.                                                                                                                                             

Our satellite and media customers include programmers who own and operate
packages of content or channels, news agencies, sports broadcasters and
production companies. Our customer list includes such market leaders as
AOL/Time Warner (CNN, Turner, Cartoon Network), BBC, Discovery Channel, QVC,
the Associated Press and British Sky Broadcasting.

Public Safety

Our Public Safety group is a national service and support organization
providing communication services for mission-critical customer operations
around-the-clock. The group has a longstanding relationship with the public
safety community spanning over 40 years. Customers include Police, Fire and
Ambulance services and a wide range of public and private sector organizations
including the Maritime Coastguard Agency and the Royal National Lifeboat
Institution whose core business relies on exacting levels of performance,
resilience and availability from their communications systems.

Understanding the critical elements needed to keep technology working at
all times is pivotal to the design of modern systems. Therefore, we also
provide independent systems integration services, in both mobile radio
communications and fixed-line communication networks, making a wide range of
technologies suitable and effective for the demanding public safety
environment.

By bringing together our experience in legacy systems support with an
independent approach to the design and integration of modern technologies we
have introduced a new range of Managed Services for radio and Integrated
Communications Technology. As a result the Public Safety Group has grown its
source of revenue and profit and today, it is the UKs largest provider of
radio communications managed services. A major customer of these services is
the Metropolitan Police Service, which has placed the management of its radio
communications activities with us via a complete outsource contract. We have
also already secured new Terminals Managed Services contracts to connect
regional police forces to their new Airwave digital network.

IV. ntl: networks

The ntl: networks group services our internal network needs. It is a
national network provider, transporting our telephone, high-speed data and
digital TV services across the UK for delivery to regionally-managed local
access networks. We own and operate one of the UKs biggest broadband and IP
networks and second-biggest local telephone network, monitored and maintained
24 hours a day, seven days a week. The networks group governs the architecture
of all of our networks, plans and implements network capacity (where and when
it is needed) and operates our backbone telephone, data and transmission
networks.

As of December 31, 2002, our network passed 7.6 million telephony homes,
had more than 3.1 million telephony lines in use and handled more than 1.5
billion minutes of telephone conversations per month. Our network passed a
total of 7.8 million analog TV homes and 7.3 million digital TV homes as of
December 31, 2002. It has been upgraded to deliver broadband services to over
7 million homes and as of December 31, 2002, served 517,000 broadband customers
and handled more than 2 billion minutes of Internet use per month. The core
network has a fiber backbone that is more than 13,500 kilometers long of which
10,800 kilometers are owned or operated by us and 2,700 kilometers are leased
fiber from other network owners. This network has 122,000 kilometers of
copper/coaxial connections. A total of 99 switches sites direct telephony
traffic around the core and local networks. In addition, we have more than 400
hub sites, points of presence, repeater nodes or other type of network site,
and over 140 radio sites. The ntl: networks groups primary customers are ntl:
home and ntl: business, which run their products across the network.

Architecture & Standards

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The development of our networks is the responsibility of the Architecture
and Standards group. This group sets network strategy and creates architecture
for national and local access networks, setting technical standards for the
whole network. It also manages the RF spectrum on the broadband local access
network. The group is also responsible for network economics; this year the
focus is on defining a set of product unit costs that will help us measure our
financial performance more accurately.

During 2003, the group will continue the 18-month rollout of a £17 million
network records management system. This system is intended to help the business
to exploit the network by ensuring that network information is quickly and
accurately available  from cables in the ground to street cabinets  to help
support customers requirements.

Capacity Management

Capacity on the data, optical and voice networks is planned by the Voice,
and Data & Optical Capacity Management groups, using customer forecasts to
implement expansion. These groups also provide network support for all standard
data products through its Demand and Delivery team, as well as maintaining an
up-to-date inventory of all data and optical network resources and forecasts
for capital budgets. The Voice Capacity group also monitors and manages the
capacity of buildings that contain our network hardware. The group maintains an
up-to-date inventory of all voice network resources and provides forecasts for
capital budget plans for internal customers. The group also provides network
support for all standard voice products.

Network Operations

The Network Operations group operates, manages and maintains the core
network infrastructure that transports our voice, Internet, data, optical and
DTV services. It is developing operational support systems for this
infrastructure and extending visibility of network status and performance data
into the business units. The group also determines support strategies for this
infrastructure, including the establishment and management of maintenance and
support contracts with internal and external suppliers. Another key role is to
establish and manage network security.

V. ntl: carrier services and mobile

External network services customers are managed by our carrier services
and mobile division, whose main focus is the supply of dark fiber (fiber optic
cable that is in place and available to carry a users data when needed) and
transmission capacity to both national and international telecommunications
operators. The national and local networks are used to interconnect these
carriers to cities in the UK and Ireland. We have successfully positioned
ourselves as a credible supplier of such services. We also have connectivity to
many of the UKs international cable landing stations. These are shore-based
locations where major submarine cable operators land their sea cables. We have
developed products to address the need to connect between the cable landing
sites and the major UK international nodes such as Telehouse, London. These
services are also known as backhaul services. We expect to continue serving
the wholesale marketplace through our strategy of providing high quality and
competitively priced services, customized to meet the needs of other
telecommunications operators, which need to expand their network within the UK
or connect customers to their existing network. Customers include fixed wire
line and mobile telecommunications operators, such as Worldcom, BT, Energis and
France Telecom.

A dedicated team addresses the needs of the UK mobile operators and we are
a major supplier to Vodafone, Hutchinson and Orange. We have developed a
successful business supplying core inter-switch and backhaul network capacity
to UK mobile operators and have commercial relationships with the four of the
five incumbent mobile operators.

In addition, we have been instrumental in developing a new commercial and
technical model for the supply of networks to the mobile operators. These
developments culminated in the award, in April 2000, of a five-year £150
million contract by Orange that encompasses the design, build and maintenance
of the network.

The wholesale market saw the reorganization or bankruptcy of many of the
new entrant operators in 2002, especially those companies whose focus had been
on serving carriers. As a result of this, several customers that had signed
contracts with us running through 2003 are no longer in business. While this
will have some effect on this divisions revenue for 2003, most of our existing
contracts are now with telecommunications companies with high volumes of retail
traffic. Furthermore, our sales focus is on UK telecommunications companies who
service the retail rather than the wholesale markets. Commercial arrangements
are structured to minimize any financial exposure to another operator.

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The ntl: carrier services team also negotiates and manages the commercial
agreements with BT and Cable and Wireless where we egress our own voice or IP
traffic across their networks or purchases leased line services from them. In
addition, the team also manages the ingress and egress relationships with other
telecommunications operators.

The ntl: carrier services team also sells voice termination services to a
wider mix of operators. These relationships allow us to reduce our cost for
carriage of our international telephony traffic.

NTLs Businesses and Investments in the Republic of Ireland

In July 1999, we acquired Cablelink Ltd. in the Republic of Ireland, which
then had over 400,000 homes in network service areas in Dublin, Galway and
Waterford. The companys name was changed to NTL Communications (Ireland)
Limited in May 2000, and is referred to in this document as NTL Ireland. NTL
Ireland is managed independently from ntl: home but is considered part of the
consumer services segment of our business.

As of December 31, 2002, NTL Ireland provided cable television services in
Dublin, Galway and Waterford to approximately 368,000 subscribers and had a 77.5%
penetration rate over its cable network, which passed over 474,900 homes. NTL Ireland is in the process of instituting a more rigorous credit policy
that is expected to lead to the involuntary disconnection of certain customers.
As a result of this, NTL Ireland anticipates that its residential customer
base will decline by approximately 25,000 net customers in 2003. As a result, we
expect a decline in revenue, programming costs and bad debt expense,
but taken together we believe these changes will
not have a significant overall impact on our results of operations or cash flows.

Part
of that cable network has been upgraded to a two-way network which passed
23,000 homes. The company holds cable and MMDS licenses to provide analog and
digital television services in its network service areas for the next 11 years.
It also has a full service license allowing it to provide public telephony,
Internet and other value-added services throughout Ireland. Business services
provided in the Republic of Ireland include business telecommunications and
Internet services. Based on the year ended December 31, 2002, our revenue in
the Republic of Ireland was derived approximately 86% from residential
customers and 14% business customers.

Among our recent highlights, NTL Ireland:



| |  |  | secured regulatory approval and implemented a 33% price increase for
cable TV from October 2001 in exchange for relinquishing the exclusivity
franchise over the cable network service areas in March 2002;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | agreed to a revised MMDS network digital TV roll out schedule with
the Commission for Communications Regulation, or ComReg, to be
implemented by June 2003; and                                            
|
| |  |  | issued advance notice to appropriate regulatory authorities and cable
TV customers of a 9% price increase effective from January 2003.                                                                     

As in the UK, product and pricing strategies emphasize choice, value and
quality and are designed to encourage subscription to multiple services and to
maximize customer retention and average revenue per customer.

Cable Television

In the Republic of Ireland, we currently offer both an analog and digital
television services within our three network service areas. The analog service
has a basic pack of 15 television channels and is considered very competitive
with the emphasis on the quality of the service offered. It carries every Irish
and UK terrestrial channel and a selection of quality satellite channels.
Analog subscribers have the option to upgrade their analog service to include
premium sports packs.

Our digital television service in the Republic of Ireland was launched in
September 2001 in all network service areas and is currently available to 90%
of our customer base. The digital service packaging and pricing strategy
encourages our analog subscribers to upgrade to the digital service while
retaining the basic analog entry pack. We provide a single digital television
pack offering a wide selection of digital channels with a low entry price
point. If subscribers upgrade to digital, further revenue can be generated by
encouraging uptake of additional services such as digital premium sports and
movie services, special interest channels, and our joint venture
movies-on-demand service called Front Row. As of December 31, 2002, NTL
Ireland had 38,000 digital subscribers.

Telephony

We provide direct on-net and indirect Carrier pre-Select (CPS) telephony
product to approximately 6,400 customers in the Republic of Ireland. This
service is available to both residential and business customers. We suspended
marketing and promoting residential CPS telephony in December 2002 for
commercial and strategic regulatory reasons but continue to expand our market
share of the Business CPS telephony markets. Currently, we also offer direct
telephony to a limited number of customers.

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In addition, we offer business customers a primary rate ISDN service. We
deliver this service via a 2Mb/s circuit over fiber directly into the
customers premises. It is suitable for larger customers requiring a minimum of
30 lines.

Internet

We provide a dial-up Internet service to 2,500 existing telephony
customers (both direct and indirect) in the Republic of Ireland. We are
currently conducting trials for a broadband Internet service in West Dublin,
offering a 128Kb/s and a 512Kb/s service. Customers have the option to rent the
cable modem for 5 a month, with a monthly charge of 25 or 35, depending on
the option chosen. To date, we have achieved an 6.5% penetration level within
the specific trial area, with 1,500 customers subscribing to the service as of
December 31, 2002.

We provide dedicated lines to business customers in our Dublin franchise
for Internet access with speeds ranging from 64Kb/s to 34Mb/s. We also sell
leased lines in Dublin to customers requiring connectivity. One of our business
objectives is to achieve higher penetration within large corporate businesses
based in the Dublin region.

NTLs Customer Statistics as of December 31, 2002

The following table illustrates our residential customer statistics as of
December 31, 2002:

|                            |                     |    |          |         |   |       |       |       |   |  |          |         |  
|--------------------------- | ------------------- | -- | -------- | ------- | - | ----- | ----- | ----- | - |  | -------- | ------- | -
|(Subscriber totals in 000s) |                     | UK |          | Ireland |   | Total
|                            |                     |    |          |         |   |      
|Homes in Franchise          |                     |    | 11,411.2 |         |   |       | 474.9 |       |   |  | 11,886.1 |        
|Homes Passed                |                     |    | 8,404.1  |         |   |       | 474.9 |       |   |  | 8,879.0  |        
|Homes Marketable            |                     |    | 7,733.0  |         |   |       | 474.9 |       |   |  | 8,207.9  |        
|                            |                     |    |          |         |   |       |       |       |   |  |          |        
|                            | Telco               |    |          | 7,510.0 |   |       |       | 474.9 |   |  |          | 7,984.9 |  
|                            | ATV                 |    |          | 7,733.0 |   |       |       | 474.9 |   |  |          | 8,207.9 |  
|                            | DTV                 |    |          | 7,126.0 |   |       |       | 408.1 |   |  |          | 7,534.1 |  
|                            | Broadband           |    |          | 6,745.6 |   |       |       | 23.0  |   |  |          | 6,768.6 |  
|Customers                   |                     |    | 2,686.4  |         |   |       | 368.0 |       |   |  | 3,054.4  |        
|                            |                     |    |          |         |   |       |       |       |   |  |          |        
|                            | Single RGU          |    |          | 762.2   |   |       |       | 361.6 |   |  |          | 1,123.8 |  
|                            | Dual RGU            |    |          | 1,550.9 |   |       |       | 6.4   |   |  |          | 1,557.3 |  
|                            | Triple RGU          |    |          | 373.3   |   |       |       |      |   |  |          | 373.3   |  
|Telephone                   |                     |    | 2,411.5  |         |   |       | 6.4   |       |   |  | 2,417.9  |        
|                            |                     |    |          |         |   |       |       |       |   |  |          |        
|                            | Talk Plan subs      |    |          | 193.3   |   |       |       |       |   |  |          |         |  
|Television                  |                     |    | 2,055.3  |         |   |       | 368.0 |       |   |  | 2,423.3  |        
|                            |                     |    |          |         |   |       |       |       |   |  |          |        
|                            | DTV                 |    |          | 1,229.0 |   |       |       | 38.0  |   |  |          | 1,267.0 |  
|                            | ATV                 |    |          | 804.6   |   |       |       | 311.1 |   |  |          | 1,115.7 |  
|                            | MATV                |    |          | 21.7    |   |       |       | 18.9  |   |  |          | 40.6    |  
|Internet                    |                     |    | 987.3    |         |   |       | 4.0   |       |   |  | 991.3    |        
|                            |                     |    |          |         |   |       |       |       |   |  |          |        
|                            | Dial-Up (metered)   |    |          | 122.7   |   |       |       | 2.5   |   |  |          | 125.2   |  
|                            | Dial-Up (unmetered) |    |          | 320.7   |   |       |       |      |   |  |          | 320.7   |  
|                            | DTV Access          |    |          | 26.8    |   |       |       |      |   |  |          | 26.8    |  
|                            | Broadband           |    |          | 517.1   |   |       |       | 1.5   |   |  |          | 518.6   |  
|RGUs (1)                    |                     |    | 4,983.9  |         |   |       | 375.9 |       |   |  | 5,359.8  |        
|                            |                     |    |          |         |   |       |       |       |   |  |          |        
|                            | Telephone           |    |          | 2,411.5 |   |       |       | 6.4   |   |  |          | 2,417.9 |  
|                            | Television          |    |          | 2,055.3 |   |       |       | 368.0 |   |  |          | 2,423.3 |  
|                            | Broadband Internet  |    |          | 517.1   |   |       |       | 1.5   |   |  |          | 518.6   |  
|Service Units (2)           |                     |    | 5,454.1  |         |   |       | 378.4 |       |   |  | 5,832.5  |        
|RGUs/Customer               |                     |    | 1.86     | x       |   |       | 1.02  | x     |   |  | 1.75     | x      
|Service Units/Customer      |                     |    | 2.03     | x       |   |       | 1.03  | x     |   |  | 1.91     | x      
|Penetration:                |                     |    |          |         |   |       |       |       |   |  |          |        
|                            | Telephone           |    |          | 32.1    | % |       |       | 1.3   | % |  |          | 30.3    | %
|                            | Television          |    |          | 26.6    | % |       |       | 77.5  | % |  |          | 29.5    | %
|                            | Broadband Internet  |    |          | 7.7     | % |       |       | 6.5   | % |  |          | 7.7     | %
|                            | Customer            |    |          | 34.7    | % |       |       | 77.5  | % |  |          | 37.2    | %
|                            | RGU                 |    |          | 64.4    | % |       |       | 79.2  | % |  |          | 65.3    | %
|                            | Service Unit        |    |          | 70.5    | % |       |       | 79.7  | % |  |          | 71.1    | %
|Q4 Customer/RGU Movement    |                     |    |          |         |   |       |       |       |   |  |          |        

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|                            |                                 |    |         |         |   |       |       |       |   |  |         |         |  
|--------------------------- | ------------------------------- | -- | ------- | ------- | - | ----- | ----- | ----- | - |  | ------- | ------- | -
|(Subscriber totals in 000s) |                                 | UK |         | Ireland |   | Total
|                            |                                 |    |         |         |   |       |      
|                            | Opening Subs                    |    |         | 2,667.0 |   |       |       | 368.0 |   |  |         | 3,035.0 |  
|                            | Gross Adds                      |    |         | 105.8   |   |       |       | 7.2   |   |  |         | 113.0   |  
|                            | Disconnects (3)                 |    |         | (108.1  | ) |       |       | (7.2  | ) |  |         | (115.3  | )
|                            |                                 |    |         |         |   |       |       |       |   |  |         |        
|                            |                                 |    | 2,664.7 |         |   |       | 368.0 |       |   |  | 3,032.7 |        
|                            | MATV Subs (included @ 31st Dec) |    |         | 21.7    |   |       |       | 0.0   |   |  |         | 21.7    |  
|                            |                                 |    |         |         |   |       |       |       |   |  |         |        
|                            | Closing Subs                    |    |         | 2,686.4 |   |       |       | 368.0 |   |  |         | 3,054.4 |  
|                            | Quarterly Customer Adds (4)     |    |         | (2.3    | ) |       |       |      |   |  |         | (2.3    | )
|                            | Quarterly RGU Adds (4)          |    |         | 91.2    |   |       |       | 0.8   |   |  |         | 113.7   |  
|                            | % Customer Churn (5)            |    |         | 15.9    | % |       |       | 7.7   | % |  |         | 14.9    | %
|Off-Net Telephony           |                                 |    | 90.8    |         |   |       | 2.3   |       |   |  | 93.1    |        
|                            |                                 |    |         |         |   |       |       |       |   |  |         |        
|                            | Telephone                       |    |         | 21.9    |   |       |       |      |   |  |         | 21.9    |  
|                            | Telephone + Internet            |    |         | 68.9    |   |       |       | 2.3   |   |  |         | 71.2    |  



|(1) |  | RGUs are defined as all on-net telephone, television and Broadband Internet subscribers.                    
|--- |  | ------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Service units are defined as all on-net telephone, television and Internet subscribers.                     
|   
|(3) |  | Disconnects include customers which cancel service due to moving premise.                                   
|   
|(4) |  | Quarterly customer adds and quarterly RGU adds exclude 21.7 MATV customers not previously reported.         
|   
|(5) |  | Annualized churn is defined as: (Quarterly disconnects x 4) / (opening customers + 50% quarterly gross adds)

Other Operations

In addition to our communications operations described above, we have
investments in a virtual ISP, VirginNet, a pay-per-view content provider, Front
Row, joint ventures with UK digital television and radio license holders and a
calling card business.

In May 2001, we appointed IBM as our strategic outsourcing partner for the
provision of Information Technology (IT) services to us covering our operations
in the UK and Ireland until 2012. These services provide support for the
following of our IT sections: End User Helpdesk, End User Computing, Midrange,
Voice and Data, Application Development and Application Maintenance. We have
retained certain elements of our IT, including DTV, Internet and broadband,
which are fundamental to our competitive advantage.

Competition in the UK

We face significant competition from established and new competitors in
the areas of residential telephony, business telecommunications services,
Internet and cable television.

Consumer Services

We compete primarily with BT in providing telephone services to
residential customers in the UK. BT occupies an established market position and
manages fully built networks and has resources substantially greater than ours.
According to the Office of Telecommunications, or OFTEL, as at June 2002, BT
serviced 82.5% of UK residential telephone exchange line customers. Our growth
in telecommunications services, therefore, depends upon our ability to convince
BTs customers to switch to our telecommunications services. We believe that
value for money is currently one of the most important factors influencing the
decision of UK customers to switch from BT to a competing telecommunications
service. BT has, however, introduced price reductions in some categories of
calls and, due to regulatory price controls, BT will be making further
reductions in its telecommunications prices. Accordingly, although we intend to
remain competitive, in the future we may be unable to offer residential
telephone services at rates lower than those offered by BT. In this case, we
may not achieve desired penetration rates and may experience a decline in total
revenues. There can be no assurance that any such decline in revenues or
penetration rates will not adversely affect us. In addition to BT, other
telecommunications competitors could prevent us from increasing our share of
the residential telecommunications market. In particular, carrier pre-selection
for all calls (except for some special categories) was launched in 2001, which
may increase the appeal of indirect access operators, whose discounted call
charges may undercut us.

We also compete with mobile networks. This technology may grow to become a
competitive threat to our networks, particularly if call charges are reduced
further on the mobile networks. Our tower services group may enable us to
benefit from the growth in this technology. There can be no assurance, however,
that we will be able to compete successfully with such telecommunications
operators.

We believe that we have a competitive advantage in the residential market
because we offer integrated telephone, cable television, telecommunications
services (including Internet, interactive and on-line services) and
multi-product packages designed to encourage

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customers to subscribe to multiple services. The packages we currently
offer to the majority of our UK residential franchise customers comprise
telephone service, narrowband Internet access service, broadband Internet
access services, all of the current terrestrial television channels and access
to multi-channel television, including pay per view and interactive television
services. Our packaging and pricing are designed to encourage our customers to
use multiple services such as dual telephone and broadband, dual telephone and
narrowband, dual telephone and TV, or triple telephone, TV and Internet access.
Of our competitors, only Telewest, which does not offer its services in our
franchise areas, is able to offer the full range of services we provide.
However, there can be no assurance that this competitive advantage will
continue. Indeed, BT and all other operators have been permitted to provide and
convey cable television services throughout the UK from January 1, 2001, and
exclusive franchises will no longer be awarded.

BSkyB currently markets telecommunications services on an indirect access
basis, which requires the customer to dial additional digits before entering
the primary telephone number, thus diverting calls onto another operators
network.

Our cable television systems compete with direct reception over-the-air
terrestrial broadcast television, DTH satellite services (i.e., BSkyB) and
satellite master antenna systems. In addition, pay television and pay-per-view
services offered by us compete to varying degrees with other communications and
entertainment media, including home video, cinema exhibition of feature films,
live theater and newly emerging multimedia services. We expect that, in the
future, we may face competition from programming provided by video-on-demand
services. In addition, BSkyB has access to various movie and sports programming
content, with which they create some of the most popular pay TV channels in the
UK. Although there are competing channel providers, the position of programming
supplier to us undoubtedly is an advantage to BSkyB, not only because the Sky
brand is a feature of our cable TV service, but also because we are dependant
upon the supply of these Sky premium channels allowing BSkyB, subject to
applicable regulation, to influence pricing and bundling.

We offer our broadband Internet service at flat rates of £14.99, £24.99
and £34.99 per month for 128Kb/s, 600Kb/s and 1Mb/s, respectively, including
the rental of a cable modem. This compares with a 512Kb/s ADSL service from BT
Broadband and Freeserve at £27 and £27.99 per month plus purchase of the modem,
respectively.

Business Telecommunications

We face a wide range of competitors in the UK market. The nature of this
competition varies depending on geography, product and the opportunity size.
Only BT and Telewest have both extensive local access networks and a national
backbone network, however, as Telewests local networks do not overlap with our
own networks we do not compete with them to any material extent; in all
opportunities BT would be a major competitor. Cable and Wireless and Energis
own national backbone networks and they tend to focus on the large
enterprise/corporate markets as does Worldcom, however, they do not own network
to any material extent and rely on wholesale arrangements to supply their
customers.

Colt has
an extensive network particularly in London and also focuses
on large enterprise/corporate accounts; Thus has network in Scotland,
principally in Edinburgh and Glasgow and YourCom has network in Manchester.
We face these competitors on a local basis mainly in the medium to large end of
the small to medium size enterprise (or SME) market and in larger
enterprise/corporate accounts.

Although many customers have a dual supplier sourcing policy, competition
remains based on price and quality of service and we expect price competition
to intensify as existing and other new entrants compete aggressively. Most of
these competitors have substantial resources and there can be no assurance that
these or other competitors will not expand their businesses in our existing
markets or that we will be able to continue to compete successfully with such
competitors in the business telecommunications market.

Broadcast Transmission and Tower Services

Crown Castle UK Ltd, a subsidiary of Crown Castle International Corp.,
referred to as Crown, is our primary competition in the terrestrial broadcast
transmission market in the UK. Crown provides analog transmission services to
the BBC and digital transmission services to the BBC. Crown has diversified
from its core television broadcasting business using its transmission
infrastructure to enter into the radio transmission and telecommunications
sectors.

Although Crown is our direct competitor, we each have reciprocal rights to
use each others sites for analog broadcast transmission in order to enable
each of us to achieve the necessary countrywide coverage. This
relationship was
formalized by the site-sharing agreement entered into in 1991 in respect of our
respective analog transmission businesses. With respect to our respective
digital

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transmission businesses, although terms have been agreed, a formal
agreement has yet to be signed governing our relationship. However, we
are operating under an informal arrangement pending such formalization.

Crown also offers site rental on a significant number of its sites (some
of which are managed on behalf of third parties). Like us, Crown offers a full
range of site-related services to its customers, including installation and
maintenance. In November 2000, Crown entered into an agreement with BT to
deliver roof space and grounds at an initial 4,000 BT exchange sites around the
UK. We believe our towers to be at least as well situated as Crowns and that
we will be able to continue expanding our own third-party site-sharing
penetration.

All four UK mobile operators own site infrastructure and lease space to
other users. Their openness to sharing with direct competitors varies by
operator. T-Mobile and O2 have announced joint deployment on some sites in the
UK. BT and Cable & Wireless are both major site-sharing customers but also
compete by leasing their own sites to third parties. BTs position in the
market is even larger when considered in combination with its interest in O2.

Several other companies compete in the market for site rental. These
include Gridcom UK (part of the merged National Grid Lattice plc), the
Automobile Association and the Royal Automobile Club. Some companies own sites
initially developed for their own networks, while others are developing sites
specifically to exploit this market.

Carrier Services and Mobile

BT and Cable & Wireless are our principal competitors across all areas of
both the Carrier Services and Mobile markets. Competition is based on price,
range and quality of services. The ubiquity of BTs local access network across
the UK also puts it in a strong competitive position. Competition is most
intense on key city-to-city routes where new entrants have increased the number
of suppliers and had a significant negative impact on prices. Where
opportunities are closer aligned to our franchise geography, the number of
competitors is significantly reduced.

Competition in the Republic of Ireland

Since 1998, BSkyB has had a presence in the Irish pay-TV market. In the
past two years BSkyB has been aggressively marketing its digital television
service to Irish consumers and it is estimated that it is the second largest
pay-television operator in the Irish market after NTL with 272,000 customers.
BSkyB closed a deal in April 2002 with Irish free to air broadcasters to carry
the television stations RTE1, Network 2, TV3 and TG4 on its second tier
package. At present BSkyB is not regulated in Ireland and NTL, which is subject
to regulation, may be at a competitive disadvantage in the Irish television
market.

The principal competitors to our business operations in the Republic of
Ireland are Worldcom, Eircom and ESAT BT. For residential telephony, the
incumbent fixed line operator, Eircom that provides direct telephony and CPS
services and ESAT BT are our main competitors.

Government Regulation

Regulation in the UK

Telecommunications service industries in the UK are governed by
legislation under the Telecommunications Act 1984, the Broadcasting Act 1990,
and the Broadcasting Act 1996. The operator of a full-service
telecommunications system in the UK requires the following two principal
non-exclusive licenses:



| |  |  | a telecommunications license, granted under the Telecommunications
Act by the Secretary of State and supervised by the Department of Trade
and Industry, or DTI, and OFTEL, which authorizes the installation and
operation of the telecommunications network used to provide cable
television and cable telephone services; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a cable television license granted under the Broadcasting Act and
supervised by the Secretary of State and the Independent Television
Commission, or ITC, which authorizes the provision of broadcasting
services.                                                                                                              

Our
subsidiary NTL Group Limited holds a 25-year telecommunications
license running from June 23, 2000 and a
15-year cable television license running from January 1, 2000,
each covering the whole of the UK. Our subsidiary National
Transcommunications Limited holds a 25-year telecommunications
license running from January 1, 1991 for the purposes of running the broadcast
network, also covering the whole of the UK.

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Each type of license described above contains various
conditions, and in the event of the breach of such conditions, the Director
General of Telecommunications (the head of OFTEL) or the ITC, as appropriate,
could issue an enforcement order and ultimately commence proceedings to require
compliance or to revoke such licenses.

Price Regulation

BT is currently subject to controls over the prices it may charge
customers. In particular, BT may not increase charges for certain services by
more than the amount of the percentage change in the retail price index. In
July 2002, OFTEL confirmed that BT would be subject to a requirement to
introduce a new wholesale indirect access product designed to stimulate
competition in the calls market. A safeguard price cap of RPI-RPI to prevent
increases in the bills of the lowest spending 80% of residential customers by
spend would remain in place until this product was fully implemented by BT and
was being used by other operators to provide services. After that, a safeguard
cap of RPI+0 would remain in place to peg prices to the rate of inflation,
pending a further review of the retail market in 2004.

We are not subject to the same scrutiny and control by OFTEL of our retail
telephone prices as BT, given our non-dominant status in the market. However,
we are subject to prohibitions on undue preference and undue discrimination in
our cable television pricing. We are also required to publish our standard
prices, terms and conditions for cable television services.

Number Portability

The European Union agreed in 1998 to a revision to the Interconnection
Directive that made it a requirement for Member States to mandate number
portability. Implementing regulations came into force on January 19, 2000
requiring that number portability should be provided on request to all
customers switching between different operators and providers of fixed
telecommunications services. We have a process in place to comply with our
existing obligations and we are now in the process establishing arrangements
with other operators.

Local Loop Unbundling

In November 1999, an OFTEL policy statement mandated the unbundling of
BTs local loop to rival providers, enabling them to offer a range of higher
bandwidth services using Digital Subscriber Line (DSL) technology. On August 8,
2000, conditions in BTs license were brought into force setting out the
requirements under which BT must provide services necessary for local loop
unbundling. OFTEL published the wholesale prices for BTs unbundled local loops
on December 2000 and prices for shared access were published in 2001 although
discussions continue as to the appropriate wholesale charges. In addition, BT
is currently rolling out ADSL over its own network. ADSL will allow consumers
access to high-speed information services.

Local loop unbundling could allow us to increase our broadband off-net
subscriber base, although we are not currently pursuing this initiative. Local
loop unbundling could also increase competition for us, as it will also allow
other providers of broadband Internet access services to provide services to
current or potential customers of ours. A number of companies, such as
Freeserve, have started to market broadband services using BTs local loop.

Interconnection

NTL Group Limited and National Transcommunications Limited have Annex II
status giving them rights of interconnection at wholesale rates to other
operators with similar status.

Open Access to Cable Infrastructure

In April 2001, OFTEL issued a statement on regulated access to cable
infrastructure (referred to as open access). The conclusion reached by OFTEL
was that no case existed for mandating open access to cable infrastructure at
that time.

BSkyB

In December 2002, the Office of Fair Trading, or OFT, announced that it
had concluded its investigation of whether BSkyB has acted in breach of the UK
Competition Act 1998, in particular by:

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| |  |  | Exerting an anti-competitive margin squeeze on rival distributors of Pay TV;
| | - |  | ------------------------------------------------------------------------------
|
| |  |  | Pricing its channels in the form of anti-competitive mixed bundling; and    
|
| |  |  | Giving anti-competitive discounts to distributors.                            



| | The conclusion of the OFTs analysis are that:
| | ----------------------------------------------



| |  |  | BSkyB has a dominant position for the wholesale supply of certain premium sports and film channels;                                                                                                   
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | With a borderline result, there are insufficient grounds for finding
that BSkyB had abused a dominant position by exerting an
anti-competitive margin squeeze against rival distributors of Pay TV; or
|
| |  |  | There are insufficient grounds for finding that BSkyB had abused a
dominant position in respect of the mixed bundling of its channels; and                                                            
|
| |  |  | BSkyB had not been found in breach of competition law.                                                                                                                                                

Competition Act 1998

The Competition Act, which came into force in March 2000, introduced a
prohibition on the abuse of a dominant position and on anti-competitive
agreements and introduced third party rights, stronger investigative powers,
interim measures and effective enforcement powers (including fines of up to 10%
of UK turnover). The Competition Act enables third parties to bring enforcement
actions directly against telecommunications operators who are in breach of the
prohibitions and seek damages, rather than have to wait for the Director
General of Telecommunications to make an enforcement order.

In February 2000, OFTEL issued specific guidance on the application of the
Competition Act in the telecommunications sector. This guidance states that
OFTEL would follow closely the general principles of competition law in its
application of the new prohibitions. In addition, the regulators must not reach
decisions that are inconsistent with EC law.

The Competition Act, as well as OFTELs regulations, limits the types of
agreements and arrangements we can enter into. For example, we may be
prohibited from establishing pricing arrangements or purchasing arrangements
which have the effect of reducing competition in the market or forcing
companies to behave in a certain way dictated by us.

The Enterprise Act

The Enterprise Act received Royal Assent on 7 November 2002. It covers a
range of measures to enhance business through strengthening the UKs
competition law framework, transforming the approach to bankruptcy and
corporate rescue, and empowering consumers.

The main reforms in the Act are:

Competition. To a large extent rather than the Secretary of State,
independent, competition bodies will now take decisions on merger and market
investigations using competition-based tests. This competition-based test will
replace the existing public interest test and will assess whether the merger
will lead to a substantial lessening of competition. A new jurisdictional
threshold on turnover replaces the old gross assets test. The acquisition of a
business with annual sales in the UK of £70 million or more will qualify for
investigation.

The competition authorities will issue comprehensive guidance on the new
regime. They will be obliged to consult on and give reasons for all significant
decisions. There will be a new right of appeal to the Competition Appeals
Tribunals, or CAT, in merger and market inquiries. Inquiries will have to be
completed within statutory maximum timetables. Reforms to the Competition
Commissions procedures will allow for a more transparent and better-informed
remedy-setting phase following the publication of provisional competition
findings.

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Individuals who cause or encourage the making of agreements between
competitors designed to fix prices, share markets, limit supply or production
and rig bids within the UK, can be prosecuted and imprisoned for up to 5 years.
Victims of anti-competitive behavior will have greater opportunities to gain
redress, and will now find it easier to bring claims for damages for losses
suffered due to anti-competitive behavior. Where infringement has already been
established by the OFT, CAT or the European Commission, the CAT can award
damages for that infringement. Where no prior decision is available, claims may
be pursued in the High Court.

Consumer Protection. Stop Now Orders will now be extended to protect
consumers from traders (including companies like us) who do not meet their
legal obligations. The new enforcement regime will apply to infringements of a
wide range of legislation protecting the economic interests of consumers, such
as failing to carry out a service to a reasonable standard. This will also
ensure that honest traders, especially small businesses, do not face unfair
competition from those who engage in unlawful conduct.

Designated consumer bodies will be empowered to make super-complaints to
the OFT about features of a market which are harming consumers. The aim is to
address situations were markets have failed to work for consumers, rather than
the conduct of particular companies. The OFT will be required to specify what
action it intends to take within 90 days. This will significantly strengthen
the voice of consumers on competition matters.

Insolvency. The Act reforms corporate insolvency law by streamlining the
administration procedures; making them quicker, more flexible, easier to access
and fairer.

Mobile Phone Termination Charges

On December 12, 2001, OFTEL announced that it had referred to the
Competition Commission its proposal to impose a cap on the amount mobile phone
operators can charge for receiving calls on their networks. OFTELs conclusion
was that mobile termination rates were substantially in excess of cost and that
there was little incentive for operators to reduce the charges. Accordingly,
OFTEL proposed a charge cap on future termination rates of RPI -12% over four
years.

It was announced on January 22, 2003, that the Competition Commissions
findings supported OFTELs view that consumers pay too much for calls to mobile
phones and that the mobile operators must cut their termination charges for
these calls. Following the Director Generals reference to the Competition
Commission in January 2002, the Competition Commission has reached the
following conclusions:



| |  |  | operators are overcharging customers by up to 40 percent for
terminating calls onto their networks;                                                                                                                  
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | callers to mobile phones have no choice but to pay the termination
charge set by the mobile operator, which means that there is little
incentive for the operators to reduce their charges towards their actual
cost;
|
| |  |  | there should be a 15 percent cut in call termination charges for all
mobile operators by July 25, 2003; and                                                                                                          
|
| |  |  | further charge controls for termination rates should be introduced
after July: RPI-15% for O2 and Vodafone, and RPI-14% for Orange and
T-Mobile. The charge controls should run for three years until 2005-06.       

OFTEL has accepted the Competition Commissions conclusions and will now
consult on the amendment to each mobile operators license in the light of
these recommendations. The mobile operators have said that they intend to seek
a judicial review of the Competition Commissions investigation, and as at
todays date, T-Mobile has filed an application for judicial review with the
Court, and Vodafone has expressed an intention to do so.

Broadcast Services

A portion of our total revenue is attributable to the provision of
television and radio transmission and distribution services. In the UK, the
provision of such services is governed by the Telecommunications Act 1984 and
the Wireless Telegraphy Act 1949.

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Telecommunications Act and Broadcasting Act Licenses

The licenses governing ntl: broadcast contain conditions and provisions
which, among other things:



| |  |  | require us to publish our charges and terms and conditions of
business and not to show undue preference to or exercise undue
discrimination against particular persons in the provision of certain
telecommunications services;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | impose on us an obligation to share our transmission sites with other transmission operators;                                                                                                                                  
|
| |  |  | restrict the prices which we are allowed to charge for the provision of some services;                                                                                                                                         
|
| |  |  | prohibit us from cross-subsidizing the unregulated side of our business; and                                                                                                                                                   
|
| |  |  | impose a requirement for separate accounts to be produced in relation
to both the regulated and unregulated parts of our business. However, we
are not obliged to do anything not reasonably practicable.                    

Price Cap Review

A part of our ntl: broadcast business is regulated. This regulated
business may be divided into two categories: Price Regulated Business and
Applicable Rate Business. Price Regulated Business comprises those
telecommunication services, which we are obliged to provide pursuant to our
Transmission License and in respect of which price controls are imposed. Our
Applicable Rate Business comprises those telecommunications services, which we
are obliged to provide but which do not fall within the definition of Price
Regulated Business. Charges for Applicable Rate Business are agreed between the
relevant customer and us. If despite all reasonable efforts an agreement cannot
be reached between us and a significant proportion of our customers in respect
of any particular telecommunications service, the Director General will
determine the charge.

In respect of any services provided by us which are not Price Regulated
Business or Applicable Rate Business, our prices are wholly unregulated, except
for the overriding duty not to engage in any pricing policy which constitutes
undue preference or undue discrimination against any person or class of persons
in respect of telecommunications services. Our unregulated income would
include, for example, charges for site rentals to PCN operators.

Our Price Regulated Business consists of the television transmission
service provided to the ITV (Channel 3) companies and Channel 4/S4C including
the operation and maintenance of transmission equipment and the provision to
third party transmission operators of the accommodation, masts and antennae
necessary for the operation of broadcast transmission services.

On December 24, 1996, the Director General of Telecommunications issued
the formal modification to our Telecommunications Act Licenses to effect the
price controls, which are to apply to us for the period from January 1, 1997 to
December 31, 2002. The Price Cap Review had two purposes: (1) to establish a
new P0 (allowable revenues for the first year of the next control period,
1997, in respect of our Maximum Price Regulated Business) and (2) to establish
a new X (the percentage by which such revenues must, after allowing for
consumer price inflation, be reduced each year thereafter). The Director
Generals review concluded that, on assumptions at the time (1996), the new P0
was (UK Pound) 53.4 million and the new X was 4.0%.

In April 2002, OFTEL agreed with us to extend the existing price control
until July 31, 2003. OFTEL will shortly commence a review of the broadcast
transmission market which will in turn lead to a decision on whether to extend
price controls beyond July, remove controls altogether, or introduce other
regulatory requirements in place of price controls.

Communications Bill

In December 2002, the UK Government introduced a Communications Bill
intended to incorporate into UK law a series of EU Directives, and create a new
body OFCOM to regulate the communications industry. This will merge the
functions of, among others, OFTEL, the Radiocommunications Agency and ITC and
it is intended that it will provide a more flexible framework for regulating a
converging industry.

The proposed legislation includes a number of other significant changes to
the existing regulatory regime, including:

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| |  |  | The abolition of individual network licenses, to be replaced with
general authorizations;                                                          
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | A new framework for imposing access rules on all platforms which have
Significant Market Power  closely related to the market dominance
principle;
|
| |  |  | Rights and obligations currently applied to infrastructure-based
operators only will be extended to service providers; and                           
|
| |  |  | Content rules will be applied in a light touch fashion and Internet
content is not intended to be regulated at all.                                

Regulation in the Republic of Ireland

Legislation and Licensing

NTL Ireland has a General Telecommunications License granted under the
Telecommunications Act 1983 and separate cable TV and Multi-channel Multi-point
Distribution System (MMDS), licenses for each of its cable TV and MMDS
franchises in Dublin, Galway and Waterford, granted under the Wireless
Telegraphy Acts 1926 to 1988. In addition, the cable television industry in the
Republic of Ireland is governed by the Wireless Telegraphy (Programme Service
Distribution) Regulations 1999. The Office of the Director of
Telecommunications Regulation, or ODTR, has now been replaced under the
Communications Regulations Act 2002 by the Commission for Communications
Regulation, also known as ComReg, as the Irish regulatory body responsible for
regulation of the communications industry.

NTL Ireland was awarded its Cable and MMDS licenses in 1999 and
telecommunications license in 1998. The telecommunications license enables us
to provide voice, data and Internet services throughout the Republic of Ireland
by interconnecting with other operators. To date, we have concluded an
interconnection agreement with the incumbent operator, Eircom. The cable TV and
MMDS licenses require us to provide television services in a digital format to
all customers by April 2004. To date, we have met our digital roll out
obligations for cable TV and have reached agreement with the regulator with
respect to MMDS roll out.

The 1999 Regulations required cable TV and MMDS operators to obtain prior
consent of the regulator for price increases. As a condition of being granted a
34% price increase by the former ODTR in October 2001, we agreed to surrender
exclusivity in our franchise areas with effect from March 1, 2002 and are
accordingly not subject to the requirement to obtain prior consent from ComReg
for future price increases. However, ComReg continues to retain retrospective

price investigation powers under the 1999 Regulations which empowers it to
investigate retail prices and direct that such prices be altered. The
regulations also require cable TV operators to pay a levy of 3.5% of annual
gross revenue to ComReg.

The cable TV and MMDS licenses oblige us to seek the consent of ComReg to
any changes in our basic analog television line up, and to maintain separate
accounts in respect of distribution of licensed program services.

Under the new EU Authorizations Directive published in the Official
Journal of the EU, the current Irish licensing regime will be replaced by a
system of non-prescriptive authorizations by July 25, 2003.

MMDS Business

Our MMDS business in the Republic of Ireland provides analog television to
over 18,900 customers in our Dublin, Galway and Waterford franchise areas. We
were obliged under our MMDS licenses to provide MMDS services in a digital
format by January 1, 2001, with a grace period until June 30, 2001. Failure to
meet these milestones could have resulted in revocation of our MMDS licenses.

In December 2000, we informed ComReg that we did not intend to provide
television services in a digital format on our MMDS networks and accordingly
undertook to transfer the licenses and the customer base to a third party.
However, a sale was not completed during the period December 2000 to November
2002 and so we reached an agreement with ComReg to implement a revised digital
rollout schedule. As part of this agreement, we have undertaken to make digital
TV services available to 95% of customers within our MMDS franchise areas by
June 1, 2003. Failure to meet this deadline will trigger payment of a 100,000
bond to ComReg. In addition, we accepted a two year reduction in the term of
our MMDS license now due to expire in 2012, but were able to retain

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exclusivity to 2004. This exclusivity may become obsolete in any event in
2003 due to new EU Directives, which aim to liberalize the entire European
communications market

European Union Legislation

Our business is further regulated by the EU under various European
Commission Directives. In February 2002, the European Union adopted a package
of legislative measures, which set out a new framework for electronic
communication and ensures that the legislation is more technology neutral. The
new framework consists of five harmonization Directives, including a framework
Directive and four specific Directives on authorization, access and
interconnection, universal service and users rights, and data protection in
telecommunications services, a Regulation on unbundling the local loop, a draft
liberalization Directive and a decision on Community radio spectrum policy.

The UK Government must now implement these directives into UK law no later
than July 24, 2003, and intends to do so with the enactment of the
Communications Bill. This will have a number of important effects on the
current regulatory regime, including the abolition of existing individual
Telecommunications Act licenses, to be replaced with a General Authorization.
Regulators will be required to undertake a review of individual communications
market sectors with a view to identifying the level of competition in those
sectors, and which companies if any have Significant Market Power (SMP)
(equivalent to a dominant position in competition law). A finding of SMP will
lead to the imposition of specific controls such as price controls or open
access requirements.

Research and Development

Our research and development activities involve the analysis of
technological developments affecting our cable television, telephone and
telecommunications business, the evaluation of existing services and sales and
marketing techniques and the development of new services and techniques.

Patents, Trademarks, Copyrights and Licenses

We do not have any material patents or copyrights nor do we believe that
patents play a material role in our business. We own and have the right to use
registered trademarks, which in some cases are, and in others may be, of
material import to our business, including the ntl: logo. In addition, we
are substantially dependent on the licenses granted by the legislative agencies
which regulate our respective businesses. The loss of any one or more of those
licenses could have a material adverse effect on our business and financial
condition.

Customers

Except for our broadcast services business and ntl: business, no material
part of our business is dependent upon a single customer or a few customers,
the loss of any one or more of which would have a materially adverse effect on
us. In our broadcast services business, 34.6% of revenues from the broadcast
services business in 2002 was derived from contracts with the ITV companies
(not including ITV Digital), Channel 4/S4C and Channel 5 in the UK, the loss of
one or more of which may have a material adverse effect on the broadcast
business.

Employees

In the UK and Ireland, at December 31, 2002, we had approximately 15,130
employees, approximately 13,700 of whom are permanent and approximately 1,430
of whom are temporary or contract employees. We believe that our relationship
with our employees is good.




Item 2. Properties

In the UK and Ireland, we own, lease or occupy under license 109 business
unit and regional offices, our corporate head offices in each of Hook and
Dublin, and 2 retail shops.

In addition, we own or lease approximately 660 switching
centers/head-ends, operational hub-sites, and other types of network sites
(e.g. points of presence and repeater nodes) together with warehouses and other
non-operational properties, as well as various cable television, telephone and
telecommunications equipment housed on public and private sites.

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In addition, in the UK, for the purposes of our site leasing and broadcast
transmission businesses, we own, lease, contract to lease, or occupy under
license approximately 1,410 properties. For these businesses, we also are the
licensee of approximately 660 transmitter sites which are owned by Castle
Transmission and shared between the two organizations pursuant to a site
sharing agreement.

We maintain offices under lease for our corporate staff in New York City
and London. We believe that our facilities are presently adequate for their
current use.




Item 3. Legal Proceedings

In connection with the now consummated Chapter 11 cases, proofs of claim
were filed against us and other debtors in those cases by Morgan Stanley Senior
Funding Inc. for $11,400,000. These claims are asserted by Morgan Stanley
Senior Funding Inc. to relate to alleged unpaid fees for commitments of capital
made to various companies within the former NTL group of companies in 1999. We
believe we have legitimate defenses to these claims.

NTL Europe, our former parent company prior to our emergence from Chapter
11 on January 10, 2003, and certain of its officers, including our President 
Chief Executive Officer, have been named as defendants in a number of purported
securities class action lawsuits. The complaints in those cases generally
allege that the defendants failed to accurately disclose NTL Europes financial
condition, finances and future prospects in press releases and other
communications with investors prior to filing its Chapter 11 case in federal
court. We do not know of any facts that would support these allegations, and
the defendants have informed us that they intend to defend these lawsuits
vigorously. While NTL Europe has been released from liability in these actions
as a result of the consummation of the Plan, the case remains pending against
the individuals named as defendants. We have not been named as a defendant. The
cases have been consolidated for all purposes before the U.S. District Court
for the Southern District of New York.

We are involved in certain other disputes and litigation arising in the
ordinary course of our business. None of these matters are expected to have a
material adverse effect on our financial position, results of operations or
cash flows.




Item 4. Submission of Matters to a Vote of Security Holders

There were no matters that were submitted to a vote of our stockholders
during the quarter ended December 31, 2002.




PART II




Item 5. Market for the Registrants Common Equity and Related Stockholder Matters

(a) Market Information.

Until the consummation of the Plan on January 10, 2003, we were a indirect
wholly-owned subsidiary of the entity now known as NTL Europe, Inc. (then known
as NTL Incorporated) and there was no market for our common stock. Following
consummation of the Plan on January 10, 2003, our common stock and Series A
warrants were listed on the Nasdaq National Market and currently trade under
the symbols NTLI and NTLIW, respectively. Our common stock has not been
quoted on the Nasdaq National Market for a full quarterly period.

(b) Holders.

As of
March 21, 2003, our transfer agent informed us that there were approximately 46 record holders of our
common stock.

(c) Dividends.

Since our inception, we have not declared or paid any cash dividends on
our common stock. We currently intend to retain any earnings for use in the
operation and expansion of our business and for debt service and, therefore, we
do not anticipate paying cash dividends in the foreseeable future. Please refer
to the section of this annual report entitled Risk Factors  We do not expect
to pay dividends on our common stock in the foreseeable future for a
discussion of the legal and contractual restrictions on our ability to declare
and pay cash dividends.

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(d) Securities authorized for issuance under equity compensation plans.

The Plan provides that on or after January 10, 2003, the Effective Date
of the Plan, the compensation committee of our board of directors is authorized
to, and will, adopt a management incentive plan. The purpose of the management
incentive plan is to provide incentives to certain of our employees and the
employees of our subsidiaries, as well as to incentivize their efforts in
fostering and promoting our long term growth and performance and to better
align such employees interests with those of our stockholders. Under the
management incentive plan, options to purchase up to 10% of the issued and
outstanding shares of our common stock as of the Effective Date may be granted
from time to time to certain of our employees and the employees of our
subsidiaries. Accordingly, on the Effective Date pursuant to the Plan, we
reserved 5 million shares of our common stock for issuance under the management
incentive plan. The management incentive plan has not yet formally been
adopted, as the compensation committee of our board of directors has not
convened since the Effective Date, although such adoption is called for by the
Plan. The form of management incentive plan approved in the Plan is included as
an exhibit to this annual report.

(e) Sales of unregistered securities.

On the Effective Date (January 10, 2003), pursuant to the Plan, we issued
50,000,969 shares of our common stock and 8,750,496 Series A warrants to
certain former creditors and stockholders of NTL and our subsidiaries in
reliance on the exemption from registration afforded by Section 1145 of the US
Bankruptcy Code. We received no proceeds from the issuance of such shares of
our common stock and Series A warrants.

Also on the Effective Date, in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act, we and certain of our
subsidiaries issued 19% Senior Secured Notes due 2010 (referred to as the Exit
Notes) and 500,000 shares of our common stock to the initial purchasers of the
Exit Notes. The gross proceeds from the Exit Notes and such shares totaled $500
million.

On January 24, 2003, in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act, an aggregate of 83,245 shares
of our common stock was issued in escrow to certain of our executives pursuant
to their employment agreements. We received no proceeds from the issuance of
such shares of our common stock.




Item 6.Selected Financial Data

The selected consolidated financial information of NTL Incorporated
(formerly NTL Communications Corp.) presented below under the captions income
statement data for the years ended December 31, 2002, 2001, 2000, 1999 and
1998, and balance sheet data as of December 31, 2002, 2001, 2000, 1999 and 1998
was derived from our consolidated financial statements audited by Ernst & Young
LLP. This information should be read in conjunction with the consolidated
financial statements and notes thereto appearing elsewhere in this annual
report.

Beginning on May 8, 2002, the date that we, NTL Europe and certain or our
and NTL Europes subsidiaries filed the Plan under Chapter 11 of the US
Bankruptcy Code, we have prepared our consolidated financial statements in
accordance with the American Institute of Certified Public Accountants
Statement of Position 90-7, Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code (referred to as SOP 90-7 in this annual report).
Pursuant to SOP 90-7, beginning on May 8, 2002 we discontinued accruing
interest expense on certain of our prepetition obligations. Our reported
interest expense in 2002 excludes $662.9 million of contractual interest for
the period from May 8, 2002 to December 31, 2002. Also in 2002,
recapitalization items, net were $151.8 million. Recapitalization items
include all transactions incurred as a result of our Chapter 11 reorganization.
Recapitalization items, net include $36.2 million for employee retention
related to substantially all of our UK employees and $116.7 million for
financial advisory, 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.

In addition, in 2002 we recorded asset impairment charges of $445.1
million consisting of non-cash charges to write down certain fixed assets of
$56.0 million, license acquisition costs of $29.0 million and goodwill of
$360.1 million. We also recorded restructuring charges of $104.8 million and
non-cash charges of $284.4 million primarily for allowances for the cancellation of receivables from NTL Europe
in accordance with the Plan. Amortization expense in 2002 decreased from
amounts in prior periods due to the adoption of Statement of

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Financial Accounting Standards (referred to as SFAS) No. 142 on January 1,
2002 which ended the amortization of goodwill and other indefinite lived
intangible assets.

As of December 31, 2001, $14,203.0 million of our long-term debt was
classified as current due to the uncertainties about compliance with the terms
and conditions of the instruments and agreements governing our debt that would
give the holders of the debt the right to accelerate payment. In the fourth
quarter of 2001, we recorded asset impairment charges totaling $8,161.6 million
including goodwill of $8,077.8 million, license acquisition costs of $58.8
million, customer lists of $9.1 million, other intangibles of $14.9 million and
investments in affiliates of $1.0 million. In addition, in 2001 we recorded
restructuring costs of $202.8 million, integration and consulting costs of
$95.1 million and a loss on the sale of the ConsumerCo off-net indirect access
customers of $88.5 million.

In May 2000, NTL Europe purchased ConsumerCo for an aggregate purchase
price of approximately $13.1 billion, including intangibles of approximately
$8.9 billion. We subsequently acquired ConsumerCo from NTL Europe. The net
assets and results of operations of ConsumerCo are included in the consolidated
financial statements beginning in May 2000. Also in 2000, we recorded
restructuring charges of $65.9 million and costs of $26.8 million primarily to
integrate acquired companies, mostly related to information technology
integration as well as costs incurred for business rationalization consulting.

In March 1999, we purchased Diamond Cable Communications Limited, referred
to as Diamond in this annual report, for an aggregate purchase price of
approximately $984.6 million, including intangibles of approximately $1.3
billion. In July 1999, we purchased Cablelink Limited, referred to as
Cablelink, for an aggregate purchase price of approximately $700.5 million,
including intangibles of approximately $669.6 million. In September 1999, NTL
Delaware purchased NTL Business for an aggregate purchase price of $175.0
million, including intangibles of approximately $176.9 million. We subsequently
acquired NTL Business from NTL Delaware. The net assets and results of
operations of Diamond, Cablelink and NTL Business are included in the
consolidated financial statements from March 1999, July 1999 and September
1999, their respective dates of acquisition. In August 1999, Telewest
Communications plc exercised its right to purchase all of our shares of Cable
London PLC and all of our related rights and interests for a purchase price of
approximately £428.0 million. We recorded a gain of $493.1 million on this
sale.

In June and September 1998, we purchased ComTel and Telecential
Communications, which we refer to collectively as ComTel, for an aggregate
purchase price of approximately $969.0 million, including intangibles
aggregating approximately $224.0 million. In October 1998, we purchased Comcast
UK Cable Partners Limited (now known as NTL (Triangle) LLC and referred to as
NTL Triangle in this annual report), for an aggregate purchase price of
approximately $600.4 million, including intangibles of approximately $129.8
million. In December 1998, we purchased Eastern Group Telecoms Limited
(referred to as EGT) for an aggregate purchase price of approximately $151.0
million, including intangibles of approximately $45.0 million. The net assets
and results of operations of ComTel, NTL Triangle and EGT are included in the
consolidated financial statements from September 1998, October 1998 and
December 1998, their respective dates of acquisition.

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|                       |  |                                      |          |      |  |      |           |      |  |      |          |   |  |   |         |   |  |   |        |  
|---------------------- |  | ------------------------------------ | -------- | ---- |  | ---- | --------- | ---- |  | ---- | -------- | - |  | - | ------- | - |  | - | ------ | -
|                       |  | Year Ended December 31,             
|                       |  |                                     
|                       |  | 2002                                 |          | 2001 |  | 2000 |           | 1999 |  | 1998
|                       |  |                                      |          |      |  |      |           |      |  |     
|                       |  | (in millions, except per share data)
|Income Statement Data: |  |                                      |          |      |  |      |           |      |  |      |          |   |  |   |         |   |  |   |        |  
|Revenues               |  | $                                    | 3,265.1  |      |  | $    | 3,189.6   |      |  | $    | 2,484.2  |   |  | $ | 1,537.1 |   |  | $ | 747.0  |  
|Operating (loss)       |  |                                      | (1,401.8 | )    |  |      | (10,401.6 | )    |  |      | (1,525.2 | ) |  |   | (611.0  | ) |  |   | (228.6 | )
|Net (loss)             |  |                                      | (2,375.8 | )    |  |      | (11,837.0 | )    |  |      | (2,388.1 | ) |  |   | (716.5  | ) |  |   | (534.6 | )

|                                                 |  |                         |          |      |  |      |           |      |  |      |          |   |  |   |         |  |  |   |         | 
|------------------------------------------------ |  | ----------------------- | -------- | ---- |  | ---- | --------- | ---- |  | ---- | -------- | - |  | - | ------- |  |  | - | ------- | 
|                                                 |  | Year Ended December 31,
|                                                 |  |                        
|                                                 |  | 2002                    |          | 2001 |  | 2000 |           | 1999 |  | 1998
|                                                 |  |                         |          |      |  |      |           |      |  |     
|                                                 |  | (in millions)          
|Balance Sheet Data:                              |  |                         |          |      |  |      |           |      |  |      |          |   |  |   |         |  |  |   |         | 
|Cash, cash equivalents and
marketable securities |  | $                       | 507.2    |      |  | $    | 251.1     |      |  | $    | 423.5    |   |  | $ | 1,079.2 |  |  | $ | 996.9   | 
|Working capital                                  |  |                         | (6,794.6 | )    |  |      | (15,073.7 | )    |  |      | (946.3   | ) |  |   | 423.9   |  |  |   | 600.5   | 
|Fixed assets                                     |  |                         | 11,088.9 |      |  |      | 10,840.3  |      |  |      | 10,916.8 |   |  |   | 5,348.4 |  |  |   | 3,854.4 | 
|Total assets                                     |  |                         | 13,041.4 |      |  |      | 13,030.4  |      |  |      | 23,146.5 |   |  |   | 9,733.0 |  |  |   | 6,194.1 | 
|Long-term debt (1)                               |  |                         | 15,766.5 |      |  |      | 14,203.0  |      |  |      | 11,843.4 |   |  |   | 7,598.0 |  |  |   | 5,043.8 | 
|Redeemable preferred stock                       |  |                         |         |      |  |      |          |      |  |      |         |   |  |   |        |  |  |   | 124.1   | 
|Shareholders equity (deficiency)                |  |                         | (5,176.1 | )    |  |      | (3,179.0  | )    |  |      | 9,012.2  |   |  |   | 1,066.0 |  |  |   | 355.2   | 

(1)     As of December 31, 2002, long-term debt of $5,952.3 million
was classified as current and $9,814.2 million was classified as liabilities subject to
compromise. As of December 31, 2001, there was $14,203.0 million of long-term
debt classified as current.

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Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations

NTLs Completed Restructuring

On May 8, 2002, NTL Incorporated (then known as NTL Communications Corp.),
NTL Europe (then known as NTL Incorporated) and certain of our and NTL Europes
subsidiaries filed a pre-arranged joint reorganization plan under Chapter 11 of
the US Bankruptcy Code. Our operating subsidiaries and those of NTL Europe were
not included in the Chapter 11 filing. The Plan became effective on January 10,
2003, at which time we emerged from Chapter 11 reorganization.

Pursuant to the Plan, the entity formerly known as NTL Incorporated and
its subsidiaries and affiliates were split into two separate groups, and we and
NTL Europe each emerged as independent public companies. The entity formerly
known as NTL Communications Corp. (the registrant) was renamed NTL
Incorporated and became the holding company for the former NTL groups
principal UK and Ireland assets. Prior to consummation of the Plan, we were a
wholly-owned subsidiary of the entity then known as NTL Incorporated, which,
pursuant to the Plan, was renamed NTL Europe, Inc. and which became the
holding company for the former NTL groups continental European and certain
other assets. Pursuant to the Plan, all of the outstanding securities of our
former parent company (NTL Europe) and certain of its subsidiaries, including
us, were cancelled, and we issued shares of our common stock and Series A
warrants and NTL Europe issued shares of its common stock and preferred stock
to various former creditors and stockholders of our former parent company and
its subsidiaries, including us. The precise mix of new securities received by
holders of each particular type of security of our former parent company and
its subsidiaries was set forth in the Plan.

Background of Restructuring

Both the equity and debt capital markets experienced periods of
significant volatility in 2001 and 2002, particularly for securities issued by
telecommunications and technology companies. As a result, the ability of our
former parent company and its subsidiaries to access those markets as well as
its ability to obtain financing from its bank lenders and equipment suppliers
became severely restricted. In addition, our former parent company and its
subsidiaries, including us, had no further funds available, or were unable to
draw upon funds under our credit facilities. As a result of these factors,
together with its substantial leverage, on January 31, 2002, our former parent
company announced that it had appointed professional advisors to advise on
strategic and recapitalization alternatives to strengthen its balance sheet,
reduce debt and put an appropriate capital structure in place for its business.

Promptly upon obtaining the requisite waivers from the lenders under its
credit facilities, in March 2002, our former parent company commenced
negotiations with a steering committee of the unofficial committee of its
bondholders and the committees legal and financial advisors.

Our former parent company and its subsidiaries failed to make interest
payments on some of the outstanding notes starting on April 1, 2002. Our former
parent company also failed to declare or pay dividends on certain series of its
outstanding preferred stock, due to a lack of available surplus under Delaware
law.

On April 16, 2002, our former parent company announced that it and the
unofficial committee of its public bondholders had reached an agreement in
principle on a comprehensive recapitalization of the former NTL group. To
implement the proposed recapitalization plan, on May 8, 2002, we, our former
parent company and certain of our former parent companys other subsidiaries
filed cases and a pre-arranged joint reorganization plan under Chapter 11 of
the US Bankruptcy Code. In connection with the filing, some members of the
unofficial creditors committee of bondholders entered into a credit facility
agreement, referred to in this annual report as the DIP facility, committing to
provide a wholly-owned subsidiary of ours with up to $500 million in new debt
financing (NTL Delaware committed to provide up to an additional $130 million
to us under the DIP facility).

As a result of the payment defaults as well as the voluntary filing under
Chapter 11 by our former parent company and certain of its subsidiaries on May
8, 2002, there was an event of default under all of our former parent company
and its subsidiaries credit facilities and the indentures governing all of
their publicly traded debt, other than debt of NTL Triangle.

The Plan was confirmed by the Bankruptcy Court on September 5, 2002.
During the fall of 2002, our former parent company negotiated with a group of
lenders to enter into a new financing arrangement to repay the DIP facility, to
repay certain obligations and to provide liquidity to us and our subsidiaries.
The Plan became effective on January 10, 2003 (referred to as the Effective
Date), at which time we emerged from Chapter 11 reorganization. In connection
with our emergence from Chapter 11 reorganization, we and certain of our
subsidiaries issued $558.249 million aggregate principal face amount of 19%
Senior Secured Notes due 2010 (the Exit Notes) on January 10, 2003. Initial
purchasers of our Exit Notes also purchased 500,000 shares of our common stock
on that date. The

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gross proceeds from the sale of our Exit Notes and such shares totaled
$500 million. The proceeds were used in part to repay amounts outstanding under
the DIP facility (which was repaid on the Effective Date) and to purchase from
NTL Delaware a £90 million note of NTL (UK) Group Inc. and to repay certain
other obligations. Also on January 10, 2003, we and our lending banks amended
our existing credit facilities.

Pro Forma Consolidated Balance Sheet as of December 31, 2002

The following pro forma consolidated balance sheet as of December 31, 2002
gives effect to our emergence from Chapter 11 reorganization and the adoption
of fresh-start reporting as if both had occurred on December 31, 2002. We
adopted fresh-start reporting in January 2003 in accordance with the
SOP 90-7. We adopted fresh-start reporting because the holders of our
voting common shares immediately before filing and confirmation of
the Plan received less than 50% of the voting shares of the emerging
company, and because our reorganization value is less than our
post-petition liabilities and allowed claims.

The adjustments entitled Emergence from Chapter 11 reflect the
consummation of the Plan, including the cancellation of a substantial portion
of our outstanding debt and the issuance of shares of new common stock and
Series A warrants to various former creditors and stockholders of our former
parent company and certain of its subsidiaries, including us. The adjustments
entitled Fresh-Start reflect the adoption of fresh-start reporting. We
engaged an independent financial advisor to assist in the determination of the
reorganization value (or fair value) of our assets and the present value of our
liabilities. This determination resulted in the fresh-start reporting
adjustments to write-down fixed assets and write-up intangible assets to their
fair values. In addition, our total reorganization value exceeded the amounts
allocable to identifiable assets that resulted in a new indefinte-lived
intangible asset.

The emergence from Chapter 11 and the adoption of fresh-start reporting in
January 2003 resulted in the following items of income (expense) that
will be recognized in our financial statements for the quarter ended
March 31, 2003:

|                                              |  |             |        |  
|--------------------------------------------- |  | ----------- | ------ | -
|                                              |  | In
millions
|                                              |  |            
|Gain on debt discharge                        |  | $           | 8,452  |  
|Fresh-start adoption  intangible assets      |  |             | 1,522  |  
|Fresh-start adoption  long term debt         |  |             | 221    |  
|Fresh-start adoption  deferred tax liability |  |             | (69    | )
|Fresh-start adoption  accrued expenses       |  |             | (120   | )
|Fresh-start adoption  fixed assets           |  |             | (3,195 | )
|                                              |  |             |        |  
|TOTAL                                         |  | $           | 6,811  |  
|                                              |  |             |        |  

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Pro Forma Consolidated Balance Sheet as of December 31, 2002 (continued)

|                                                                           |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |         | 
|-------------------------------------------------------------------------- | --------------------------------------------------------------- | - | ---------- | --------- | -------------- | - | ------------- | -------- | --------- | - | -------- | --------- | - | - | -------- | ------- | 
|                                                                           |                                                                 |   | Historical |           | Emergence from |   | Fresh         |          |           |   |         
|                                                                           |                                                                 |   |            |           | Chapter 11     |   | Start         |          | Pro Forma
|                                                                           |                                                                 |   |            |           |                |   |               |          |          
|                                                                           |                                                                 |   |            |           |                |   | (in millions) |          |           |   |          |           |   |   |         
|Assets                                                                     |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|Current assets:                                                            |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|                                                                           | Cash and cash equivalents                                       |   | $          | 502.0     |                |   | $             | 138.7    |           |   | $        |          |   |   | $        | 640.7   | 
|                                                                           | Marketable securities                                           |   |            | 5.2       |                |   |               |         |           |   |          |          |   |   |          | 5.2     | 
|                                                                           | Accounts receivable trade, less
allowance for doubtful accounts |   |            | 395.9     |                |   |               |         |           |   |          |          |   |   |          | 395.9   | 
|                                                                           | Due from affiliates                                             |   |            | 1.6       |                |   |               |         |           |   |          |          |   |   |          | 1.6     | 
|                                                                           | Other                                                           |   |            | 192.7     |                |   |               |         |           |   |          |          |   |   |          | 192.7   | 
|                                                                           | Due from NTL Europe, Inc.                                       |   |            | 73.3      |                |   |               | (72.4    | )         |   |          |          |   |   |          | 0.9     | 
|                                                                           |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|Total current assets                                                       |                                                                 |   | 1,170.7    |           |                |   | 66.3          |          |           |   |         |           |   |   | 1,237.0  |        
|Fixed assets, net                                                          |                                                                 |   | 11,088.9   |           |                |   |              |          |           |   | (3,194.9 | )         |   |   | 7,894.0  |        
|Intangible assets, net                                                     |                                                                 |   | 395.3      |           |                |   |              |          |           |   | 868.4    |           |   |   | 1,263.7  |        
|Investments in and loans to affiliates, net                                |                                                                 |   | 8.4        |           |                |   |              |          |           |   |         |           |   |   | 8.4      |        
|Reorganization value in excess of
amounts allocable to identifiable assets |                                                                 |   |           |           |                |   |              |          |           |   | 653.3    |           |   |   | 653.3    |        
|Other assets, net                                                          |                                                                 |   | 378.1      |           |                |   | (187.0        | )        |           |   |         |           |   |   | 191.1    |        
|                                                                           |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|Total assets                                                               |                                                                 | $ | 13,041.4   |           |                | $ | (120.7        | )        |           | $ | (1,673.2 | )         |   | $ | 11,247.5 |        
|                                                                           |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|Liabilities and shareholders equity
(deficiency)                          |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|Liabilities not subject to compromise                                      |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|Current liabilities:                                                       |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|                                                                           | Accounts payable                                                |   | $          | 385.8     |                |   | $             | 0.7      |           |   | $        |          |   |   | $        | 386.5   | 
|                                                                           | Accrued expenses and other                                      |   |            | 780.5     |                |   |               | 6.6      |           |   |          | (32.7     | ) |   |          | 754.4   | 
|                                                                           | Accrued construction costs                                      |   |            | 70.4      |                |   |               |         |           |   |          |          |   |   |          | 70.4    | 
|                                                                           | Interest payable                                                |   |            | 177.3     |                |   |               | 38.0     |           |   |          |          |   |   |          | 215.3   | 
|                                                                           | Deferred revenue                                                |   |            | 359.8     |                |   |               |         |           |   |          |          |   |   |          | 359.8   | 
|                                                                           | Due to NTL Europe, Inc.                                         |   |            | 236.1     |                |   |               | (234.6   | )         |   |          |          |   |   |          | 1.5     | 
|                                                                           | Current portion of long-term debt                               |   |            | 5,955.4   |                |   |               | (5,952.3 | )         |   |          |          |   |   |          | 3.1     | 
|                                                                           |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|Total current liabilities                                                  |                                                                 |   | 7,965.3    |           |                |   | (6,141.6      | )        |           |   | (32.7    | )         |   |   | 1,791.0  |        
|Long-term debt                                                             |                                                                 |   |           |           |                |   | 6,540.1       |          |           |   |         |           |   |   | 6,540.1  |        
|Long-term debt discount                                                    |                                                                 |   |           |           |                |   |              |          |           |   | (221.3   | )         |   |   | (221.3   | )      
|Other                                                                      |                                                                 |   |           |           |                |   |              |          |           |   | 47.2     |           |   |   | 47.2     |        
|Deferred income taxes                                                      |                                                                 |   | 94.4       |           |                |   |              |          |           |   | 68.5     |           |   |   | 162.9    |        
|Liabilities subject to compromise                                          |                                                                 |   | 10,157.8   |           |                |   | (10,157.8     | )        |           |   |         |           |   |   |         |        
|Shareholders equity (deficiency):                                         |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|                                                                           | Common stock-new                                                |   |            |          |                |   |               | 0.5      |           |   |          |          |   |   |          | 0.5     | 
|                                                                           | Additional paid-in capital                                      |   |            | 14,045.5  |                |   |               | 1,194.1  |           |   |          | (12,312.5 | ) |   |          | 2,927.1 | 
|                                                                           | Accumulated other comprehensive (loss)                          |   |            | (653.6    | )              |   |               | 0.4      |           |   |          | 653.2     |   |   |          |        | 
|                                                                           | Retained earnings (deficit)                                     |   |            | (18,568.0 | )              |   |               | 8,443.6  |           |   |          | 10,124.4  |   |   |          |        | 
|                                                                           |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|                                                                           |                                                                 |   | (5,176.1   | )         |                |   | 9,638.6       |          |           |   | (1,534.9 | )         |   |   | 2,927.6  |        
|                                                                           |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |        
|Total liabilities and shareholders equity
(deficiency)                    |                                                                 | $ | 13,041.4   |           |                | $ | (120.7        | )        |           | $ | (1,673.2 | )         |   | $ | 11,247.5 |        
|                                                                           |                                                                 |   |            |           |                |   |               |          |           |   |          |           |   |   |          |         | 

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Liquidity and Capital Resources

We have historically incurred operating losses and negative operating cash
flow. In addition, we required and expect to continue to require significant
amounts of capital to finance construction of our networks, connection of
customers to the networks, other capital expenditures and for working capital
needs including debt service requirements.

We
currently expect that we will require approximately
£310 million ($499
million) to fund our working capital including debt service, capital
expenditures, and payments made on the Effective Date pursuant to the Plan and
the amendment of our existing credit facilities, net of cash from operations,
in the twelve months from January 1, 2003 to December 31,
2003. A significant portion of the £310 million total relates
to payments made on the Effective Date. We believe
that cash, cash equivalents and marketable securities on hand of $507.2 million
as of December 31, 2002, plus the proceeds from sale of the Exit Notes and
500,000 shares of common stock of $500.0 million, will be sufficient for our
cash requirements during the twelve months from January 1, 2003 to December 31,
2003.

Over the long term, we will continue to require cash to fund operations,
service our debt and implement our strategy. In order to fund these
requirements, we anticipate that we will use cash flow from operations and may
also need to issue additional debt or equity securities or may need to secure
additional bank financing. Given the restrictions on incurring additional debt
in the indentures governing our outstanding notes, there can be no assurance
that these sources of funds will be available to us.

The indentures governing our outstanding notes, among other things,
restrict and, in some cases, prohibit our ability and the ability of most of
our subsidiaries to incur additional debt, create or incur liens, and sell
assets. In addition, we and our subsidiaries must comply with certain
financial covenants in these debt instruments. The Senior Credit Facility and
Working Capital Credit Facility also impose restrictions on our ability and the
ability of most of our subsidiaries to incur additional debt and other
extensive restrictions on most of our subsidiaries, including restrictions on
the ability of such subsidiaries to create or incur liens and sell assets. In
addition, we and most of our subsidiaries must comply with and meet certain
financial covenants in these credit facilities.

Our ability to meet our funding requirements is dependent upon a number of
factors, including our existing cash balances, the cash flow generated by our
operating subsidiaries, and our ability to obtain additional financing in the
future. Failure to achieve profitability or maintain or achieve various other
financial performance levels could in the future diminish our ability to
sustain operations, meet financial covenants, obtain additional funds, and make
required payments on our indebtedness.

Based on preliminary valuations of our pension plans, as of December 31,
2002, we believe the projected benefit obligations of certain of our defined
benefit plans exceeded the fair value of plan assets by an aggregate of
approximately £81.0 million ($130.4 million). We will need to fund this
deficit in accordance with the laws and regulations in the UK. We currently
believe we will have to use cash of approximately £8 million per year beginning
in 2003 to meet the UK requirements. The valuation of our pension plans
requires the use of assumptions and estimates. Changes in these assumptions and
estimates as well as future investment returns could potentially have a
material impact, either upwards or downwards, on this estimated funding
requirement.

We are a holding company with no independent operations or significant
assets other than our investments in and advances to our subsidiaries. We
depend upon the receipt of sufficient funds from our subsidiaries to meet our
obligations. In addition, the terms of our and our subsidiaries existing and
future indebtedness and the laws of the jurisdictions under which those
subsidiaries are organized limit the payment of dividends, loan repayments and
other distributions to us under many circumstances.

Description of Outstanding Notes and Credit Facilities

The following summarizes the terms of the significant notes and credit
facilities issued by us and our subsidiaries and outstanding as of the date
hereof:

NTL Incorporated:

(1)    19% Senior Secured Notes (Exit Notes) due January 1, 2010; principal
amount at maturity of $558.249 million; redeemable at the Companys
option after January 10, 2003; interest payable in cash semiannually from
July 1, 2003; with respect to the interest payment due on July 1, 2003,
we may elect to pay any portion of the interest in cash or by issuance of
additional pay-in-kind notes; with respect to the interest payments due
on January 1, 2004 and July 1, 2004, we may make a similar election based
on our Available Cash, as defined;

The
purchasers of our Exit Notes are entitled to registration rights with
respect to such notes pursuant to the Exchange and Registration Rights
Agreement, which is an exhibit to this annual report. Under the
Exchange and Registration Rights Agreement, we agreed, among other
things, to file with the Securities and Exchange Commission a
registration statement with respect to an offer to exchange the Exit
Notes for new notes registered under the Securities Act with terms
substantially identical to those of the unregistered notes. If we
fail to file such registration statement with the Securities and
Exchange Commission on or before April 15, 2003 or if certain
other registration default events described in the Exchange and
Registration Rights Agreement occur, then we will be required to pay
special interest to each holder of the Exit Notes, pursuant to
provisions of the Exchange and Registration Rights Agreement, during
the period of one or more of such registration default events. We
would pay such special interest at a rate of 0.5% per annum, which
will increase to 1.0% per annum after the first 120-day period
following the occurrence of the first such registration default. In
addition, our failure to register the notes in compliance with the
Exchange and Registration Rights Agreement would result in an event
of default under the Indenture governing the Exit Notes.

NTL Communications Limited:

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(2)    Working Capital Credit Facility originally dated May 30, 2000 (and
subsequently amended and restated) of approximately £408.3 million
($657.1 million), all of which was outstanding as of December 31, 2002;
interest payable at least every six months at LIBOR plus mandatory costs
plus a margin rate which commenced at 4.50% per annum and increases by
0.50% per annum at the end of each quarter after the date upon which the
facility was first utilized (subject to a cap on total interest of 16%
per annum and a cap on total interest payable in cash of 14% per annum
(any excess being added to principal)); effective interest rate of 11.76%
per annum at December 31, 2002; principal is due in full on March 31,
2006;

NTL Investment Holdings Limited (a wholly owned subsidiary of NTL Communications Limited):

(3)    Senior Credit Facility originally dated May 30, 2000 (and
subsequently amended and restated) of £2,784.8 million ($4,482.1
million), all of which was outstanding as of December 31, 2002;
comprising a revolving facility of £2,584.8 million ($4,160.2 million)
and a term facility of £200.0 million ($321.9 million); interest payable
at least every six months at LIBOR plus mandatory costs plus a margin
rate which, in the case of the revolving facility, is fixed at 3.50% per
annum for six months from January 10, 2003 and which then varies,
depending upon satisfaction of a financial covenant over six monthly
periods, between 4.00% and 2.50% per annum and which, in the case of the
term facility, is fixed at 5.50% per annum; effective interest rate on
the revolving facility of 6.26% per annum at December 31, 2002; effective
interest rate on the term facility of 7.76% per annum at December 31,
2002; the unused portion of the commitment to make the revolving facility
available 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 then outstanding under the revolving facility is due in full on
September 30, 2005; principal under the term facility is due in six
quarterly installments beginning on June 30, 2006 and increasing from £5
million repayments due on the first two repayment dates to £10 million
repayments due on the next three repayment dates with the balance being
due on September 30, 2007;

NTL Triangle:

(4)  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 Holdings:

(5)    10% Senior Sterling Notes due February 1, 2008; principal amount at
maturity of £135.0 million ($217.3 million); interest payable
semiannually from August 1, 1998; redeemable at Diamond Holdings option
on or after February 1, 2003; and

(6) 
  9 1/8% Senior Notes due February 1, 2008; principal amount at maturity of
$110.0 million; interest payable semiannually from August 1, 1998;
redeemable at Diamond Holdings option on or after February 1, 2003.

Contractual Obligations and Commercial Commitments

The following table includes aggregate information about our contractual
obligations as of December 31, 2002, as adjusted to give effect to our
emergence from Chapter 11 reorganization, and the periods in which payments are
due.

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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                     |  | $             | 6,545.1 |        |  | $         | 0.4   |       |  | $       | 4,161.0 |       |  | $ | 1,497.1 |  |  | $ | 886.6   | 
|Capital Lease Obligations          |  |               | 206.8   |        |  |           | 9.3   |       |  |         | 17.0    |       |  |   | 13.8    |  |  |   | 166.7   | 
|Operating Leases                   |  |               | 716.3   |        |  |           | 84.0  |       |  |         | 131.3   |       |  |   | 106.5   |  |  |   | 394.5   | 
|Unconditional Purchase Obligations |  |               | 1,422.0 |        |  |           | 437.6 |       |  |         | 219.1   |       |  |   | 218.8   |  |  |   | 546.5   | 
|Other Long-Term Obligations        |  |               | none    |        |  |           |      |       |  |         |        |       |  |   |        |  |  |   |        | 
|                                   |  |               |         |        |  |           |       |       |  |         |         |       |  |   |         |  |  |   |         | 
|Total Contractual Cash Obligations |  | $             | 8,890.2 |        |  | $         | 531.3 |       |  | $       | 4,528.4 |       |  | $ | 1,836.2 |  |  | $ | 1,994.3 | 
|                                   |  |               |         |        |  |           |       |       |  |         |         |       |  |   |         |  |  |   |         | 

The following table includes aggregate information about our commercial
commitments as of December 31, 2002. Commercial commitments are items that we
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

|                               |  |               |      |           |  |       |     |       |  |         |      |  |  |   |     |  |  |   |      | 
|------------------------------ |  | ------------- | ---- | --------- |  | ----- | --- | ----- |  | ------- | ---- |  |  | - | --- |  |  | - | ---- | 
|                               |  | Total         |      |           |  |       |     |       |  |         |      |  |  |   |     |  |  |  
|Other Commercial               |  | Amounts       |      | Less than |  | 1-3   |     | 4-5   |  | Over   
|Commitments                    |  | Committed     |      | 1 Year    |  | Years |     | Years |  | 5 Years
|                               |  |               |      |           |  |       |     |       |  |        
|                               |  | (in millions)
|Guarantees                     |  | $             | 34.1 |           |  | $     | 5.0 |       |  | $       | 15.4 |  |  | $ | 0.2 |  |  | $ | 13.5 | 
|Lines of Credit                |  |               | none |           |  |       |     |       |  |         |      |  |  |   |     |  |  |   |      | 
|Standby Letters of Credit      |  |               | none |           |  |       |     |       |  |         |      |  |  |   |     |  |  |   |      | 
|Standby Repurchase Obligations |  |               | none |           |  |       |     |       |  |         |      |  |  |   |     |  |  |   |      | 
|Other Commercial Commitments   |  |               | none |           |  |       |     |       |  |         |      |  |  |   |     |  |  |   |      | 
|                               |  |               |      |           |  |       |     |       |  |         |      |  |  |   |     |  |  |   |      | 
|Total Commercial Commitments   |  | $             | 34.1 |           |  | $     | 5.0 |       |  | $       | 15.4 |  |  | $ | 0.2 |  |  | $ | 13.5 | 
|                               |  |               |      |           |  |       |     |       |  |         |      |  |  |   |     |  |  |   |      | 

Consolidated Statements of Cash Flows

Cash provided by (used in) operating activities was $258.7 million,
$(558.6) million and $(169.0) million in the years ended December 31, 2002,
2001 and 2000, respectively. Cash paid for interest exclusive of amounts
capitalized in the years ended December 31, 2002, 2001 and 2000 was $410.0
million, $776.6 million and $363.9 million, respectively. In addition, the
change in cash provided by (used in) operating activities is due to changes in
working capital as a result of the timing of receipts and
disbursements including the suspension of certain payments due to
our Chapter 11 reorganization.

Cash used in investing activities was $844.2 million, $1,858.1 million,
$9,506.7 million in the years ended December 31, 2002, 2001 and 2000,
respectively. Cash used in investing activities primarily includes cash used
for purchases of fixed assets and acquisitions, net of cash acquired.

Purchases of fixed assets were $680.9 million, $1,653.0 million and
$1,961.8 million in the years ended December 31, 2002, 2001 and 2000,
respectively, as a result of continuing fixed asset purchases and network
construction. We continued to minimize purchases of fixed assets in 2002 in an
effort to conserve cash.

Cash used in investing activities in the year ended December 31, 2001 also
includes cash used for a loan to our former parent company of $150.0 million.
On September 28, 2001, we loaned our former parent company $150.0 million in
exchange for 15.0% Promissory Notes due September 30, 2004. Interest was
payable monthly in cash at a rate of 15.0% per annum beginning on October 31,
2001. These notes were canceled pursuant to the Plan.

Cash used for acquisitions, net of cash acquired, of $7,514.9 million in
the year ended December 31, 2000 was primarily for the acquisition of
ConsumerCo.

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Cash provided by financing activities was $800.6 million, $2,252.1
million, and $9,050.6 million in the years ended December 31, 2002, 2001 and
2000, respectively.

Proceeds from borrowings from NTL Delaware of $135.2 million in the year
ended December 31, 2002 is the £90.0 million loan to NTL (UK) Group, Inc. This
note was purchased by a subsidiary of NTL Incorporated for consideration of the
principal amount of the note plus accrued interest on the Effective Date. Proceeds from
borrowings, net of financing costs, of $670.1 million in the year ended
December 31, 2002 includes $463.2 million borrowed under the NTL Communications
Limited Working Capital Credit Facility, net of costs of $9.5 million and
$229.0 borrowed under the Communications Cable Funding Corp. DIP facility, net
of costs of $12.6 million.

Proceeds from borrowings, net of financing costs, of $2,643.4 million in
the year ended December 31, 2001 include $838.5 million borrowed under the
Senior Credit Facility, $431.8 million borrowed under the Working Capital
Credit Facility, $1,150.0 million from the issuance of our 6-3/4% Convertible
Senior Notes and $277.9 million from the issuance of our 12-3/8% Senior Euro
Notes, net of aggregate financing costs of $54.8 million.

Principal payments of $421.5 million in the year ended December 31, 2001
include optional repayments of $395.8 million under the NTL Communications
Limited credit agreements and repayments of an aggregate of $25.7 million of
other debt.

Proceeds from borrowings, net of financing costs, of $5,009.8 million in
the year ended December 31, 2000 were primarily for the acquisition of
ConsumerCo including the credit agreements entered into with a group of banks.
Included in proceeds from borrowings, net of financing costs, is $1,494.9
million of borrowings that was not related to the ConsumerCo acquisition and
net proceeds of $496.5 million from the sale of the 11-7/8%
Notes due 2010.

Principal payments of $1,263.9 million in the year ended December 31, 2000
include optional repayments of $1,168.2 million of amounts borrowed under
credit agreements.

Cash provided by financing activities also includes the following.
Contributions from our former parent company NTL Delaware were $3.9 million,
$40.8 million and $5,227.2 million in the years ended December 31, 2002, 2001,
and 2000, respectively. The contributions of $5,227.2 million in the year
ended December 31, 2000 include cash used to acquire ConsumerCo.

Results of Operations

The following discussion of our results of operations reflects our
business segments up to December 31, 2002, after which time we performed an
internal organizational restructuring which resulted, among other things, in
the transfer of our national and international carrier telecommunications
services and certain of our managed network services from our business group
into new separate groups, and the transfer of our public safety line of
business from our business services group to our broadcast transmission and
tower services group.

We provide a broad range of communication services, including: (1)
consumer telecommunications and television, (2) business telecommunications and
(3) broadcast transmission and other related services. Our consumer
telecommunications and television services comprise broadband services to
consumer markets including residential telephone, analog and digital cable
television, Internet access, and interactive services. Our business
telecommunications services include business telecommunications, national and
international carrier telecommunications, 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.

Consumer Services: In our consumer telecommunications and television
segment we derive revenues principally from monthly fees
and usage charges for (1) telephone service, (2) cable television service and
(3) Internet access. Our packaging and pricing are designed to encourage our
customers to use multiple services such as dual telephone and broadband, dual
telephone and TV or triple telephone, TV and Internet access.

Business Services: In our business telecommunications segment
we derive revenues principally from (1) monthly fees and usage
charges for inbound and outbound voice and data telephony, (2) charges for
voice, data and Internet services provided to managed network customers and (3)
charges for various outstanding arrangements provided to public safety
customers.

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Broadcast Transmission and Tower Services: In our broadcast transmission
and other services segment we derive revenues
principally from charges for (1) site leasing services, (2) national and
regional television broadcasting, (3) national, regional and local radio
broadcasting and (4) satellite up-linking for program and content distribution.

The principal components of our expenses include (1) costs to connect our
network to other networks (referred to as interconnection), (2) television
programming costs, (3) payroll and other employee related costs, (4) repairs
and maintenance, (5) facility related costs, such as rent, utilities and rates,
(6) marketing and selling costs and (7) provisions for bad debts.

As expected, our growth in 2002 was curtailed by funding constraints.
Cash constraints present many challenges to the successful execution of our
business plan. We are conserving cash by minimizing capital expenditures
including expenditures to connect new customers to our network. In order to
maintain revenues and cash from operations, we must reduce and limit customer
churn. We continue to focus on improving our customer service and increasing
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 at a relatively early stage although we have
continued to make progress through December 31, 2002. Although the new system
does not yet support our full suite of services, we expect to substantially
complete the project by the third quarter of 2004. The total project cost is
estimated to be approximately £75.0 million, of which we have incurred
approximately £22.6 million through December 31, 2002. We cannot be certain
that this project will be successful. If the full integration is not
successful, we could experience an adverse effect on customer service, our
churn rate and our costs of maintaining these systems going forward. We could
also experience operational failures related to billing and collecting revenue
from our customers, which, depending on the severity of the failure, could have
a material adverse effect on our business.

Moreover, the integration process has involved a number of internal
reorganizations of our business as we continue to strive for better
performance. These reorganizations have typically involved, among other
things, the termination of employees made redundant as a result of the process.
Although we cannot predict precisely the effect that this has had, it is
likely these internal reorganizations have negatively impacted employee morale.
If we undertake additional internal reorganizations they will similarly likely
negatively impact employee morale. Negative effects on employee morale can have a
negative effect on our operations generally.

Our plan to reduce churn and to increase average revenue per unit
(referred to as 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. 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.

The wholesale national and international telecommunications market saw the
reorganization or bankruptcy of many of the new entrant operators in 2002,
especially those companies whose focus had been on serving carriers. As a
result of this, several customers that had signed contracts with us running
through 2003 are no longer in business. While this will have some effect on our
revenue for 2003, most of our existing contracts are now with
telecommunications companies with high volumes of retail traffic. Furthermore,
our sales focus is on UK telecommunications companies who service the retail
rather than the wholesale markets. We attempt to structure our commercial arrangements to
minimize any financial exposure to another operator.

Media speculation regarding our recent Chapter 11 reorganization and
financial condition could have an adverse effect on parts of our business.
Similarly, negative press about the financial condition of alternative telecom
carriers in general may adversely affect 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 bundled voice, data and Internet services for SMEs. However, due
to the negative publicity surrounding our recent Chapter 11 reorganization and
financial condition and the potential effect of that publicity on our brand
name, we may find it difficult to increase market share. We believe our
recapitalization process and the general unfavorable climate for alternative
telecom carriers affected our revenues in 2002 as prospective customers began
deferring orders beginning in the fourth quarter of 2001. Even though we have
successfully completed the recapitalization process, there is no assurance that
such negative publicity will not adversely impact our results of operations or
have a long-term 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 refuse to 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 a
significant effect on results of operations or cash flows in 2002.

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NTL Ireland is in the process of instituting a more rigorous credit policy
that is expected to lead to the involuntary disconnection of certain customers.
As a result of this, NTL Ireland anticipates that its residential customer
base will decline by approximately 25,000 net customers in 2003. As a result, we
expect a decline in revenue, programming costs and bad debt expense,
but taken together we believe these changes will
not have a significant overall impact on our results of operations or cash flows.

Years Ended December 31, 2002 and 2001

The results of operations for the year ended December 31, 2001 include CWC
Off-Net, which was sold in the fourth quarter of 2001.

The previously announced review of a number of our balance sheet accounts
found that certain provisions that were being held against anticipated
liabilities were no longer necessary. The release of these provisions resulted
in a decrease in revenue of £2.7 million ($4.1 million), a decrease in
operating expense of £23.1 million ($34.7 million) and a decrease in selling,
general and administrative expense of £23.0 million ($34.6 million) in the
three months ended December 31, 2002 (resulting in a net
adjustment of £43.4 million ($65.2 million)).

In
addition, in 2002 we engaged in a process of reducing our
expenditures in a variety of areas including customer acquisitions
and expenditures relating to certain capital improvements. These
measures, as well as the restructuring of our operations in 2001,
which resulted in significant headcount reductions and departmental
reorganizations, caused us to reassess whether for certain 2002
expenditures, assumptions related to the allocation of those costs
between capital and operating expense needed to be revised. This
previously announced review has been
completed, resulting in a £16.3 million ($24.5 million) increase in operating
expense and a £24.9 million ($37.4 million) increase in selling, general and
administrative expense and the corresponding reduction in fixed assets of £41.2
million ($61.9 million) in the three months ended December 31, 2002.

There was no impact on cash in 2002 from either of these adjustments.
These two adjustments relate principally to periods prior to the three months
ended December 31, 2002. For the first, second and third quarters of 2002,
operating expense would increase by approximately £4 million per quarter and
selling, general and administrative expense would increase by approximately £6
million per quarter if the reallocation of the £41.2 million from capitalized
costs to expense was reflected in the appropriate periods. The £43.4 million
net adjustment would not be reallocated to the first, second and third quarters
of 2002 because these provisions related to periods prior to 2002.

Consolidated revenues increased by 2.4% to $3,265.1 million in the year
ended December 31, 2002, as compared to $3,189.6 million in the year ended
December 31, 2001. Consolidated revenues in UK pounds decreased by 1.9% to
£2,173.1 million from £2,216.1 million.

In the years ended December 31, 2002 and 2001, the United Kingdom
accounted for 97.3% and 98.0%, respectively and Ireland accounted for 2.7% and
2.0%, respectively of total consolidated revenues.

In the years ended December 31, 2002 and 2001, consumer telecommunications
and television revenues were 63.5% and 64.9%, respectively, business
telecommunications revenues were 27.0% and 26.2%, respectively and broadcast
transmission and other revenues were 9.5% and 8.9%, respectively of total
consolidated revenues.

Consumer telecommunications and television revenues increased by 0.2% to
$2,074.1 million in 2002 from $2,069.2 million in 2001 as a result of changes
in foreign currency exchange rates. These revenues in UK pounds decreased by
4.0% to £1,380.4 million from £1,437.6 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 approximately £46.0 million of consolidated
revenues in the year ended December 31, 2001. Consumer telecommunications and
television revenues have also been affected by a reduction in the customer base
due to disconnects and lower telephony usage. This decrease was partially
offset by price increases and an increase in broadband Internet services.

Business telecommunications revenues increased by 5.2% to $880.1 million
from $836.8 million. These revenues in UK pounds increased by 0.8% to £585.8
million from £581.4 million. Business telecommunications revenues increased in
the year ended December 31, 2002 as a result of the acquisition of the assets
and contracts of Viatel UK in the third quarter of 2001. This increase was
offset by a decrease in revenues in the Carrier division resulting from a
downturn in the Carriers market together with a one off reduction in revenues
in the SME and Retail divisions due principally to uncertainties arising from
our Chapter 11 reorganization.

Broadcast transmission and other revenues increased by 9.6% to $310.9
million from $283.6 million. These revenues in UK pounds increased by 5.0% to
£206.9 million from £197.1 million. The increase is primarily the result of an
increase in digital radio roll-out and project revenues, and an increase in
site related revenues.

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Operating expenses (including network expenses) decreased by 4.0% to
$1,502.5 million from $1,564.3 million primarily as a result of decreases in
telephony interconnection and television programming costs. Operating expenses
as a percentage of revenues declined to 46.0% in 2002 from 49.0% in 2001.

Selling, general and administrative expenses decreased by 20.9% to $769.8
million from $973.2 million, which primarily reflects various cost savings
efforts including restructurings announced in the third and fourth quarters of
2001. Selling, general and administrative expenses as a percentage of revenues
decreased to 23.6% in 2002 from 30.5% in 2001.

Asset impairment charges were $445.1 million and $8,160.6 million in the
years ended December 31, 2002 and 2001, respectively. Asset impairment charges
of $445.1 million in 2002 are non-cash charges to write-down certain assets to
their estimated fair values based on our assessment that their carrying value
was not recoverable. These charges in 2002 include fixed assets of $56.0
million, license acquisition costs of $29.0 million and goodwill of $360.1
million. The charge with respect to fixed assets was estimated based
upon the technological obsolescence of certain network and other equipment. The charge with respect to license
acquisition costs and goodwill was determined in accordance with SFAS
No. 142. The aggregate charge of $445.1 million in 2002 related to our
business segments as follows: $434.5 million consumer, $5.3 million business
and $5.3 million shared. Asset impairment charges of $8,160.6 million in
2001 included goodwill of $8,077.8 million, license acquisition costs of $58.8
million, customer lists of $9.1 million and other intangibles of $14.9 million.
The aggregate asset impairment charge of $8,161.6 million, which includes $1.0
million included in share of losses from equity investments, related to our
business segments as follows: $6,048.1 million consumer, $2,113.0 business and
$0.5 million broadcast.

Non-cash compensation of $30.6 million in the year ended December 31, 2001
was due to modifications to certain stock options approved by the Compensation
and Option Committee of the Board of Directors of our former ultimate parent
company in July 2001. All options to purchase shares of our former ultimate
parent companys common stock were cancelled on the Effective Date pursuant to
the Plan.

Other charges of $389.2 million in the year ended December 31, 2002
include restructuring charges of $104.8 million and non-cash charges of $284.4
million primarily for allowances for the cancellation of receivables from our former
ultimate parent company and certain of its subsidiaries in accordance with the
Plan. Other charges of $297.9 million in the year ended December 31, 2001
include restructuring charges of $202.8 million and costs of $95.1 million
incurred primarily to integrate acquired companies, mostly related to
information technology integration, as well as costs incurred for business
rationalization consulting.

Restructuring charges of $104.8 million, $202.8 million and $65.9 million
in the years ended December 31, 2002, 2001 and 2000, respectively, relate to
our actions to reorganize, re-size and reduce operating costs and create
greater efficiency in various areas. An aggregate of $7.5 million of the 2002
restructuring charges and $57.9 million of the 2001 restructuring charges were
for the write-off of equipment and other assets that are not in use and will
not require any future cash outlays. The employee severance and related costs
in 2000 were for approximately 2,300 employees to be terminated, none of whom
were still employed by us as of December 31, 2002. These costs in 2001 were
for approximately 5,200 employees to be terminated, of which approximately 20
employees were still employed by us as of December 31, 2002. These costs in
2002 were for approximately 740 employees to be terminated, of which
approximately 350 employees were still employed by the Company as of December
31, 2002. The following table summarizes the restructuring charges incurred
and utilized in 2000, 2001 and 2002:

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|                           |  |             |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |   |        |  
|-------------------------- |  | ----------- | ----- | ----- |  | ------------- | ----- | ------ |  | ----- | ----- | ----- |  | - | ----- | - |  | - | --- |  |  | - | ------ | -
|                           |  | Employee    |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |  
|                           |  | Severance   |       | Lease |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     | 
|                           |  | and Related |       | Exit  |  | Agreement     |       | Fixed  |  |       |       |       |  |   |       |  
|                           |  | Costs       |       | Costs |  | Modifications |       | Assets |  | Other |       | Total
|                           |  |             |       |       |  |               |       |        |  |       |       |      
|Charged to expense         |  | $           | 47.9  |       |  | $             | 18.0  |        |  | $     |      |       |  | $ |      |   |  | $ |    |  |  | $ | 65.9   |  
|Utilized                   |  |             |      |       |  |               |      |        |  |       |      |       |  |   |      |   |  |   |    |  |  |   |       |  
|                           |  |             |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |   |        |  
|Balance, December 31, 2000 |  |             | 47.9  |       |  |               | 18.0  |        |  |       |      |       |  |   |      |   |  |   |    |  |  |   | 65.9   |  
|2000 provision utilized    |  |             | (41.3 | )     |  |               | (9.6  | )      |  |       |      |       |  |   |      |   |  |   |    |  |  |   | (50.9  | )
|2000 provision released    |  |             | (6.6  | )     |  |               | (7.3  | )      |  |       |      |       |  |   |      |   |  |   |    |  |  |   | (13.9  | )
|Charged to expense         |  |             | 98.7  |       |  |               | 32.4  |        |  |       | 27.7  |       |  |   | 57.9  |   |  |   |    |  |  |   | 216.7  |  
|2001 provision utilized    |  |             | (26.2 | )     |  |               |      |        |  |       |      |       |  |   | (57.9 | ) |  |   |    |  |  |   | (84.1  | )
|                           |  |             |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |   |        |  
|Balance, December 31, 2001 |  |             | 72.5  |       |  |               | 33.5  |        |  |       | 27.7  |       |  |   |      |   |  |   |    |  |  |   | 133.7  |  
|2000 provision utilized    |  |             |      |       |  |               | (1.1  | )      |  |       |      |       |  |   |      |   |  |   |    |  |  |   | (1.1   | )
|2001 provision utilized    |  |             | (71.9 | )     |  |               | (17.3 | )      |  |       | (16.2 | )     |  |   |      |   |  |   |    |  |  |   | (105.4 | )
|2001 provision released    |  |             | (0.6  | )     |  |               | (15.1 | )      |  |       | (11.5 | )     |  |   |      |   |  |   |    |  |  |   | (27.2  | )
|Charged to expense         |  |             | 35.2  |       |  |               | 78.9  |        |  |       | 1.2   |       |  |   | 7.5   |   |  |   | 9.2 |  |  |   | 132.0  |  
|2002 provision utilized    |  |             | (23.3 | )     |  |               | (0.2  | )      |  |       |      |       |  |   | (7.5  | ) |  |   |    |  |  |   | (31.0  | )
|                           |  |             |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |   |        |  
|Balance, December 31, 2002 |  | $           | 11.9  |       |  | $             | 78.7  |        |  | $     | 1.2   |       |  | $ |      |   |  | $ | 9.2 |  |  | $ | 101.0  |  
|                           |  |             |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |   |        |  

Corporate expenses decreased to $18.7 million in 2002 from $24.3 million
in 2001 primarily due to a decrease in legal, accounting and other professional
costs.

Depreciation expense increased to $1,477.9 million in 2002 from $1,361.4
million in 2001 primarily due to an increase in depreciation of
telecommunications and cable television equipment.

Amortization expense decreased to $63.7 million from $1,178.9 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 year ended December 31, 2001, after deducting the amortization of
goodwill and other indefinite lived intangible assets of $1,104.9 million,
would have been $74.0 million but for the application of SFAS No. 142.

Interest expense decreased to $780.2 million from $1,240.8 million as a
result of the 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 SOP 90-7, we did not recognize interest expense on
certain of our outstanding publicly traded notes on or after May 8, 2002 (the
date we and certain of our subsidiaries filed our Plan under Chapter 11 of the
Bankruptcy Code). Our contractual interest for the year ended December 31,
2002 was $1,425.4 million. The increase in contractual interest expense in
2002 as compared to 2001 is primarily due to additional borrowings under credit
facilities and the issuance of new notes in 2001. Interest of $456.3 million
and $844.3 million was paid in cash in the years ended December 31, 2002 and
2001, respectively.

Other losses of $88.5 million in 2001 are from the sale of the CWC off-net
indirect access customers in the fourth quarter of 2001.

Foreign currency transaction gains (losses) were losses of $94.1 million
in the year ended December 31, 2002 and gains of $0.6 million in the year ended
December 31, 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 were $151.8 million in the year ended December
31, 2002. Recapitalization items include all transactions incurred as a result
of our Chapter 11 reorganization. Recapitalization items, net include $36.2
million for employee retention related to substantially all of our UK employees
and $116.7 million for financial advisory, 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.

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Net loss was $2,375.8 million in the year ended December 31, 2002 and
$11,837.0 million in the year ended December 31, 2001. This change was the
result of the factors discussed above, particularly the reduction in
amortization expense of $1,115.2 million in 2002 and the $8,160.6 million asset
impairment charges in 2001.

Years Ended December 31, 2001 and 2000

As a result of the completion of the acquisition of the consumer cable
telephone, Internet and television operations of ConsumerCo on May 30, 2000, we
consolidated the results of operations of this business from the date of
acquisition.

Consolidated revenues increased by 28.4% to $3,189.6 million in 2001, as
compared to $2,484.2 million in 2000. Revenue growth was achieved through
acquisitions and 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 telecommunications
divisions.

In 2001 and 2000, the UK accounted for 98.0% and 97.5%, respectively, of
total consolidated revenues. Ireland accounted for the remainder of the
consolidated revenues, or 2.0% and 2.5% in 2001 and 2000, respectively.

Consumer telecommunications and television revenues were 64.9% and 61.1%
of total consolidated revenues in 2001 and 2000, respectively. Business
telecommunications revenues were 26.2% and 28.3% of total consolidated revenues
in 2001 and 2000, respectively. Broadcast transmission and other revenues were
8.9% and 10.6% of total consolidated revenues in 2001 and 2000, respectively.

Consumer telecommunications and television revenues increased to $2,069.2
million in 2001 from $1,518.2 million in 2000 as a result of the ConsumerCo
acquisition, price increases, upselling new services to customers and from
growth in our customer base. The 2001 and 2000 revenue includes $956.6 million
and $532.2 million, respectively, from ConsumerCo. Upselling to existing
customers, new digital and cable modem customers and the price increases
implemented in the first and second quarters of 2001 resulted in ARPU increases
that contributed to the revenue increase.

Business telecommunications revenues increased to $836.8 million in 2001
from $702.2 million in 2000 as a result of acquisitions and from the growth in
our customer base. The acquisition of the assets and contracts of Viatel UK in
the third quarter of 2001 accounted for $65.3 million of the revenue in 2001.
The 2001 and 2000 revenue includes $97.4 million and $62.1 million,
respectively, from ConsumerCo.

Broadcast transmission and other revenues increased to $283.6 million in
2001 from $263.8 million in 2000. 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.

Operating expenses (including network expenses) increased to $1,564.3
million in 2001 from $1,223.2 million in 2000 as a result of increases in
interconnection and programming costs due to revenue growth. The 2001 and 2000
expense includes $491.5 million and $281.4 million, respectively, from
ConsumerCo.

Selling, general and administrative expenses increased to $973.2 million
in 2001 from $969.1 million in 2000. The 2001 and 2000 expense includes $293.3
million and $213.1 million, respectively, from ConsumerCo. Selling, general and
administrative expenses as a percentage of revenues decreased to 30.5% in 2001
from 39.0% in 2000. The percentage decrease reflects various cost savings
efforts.

Asset impairments in 2001 of $8,160.6 million are related to intangible
assets. During 1999 and 2000, acquisitions were made against a background of
increasing consolidation and record valuations in the telecommunications
industry. In 2001, we performed a review of the recoverability of our
long-lived assets and associated goodwill. This review was initiated because of
the decline in our former ultimate parent companys stock price and
significantly lower valuations for companies within our industry. Additionally,
at the time of our review, the book value of our former ultimate parent
companys net assets significantly exceeded its market capitalization.
Accordingly, the fair value of our assets was determined by discounting our
estimates of the expected future cash flows related to these assets when the
non-discounted cash flows indicated that the long-lived assets would not be
recoverable. We recorded a write-down of $8,161.6 million in the fourth quarter
of 2001 as a result of this analysis and review, of which $8,160.6 million is
included in asset impairments and $1.0 million is included in share of losses
from equity investments. The asset impairment charge of $8,160.6 million
included goodwill of $8,077.8 million, license acquisition costs of $58.8
million, customer lists of $9.1 million and

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other intangibles of $14.9 million. The aggregate asset impairment charge
of $8,161.6 million related to our business segments as follows: $6,048.1
million Consumer, $2,113.0 million Business and $0.5 million Broadcast.

Non-cash compensation of $30.6 million in 2001 was due to modifications to
certain stock options approved by the Compensation and Option Committee of the
Board of Directors of our former ultimate parent company in July 2001. The
latest possible expiration date of options to purchase an aggregate of
approximately 4.7 million shares of our former parent companys common stock
with exercise prices from $.17 to $14.76 per share was extended from July 30,
2001 to October 2004, as applicable, to January 30, 2006. We recognized
non-cash compensation expense based on the excess of the quoted market price of
our former ultimate parent companys common stock on the date of the
modification of $12.05 per share over the exercise price per share. All options
to purchase shares of our former ultimate parent companys common stock were
cancelled on the Effective Date pursuant to the Plan.

Other charges of $297.9 million in 2001 include restructuring charges of
$202.8 million and costs of $95.1 million incurred primarily to integrate the
acquired companies, mostly related to information technology integration, as
well as costs incurred for business rationalization consulting. Other charges
of $92.7 million in 2000 include restructuring charges of $65.9 million and
costs of $26.8 million incurred primarily to integrate the acquired companies,
mostly related to information technology integration, as well as costs incurred
for business rationalization consulting. The increase in the information
technology integration and consulting costs was the result of an acceleration
of a number of these projects, and the associated fees to the consultants and
advisors, in order to achieve the cost savings earlier than projected.
Restructuring charges of $202.8 million and $65.9 million in the years ended
December 31, 2001 and 2000, respectively, relate to our announcements in the
fourth quarter of 2001 and in November 2000 that we were taking additional
actions to reorganize, re-size and reduce operating costs and create greater
efficiency in various areas.

Corporate expenses increased to $24.3 million in 2001 from $23.7 million
in 2000 primarily due to the increase in various overhead costs.

Depreciation and amortization expense increased to $2,540.3 million in
2001 from $1,700.7 million in 2000 due to an increase in amortization on
acquisition related intangibles and an increase in depreciation of
telecommunications and cable television equipment. The 2001 and 2000 expense
includes $1,466.0 million and $802.0 million, respectively, from ConsumerCo,
including amortization of the acquisition related intangibles.

Interest expense increased to $1,240.8 million in 2001 from $886.3 million
in 2000 due to the issuance of additional debt, and the increase in the
accretion of original issue discount on the deferred coupon notes. The 2001 and
2000 expense includes $273.2 million and $135.0 million, respectively related
to ConsumerCo. Interest of $844.3 million and $459.0 million was paid in cash
in the years ended December 31, 2001 and 2000, respectively.

Other losses of $88.5 million in 2001 are from the sale of the ConsumerCo
off-net indirect access customers.

Foreign currency transaction gains (losses) were gains of $0.6 million in
2001 and losses of $58.1 million in 2000 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, our foreign subsidiaries
whose functional currency is not the U.S. dollar hold cash, cash equivalents
and debt denominated in U.S. dollars which are affected by changes in exchange
rates.

Income tax expense in 2001 of $118.1 million is primarily the result of an
increase in the deferred tax liability attributable to separate company profits
of a foreign subsidiary offset to some extent by a decrease in net deferred tax
liabilities attributable to operating losses of other foreign subsidiaries. The
increase in deferred tax liabilities includes an adjustment related to 1997
through 2000 of approximately $116.1 million that is primarily attributable to
additional tax depreciation being claimed during 2001 on original and amended
income tax returns.

Consolidated net loss increased to $11,837.0 million in 2001 from $2,388.1
million in 2000. The increase in net loss was primarily a result of the asset
impairment charge in 2001 of $8,160.6 million relating to our intangible
assets.

Critical Accounting Policies

Our consolidated financial statements and related financial information
are based on the application of accounting principles generally accepted in the
United States (referred to as GAAP). GAAP requires the use of estimates,
assumptions, judgments and subjective interpretations of accounting principles
that have an impact on the assets, liabilities, revenue and expense amounts
reported, as well as disclosures about contingencies, risk and financial
condition. The following critical accounting policies have the potential to

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have a more significant impact on our financial statements, either because
of the significance of the financial statement item to which they relate, or
because they require more judgment and estimation due to the uncertainty
involved in measuring, at a specific point in time, transactions which are
continuous in nature.



| |  | We maintain allowances for doubtful accounts and other receivables for
estimated losses resulting from the potential inability of our
customers or the other parties to make payments. These allowances are
estimated based on the current aging of receivables, prior collection
experience and future expectations of conditions that might impact the
collectibility. If the financial condition of our customers or the
other parties were to deteriorate resulting in an impairment in their
ability to make payments, additions to the allowances may be required.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Our determination of the treatment of contingent liabilities in the
financial statements is based on a view of the expected outcome of the
applicable contingency. We consult legal counsel on matters related to
litigation. We consult experts both within and outside the company
with respect to other matters that arise in the ordinary course of
business. Examples of such matters that are based on assumptions,
judgments and estimates are the amount to be paid to terminate certain
agreements included in restructuring charges and the amounts to be
paid to settle certain other liabilities. A liability is accrued if
the likelihood of occurrence of an adverse outcome is probable and the
amount is capable of estimation.                                                                                                                                                                                                                                                                                                       
| 
| |  | We review long-lived assets and our intangible assets with indefinite
lives for impairment as described in the Notes to Consolidated
Financial Statements. In
analyzing potential impairments, we use projections of future cash
flows from the asset. The projections are based on assumptions,
judgments and estimates of growth rates for the related business,
anticipated future economic, regulatory and political conditions, the
assignment of discount rates relative to risk and estimates of
terminal values. Changes to these variables in the future may
necessitate impairment charges to reduce the carrying value to fair
value.                                                                                                                                                                                                                                                                                                                                                                                                      
| 
| |  | We assign fixed assets and intangible assets useful lives that impact
the annual depreciation and amortization expense. The assignment of
useful lives involves significant judgments and the use of estimates.
Changes in technology or changes in intended use of these assets may
cause the estimated useful life to change.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| 
| |  | We have recorded restructuring charges as a result of additional
actions to reorganize, re-size and reduce operating costs and create
greater efficiency in various areas. These charges, for both severance
and exit costs, required the use of estimates. Actual results could
differ from those estimated for restructuring.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| 
| |  | The valuation of our pension plans requires the use of assumptions and
estimates that are used to develop actuarial valuations of expenses,
projected benefit obligations and funding requirements. These
assumptions include, among others, discount rates, investment returns
and projected salary increases. The actuarial models used in the
valuations use assumptions on demographic factors such as retirement,
mortality and turnover. Changes in assumptions and actual investment
returns in the future could potentially have a material impact on our
pension expense and funding requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                           
| 
| |  | Fixed assets, net, totaled
$11,088.9 million and $10,840.3 million, representing 85.0% and 83.2% of total assets,
at December 31, 2002 and 2001, respectively. Pro forma for our
emergence from Chapter 11 and the adoption of fresh-start
reporting as if both had occurred on December 31, 2002, fixed
assets, net would be $7,894.0 million representing 70.2% of pro
forma total assets at December 31, 2002. Fixed assets are stated
at cost, which includes amounts capitalized for labor and overhead
expended in connection with the design and installation of our
operating network equipment and facilities. Costs associated with
initial customer installations, additions of network equipment
necessary to enable advanced services, acquisition of additional
fixed assets and replacement of existing fixed assets are
capitalized. The costs of reconnecting the same service to a
previously installed premise are charged to expense in the period
incurred. Costs for repairs and maintenance are charged to expense as
incurred.
| 
|  |  | Internal costs directly related to
the construction and installation of fixed assets, including payroll
and related costs of certain employees and rent and other occupancy
costs are capitalized. The payroll
and related costs of certain employees that are directly related to
construction and installation activities are capitalized based on
specific time devoted to these activities where identifiable. In
cases where the time devoted to these activities is not specifically
identifiable, we capitalize costs based upon estimates. We are in the
process of upgrading our accounting systems to reduce reliance upon
estimates in determining amounts capitalized. Rent and other occupancy
costs are capitalized based on rates derived from the costs of the
facilities and a factor based on function or use.                                                                                                                                                                                                                      
| 
|  |  | The internal costs capitalized in
the years ended December 31, 2002, 2001 and 2000 were
approximately £115 million ($185.1 million),
£251 million ($365.1 million) and
£259 million ($387.4 million), respectively. The
approximately £115 million of costs capitalized in the year
ended December 31, 2002 is after the £41.2 million
adjustment in the three months ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| 
|  |  | The American Institute of
Certified Public Accountants issued an Exposure Draft of a Proposed
Statement of Position on Accounting for Certain Costs and Activities
related to Property, Plant and Equipment dated June 29, 2001.
This Exposure Draft is not currently GAAP. However, if this Exposure
Draft is adopted, it would require among other things that rent and
other occupancy costs are charged to expense as incurred. In the year
ended December 31, 2002, we capitalized approximately
£9 million of such costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

The
following table includes the calculation of internal costs
capitalized as a percentage of total operating and selling, general
and administrative expenses and as a percentage of cash used to
purchase fixed assets.



|                                                                                                                   |                         |   |         |      |  |   |         |   |  |   |         |   | 
|------------------------------------------------------------------------------------------------------------------ | ----------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | - | 
|                                                                                                                   | Year Ended December 31,
|                                                                                                                   |                        
|                                                                                                                   | 2002                    |   |         | 2001 |  |   | 2000    |  
|
|                                                                                                                   |                        
|                                                                                                                   | (in millions)          
|Internal costs capitalized                                                                                         |                         | $ | 185.1   |      |  | $ | 365.1   |   |  | $ | 387.4   |  
|Total operating and selling,
general and administrative expenses                                                   |                         |   | 2,272.3 |      |  |   | 2,537.5 |   |  |   | 2,192.3 |  
|
|Internal costs capitalized as a
percentage of total operating and selling, general
    and administrative
expenses |                         |   | 8.1     | %    |  |   | 14.4    | % |  |   | 17.7    | %
|
|Purchase of fixed assets                                                                                           |                         |   | 680.9   |      |  |   | 1,653.0 |   |  |   | 1,961.8 |  
|
|Internal costs capitalized as a
percentage of purchase of fixed assets                                             |                         |   | 27.2    | %    |  |   | 22.1    | % |  |   | 19.7    | %
|
|                                                                                                                  

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Recent Accounting
Pronouncements

On December 31, 2002, the Company adopted SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure. SFAS No. 148 amends
SFAS No. 123, Accounting for Stock Based Compensation, to provide alternative
methods of transition to SFAS No. 123s fair value method of accounting for
stock-based employee compensation. SFAS No. 148 also amends the disclosure
provisions of SFAS No. 123 and APB Opinion No. 28, Interim Financial
Reporting.

On July 30, 2002, the Financial Accounting Standards Board (referred to as
the FASB) issued SFAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities. SFAS No. 146 replaces Emerging Issues Task Force Issue
No. 94-3 Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). SFAS No. 146 requires that a liability for costs associated
with an exit or disposal activity is recognized when the liability is incurred.
Under Issue No. 94-3, a liability for an exit cost as defined was recognized at
the date of a commitment to an exit or disposal plan. SFAS No. 146 is effective
for exit or disposal activities that are initiated after December 31, 2002. The
adoption of this standard is not expected to have a significant effect on our
results of operations, financial condition or cash flows.

In April
2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections, which was effective for us on January 1, 2003. SFAS No. 145
requires any gain or loss recognized on the extinguishment of debt to be
classified as income or loss from continuing operations. Prior to SFAS No. 145,
gain or loss from the extinguishment of debt was classified as an extraordinary
item.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, effective for us 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
our results of operations, financial condition or cash flows.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, effective for us 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 adoption of this new standard is not expected to have a significant effect on
our results of operations, financial condition or cash flows.

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. We adopted SFAS
No. 141 and SFAS No. 142 on
January 1, 2002. Primarily due to the significant impairment charge that we
recorded in 2001, the adoption of this new standard did not result in
an impairment charge on adoption.

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

We also performed an evaluation for impairment of our goodwill and license
acquisition costs as of January 1, 2002 and determined that no impairment
charge was required.

Estimated aggregate amortization expense for each of the five succeeding
fiscal years from December 31, 2002, as adjusted for our emergence from Chapter
11 reorganization and the adoption of fresh-start reporting, is as follows:
$200.2 million in 2003, $200.2 million in 2004, $200.2 million in 2005, $198.7
million in 2006 and $197.7 million in 2007.

The following table shows our net (loss) as adjusted for the adoption of
SFAS No. 142, had SFAS No. 142 been in effect on January 1 of each period (in
millions).

|                         |  |   |                         |   |      |   |           |   |  |   |          |   | 
|------------------------ |  | - | ----------------------- | - | ---- | - | --------- | - |  | - | -------- | - | 
|                         |  |   | Year Ended December 31,
|                         |  |   |                        
|                         |  |   | 2002                    |   | 2001 |   | 2000     
|                         |  |   |                         |   |      |   |          
|Net (loss)  as reported |  | $ | (2,375.8                | ) |      | $ | (11,837.0 | ) |  | $ | (2,388.1 | )
|Amortization of:         |  |   |                         |   |      |   |           |   |  |   |          |  

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|                         |                           |   |                         |   |      |   |           |         |  |   |          |       | 
|------------------------ | ------------------------- | - | ----------------------- | - | ---- | - | --------- | ------- |  | - | -------- | ----- | 
|                         |                           |   | Year Ended December 31,
|                         |                           |   |                        
|                         |                           |   | 2002                    |   | 2001 |   | 2000     
|                         |                           |   |                         |   |      |   |          
|                         | Goodwill                  |   |                         |  |      |   |           | 1,067.3 |  |   |          | 668.5 | 
|                         | License acquisition costs |   |                         |  |      |   |           | 36.9    |  |   |          | 81.1  | 
|                         | Other                     |   |                         |  |      |   |           | 0.7     |  |   |          | 0.7   | 
|                         |                           |   |                         |   |      |   |           |         |  |   |          |      
|                         |                           |   |                        |   |      |   | 1,104.9   |         |  |   | 750.3    |      
|                         |                           |   |                         |   |      |   |           |         |  |   |          |      
|Net (loss)  as adjusted |                           | $ | (2,375.8                | ) |      | $ | (10,732.1 | )       |  | $ | (1,637.8 | )    
|                         |                           |   |                         |   |      |   |           |         |  |   |          |      




Item 7a.Quantitative and Qualitative Disclosures About Market Risk

We are 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. We do not enter into derivative financial
instruments for trading or speculative purposes. We have 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 our floating interest rate debt. The
counterparties were major financial institutions.

Foreign Exchange Contracts

To the extent we obtain financing in U.S. dollars and incur construction
and operating costs in various other currencies, we will encounter currency
exchange rate risks. Furthermore, our revenues are generated in foreign
currencies while our interest and principal obligations with respect to a
significant portion of our existing indebtedness are payable in U.S. dollars.

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

We had cross currency swaps to hedge exposure to movements in the Euro to
British pound exchange rate. In May 2002, we closed out our 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, we entered into interest rate swaps, with a notional amount of
£100.0 million, to hedge exposure to the floating rate indebtedness incurred
under the NTL Communications Limited £200.0 million Term Facility. In March
2002, these swaps were sold, and we received cash of £0.2 million.

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The following table provides information about our long-term fixed and
floating interest rate debt that are sensitive to changes in interest rates and
foreign currency exchange rates, as of December 31, 2002, as adjusted to give
effect to our emergence from Chapter 11 reorganization.

NTL INCORPORATED (FORMERLY NTL COMMUNICATIONS CORP.) AND SUBSIDIARIES



|                                         |  |          |   |          |  |          |   |          |  |                |         |  |                |                |        |  |                |   |        |  
|---------------------------------------- |  | -------- | - | -------- |  | -------- | - | -------- |  | -------------- | ------- |  | -------------- | -------------- | ------ |  | -------------- | - | ------ | -
|                                         |  | Year     |   | Year     |  | Year     |   | Year     |  | Year          
|                                         |  | Ending   |   | Ending   |  | Ending   |   | Ending   |  | Ending        
|                                         |  | 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                  |  |          |  |          |  |          |  |          |  |                |        |  |                |                |       |  |                | $ | 517.3  |  
|Average Interest Rate                    |  |          |   |          |  |          |   |          |  |                |         |  |                |                |        |  |                |   | 11.20  | %
|UK Pound Fixed Rate                      |  |          |  |          |  |          |  |          |  |                |        |  |                |                |       |  |                |   |       |  
|Average Interest Rate                    |  |          |   |          |  |          |   |          |  |                |         |  |                |                |        |  |                |   |        |  
|Average Forward
Exchange Rate            |  |          |   |          |  |          |   |          |  |                |         |  |                |                |        |  |                |   |        |  
|UK Pound
Variable Rate                   |  |          |  |          |  |          |  |          |  | £              | 2,584.8 |  |                | £              | 408.3  |  |                |   |       |  
|Average Interest Rate                    |  |          |   |          |  |          |   |          |  | LIBOR plus 3.5 | %       |  | LIBOR plus 7.5 | %              |        |  |                |  
|Average Forward
Exchange Rate            |  |          |   |          |  |          |   |          |  |                | 1.5440  |  |                |                | 1.5366 |  |                |   |        |  
|UK Pound
Variable Rate                   |  |          |  |          |  |          |  |          |  |                |        |  |                | £              | 20.0   |  |                | £ | 180.0  |  
|Average Interest Rate                    |  |          |   |          |  |          |   |          |  |                |         |  |                | LIBOR plus 5.5 | %      |  | LIBOR plus 5.5 | %
|Average Forward
Exchange Rate            |  |          |   |          |  |          |   |          |  |                |         |  |                |                | 1.5366 |  |                |   | 1.5311 |  

[Additional columns below]

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

|                                         |  |            |        |       |  |          |         |  |  |       |         | 
|---------------------------------------- |  | ---------- | ------ | ----- |  | -------- | ------- |  |  | ----- | ------- | 
|                                         |  |            |        |       |  |          |         |  |  | Fair 
|                                         |  |            |        |       |  |          |         |  |  | Value
|                                         |  | Thereafter |        | Total |  | 12/31/02
|                                         |  |            |        |       |  |         
|Long-term Debt
Including Current
Portion |  |            |        |       |  |          |         |  |  |       |         | 
|U.S. Dollars Fixed
Rate                  |  | $          | 668.2  |       |  | $        | 1,185.5 |  |  | $     | 939.0   | 
|Average Interest Rate                    |  |            | 17.37  | %     |  |          |         |  |  |       |         | 
|UK Pound Fixed Rate                      |  | £          | 135.0  |       |  | £        | 135.0   |  |  | £     | 108.0   | 
|Average Interest Rate                    |  |            | 10.00  | %     |  |          |         |  |  |       |         | 
|Average Forward
Exchange Rate            |  |            | 1.4316 |       |  |          |         |  |  |       |         | 
|UK Pound
Variable Rate                   |  |            |       |       |  | £        | 2,993.1 |  |  | £     | 2,993.1 | 
|Average Interest Rate                    |  |            |        |       |  |          |         |  |  |       |         | 
|Average Forward
Exchange Rate            |  |            |        |       |  |          |         |  |  |       |         | 
|UK Pound
Variable Rate                   |  |            |       |       |  | £        | 200.0   |  |  | £     | 200.0   | 
|Average Interest Rate                    |  |            |        |       |  |          |         |  |  |       |         | 
|Average Forward
Exchange Rate            |  |            |        |       |  |          |         |  |  |       |         | 

Risk Factors

Our business is capital intensive and we have historically incurred losses and
generated negative cash flows and cannot assure you that we will be profitable
in the future or that we will have sufficient liquidity to fund our working
capital and capital expenditures and to meet our obligations under our existing
debt instruments.

Our business is very capital intensive and has always required significant
amounts of cash. Historically, construction, operating expenditures and
interest costs have resulted in negative cash flow, which we expect will
continue for the foreseeable future. We have also incurred and expect to
continue to incur substantial losses. We cannot be certain that we will achieve
or sustain profitability in the future. Failure to achieve profitability could
diminish our ability to sustain operations, meet financial covenants, obtain
additional required funds and make required payments on any indebtedness we
have incurred or may incur.

We had net losses for the year ended December 31, 2002 of $2,375.8
million, and for the years ended December 31:



| |  |  | 2001: $11,837.0 million (including an asset impairment charge of $8,160.6 million)
| | - |  | ----------------------------------------------------------------------------------
|
| |  |  | 2000: $2,388.1 million                                                            
|
| |  |  | 1999: $716.5 million                                                              
|
| |  |  | 1998: $534.6 million                                                              

As of December 31, 2002, our accumulated deficit was $18.6 billion.

Moreover,
we currently expect that we will require approximately £310
million ($499 million) to fund our working capital and capital
expenditures, and payments we were required to make on the Effective
Date pursuant to the Plan

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and the amendment of our UK credit
facilities, net of cash from operations, in the twelve months from
January 1, 2003 to December 31, 2003. A significant portion
of the £310 million total relates to payments made on the
Effective Date. We believe
that cash, cash equivalents and marketable securities on hand of $507.2 million
as of December 31, 2002, and the $500 million in cash from the issuance of the
Exit Notes and shares of our common stock to the purchasers of the Exit Notes
will be sufficient for our cash requirements during the twelve months from
January 1, 2003 to December 31, 2003. It is possible that these sources of cash
will be insufficient resulting in our having to raise additional funds for
liquidity. There can be no assurance we will have the requisite access to new
funding if the need arises.

In addition, beginning in 2005, a series of principal payments will come
due on our existing debt instruments as they approach their respective maturity
dates. Our ability to make these payments and meet our ongoing funding
requirements is dependent upon a number of factors, including our existing cash
balances, the cash flow generated by our operating subsidiaries, and our
ability to obtain additional financing in the future. Failure to achieve
profitability or maintain or achieve various other financial performance levels
could in the future diminish our ability to sustain operations, meet financial
covenants, obtain additional funds, and make required payments on our
indebtedness.

We are a holding company that is dependent upon cash flow from our subsidiaries
to meet our obligations; our ability to access that cash flow may be limited in
some circumstances.

We are a holding company with no independent operations or significant
assets other than our investments in and advances to our subsidiaries. We
depend upon the receipt of sufficient funds from our subsidiaries to meet our
obligations. In addition, the terms of existing and future indebtedness of us
and our subsidiaries and the laws of the jurisdictions under which those
subsidiaries are organized limit the payment of dividends, loan repayments and
other distributions to us under many circumstances.

We have historically had a deficiency of earnings to fixed charges and our
earnings in the future may not be sufficient to cover those fixed charges.

For the years ended December 31, 2002, 2001, 2000, 1999 and 1998, our
earnings were insufficient to cover fixed charges by approximately
$2,447.8 million, $11,786.6 million, $2,563.1 million, $785.2 million and $535.0
million, respectively. Fixed charges consist of interest expense, including
capitalized interest, amortization of fees related to debt financing and rent
expense deemed to be interest. Our earnings in the future may not be sufficient
to cover those fixed charges.

Our substantial leverage could adversely affect our financial health and
diminish shareholder value.

We are, and, for the foreseeable future will continue to be, highly
leveraged. On a pro forma basis to give effect to our emergence from Chapter
11 reorganization as of December 31, 2002, the accreted value of our total
long-term indebtedness would have been $6,540.1 million. This debt represents
approximately 69.1% of our estimated total capitalization on a pro forma basis
as of December 31, 2002.

Our substantial indebtedness, coupled with the relatively high effective
interest rate on our Exit Notes, could adversely affect our financial health
and, consequently, erode shareholder value, by, among other things:



| |  |  | increasing our vulnerability to adverse changes in general economic
conditions or increases in prevailing interest rates particularly for
any borrowings at variable interest rates,    
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | limiting our ability to obtain additional financing, if needed, and                                                                                                                     
|
| |  |  | requiring us to dedicate a substantial portion of our cash flow from
operations to service our debt, which reduces the funds available for
operations and future business opportunities.

In addition, the significant cash payments required as a result of the
relatively high interest rates of our debt, if left outstanding, could
negatively impact shareholder value.

We are subject to restrictive debt covenants pursuant to our indebtedness.

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As part of our implementation of the Plan, we issued $558.249 million
principal amount of Exit Notes to certain of our creditors under the terms of
an indenture. In addition, we amended the terms of our existing Senior Credit
Facility and Working Capital Credit Facility.

The indentures governing our outstanding notes, including our Exit Notes,
among other things, significantly restrict and, in some cases, prohibit our
ability and the ability of most of our subsidiaries to:



| |  |  | incur additional debt;                                                               
| | - |  | -------------------------------------------------------------------------------------
|
| |  |  | create or incur liens;                                                               
|
| |  |  | pay dividends or make other equity distributions;                                    
|
| |  |  | purchase or redeem share capital;                                                    
|
| |  |  | create restrictions on the payment of dividends or other amounts by our subsidiaries;
|
| |  |  | make investments;                                                                    
|
| |  |  | sell assets;                                                                         
|
| |  |  | issue or sell share capital of certain subsidiaries;                                 
|
| |  |  | engage in transactions with affiliates; and                                          
|
| |  |  | effect a merger or consolidation of, or sell all or substantially all of our assets. 

Similar restrictive covenants are contained in our Senior Credit Facility
and Working Capital Credit Facility which are applicable to us and most of our
subsidiaries. In addition, under our credit facilities, we and our subsidiaries
must comply with certain financial covenants specifying various financial
performance levels that we are required to meet. In the event we were to fail
to meet any of these covenants and were unable to cure such breach or otherwise
renegotiate such covenant, the lenders under those facilities would have
significant rights to seize control of most of our assets. Such a default, or a
breach of any of the other obligations in the indenture governing our Exit
Notes, could also trigger a default under our Exit Notes.

The covenants in our credit facilities and the indentures governing our
outstanding notes and any future debt may significantly restrict our future
operations. Furthermore, upon the occurrence of any event of default under the
indentures governing our notes, our credit facilities or the agreements
governing any other debt of our subsidiaries, the lenders could elect to
declare all amounts outstanding under such indentures, credit facilities or
agreements, together with accrued interest, to be immediately due and payable.
If those lenders accelerate the payment of those amounts, we cannot assure you
that our assets and the assets of our subsidiaries will be sufficient to repay
in full those amounts.

Our Chapter 11 reorganization and uncertainty over our financial condition may
harm our business and our brand name.

Adverse publicity or news coverage regarding our recent Chapter 11
reorganization and financial condition could have an adverse effect on parts of
our business. Similarly, negative press about the financial condition of other
cable and pay television operations and alternative telecom carriers in general
may affect 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
Chapter 11 reorganization and 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. Although we have successfully consummated the Plan,
there is no assurance that such negative publicity will not adversely impact
our results of operations or have a long-term effect on our brand.

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In addition, uncertainty during our recapitalization process may have
adversely affected our relationships with our suppliers. If suppliers become
increasingly concerned about our financial condition, they may demand faster
payments or refuse to extend normal trade credit, both of which could further
adversely affect our cash conservation measures and our results of operations.
We may not be successful in obtaining alternative suppliers if the need arises
and this would adversely affect our results of operations.

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,
our business plan contemplates the introduction of services using new
technologies. Our investments in those 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 our ability to fund such
implementation may depend on our ability to obtain additional financing. We
cannot be certain that we would be successful in obtaining any additional
financing required.

We are subject to significant competition in each of our business areas and we
expect that competition will intensify  if we are unable to compete
successfully, our financial conditions and results of operations could be
adversely affected.

We face significant competition from established and new competitors in
each of our businesses. In particular, in two of our three key lines of
business  telephony and television  the markets are dominated by our
competitors (BT and BSkyB, respectively), who have very large market shares and
generally have less financial and operating constraints than we do. As existing
technology develops and new technologies emerge, we believe that competition
will intensify in each of our business areas, particularly business
telecommunications and the Internet. Some of our competitors have substantially
greater financial and technical resources than we do. Moreover, we may also be
required to reduce prices if our competitors reduce prices, or as a result of
any other downward pressure on prices for telecommunications services, which
could have an adverse effect on us.

In addition, BSkyB has access to various movie and sports programming
content, with which they create some of the most popular pay TV channels in the
UK. We carry several of those channels on our systems. Although there are
competing channel providers, the position of programming supplier to NTL
undoubtedly is an advantage to BSkyB, not only because the Sky brand is a
feature of our cable TV service, but also because we are dependant upon the
supply of these Sky premium channels allowing BSkyB to influence pricing and
bundling. Thus far, regulators have not disturbed the pricing arrangements
imposed on us by BSkyB. We are currently negotiating with BSkyB a formal, long-term
agreement for the supply of certain BSkyB channels, and we believe this will be
concluded amicably. However, in the event that we are unable to conclude an
agreement successfully, we may be faced with uncertainty over the terms and
charges of such supply, now and in the future.

If we are unable to compete successfully, our financial condition and
results of operations could be adversely affected.

Our growth has been curtailed by funding constraints.

We have significantly decreased the amount we are spending on capital
expenditures due to liquidity constraints during the recapitalization process
and expect to further reduce capital expenditures during 2003. The decrease in
capital expenditure is the result of our need to divert increasing amounts of
our financial resources to meet liquidity requirements. As a result, we may be
unable to increase our customers in the short term and our near-term revenue
and future revenue growth may be adversely affected.

We remain subject to the risks of successfully integrating the acquisitions
through which we have historically grown our business. In particular, we are in
the process of integrating our various billing and operation platforms  if we
do not complete this integration, we could experience an adverse effect on our
customer service, churn rate and operating costs.

We have historically grown our business through acquisitions. This has
resulted in our being exposed to the risk of failing to successfully integrate
those acquisitions, in particular, workforce, management, network and systems.
A significant result of our growth through acquisitions is that we have
inherited a variety of distinct billing and customer service systems from
various companies that we have acquired. 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; however, we do not as yet
have an integrated billing and operational platform. We cannot be certain that
this integration project will be successful. If the full integration of our
billing and customer service systems is not successful, we could experience an
adverse effect on our customer service, churn rate and costs of

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maintaining these systems going forward. We could also experience
operational failures related to billing and collecting revenue from our
customers, which, depending on the severity of the failure, could have a
material adverse effect on our business.

Moreover, the integration process has involved a number of internal
reorganizations of our business as we continue to strive for better
performance. These reorganizations have typically involved, among other
things, the termination of employees made redundant as a result of the process.
Although we cannot predict precisely the effect that this has had, it is
likely these internal reorganizations have negatively impacted employee morale.
If we undertake additional internal reorganizations they will similarly likely
negatively impact morale. Negative effects on employee morale can have a
negative effect on our operations generally.

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. The successful implementation of our business plan depends upon a
reduction in the percentage of our customers that stop using our services.

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. If the
integration of our various billing system is not successful, we could
experience an adverse effect on customer service and, in turn, our churn rate.

We plan to increase our customer and revenue generating unit (referred to
in this annual report as an RGU) base in 2003. If demand for our products and
services is greater than anticipated, our customer service call centers could
experience a higher than expected volume of calls. If customer service suffered
as a result, it could contribute to churn. Our business plan also includes the
migration of our customers from analog to digital service. The migration
process could also increase churn levels.

Our ability to reduce churn could also be adversely affected by the
availability of competing services in the UK, such as the digital satellite and
digital terrestrial television services offered by BSkyB and the BBC, and
telephone, Internet and broadband services offered by BT. BT and BSkyB have
regularly launched strong direct and indirect win-back campaigns to entice our
customers to churn and move to these competing services.

Another part of our strategy to reduce churn is to increase 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,
which would adversely impact our results of operations.

Our prospects will depend in part on our ability to control our costs while
maintaining and improving our service levels following our restructuring.

As a result of capital constraints imposed on our business during our
restructuring, we have been engaged in a process of reducing expenditures in a
variety of areas, including by way of a substantial reduction in capital
expenditure, a reduction in the number of our employees and the outsourcing of
some functions. Our prospects will depend in part on our ability to continue to
control costs and operate more efficiently, while maintaining and improving our
existing service levels. In particular, in order to reduce costs we are in the
process of negotiating with several of our vendors for better terms under
existing and future agreements. We cannot be certain that such negotiations
will conclude successfully.

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

A significant component of our strategy is to successfully market
broadband products to our existing consumer customer 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 the DSL
service offered by BT and Freeserve. Additionally, 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 results of operations will be adversely
affected.

Our actual results of operations and
financial condition may differ from our reported results of
operations and financial condition due to the use of estimates and
assumptions in the preparation of our financial statements.

The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Such
estimates and assumptions impact, among others, the following: the
amount of uncollectible accounts and notes receivable, the amount to
be paid to terminate certain agreements included in restructuring
costs, the amount to be paid for other liabilities, our pension
expense and pension funding requirements, estimates related to the
amount of costs to be capitalized in connection with the construction
and installation of our network and facilities and estimates related
to the value of investments, long-lived assets and goodwill.

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We are dependant upon a samll
number of key personnel.

A small number of key executive officers manage our 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.
Although we have entered into employment contracts with all of our executive
officers, those contracts cannot prevent such individuals from resigning. If an
individual does resign, he or she is bound by certain non-compete clauses which
may or may not discourage the individual from leaving.

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

Our principal business activities are regulated and supervised by various
governmental bodies. Changes in laws, regulations or governmental policy or the
interpretations of those laws or 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.

We are 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.

We are dependent upon many critical systems and processes, many of which are
dependent upon hardware that is concentrated in a small number of locations. If
a catastrophe were to occur at one or more of those locations, it could have a
material adverse effect on our business.

Our business is dependent on many sophisticated critical systems, which
support all of the various aspects of our operations from our network to our
billing and customer service systems. The hardware supporting a large number of
critical systems are housed in a relatively small number of locations. If one
or more of these locations were to be subject to fire, natural disaster,
terrorism, power loss, or other catastrophe, it could have a material adverse
effect on and cause irreparable harm to our business. We are currently studying
ways to improve our disaster recovery to prevent or mitigate such a potential
failure. However, despite any disaster recovery, security and service
continuity protection measures we have or may in the future take we cannot
assure you that these measures will be sufficient. In addition, although we
build our network in resilient rings to ensure the continuity of network
availability in the event of any damage to our underground fibers, should any
ring be cut twice in different locations, it is likely that no transmission
signals will be able to pass, which could cause significant damage to our
business. This is especially so in relation to our Sirius undersea ring
connecting the UK to the Republic of Ireland: any simultaneous cut of the
Northern and Southern rings would isolate our Irish networks from our UK
networks for an extended period.

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

We obtain insurance of the type and in the amounts that we believe are
customary for similar companies. Consistent with this practice, we do 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 obtained significant financing and
may in the future obtain additional financing in U.S. dollars but generally
generate revenues and incur expenses in pounds sterling and Euros.

We encounter currency exchange rate risks because we generate revenues and
incur construction and operating expenses in pounds sterling and Euros while we
pay interest and principal obligations with respect to a significant amount of
our existing indebtedness in U.S. dollars. We cannot assure you that any
hedging transactions we 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 we have not fully hedged against such declines, the effective
cost of servicing our U.S. dollar debt will be higher and we will incur
currency losses.

Our broadcast services business is dependent upon ITV and other contracts.

Our broadcast services business has contracts for the provision of
television broadcasting transmission services with the ITV national network of
15 affiliated television stations, Channel 4/S4C and Channel 5. The majority of
the prices that we may charge these companies for transmission services are
subject to regulation by the UK Office of Telecommunications (referred to in
this annual report as OFTEL). Although, historically, the ITV companies and
Channel 4/S4C have renewed their contracts with us, we

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cannot assure you that they will do so upon expiration of the current
contracts, that they will not negotiate terms for provision of transmission
services by us on a basis less favorable to us or that they would not seek to
obtain from third parties a portion of the transmission services that we
currently provide.

Other
contracts include a contract for the provision of communication services to the
Metropolitan Police. This contract is subject to renewal and we cannot assure
you that the renewal will be on the same basis, or that the
Metropolitan Police will not seek other
parties to provide the services.

The loss of any one of these contracts could have a material adverse
effect on us.

Our broadcast services business is dependent upon site sharing arrangements
with its principal competitor.

As a result of, among other factors, a natural shortage of potential
transmission sites and the difficulties in obtaining planning permission for
erection of further masts, Crown Castle U.K. Ltd. and we have made arrangements
to share a large number of tower sites. We cannot assure you that the site
sharing arrangements will not be terminated. Termination of the site sharing
arrangements would have a material adverse effect on us.

Under the present arrangements for analog broadcast services, one of the
parties is the owner, lessor or licensor of each site and the other party is
entitled to request a license to use specified facilities at that site. Each
site license granted pursuant to the site sharing agreement is for an initial
period expiring on December 31, 2005, subject to title to the site and to the
continuation in force of the site sharing agreement. Each site sharing
agreement provides that, if requested by the sharing party, it will be extended
for further periods. Either party may terminate the agreement by giving 5
years written notice until December 31, 2005 or at any date which is a date 10
years or a multiple of 10 years after December 31, 2005. With respect to
digital broadcast services, we and Crown Castle U.K. Ltd. are
negotiating a
formal arrangement pending finalization of a separate digital site sharing
agreement which is envisaged to be on terms similar to the existing
analog site sharing agreement. Presently the parties are operating under an
informal arrangement pending finalization of the formal arrangement. Although
we believe such formalization will be concluded successfully, we cannot be
certain of that conclusion.

Some provisions of the agreements governing our indebtedness and the
indebtedness of our subsidiaries, our stockholder rights plan and certain
provisions of our certificate of incorporation could delay or prevent
transactions involving a change of control of NTL Incorporated.

We may, under some circumstances involving a change of control, be
obligated to offer to repurchase substantially all of our outstanding notes,
and repay other indebtedness (including our bank facilities). We cannot assure
you that we will have available financial resources necessary to repurchase
those notes or repay that indebtedness in those circumstances.

If we cannot repurchase and repay this indebtedness in the event of a
change of control, the failure to do so would constitute an event of default
under the indentures and agreements under which that indebtedness was incurred
and could result in a cross-default under other indebtedness. The threat of
this could have the effect of delaying or preventing transactions involving a
change of control of NTL Incorporated, including transactions in which
stockholders might otherwise receive a substantial premium for their shares
over then current market prices, and may limit the ability of our stockholders
to approve transactions that they may deem to be in their best interest.

Our stockholder rights plan and certain provisions of our certificate of
incorporation may have the effect, alone or in combination with each other or
with the existence of authorized but unissued common stock and preferred stock,
of preventing or making more difficult transactions involving a change of
control of NTL Incorporated.

We do not expect to pay dividends on our common stock in the foreseeable
future.

We have never paid cash dividends on our common stock and do not expect to
pay dividends on our common stock in the foreseeable future. The payment of any
dividends by us in the future will be at the discretion of our board of
directors and will depend upon, among other things, future earnings,
operations, capital requirements, our general financial condition and the
general financial condition of our subsidiaries. In addition, under Delaware
law, a corporation cannot declare or pay dividends on its capital stock unless
it has available surplus.

Furthermore, the indentures governing the outstanding notes issued by us
and our subsidiaries Diamond Holdings Limited and NTL (Triangle) LLC and the
terms of our Senior and Working Capital Credit Facilities impose limitations on
the payment of

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dividends to us by our subsidiaries and the distribution of earnings or
making of other payments to us by our subsidiaries, which consequently limits
amounts available for us to pay dividends on our common stock. Additionally,
the indenture governing the Exit Notes directly limits our ability to pay
dividends on our common stock. The terms of any future indebtedness of our
subsidiaries may generally restrict the ability of some of our subsidiaries to
distribute earnings or make other payments to us.

The market price of the common stock is subject to volatility as well as trends
in the telecommunications industry in general.

The current market price of our common stock may not be indicative of
prices that will prevail in the trading markets in the future. The market price
of the common stock could be subject to wide fluctuations in response to
numerous factors, many of which are beyond our control. These factors include,
among other things, actual or anticipated variations in our operation results
and cash flow, our earnings releases and our competitors earnings releases,
announcements of technological innovations, changes in financial estimates by
securities analysts, market conditions in the industry and the general state of
the securities markets and the market for telecommunications stocks, changes in
capital markets that affect the actual or perceived availability of capital to
communications companies, governmental legislation or regulation, currency and
exchange rate fluctuations, as well as general economic and market conditions,
such as recessions. In particular, valuations of telecommunication companies
have generally fallen over the past two years. Trends in this industry are
likely to have a corresponding impact on the price of our common stock.

Sales of large amounts of our common stock or the perception that sales could
occur may depress our stock price.

On the Effective Date, we issued an aggregate of 50,000,969 shares of our
common stock to former holders of our debt securities and former holders of
debt securities of NTL Europe, NTL Delaware and Diamond Cable Communications
Limited pursuant to the Plan and 500,000 shares of our common stock to the
purchasers of our Exit Notes. These shares represented substantially all of our
outstanding common stock as of the Effective Date. None of these shares are
subject to any lock up restrictions and may be sold at any time, subject to
compliance with applicable law, including the Securities Act.

Sales of large blocks of shares of our common stock acquired pursuant to
the Plan in the public market could lower our stock price and impair our
ability to raise funds in future stock offerings.

We may in the future seek to raise funds through equity offerings, which would
have a dilutive effect on our common stock.

In the future we may determine to raise capital through offerings of our
common stock, securities convertible into our common stock, or rights to
acquire such securities or our common stock. In any such case, the result would
ultimately be dilutive to our common stock by increasing the number of shares
outstanding. We cannot predict the effect such dilution may have on the price
of our common stock.




Item 8.Financial Statements and Supplementary Data.

The following is a summary of the quarterly results of operations for the years
ended December 31, 2002 and 2001.

|                 |  |                    |        |         |  |              |        |                 |  |   |        |   |  |   |        |  
|---------------- |  | ------------------ | ------ | ------- |  | ------------ | ------ | --------------- |  | - | ------ | - |  | - | ------ | -
|                 |  | (in millions)     
|                 |  |                   
|                 |  | 2002(1)           
|                 |  |                   
|                 |  | Three Months Ended
|                 |  |                   
|                 |  | March 31           |        | June 30 |  | September 30 |        | December 31 (2)
|                 |  |                    |        |         |  |              |        |                
|Revenues         |  | $                  | 792.9  |         |  | $            | 802.8  |                 |  | $ | 830.3  |   |  | $ | 839.1  |  
|Operating (loss) |  |                    | (119.0 | )       |  |              | (115.0 | )               |  |   | (464.7 | ) |  |   | (703.1 | )
|Net (loss)       |  |                    | (459.9 | )       |  |              | (417.0 | )               |  |   | (567.6 | ) |  |   | (931.3 | )

|                 |  |                    |        |         |  |              |        |             |  |   |        |   |  |   |          |  
|---------------- |  | ------------------ | ------ | ------- |  | ------------ | ------ | ----------- |  | - | ------ | - |  | - | -------- | -
|                 |  | 2001(3)           
|                 |  |                   
|                 |  | Three Months Ended
|                 |  |                   
|                 |  | March 31           |        | June 30 |  | September 30 |        | December 31
|                 |  |                    |        |         |  |              |        |            
|Revenues         |  | $                  | 770.5  |         |  | $            | 776.9  |             |  | $ | 816.0  |   |  | $ | 826.2    |  
|Operating (loss) |  |                    | (530.9 | )       |  |              | (541.5 | )           |  |   | (494.3 | ) |  |   | (8,834.9 | )
|Net (loss)       |  |                    | (835.8 | )       |  |              | (798.9 | )           |  |   | (809.2 | ) |  |   | (9,393.1 | )



|(1) |  | In 2002, we recorded asset impairment charges of $445.1 million ($26.6
million in the third quarter and $418.5 million in the fourth quarter)
consisting of non-cash charges to write down certain assets to their
estimated fair values based on our
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|    |  | assessment that the carrying value was not recoverable. In addition, we
recorded restructuring charges of $104.8 million as follows: $1.6 million
in the first quarter, $2.1 million in the second quarter, $1.9 million in
the third quarter and $99.2 million in the fourth quarter. We also
recorded non-cash charges of $284.4 million primarily for allowances for the
cancellation of receivables from NTL Europe in accordance with the Plan as
follows: $287.8 million in the third quarter and a release of $3.4 million
in the fourth quarter primarily due to changes in the foreign currency
exchange rate. We also recorded recapitalization items as a result of our
Chapter 11 reorganization of $151.8 million as follows: $32.1 million in
the first quarter, $31.1 million in the second quarter, $32.6 million in
the third quarter and $56.0 million in the fourth quarter. The
recapitalization costs and expenses of $31.2 million in the first quarter
of 2002 were included in operating loss but were subsequently reclassified
in accordance with SOP 90-7.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The three months ended December 31, 2002 includes an adjustment for the
reallocation of certain expenditures from capitalized costs to expense of
$61.9 million and an adjustment for the release of certain provisions of
$65.2 million. These two adjustments relate principally to periods prior
to the three months ended December 31, 2002. For the first, second and
third quarters of 2002, operating expense would increase by approximately
$6 million per quarter and selling, general and administrative expense
would increase by approximately $10 million per quarter if the reallocation
of the $61.9 million from capitalized costs to expense was reflected in
the appropriate periods. The $65.2 million net adjustment would not be
reallocated to the first, second and third quarters of 2002 because these
provisions related to periods prior to 2002.                                                                                                                                                                                                        
|   
|(3) |  | In the fourth quarter of 2001, the Company recorded asset impairments
totaling $8,161.6 million including goodwill of $8,077.8 million, license
acquisition costs of $58.8 million, customer lists of $9.1 million, other
intangibles of $14.9 million and investments in affiliates of $1.0
million. In addition, in 2001 the Company recorded restructuring costs of
$202.8 million, integration and consulting costs of $95.1 million and a
loss on the sale of the ConsumerCo off-net indirect access customers of
$88.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                




Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

Not applicable.




PART III




Items 10, 11, 12, and 13.

The information required by Items 10, 11, 12 and 13 of Part III is
incorporated by reference from the Companys definitive proxy statement
involving the election of directors which the Company expects to file, pursuant
to Regulation 14A, within 120 days following the end of its fiscal year.




Item 14. Controls and Procedures



|(a) |  | Evaluation of Disclosure Controls and Procedures.The Companys
management, including the Chief Executive Officer and Acting Chief
Financial Officer, have conducted an evaluation of the effectiveness of
the Companys disclosure controls and procedures (as such term is defined
in Rule 13a-14(c) and Rule 15d-14(c) under the Securities Exchange Act of
1934, as amended (the Exchange Act)) as of a date within 90 days prior
to the filing date of this annual report (the Evaluation Date). Based on
that evaluation, the Chief Executive Officer and Acting Chief Financial
Officer have concluded that, as of the Evaluation Date, the Companys
disclosure controls and procedures are effective in alerting them on a
timely basis to material information relating to the Company (including
its consolidated subsidiaries) required to be included in the Companys
reports filed or submitted under the Exchange Act.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Changes in Internal Controls.Since the Evaluation Date, there have not
been any significant changes in the Companys internal controls, or in
other factors that could significantly affect such internal controls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      




PART IV




Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

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|(a) |  | (1) Financial Statements See list of Financial Statements on page F-1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | (2) Financial Statement Schedules See list of Financial Statement
Schedules on page F-1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | (3) Exhibits See
Exhibit Index on page 57.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(b) |  | During the fourth quarter of 2002, the Company filed the following
Current Reports on Form 8-K: Form 8-K dated November 7, 2002 (filed
November 7, 2002) under Item 9. reporting the resignation of the
Managing Director and Chief Operating Officer of NTLs UK and Ireland
businesses; Form 8-K dated December 2, 2002 (filed December 2, 2002)
under Item 9. reporting that the Company expected to reach agreement in
principle on the final terms of the arrangements necessary for the
Company to consummate the Plan with the providers of the exit facility
and the bank steering committee; and Form 8-K dated December 24, 2002
(filed December 30, 2002) under Item 9. reporting the filing in the UK
of a Fourth Supplementary Prospectus in accordance with UK Public Offers
of Securities Regulations 1995.
|   
|(c) |  | Exhibits The response to this portion of Item 15 is submitted as a
separate section of this report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(d) |  | Financial Statement Schedules See list of Financial Statement
Schedules on page F-1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|No.     |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 
|2.1     |  | Agreement and Plan of Merger,
dated as of February 9, 2000, by
and among NTL Incorporated (now
NTL Europe, Inc.), NTL Holdings
Incorporated (now NTL
(Delaware), Inc.) and Holdings
Merger Sub Inc. (Incorporated by
reference to Exhibit 2.1 to
Amendment No. 1 to the
Registration Statement on Form
S-3/A filed by NTL (Delaware),
Inc. and NTL Incorporated on
July 14, 2000, File No.
333-36434)                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.2     |  | Agreement and Plan of Merger,
dated as of March 26, 1999, by
and among NTL Incorporated (now
NTL (Delaware), Inc.), NTL
Communications Corp. (now NTL
Incorporated) and NTL Mergerco,
Inc. (Incorporated by reference
to Exhibit 2.1 to Amendment No.
2 to the Registration Statement
on Form S-3/A filed by NTL
Incorporated and NTL
Communications Corp. on June 3,
1999, File No. 333-72335)                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.3     |  | Agreement and Plan of
Amalgamation, dated as of
February 4, 1998, as amended, by
and among NTL Incorporated, NTL
(Bermuda) Limited, and Comcast
UK Cable Partners Limited
(Incorporated by reference to
the Registration Statement on
Form S-4 filed by NTL
Incorporated on September 30,
1998, File No. 333-64727)                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.4     |  | Amendment No. 1 to Agreement and
Plan of Amalgamation, dated as
of May 28, 1998, by and among
NTL Incorporated, NTL(Bermuda)
Limited and Comcast UK Cable
Partners Limited (Incorporated
by reference to Annex B to the
Registration Statement on Form
S-4 filed by NTL Incorporated on
September 30, 1998, File No.
333-64727)                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.5     |  | Share Exchange Agreement, dated
as of June 16, 1998, as amended,
by and among NTL Incorporated
and the shareholders of Diamond
Cable Communications Limited
(Incorporated by reference to
Annex A to the Proxy Statement
filed by NTL Incorporated on
January 29, 1999, File No.
000-22616)                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.6     |  | Amendment No. 1 to Share
Exchange Agreement, dated as of
December 21, 1998, by and among
NTL Incorporated and the
shareholders of Diamond Cable
Communications Limited
(Incorporated by reference to
Exhibit 99.1 to the Current
Report on Form 8-K filed by NTL
Incorporated on December 23,
1998, File No. 000-22616)                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.7     |  | Transaction Agreement, dated as
of July 26, 1999, by and among,
Bell Atlantic Corporation, Cable
and Wireless PLC, Cable,
Wireless Communications PLC and
NTL Incorporated (Incorporated
by reference to Annex J to the
Proxy Statement filed by NTL
Incorporated on February 11,
2000, File No. 000-25691)                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.8     |  | Second Amended Joint Plan of
Reorganization of NTL
Incorporated and Certain
Subsidiaries, dated July 15,
2002 (as confirmed on September
5, 2002 and subsequently
modified) (Incorporated by
reference to Exhibit 2.8 to the
Registration Statement on Form
S-1 filed by NTL Incorporated on
February 12, 2003, File No.
333-103135 )                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.1     |  | Amended and Restated Certificate
of Incorporation of NTL
Communications Corp. (now NTL
Incorporated) (Incorporated by
reference to Exhibit 1 to the
Registration Statement on Form
8-A filed by NTL Incorporated on
January 10, 2003, File No.
000-22616)                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.2     |  | Amended and Restated By-Laws of NTL Incorporated (Incorporated by
reference to Exhibit 2 to the Registration Statement on Form 8-A
filed by NTL Incorporated on January 10, 2003, File No. 000-22616)                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.1     |  | Registration Rights Agreement, dated as of January 10, 2003, by
and among NTL Incorporated and the other parties listed on the
signature pages thereto (Incorporated by reference to Exhibit 4.1
to the Current Report on Form 8-K filed by NTL Incorporated on
January 10, 2003, File No. 000-22616)                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.2     |  | Exchange and Registration Rights Agreement, dated as of January 9,
2003, by and among NTL Incorporated, the Guarantors listed on the
signature pages thereto and the initial purchasers of the Notes
(Incorporated by reference to Exhibit 4.2 to the Current Report on
Form 8-K filed by NTL Incorporated on January 10, 2003, File No.
000-22616)                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.3     |  | Indenture, dated as of January 9, 2003, by and among NTL
Incorporated, the Guarantors listed on the signature pages thereto
and U.S. Bank National Association, as trustee (Incorporated by
reference to Exhibit 4.3 to the Current Report on Form 8-K filed
by NTL Incorporated on January 10, 2003, File No. 000-22616)                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.4     |  | Indenture, dated as of November 11, 1995, by and between Comcast
UK Cable Partners Limited (now NTL (Triangle) LLC) and Bank of
Montreal Trust Company as Trustee with respect to the 11.20%
Senior Discount Debentures due 2007 (Incorporated by reference to
Exhibit 4.1 to Amendment No. 2 to the Registration Statement on
Form S-1/A filed by Comcast UK Cable Partners Limited on November
5, 1995, File No. 33-96932)
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.5     |  | First Supplemental Indenture, dated October 29, 1998, by and
between NTL (Bermuda) Limited (now NTL (Triangle) LLC) and Bank of
Montreal Trust Company as Trustee, with respect to the 11.20%
Senior Discount Debentures due 2007 (Incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K filed by NTL
(Triangle) LLC on November 4, 1998, File No. 000-24792)                                          

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|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.6   |  | Indenture, dated as of February 6, 1998, by and among Diamond
Holdings Limited, Diamond Cable Communications Limited, and The
Bank of New York as Trustee, with respect to the 10% Senior Notes
due February 1, 2008 and 9 1/8% Senior Notes due February 1, 2008
(Incorporated by reference to Exhibit 4.1 to the Registration
Statement on Form S-4, filed by Diamond Cable Communications plc
on March 20, 1998, File No. 333-48413)                                                                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.7   |  | Warrant Agreement, dated as of January 10, 2003, by and between
NTL Incorporated and Continental Stock Transfer & Trust Company,
as Warrant Agent (Incorporated by reference to Exhibit 3 to the
Registration Statement on Form 8-A filed by filed by NTL
Incorporated on January 10, 2003, File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                                     
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.8   |  | Stockholder Rights Agreement, dated as of January 10, 2003, by and
between NTL Incorporated and Continental Stock Transfer & Trust
Company, as Rights Agent (Incorporated by reference to Exhibit 4
to the Registration Statement on Form 8-A filed by filed by NTL
Incorporated on January 10, 2003, File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                           
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.1  |  | Purchase Agreement, dated as of January 9, 2003, by and among NTL
Incorporated, the Guarantors listed on the signature pages thereto
and the initial purchasers of the Notes (Incorporated by reference
to Exhibit 10.1 to the Current Report on Form 8-K filed by NTL
Incorporated on January 10, 2003, File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.2  |  | £2,500,000,000 Credit Agreement originally dated May 30, 2000, and
made among, NTL Communications Limited; NTL Business Limited
(which novated its rights and obligations to NTL Investment
Holdings Limited); NTL Communications Corp.; J.P. Morgan plc
(formerly known as Chase Manhattan plc); Morgan Stanley Dean
Witter Bank Limited; J.P. Morgan Europe Limited (formerly known as
Chase Manhattan International Limited) and the lenders party
thereto (as amended, varied, supplemented, novated and restated to
date and from time to time) (Incorporated by reference to Exhibit
10.2 to the Current Report on Form 8-K filed by NTL Incorporated
on January 10, 2003, File No. 000-22616)
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.3  |  | £1,300,000,000 Credit Agreement originally dated May 30, 2000, and
made among, NTL Communications Corp.; NTL (UK) Group, Inc.; NTL
Communications Ltd; J.P. Morgan plc (formerly known as Chase
Manhattan plc); Morgan Stanley Dean Witter Bank Ltd and Chase
Manhattan International Ltd (as amended, varied, supplemented,
novated and restated to date and from time to time) (Incorporated
by reference to Exhibit 10.3 to the Current Report on Form 8-K
filed by NTL Incorporated on January 10, 2003, File No. 000-22616)                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.4  |  | Tax Sharing Agreement, dated January 10, 2003, by and
between NTL Europe, Inc. and NTL Incorporated
(Incorporated by reference to Exhibit 10.4 to the
Current Report on Form 8-K filed by NTL Incorporated
on January 10, 2003, File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.5  |  | Transitional Services Agreement, dated January 10,
2003, by and between NTL Europe, Inc. and NTL
Incorporated (Incorporated by reference to Exhibit
10.5 to the Current Report on Form 8-K filed by NTL
Incorporated on January 10, 2003, File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.6  |  | De-Merger Agreement, dated January 10, 2003, by and
between NTL Europe, Inc. and NTL Incorporated
(Incorporated by reference to Exhibit 10.6 to the
Current Report on Form 8-K filed by NTL Incorporated
on January 10, 2003, File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.7  |  | Novation Agreement, dated January 9, 2003, by and
between NTL Europe, Inc. and NTL Incorporated
(Incorporated by reference to Exhibit 10.7 to the
Current Report on Form 8-K filed by NTL Incorporated
on January 10, 2003, File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.8  |  | Form of 2003 Stock Option Plan of NTL Incorporated
(Incorporated by reference to Exhibit 10.8 to the
Registration Statement on Form S-1 filed by NTL
Incorporated on February 12, 2003, File No.
333-103135 )                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.9  |  | Framework Agreement For The Provision Of IT
Outsourcing Services, dated as of May 23, 2001, by
and between NTL Group Limited and IBM United Kingdom
Limited (Incorporated by reference to Exhibit 10.9 to
the 2001 Annual Report on Form 10-K, filed by NTL
Incorporated on April 16, 2001, File No. 0-30673)                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.10 |  | Amendment, dated as of April 5, 2002 to the Framework
Agreement For The Provision of IT Outsourcing
Services, dated as of May 23, 2001, by and between
NTL Group Limited and IBM United Kingdom Limited
(Incorporated by reference to Exhibit 10.10 to the
2001 Annual Report on Form 10-K filed by NTL
Incorporated on April 16, 2001, File No. 0-30673)                                                                                                                                                                                                                                                                                                                                           
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.11 |  | Employment Agreement, dated as of November 7, 2002
between NTL Communications Corp. (now NTL
Incorporated) and Barclay Knapp (Incorporated by
reference to Exhibit 10.11 to the Registration
Statement on Form S-1 filed by NTL Incorporated on
February 12, 2003, File No. 333-103135 )                                                                                                                                                                                                                                                                                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.12 |  | Employment Agreement, dated as of November 7, 2002
between NTL Communications Corp. (now NTL
Incorporated) and Richard J. Lubasch (Incorporated by
reference to Exhibit 10.12 to the Registration
Statement on Form S-1 filed by NTL Incorporated on
February 12, 2003, File No. 333-103135 )                                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

58



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|      |  |                                                                                                                                                                                                                                                                               
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                               
|10.13 |  | Form of Director and Officer Indemnity Agreement and
a schedule of persons to whom the agreement has been
provided (Incorporated by reference to Exhibit 10.16
to the Registration Statement on Form S-1 filed by
NTL Incorporated on February 12, 2003, File No.
333-103135 )
|      |  |                                                                                                                                                                                                                                                                               
|12    |  | Computation of Ratio of Earnings to Fixed Charges*                                                                                                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                               
|21    |  | Subsidiaries of the registrant (Incorporated by
reference to Exhibit 21 to the Registration Statement
on Form S-1 filed by NTL Incorporated on February 12,
2003, File No. 333-103135 )                                                                                       



---

|* |  | Filed herewith
|- |  | --------------

59



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated: March 31, 2003

NTL INCORPORATEDBy:
    
    /s/ Barclay KnappBarclay KnappChief Executive Officer, President and Director


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

/s/ Barclay KnappName:
    
    Barclay KnappTitle:
    
    Chief Executive Officer,President and DirectorDate:
    
    March 31, 2003/s/ Bret RichterName:
    
    Bret RichterTitle:
    
    Senior Vice PresidentFinance and Acting Chief Financial OfficerDate:
    
    March 31, 2003


60



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|                        |  |                          
|----------------------- |  | -------------------------
|/s/ Gregg N. Gorelick  
|Name:                   |  | Gregg N. Gorelick        
|Title:                  |  | Vice PresidentController
|Date:                   |  | March 31, 2003           
|                        |  |                          
|/s/ Jeffrey D. Benjamin
|Name:                   |  | Jeffrey D. Benjamin      
|Title:                  |  | Director                 
|Date:                   |  | March 31, 2003           
|                        |  |                          
|/s/
James E. Bolin     
|Name:                   |  | James E. Bolin           
|Title:                  |  | Director                 
|Date:                   |  | March 31, 2003           
|                        |  |                          
|/s/ David Elstein      
|Name:                   |  | David Elstein            
|Title:                  |  | Director                 
|Date:                   |  | March 31, 2003           
|                        |  |                          
|                        |  |                          
|/s/ William R. Huff    
|Name:                   |  | William R. Huff          
|Title:                  |  | Director                 
|Date:                   |  | March 31, 2003           
|                        |  |                          
|/s/ James F. Mooney    
|Name:                   |  | James F. Mooney          
|Title:                  |  | Director                 
|Date:                   |  | March 31, 2003           
|                        |  |                          
|/s/ George R. Zoffinger
|Name:                   |  | George R. Zoffinger      
|Title:                  |  | Director                 
|Date:                   |  | March 31, 2003           

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CERTIFICATIONS

Pursuant to Rule 12b-25 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), we are omitting certain information within the control of
third parties from this Form 10-K for the year ended December 31, 2002 which is
intended to be filed by amendment when such information is available.

During the period ended December 31, 2002, we had outstanding two series of
registered convertible notes, our 7% Convertible Subordinated Notes due 2008
(the 7% Notes) and our 6-3/4% Convertible Senior Notes due 2008 (the 6-3/4%
Notes and, together with the 7% Notes, the Convertible Notes). The
Convertible Notes were cancelled under our joint plan of reorganization (the
Plan), which was consummated on January 10, 2003, and are thus no longer
outstanding. The 7% Notes were co-obligations of NTL Europe, Inc. and NTL
(Delaware), Inc. and the 6-3/4% Notes were co-obligations of NTL Europe, Inc.
NTL (Delaware), Inc. is a wholly owned subsidiary of NTL (Europe), Inc. and is
not a subsidiary of ours.

Because the Convertible Notes were outstanding as of December 31, 2002, Rule
3-10 of Regulation S-X requires our Annual Report on Form 10-K for
the period ended December 31, 2002 to include consolidated balance sheets for
each of NTL Europe, Inc. and NTL (Delaware), Inc. as of December 31, 2002 and
2001 and consolidated statements of operations and cash flows of each of NTL
Europe, Inc. and NTL (Delaware), Inc. for the years ended December 31, 2002,
2001 and 2000 and the related notes and financial statement schedules
(collectively, the Co-obligor Financial Statements).

Since the consummation of the Plan, we are no longer affiliated with NTL
Europe, Inc. or NTL (Delaware), Inc. As a consequence, we must rely on these
two unaffiliated companies to cooperate in the preparation, audit and filing of
the Co-obligor Financial Statements for this Form 10-K. We have formally
requested such cooperation from NTL Europe, Inc. and NTL (Delaware), Inc.
Although those companies have informed us that they intend to
cooperate in the provision of the Co-obligor Financial Statements, they informed us that
they would be unable to provide the relevant information in time to enable us
to include the Co-obligor Financial Statements in this Form 10-K, which was due
to be filed by March 31, 2003.

As a result, it has not been possible without unreasonable effort or expense
for us to include the Co-obligor Financial Statements in this Form 10-K and
still file in a timely manner. Accordingly, that information has been omitted
from this filing in accordance with Rule 12b-25 of the Exchange Act. Solely
because of the omission of the Co-obligor Financial Statements, this Form 10-K
is not accompanied by the certifications required by section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 13a-14 of the Exchange Act. However, the appropriate executive officers of the registrant
 have established disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 of the
 Exchange Act) and we have, under the supervision of such officers, evaluated the effectiveness of those disclosure controls and
 procedures as of a date within 90 days prior to the filing of this
Form 10-K. Those executive officers have disclosed the results of their evaluation to the registrants auditors and audit committee and we have disclosed
in this Form 10-K, as required by Item 14 of Form 10-K, such officers conclusions about the effectiveness
of the disclosure controls and procedures based on their evaluation and any significant changes in or affecting our internal controls.
Upon our
obtaining the necessary information from NTL Europe, Inc. and NTL (Delaware),
Inc. to enable us to file the Co-obligor Financial Statements, we will file an
amendment to this Form 10-K to include such financial statements at which time
we will also include the required certifications.

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Form 10-K-Item 15(a)(1) and (2)

NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Index to Consolidated Financial Statements
and Financial Statement Schedules

The following consolidated financial statements of NTL Incorporated (formerly
NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries are included
in Item 8:

|                                                                                                               |  |      |  | 
|-------------------------------------------------------------------------------------------------------------- |  | ---- |  | 
|Report of Independent Auditors                                                                                 |  | F-2  |  | 
|Consolidated Balance Sheets  December 31, 2002 and 2001                                                       |  | F-3  |  | 
|Consolidated Statements of
Operations     
Years ended December 31, 2002, 2001 and 2000                       |  | F-5  |  | 
|Consolidated Statement of
Shareholders Equity (Deficiency)     
Years ended December 31, 2002, 2001 and 2000 |  | F-6  |  | 
|Consolidated Statements of Cash
Flows     
Years ended December 31, 2002, 2001 and 2000                       |  | F-8  |  | 
|Notes to Consolidated Financial Statements                                                                     |  | F-10 |  | 

The following consolidated financial statement schedules of NTL Incorporated
(formerly NTL Communications Corp.) and Subsidiaries are included in Item
14(d):

|                                                           |  |     
|---------------------------------------------------------- |  | ----
|Schedule I  Condensed Financial Information of Registrant |  | F-51
|Schedule II  Valuation and Qualifying Accounts            |  | F-60

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore have been omitted.

F-1



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REPORT OF INDEPENDENT AUDITORS

The Board of Directors and
Shareholders
NTL Incorporated (formerly NTL Communications Corp.)

We have audited the consolidated balance sheets of NTL Incorporated (formerly
NTL Communications Corp.) and Subsidiaries as of December 31, 2002 and 2001,
and the related consolidated statements of operations, shareholders
equity (deficiency) and cash flows for each of the three years in the period
ended December 31, 2002. Our audits also included the financial statement
schedules listed in the Index at Item 15(a). These financial statements and
schedules are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of NTL
Incorporated (formerly NTL Communications Corp.) and Subsidiaries at December
31, 2002 and 2001, and the consolidated results of their operations and their
cash flows for each of the three years in the period ended December 31, 2002,
in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedules, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

As discussed in Note 4, the Company changed its method of accounting for
goodwill and other intangibles effective January 1, 2002.

/s/ ERNST & YOUNG LLP


New York, New York
March 27, 2003

F-2



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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries
Consolidated Balance Sheets
(dollars in millions)

|                                                                                 |                                                                                                     |   |              |       |      |   |          |       | 
|-------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | - | ------------ | ----- | ---- | - | -------- | ----- | 
|                                                                                 |                                                                                                     |   | December 31,
|                                                                                 |                                                                                                     |   |             
|                                                                                 |                                                                                                     |   | 2002         |       | 2001
|                                                                                 |                                                                                                     |   |              |       |     
|Assets                                                                           |                                                                                                     |   |              |       |      |   |          |      
|Current assets:                                                                  |                                                                                                     |   |              |       |      |   |          |      
|                                                                                 | Cash and cash equivalents                                                                           |   | $            | 502.0 |      |   | $        | 251.1 | 
|                                                                                 | Marketable securities                                                                               |   |              | 5.2   |      |   |          |      | 
|                                                                                 | Accounts receivable  trade, less allowance for doubtful accounts of
$92.7 (2002) and $126.1 (2001) |   |              | 395.9 |      |   |          | 516.2 | 
|                                                                                 | Due from affiliates                                                                                 |   |              | 1.6   |      |   |          | 4.0   | 
|                                                                                 | Other                                                                                               |   |              | 192.7 |      |   |          | 238.8 | 
|                                                                                 | Due from NTL Europe, Inc.                                                                           |   |              | 73.3  |      |   |          | 2.9   | 
|                                                                                 |                                                                                                     |   |              |       |      |   |          |       | 
|Total current assets                                                             |                                                                                                     |   | 1,170.7      |       |      |   | 1,013.0  |      
|Fixed assets, net                                                                |                                                                                                     |   | 11,088.9     |       |      |   | 10,840.3 |      
|Goodwill                                                                         |                                                                                                     |   | 330.6        |       |      |   | 647.8    |      
|Intangible assets, net                                                           |                                                                                                     |   | 64.7         |       |      |   | 119.5    |      
|Investments in and loans to affiliates, net                                      |                                                                                                     |   | 8.4          |       |      |   | 4.4      |      
|Other assets, net of accumulated amortization of $184.8 (2002) and
$125.0 (2001) |                                                                                                     |   | 378.1        |       |      |   | 255.4    |      
|Loan to NTL Europe, Inc.                                                         |                                                                                                     |   |             |       |      |   | 150.0    |      
|                                                                                 |                                                                                                     |   |              |       |      |   |          |      
|Total assets                                                                     |                                                                                                     | $ | 13,041.4     |       |      | $ | 13,030.4 |      
|                                                                                 |                                                                                                     |   |              |       |      |   |          |      

F-3



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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries
Consolidated Balance Sheets (continued)
(dollars in millions)

|                                                 |                                                                                                             |   |              |           |      |   |          |           |  
|------------------------------------------------ | ----------------------------------------------------------------------------------------------------------- | - | ------------ | --------- | ---- | - | -------- | --------- | -
|                                                 |                                                                                                             |   | December 31,
|                                                 |                                                                                                             |   |             
|                                                 |                                                                                                             |   | 2002         |           | 2001
|                                                 |                                                                                                             |   |              |           |     
|Liabilities and shareholders (deficiency)       |                                                                                                             |   |              |           |      |   |          |          
|Liabilities not subject to compromise            |                                                                                                             |   |              |           |      |   |          |          
|Current liabilities:                             |                                                                                                             |   |              |           |      |   |          |          
|                                                 | Accounts payable                                                                                            |   | $            | 385.8     |      |   | $        | 390.5     |  
|                                                 | Accrued expenses and other                                                                                  |   |              | 780.5     |      |   |          | 840.3     |  
|                                                 | Accrued construction costs                                                                                  |   |              | 70.4      |      |   |          | 107.8     |  
|                                                 | Interest payable                                                                                            |   |              | 177.3     |      |   |          | 252.0     |  
|                                                 | Deferred revenue                                                                                            |   |              | 359.8     |      |   |          | 290.2     |  
|                                                 | Due to NTL Europe, Inc.                                                                                     |   |              | 236.1     |      |   |          |          |  
|                                                 | Current portion of long-term debt                                                                           |   |              | 5,955.4   |      |   |          | 14,205.9  |  
|                                                 |                                                                                                             |   |              |           |      |   |          |          
|Total current liabilities                        |                                                                                                             |   | 7,965.3      |           |      |   | 16,086.7 |          
|Long-term debt                                   |                                                                                                             |   |             |           |      |   |         |          
|Other                                            |                                                                                                             |   |             |           |      |   | 8.9      |          
|Deferred income taxes                            |                                                                                                             |   | 94.4         |           |      |   | 113.8    |          
|Commitments and contingent liabilities           |                                                                                                             |   |              |           |      |   |          |          
|Liabilities subject to compromise                |                                                                                                             |   | 10,157.8     |           |      |   |         |          
|Shareholders (deficiency):                      |                                                                                                             |   |              |           |      |   |          |          
|                                                 | Common stock - $.01 par value; authorized 100 shares;
issued and outstanding 13 (2002) and 13 (2001) shares |   |              |          |      |   |          |          |  
|                                                 | Additional paid-in capital                                                                                  |   |              | 14,045.5  |      |   |          | 13,917.7  |  
|                                                 | Accumulated other comprehensive (loss)                                                                      |   |              | (653.6    | )    |   |          | (904.5    | )
|                                                 | (Deficit)                                                                                                   |   |              | (18,568.0 | )    |   |          | (16,192.2 | )
|                                                 |                                                                                                             |   |              |           |      |   |          |          
|                                                 |                                                                                                             |   | (5,176.1     | )         |      |   | (3,179.0 | )        
|                                                 |                                                                                                             |   |              |           |      |   |          |          
|Total liabilities and shareholders (deficiency) |                                                                                                             | $ | 13,041.4     |           |      | $ | 13,030.4 |          
|                                                 |                                                                                                             |   |              |           |      |   |          |          

See accompanying notes.

F-4



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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries
Consolidated Statements of Operations
(in millions)

|                                                                      |  |                         |          |      |  |      |           |   |  |   |          |  
|--------------------------------------------------------------------- |  | ----------------------- | -------- | ---- |  | ---- | --------- | - |  | - | -------- | -
|                                                                      |  | Year Ended December 31,
|                                                                      |  |                        
|                                                                      |  | 2002                    |          | 2001 |  | 2000
|                                                                      |  |                         |          |      |  |     
|Revenues                                                              |  |                         |          |      |  |      |           |   |  |   |          |  
|Consumer telecommunications and television                            |  | $                       | 2,074.1  |      |  | $    | 2,069.2   |   |  | $ | 1,518.2  |  
|Business telecommunications                                           |  |                         | 880.1    |      |  |      | 836.8     |   |  |   | 702.2    |  
|Broadcast transmission and other                                      |  |                         | 310.9    |      |  |      | 283.6     |   |  |   | 263.8    |  
|                                                                      |  |                         |          |      |  |      |           |   |  |   |          |  
|                                                                      |  |                         | 3,265.1  |      |  |      | 3,189.6   |   |  |   | 2,484.2  |  
|Costs and expenses                                                    |  |                         |          |      |  |      |           |   |  |   |          |  
|Operating expenses (exclusive of depreciation shown
separately below) |  |                         | 1,502.5  |      |  |      | 1,564.3   |   |  |   | 1,223.2  |  
|Selling, general and administrative expenses                          |  |                         | 769.8    |      |  |      | 973.2     |   |  |   | 969.1    |  
|Asset impairments                                                     |  |                         | 445.1    |      |  |      | 8,160.6   |   |  |   |         |  
|Non-cash compensation                                                 |  |                         |         |      |  |      | 30.6      |   |  |   |         |  
|Other charges                                                         |  |                         | 389.2    |      |  |      | 297.9     |   |  |   | 92.7     |  
|Corporate expenses                                                    |  |                         | 18.7     |      |  |      | 24.3      |   |  |   | 23.7     |  
|Depreciation                                                          |  |                         | 1,477.9  |      |  |      | 1,361.4   |   |  |   | 874.4    |  
|Amortization                                                          |  |                         | 63.7     |      |  |      | 1,178.9   |   |  |   | 826.3    |  
|                                                                      |  |                         |          |      |  |      |           |   |  |   |          |  
|                                                                      |  |                         | 4,666.9  |      |  |      | 13,591.2  |   |  |   | 4,009.4  |  
|                                                                      |  |                         |          |      |  |      |           |   |  |   |          |  
|Operating (loss)                                                      |  |                         | (1,401.8 | )    |  |      | (10,401.6 | ) |  |   | (1,525.2 | )
|Other income (expense)                                                |  |                         |          |      |  |      |           |   |  |   |          |  
|Interest income and other, net                                        |  |                         | 21.0     |      |  |      | 28.8      |   |  |   | 25.8     |  
|Interest income  NTL Europe, Inc.                                    |  |                         | 8.8      |      |  |      | 5.8       |   |  |   |         |  
|Interest expense (contractual interest of $1,425.4 (2002))            |  |                         | (762.5   | )    |  |      | (1,240.8  | ) |  |   | (886.3   | )
|Interest expense  NTL Europe, Inc.                                   |  |                         | (17.7    | )    |  |      |          |   |  |   |         |  
|Share of (losses) from equity investments                             |  |                         | (3.4     | )    |  |      | (23.2     | ) |  |   | (24.2    | )
|Other (losses)                                                        |  |                         |         |      |  |      | (88.5     | ) |  |   |         |  
|Foreign currency transaction (losses) gains                           |  |                         | (94.1    | )    |  |      | 0.6       |   |  |   | (58.1    | )
|                                                                      |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) before recapitalization items and income taxes                 |  |                         | (2,249.7 | )    |  |      | (11,718.9 | ) |  |   | (2,468.0 | )
|Recapitalization items, net                                           |  |                         | (151.8   | )    |  |      |          |   |  |   |         |  
|                                                                      |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) before income taxes                                            |  |                         | (2,401.5 | )    |  |      | (11,718.9 | ) |  |   | (2,468.0 | )
|Income tax benefit (expense)                                          |  |                         | 25.7     |      |  |      | (118.1    | ) |  |   | 79.9     |  
|                                                                      |  |                         |          |      |  |      |           |   |  |   |          |  
|Net (loss)                                                            |  | $                       | (2,375.8 | )    |  | $    | (11,837.0 | ) |  | $ | (2,388.1 | )
|                                                                      |  |                         |          |      |  |      |           |   |  |   |          |  

See accompanying notes.

F-5



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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries
Consolidated Statement of Shareholders Equity (Deficiency)
(dollars in millions)

|                                              |       |  |                |   |            |   |         |  |  |   |          |  | 
|--------------------------------------------- | ----- |  | -------------- | - | ---------- | - | ------- |  |  | - | -------- |  | 
|                                              |       |  | Common Stock   |   |            |   |        
|                                              |       |  | $.01 Par Value |   | Additional
|                                              |       |  |                |   | Paid-In   
|                                              |       |  | Shares         |   | Par        |   | Capital
|                                              |       |  |                |   |            |   |        
|Balance, December 31, 1999                    |       |  | 100            |   |            | $ |        |  |  | $ | 3,031.3  | 
|Contributions from NTL (Delaware), Inc        |       |  |                |   |            |   |         |  |  |   | 10,715.4 | 
|Corporate restructuring                       |       |  | (87            | ) |            |   |         |  |  |   |          | 
|Comprehensive loss:                           |       |  |                |   |            |   |         |  |  |   |          | 
|Net loss for the year ended December 31, 2000 |       |  |                |   |            |   |         |  |  |   |          | 
|Currency translation adjustment               |       |  |                |   |            |   |         |  |  |   |          | 
|                                              | Total |  |                |   |            |   |         |  |  |   |          |  | 
|                                              |       |  |                |   |            |   |         |  |  |   |          | 
|Balance, December 31, 2000                    |       |  | 13             |   |            |   |        |  |  |   | 13,746.7 | 
|Contribution from NTL (Delaware), Inc., net   |       |  |                |   |            |   |         |  |  |   | 140.4    | 
|Non-cash compensation                         |       |  |                |   |            |   |         |  |  |   | 30.6     | 
|Comprehensive loss:                           |       |  |                |   |            |   |         |  |  |   |          | 
|Net loss for the year ended December 31, 2001 |       |  |                |   |            |   |         |  |  |   |          | 
|Currency translation adjustment               |       |  |                |   |            |   |         |  |  |   |          | 
|Unrealized net losses on derivatives          |       |  |                |   |            |   |         |  |  |   |          | 
|                                              | Total |  |                |   |            |   |         |  |  |   |          |  | 
|                                              |       |  |                |   |            |   |         |  |  |   |          | 
|Balance, December 31, 2001                    |       |  | 13             |   |            |   |        |  |  |   | 13,917.7 | 
|Contribution from NTL (Delaware), Inc., net   |       |  |                |   |            |   |         |  |  |   | 127.8    | 
|Comprehensive loss:                           |       |  |                |   |            |   |         |  |  |   |          | 
|Net loss for the year ended December 31, 2002 |       |  |                |   |            |   |         |  |  |   |          | 
|Currency translation adjustment               |       |  |                |   |            |   |         |  |  |   |          | 
|Pension liability adjustment                  |       |  |                |   |            |   |         |  |  |   |          | 
|Unrealized net gains on derivatives           |       |  |                |   |            |   |         |  |  |   |          | 
|                                              | Total |  |                |   |            |   |         |  |  |   |          |  | 
|                                              |       |  |                |   |            |   |         |  |  |   |          | 
|Balance, December 31, 2002                    |       |  | 13             |   |            | $ |        |  |  | $ | 14,045.5 | 
|                                              |       |  |                |   |            |   |         |  |  |   |          | 

See accompanying notes.

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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries
Consolidated Statement of Shareholders Equity (Deficiency) - continued
(dollars in millions)

|                                              |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |   | 
|--------------------------------------------- | ----- | - | ------------- | --------- | ----------- | - | ----------------- | - | ----------- | - | --------- | - |  | - | ---------- | - |  | - | --------- | - | 
|                                              |       |   |               |           |             |   | Accumulated Other |   |             |   |          
|                                              |       |   |               |           |             |   | Comprehensive     |   |             |   |          
|                                              |       |   |               |           |             |   | (Loss)            |   |             |   |          
|                                              |       |   |               |           |             |   |                   |   |             |   |          
|                                              |       |   |               |           |             |   |                   |   |             |   |           |   |  |   | Net        |   |  |   |          
|                                              |       |   |               |           |             |   |                   |   |             |   |           |   |  |   | Unrealized |   |  |   |          
|                                              |       |   |               |           |             |   | Foreign           |   | Pension     |   | (Losses)  |   |  |   |           
|                                              |       |   | Comprehensive |           | Currency    |   | Liability         |   | Gains on    |   |           |   | 
|                                              |       |   | (Loss)        |           | Translation |   | Adjustments       |   | Derivatives |   | (Deficit)
|                                              |       |   |               |           |             |   |                   |   |             |   |          
|Balance, December 31, 1999                    |       |   |               |           |             | $ | 1.8               |   |             |   |           |   |  |   |            |   |  | $ | (1,967.1  | )
|Contributions from NTL (Delaware), Inc        |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Corporate restructuring                       |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Comprehensive loss:                           |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Net loss for the year ended December 31, 2000 |       | $ | (2,388.1      | )         |             |   |                   |   |             |   |           |   |  |   |            |   |  |   | (2,388.1  | )
|Currency translation adjustment               |       |   | (381.1        | )         |             |   | (381.1            | ) |             |   |           |   |  |   |            |   |  |   |           |  
|                                              |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|                                              | Total |   | $             | (2,769.2  | )           |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |   | 
|                                              |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Balance, December 31, 2000                    |       |   |               |           |             |   | (379.3            | ) |             |   |           |   |  |   |            |   |  |   | (4,355.2  | )
|Contribution from NTL (Delaware), Inc., net   |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Non-cash compensation                         |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Comprehensive loss:                           |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Net loss for the year ended December 31, 2001 |       | $ | (11,837.0     | )         |             |   |                   |   |             |   |           |   |  |   |            |   |  |   | (11,837.0 | )
|Currency translation adjustment               |       |   | (521.6        | )         |             |   | (521.6            | ) |             |   |           |   |  |   |            |   |  |   |           |  
|Unrealized net losses on derivatives          |       |   | (3.6          | )         |             |   |                   |   |             |   |           |   |  | $ | (3.6       | ) |  |   |           |  
|                                              |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|                                              | Total |   | $             | (12,362.2 | )           |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |   | 
|                                              |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Balance, December 31, 2001                    |       |   |               |           |             |   | (900.9            | ) |             |   |           |   |  |   | (3.6       | ) |  |   | (16,192.2 | )
|Contribution from NTL (Delaware), Inc., net   |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Comprehensive loss:                           |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Net loss for the year ended December 31, 2002 |       | $ | (2,375.8      | )         |             |   |                   |   |             |   |           |   |  |   |            |   |  |   | (2,375.8  | )
|Currency translation adjustment               |       |   | 351.0         |           |             |   | 351.0             |   |             |   |           |   |  |   |            |   |  |   |           |  
|Pension liability adjustment                  |       |   | (103.7        | )         |             |   |                   |   |             | $ | (103.7    | ) |  |   |            |   |  |   |           |  
|Unrealized net gains on derivatives           |       |   | 3.6           |           |             |   |                   |   |             |   |           |   |  |   | 3.6        |   |  |   |           |  
|                                              |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|                                              | Total |   | $             | (2,124.9  | )           |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |   | 
|                                              |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  
|Balance, December 31, 2002                    |       |   |               |           |             | $ | (549.9            | ) |             | $ | (103.7    | ) |  | $ |           |   |  | $ | (18,568.0 | )
|                                              |       |   |               |           |             |   |                   |   |             |   |           |   |  |   |            |   |  |   |           |  

See accompanying notes.

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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries
Consolidated Statements of Cash Flows
(in millions)

|                                                                                                        |                                                                 |   |                         |         |      |   |           |         |   |   |          |         |  
|------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | - | ----------------------- | ------- | ---- | - | --------- | ------- | - | - | -------- | ------- | -
|                                                                                                        |                                                                 |   | Year Ended December 31,
|                                                                                                        |                                                                 |   |                        
|                                                                                                        |                                                                 |   | 2002                    |         | 2001 |   | 2000     
|                                                                                                        |                                                                 |   |                         |         |      |   |          
|Operating activities                                                                                    |                                                                 |   |                         |         |      |   |           |         |   |   |          |        
|Net (loss)                                                                                              |                                                                 | $ | (2,375.8                | )       |      | $ | (11,837.0 | )       |   | $ | (2,388.1 | )      
|Adjustment to reconcile net (loss) to net cash provided by
(used in) operating activities:              |                                                                 |   |                         |         |      |   |           |         |   |   |          |        
|                                                                                                        | Depreciation and amortization                                   |   |                         | 1,541.6 |      |   |           | 2,540.3 |   |   |          | 1,700.7 |  
|                                                                                                        | Asset impairments                                               |   |                         | 445.1   |      |   |           | 8,160.6 |   |   |          |        |  
|                                                                                                        | Non-cash compensation                                           |   |                         |        |      |   |           | 30.6    |   |   |          |        |  
|                                                                                                        | Non-cash restructuring charge                                   |   |                         | 7.5     |      |   |           | 57.9    |   |   |          |        |  
|                                                                                                        | Equity in losses of unconsolidated subsidiaries                 |   |                         | 3.4     |      |   |           | 23.2    |   |   |          | 24.2    |  
|                                                                                                        | Loss on sale of assets                                          |   |                         |        |      |   |           | 88.5    |   |   |          |        |  
|                                                                                                        | Provision for losses on accounts receivable                     |   |                         | 55.2    |      |   |           | 58.3    |   |   |          | 98.5    |  
|                                                                                                        | Provision for cancellation of receivables from NTL Europe, Inc. |   |                         | 284.4   |      |   |           |        |   |   |          |        |  
|                                                                                                        | Deferred income taxes                                           |   |                         | (29.3   | )    |   |           | 116.4   |   |   |          | (80.8   | )
|                                                                                                        | Amortization of original issue discount                         |   |                         | 96.7    |      |   |           | 284.7   |   |   |          | 473.1   |  
|                                                                                                        | Other                                                           |   |                         | 145.1   |      |   |           | (16.7   | ) |   |          | (98.0   | )
|Changes in operating assets and liabilities, net of effect
from business acquisitions and dispositions: |                                                                 |   |                         |         |      |   |           |         |   |   |          |        
|                                                                                                        | Accounts receivable                                             |   |                         | 108.9   |      |   |           | (31.3   | ) |   |          | (247.9  | )
|                                                                                                        | Other current assets                                            |   |                         | 72.5    |      |   |           | 23.5    |   |   |          | (41.8   | )
|                                                                                                        | Other assets                                                    |   |                         | 0.1     |      |   |           | 56.1    |   |   |          | 42.4    |  
|                                                                                                        | Accounts payable                                                |   |                         | (144.5  | )    |   |           | (38.8   | ) |   |          | (102.2  | )
|                                                                                                        | Accrued expenses and other                                      |   |                         | 12.6    |      |   |           | (81.9   | ) |   |          | 330.3   |  
|                                                                                                        | Deferred revenue                                                |   |                         | 35.2    |      |   |           | 7.0     |   |   |          | 120.6   |  
|                                                                                                        |                                                                 |   |                         |         |      |   |           |         |   |   |          |        
|Net cash provided by (used in) operating activities                                                     |                                                                 |   | 258.7                   |         |      |   | (558.6    | )       |   |   | (169.0   | )      
|Investing activities                                                                                    |                                                                 |   |                         |         |      |   |           |         |   |   |          |        
|Acquisitions, net of cash acquired                                                                      |                                                                 |   |                        |         |      |   | (26.2     | )       |   |   | (7,514.9 | )      
|Purchase of fixed assets                                                                                |                                                                 |   | (680.9                  | )       |      |   | (1,653.0  | )       |   |   | (1,961.8 | )      
|Investments in and loans to affiliates                                                                  |                                                                 |   | (6.7                    | )       |      |   | (12.0     | )       |   |   | (27.8    | )      
|Increase in other assets                                                                                |                                                                 |   | (166.5                  | )       |      |   | (31.6     | )       |   |   | (7.2     | )      
|Loan to NTL Europe, Inc.                                                                                |                                                                 |   |                        |         |      |   | (150.0    | )       |   |   |         |        
|Proceeds from sales of assets                                                                           |                                                                 |   | 15.1                    |         |      |   | 14.6      |         |   |   |         |        
|Purchase of marketable securities                                                                       |                                                                 |   | (10.8                   | )       |      |   | (9.9      | )       |   |   | (3.3     | )      
|Proceeds from sales of marketable securities                                                            |                                                                 |   | 5.6                     |         |      |   | 10.0      |         |   |   | 8.3      |        
|                                                                                                        |                                                                 |   |                         |         |      |   |           |         |   |   |          |        
|Net cash (used in) investing activities                                                                 |                                                                 |   | (844.2                  | )       |      |   | (1,858.1  | )       |   |   | (9,506.7 | )      

F-8



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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries
Consolidated Statements of Cash Flows - continued
(in millions)

|                                                                        |  |                         |       |      |  |      |         |   |  |   |          |  
|----------------------------------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ------- | - |  | - | -------- | -
|                                                                        |  | Year Ended December 31,
|                                                                        |  |                        
|                                                                        |  | 2002                    |       | 2001 |  | 2000
|                                                                        |  |                         |       |      |  |     
|Financing activities                                                    |  |                         |       |      |  |      |         |   |  |   |          |  
|Proceeds from borrowing from NTL (Delaware), Inc.                       |  |                         | 135.2 |      |  |      |        |   |  |   |         |  
|Proceeds from borrowings, net of financing costs                        |  |                         | 670.1 |      |  |      | 2,643.4 |   |  |   | 5,009.8  |  
|Principal payments                                                      |  |                         | (8.6  | )    |  |      | (421.5  | ) |  |   | (1,263.9 | )
|Contribution from NTL (Delaware), Inc.                                  |  |                         | 3.9   |      |  |      | 40.8    |   |  |   | 5,227.2  |  
|Distribution to NTL (Delaware), Inc.                                    |  |                         |      |      |  |      | (10.6   | ) |  |   |         |  
|Cash released from escrow for debt repayment                            |  |                         |      |      |  |      |        |   |  |   | 77.5     |  
|                                                                        |  |                         |       |      |  |      |         |   |  |   |          |  
|Net cash provided by financing activities                               |  |                         | 800.6 |      |  |      | 2,252.1 |   |  |   | 9,050.6  |  
|Effect of exchange rate changes on cash                                 |  |                         | 35.8  |      |  |      | (7.8    | ) |  |   | (25.6    | )
|                                                                        |  |                         |       |      |  |      |         |   |  |   |          |  
|Increase (decrease) increase in cash and cash equivalents               |  |                         | 250.9 |      |  |      | (172.4  | ) |  |   | (650.7   | )
|Cash and cash equivalents at beginning of year                          |  |                         | 251.1 |      |  |      | 423.5   |   |  |   | 1,074.2  |  
|                                                                        |  |                         |       |      |  |      |         |   |  |   |          |  
|Cash and cash equivalents at end of year                                |  | $                       | 502.0 |      |  | $    | 251.1   |   |  | $ | 423.5    |  
|                                                                        |  |                         |       |      |  |      |         |   |  |   |          |  
|Supplemental disclosure of cash flow information                        |  |                         |       |      |  |      |         |   |  |   |          |  
|Cash paid during the year for interest exclusive of amounts
capitalized |  | $                       | 410.0 |      |  | $    | 776.6   |   |  | $ | 363.9    |  
|Income taxes paid                                                       |  |                         | 1.4   |      |  |      | 0.1     |   |  |   | 1.5      |  
|Supplemental schedule of non-cash financing activities                  |  |                         |       |      |  |      |         |   |  |   |          |  
|Contribution from NTL (Delaware), Inc.                                  |  | $                       | 123.9 |      |  | $    | 110.2   |   |  | $ | 5,488.2  |  
|Conversion of notes, net of unamortized deferred financing costs        |  |                         |      |      |  |      | 109.5   |   |  |   |         |  

See accompanying notes.

F-9



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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements

1.     Organization and Business

NTLs Completed Restructuring

On May 8, 2002, NTL Incorporated (then known as NTL Communications Corp.), (the
Company) NTL Europe, Inc. (then known as NTL Incorporated) and certain of the
Companys and NTL Europe, Inc.s subsidiaries filed a pre-arranged joint
reorganization plan (the Plan) under Chapter 11 of the US Bankruptcy Code.
The Companys operating subsidiaries and those of NTL Europe, Inc. were not
included in the Chapter 11 filing. The Plan became effective on January 10,
2003, (the Effective Date) at which time the Company emerged from Chapter 11
reorganization.

The accompanying financial statements
do not reflect any adjustments in connection with the Companys
emergence from Chapter 11 reorganization.

Pursuant to the Plan, the entity formerly known as NTL Incorporated and its
subsidiaries and affiliates were split into two separate groups, and the
Company and NTL Europe, Inc. each emerged as independent public companies. The
entity formerly known as NTL Communications Corp. was renamed NTL
Incorporated and became the holding company for the former NTL groups
principal UK and Ireland assets. Prior to consummation of the Plan, the
Company was a wholly-owned subsidiary of the entity then known as NTL
Incorporated, which, pursuant to the Plan, was renamed NTL Europe, Inc. and
which became the holding company for the former NTL groups continental
European and certain other assets. Pursuant to the Plan, all of the
outstanding securities of the Companys former ultimate parent company (NTL
Europe, Inc.) and certain of its subsidiaries, including the Company, were
cancelled, and the Company issued shares of its common stock and Series A
warrants and NTL Europe, Inc. issued shares of its common stock and preferred
stock to various former creditors and stockholders of the Companys former
ultimate parent company and its subsidiaries, including the Company. The
precise mix of new securities received by holders of each particular type of
security of the Companys former ultimate parent company and its subsidiaries
was set forth in the Plan. The outstanding notes of Diamond Holding Limited
and NTL (Triangle) LLC were not canceled and remain outstanding.

Historical Structure of the Company

The Company was incorporated in 1993 as a Delaware corporation and continued as
a publicly-traded holding company until February 1999. From February 1999 until
the Effective Date, the Company was a wholly-owned subsidiary of NTL
(Delaware), Inc., a Delaware corporation, which was incorporated in February
1999, to effect a reorganization into a holding company structure under Section
251(g) of the Delaware General Corporation Law. The holding company structure
was implemented to pursue opportunities outside of the UK and Ireland, and was
accomplished through a merger. The Companys stockholders at the time became
stockholders of the new holding company NTL (Delaware), Inc., and the Company
became a wholly-owned subsidiary of the new holding company. The new holding
company took the name NTL Incorporated until May 2000 when it was changed to
NTL (Delaware), Inc., its current name.

In May 2000 another new holding company structure was implemented in connection
with the acquisition of the residential assets of Cable & Wireless
Communications plc (CWC) (the operations acquired from CWC are called
ConsumerCo), and was similarly accomplished through a merger. The
stockholders of NTL (Delaware), Inc. became stockholders of the new holding
company, and NTL (Delaware), Inc. became a subsidiary of the new holding
company, and the Company remained a subsidiary of NTL (Delaware), Inc. (NTL
Delaware). The new holding company then took the name NTL Incorporated until
the Effective Date of the Plan (January 10, 2003), at which time its name was
changed to NTL Europe, Inc. (NTL Europe). The Company remained a subsidiary
of those two holding companies until the Effective Date, at which time NTL
Europe and its wholly owned subsidiary NTL Delaware were separated from the
Company pursuant to the Plan.

On February 21, 2001, the Companys former ultimate parent company contributed
the assets of ConsumerCo to the Company and NTL Delaware contributed the assets
of NTL Business Limited (formerly Workplace Technologies plc) (NTL Business)
to the Company. NTL Group Limited, a wholly-owned indirect subsidiary of the
Company, which was acquired in 1996, has a 30-year history in the UK as a
provider of reliable communications services.

The Company conducts its operations through direct and indirect wholly-owned
subsidiaries.

F-10



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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial
Statements(continued)

1.     Organization and Business (continued)

Business

The Company, through its direct and
indirect wholly-owned subsidiaries, owns and operates broadband
communications networks for telephone, cable television and Internet services
in the United Kingdom and Ireland, and transmission networks for television and
radio broadcasting in the United Kingdom. Based on revenues and identifiable
assets, the Companys predominant lines of business are consumer services,
business services and broadcast transmission and related services in the United
Kingdom. Consumer services include residential telephony, cable television,
Internet access and interactive services. Business services include telephony,
national and international wholesale carrier telecommunications, and radio
communications services for the emergency services community. Broadcast
transmission and related services include digital and analog television and
radio broadcasting, rental of antenna space on the Companys owned and leased
towers and sites and associated services, and satellite and media services.

2.     Reorganization and Emergence from Chapter 11

Background of Restructuring

Both the equity and debt capital markets experienced periods of significant
volatility in 2001 and 2002, particularly for securities issued by
telecommunications and technology companies. As a result, the ability of the
Companys former ultimate parent company and its subsidiaries to access those
markets as well as its ability to obtain financing from its bank lenders and
equipment suppliers became severely restricted. In addition, the Companys
former ultimate parent company and its subsidiaries, including the Company, had
no further funds available, or were unable to draw upon funds, under the
Companys credit facilities. As a result of these factors, together with its
substantial leverage, on January 31, 2002, the Companys former ultimate parent
company announced that it had appointed professional advisors to advise on
strategic and recapitalization alternatives to strengthen its balance sheet,
reduce debt and put an appropriate capital structure in place for its business.

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities in March 2002, the Companys former ultimate parent company and
certain of its subsidiaries commenced negotiations with a steering committee of
the unofficial committee of its bondholders and the committees legal and
financial advisors.

The Companys former ultimate parent company and its subsidiaries failed to
make interest payments on some of the outstanding notes starting on April 1,
2002. The Companys former ultimate parent company also failed to declare or
pay dividends on certain series of its outstanding preferred stock due to a
lack of available surplus under Delaware law.

On April 16, 2002, the Companys former ultimate parent company announced that
it and an unofficial committee of its bondholders had reached an
agreement in principle on a comprehensive recapitalization of the former NTL
group. To implement the proposed recapitalization plan, on May 8, 2002, the
Company, the Companys former ultimate parent company and certain of the other
subsidiaries of the Companys former ultimate parent company filed cases and a
pre-arranged joint reorganization plan under Chapter 11 of the U.S. Bankruptcy
Code. In connection with the filing, some members of the unofficial creditors
committee of bondholders entered into a credit facility agreement (referred to
as the DIP facility) committing to provide a wholly-owned subsidiary of the
Company with up to $500.0 million in new debt financing (NTL Delaware
committed to provide up to an additional $130.0 million under the DIP
facility.)

As a result of the payment defaults as well as the voluntary filing under
Chapter 11 by the Companys former ultimate parent company and certain of its
subsidiaries on May 8, 2002, there was an event of default under all of the
Companys former ultimate parent company and its subsidiaries credit
facilities and the indentures governing all of their publicly traded debt,
other than debt of NTL (Triangle) LLC.

The Plan was confirmed by the Bankruptcy Court on September 5, 2002. During
the fall of 2002, the Companys former ultimate parent company negotiated with
a group of lenders to enter into a new financing arrangement to repay the DIP
facility, to repay certain obligations and to provide liquidity to the Company
and its subsidiaries. The Plan became effective on January 10, 2003, at which
time the Company emerged from Chapter 11 reorganization. In connection with
the Companys emergence from Chapter 11 reorganization, the Company and certain
of its subsidiaries issued $558.249 million aggregate principal face amount of
19% Senior Secured Notes due 2010 (the Exit Notes) on January 10, 2003.
Initial purchasers of the Companys Exit Notes also purchased 500,000 shares of
the Companys common stock on that date. The gross proceeds from the sale of
the Exit Notes and
such shares totaled $500.0 million. The proceeds were used in part to repay
amounts outstanding under the DIP facility and to

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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial
Statements (continued)

2.     Reorganization and Emergence from Chapter 11 (continued)

purchase from NTL Delaware a £90.0 million note of NTL (UK) Group Inc. and to
repay certain other obligations. Also on January 10, 2003, the Company and its
lending banks amended the Companys existing credit facilities.

We have historically incurred operating losses and negative operating cash
flow. In addition, we required and expect to continue to require significant
amounts of capital to finance construction of our networks, connection of
customers to the networks, other capital expenditures and for working capital
needs including debt service requirements.

We
currently expect that we will require approximately
£310 million ($499 million) to fund our working capital including debt service, capital
expenditures, and payments made on the Effective Date pursuant to the Plan and
the amendment of our existing credit facilities, net of cash from operations,
in the twelve months from January 1, 2003 to December 31,
2003. A significant portion of the £310 million total relates to
payments made on the Effective Date. We believe
that cash, cash equivalents and marketable securities on hand of $507.2 million
as of December 31, 2002, plus the proceeds from sale of the Exit Notes and
500,000 shares of common stock of $500.0 million, will be sufficient for our
cash requirements during the twelve months from January 1, 2003 to December 31,
2003.

Recapitalization Expense

The joint reorganization plan provided that recapitalization costs be
allocated between the Company and NTL Europe.

Recapitalization items, net consist of the following:

|                                                                   |  |               |        |      |  |      |   |  |  |   |   | 
|------------------------------------------------------------------ |  | ------------- | ------ | ---- |  | ---- | - |  |  | - | - | 
|                                                                   |  | Year Ended   
|                                                                   |  | December 31, 
|                                                                   |  |              
|                                                                   |  | 2002          |        | 2001 |  | 2000
|                                                                   |  |               |        |      |  |     
|                                                                   |  | (in millions)
|Payroll and related                                                |  | $             | (36.2  | )    |  | $    |  |  |  | $ |  | 
|Professional fees                                                  |  |               | (116.7 | )    |  |      |  |  |  |   |  | 
|Interest earned on accumulated cash from
Chapter 11 proceeding (1) |  |               | 1.1    |      |  |      |  |  |  |   |  | 
|                                                                   |  |               |        |      |  |      |   |  |  |   |   | 
|                                                                   |  | $             | (151.8 | )    |  | $    |  |  |  | $ |  | 
|                                                                   |  |               |        |      |  |      |   |  |  |   |   | 

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

|                                                     |  |                   |       |  
|---------------------------------------------------- |  | ----------------- | ----- | -
|                                                     |  | Year Ended       
|                                                     |  | December 31, 2002
|                                                     |  |                  
|                                                     |  | (in millions)    
|Interest income (1)                                  |  | $                 | 1.1   |  
|Payroll and related costs paid                       |  |                   | (32.9 | )
|Professional fees                                    |  |                   | (39.0 | )
|                                                     |  |                   |       |  
|Net operating cash flows from recapitalization items |  | $                 | (70.8 | )
|                                                     |  |                   |       |  

(1)  Interest income resulting from the recapitalization is for the period May
8, 2002 through December 31, 2002.

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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements(continued)

2.     Reorganization and Emergence from Chapter 11 (continued)

Pro Forma Consolidated Balance Sheet

The following pro forma consolidated balance sheet as of December 31, 2002
gives effect to the Companys emergence from Chapter 11 reorganization and the
adoption of fresh-start reporting as if both had occurred on December 31, 2002.
The Company adopted fresh-start reporting in January 2003 in accordance with
AICPA Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code ( SOP 90-7). The Company adopted
fresh-start reporting because the holders of its voting common shares
immediately before filing and confirmation of the Plan received less than 50%
of the voting shares of the emerging company, and because the Companys
reorganization value is less than its post-petition liabilities and allowed
claims.

The adjustments entitled Emergence from Chapter 11 reflect the consummation
of the Plan, including the cancellation of a substantial portion of the
Companys outstanding debt and the issuance of shares of new common stock and
Series A warrants to various former creditors and stockholders of the Companys
former ultimate parent company and certain of its subsidiaries, including the
Company. The adjustments entitled Fresh-Start reflect the adoption of
fresh-start reporting. The Company engaged an independent financial advisor to
assist in the determination of the reorganization value (or fair value) of its
assets and the present value of its liabilities. This determination resulted in
the fresh-start reporting adjustments to write-down fixed assets and write-up
intangible assets to their fair values. In addition, the Companys total
reorganization value exceeded the amounts allocable to identifiable assets that
resulted in a new indefinte-lived intangible asset.

The emergence from Chapter 11 and the adoption of fresh-start reporting in
January 2003 resulted in the following items of income
(expense) that will be recognized in the Companys financial
statements for the quarter ended March 31, 2003:

|                                              |  |   |               |  
|--------------------------------------------- |  | - | ------------- | -
|                                              |  |   | (in millions)
|                                              |  |   |               |  
|Gain on debt discharge                        |  | $ | 8,452         |  
|Fresh-start adoption  intangible assets      |  |   | 1,522         |  
|Fresh-start adoption  long-term debt         |  |   | 221           |  
|Fresh-start adoption  deferred tax liability |  |   | (69           | )
|Fresh-start adoption  accrued expenses       |  |   | (120          | )
|Fresh-start adoption  fixed assets           |  |   | (3,195        | )
|                                              |  |   |               |  
|TOTAL                                         |  | $ | 6,811         |  
|                                              |  |   |               |  

|                                                                           |                                                                 |   |               |       |            |   |                |       |           |   |          |   |  |   |          |       | 
|-------------------------------------------------------------------------- | --------------------------------------------------------------- | - | ------------- | ----- | ---------- | - | -------------- | ----- | --------- | - | -------- | - |  | - | -------- | ----- | 
|                                                                           |                                                                 |   |               |       |            |   | Emergence from |       | Fresh-    |   |          |   | 
|                                                                           |                                                                 |   | Historical    |       | Chapter 11 |   | Start          |       | Pro Forma
|                                                                           |                                                                 |   |               |       |            |   |                |       |          
|                                                                           |                                                                 |   | (in millions)
|Assets                                                                     |                                                                 |   |               |       |            |   |                |       |           |   |          |   |  |   |          |      
|Current assets:                                                            |                                                                 |   |               |       |            |   |                |       |           |   |          |   |  |   |          |      
|                                                                           | Cash and cash equivalents                                       |   | $             | 502.0 |            |   | $              | 138.7 |           |   | $        |  |  |   | $        | 640.7 | 
|                                                                           | Marketable securities                                           |   |               | 5.2   |            |   |                |      |           |   |          |  |  |   |          | 5.2   | 
|                                                                           | Accounts receivable-trade, less
allowance for doubtful accounts |   |               | 395.9 |            |   |                |      |           |   |          |  |  |   |          | 395.9 | 
|                                                                           | Due from affiliates                                             |   |               | 1.6   |            |   |                |      |           |   |          |  |  |   |          | 1.6   | 
|                                                                           | Other                                                           |   |               | 192.7 |            |   |                |      |           |   |          |  |  |   |          | 192.7 | 
|                                                                           | Due from NTL Europe, Inc.                                       |   |               | 73.3  |            |   |                | (72.4 | )         |   |          |  |  |   |          | 0.9   | 
|                                                                           |                                                                 |   |               |       |            |   |                |       |           |   |          |   |  |   |          |      
|Total current assets                                                       |                                                                 |   | 1,170.7       |       |            |   | 66.3           |       |           |   |         |   |  |   | 1,237.0  |      
|Fixed assets, net                                                          |                                                                 |   | 11,088.9      |       |            |   |               |       |           |   | (3,194.9 | ) |  |   | 7,894.0  |      
|Intangible assets, net                                                     |                                                                 |   | 395.3         |       |            |   |               |       |           |   | 868.4    |   |  |   | 1,263.7  |      
|Investments in and loans to affiliates, net                                |                                                                 |   | 8.4           |       |            |   |               |       |           |   |         |   |  |   | 8.4      |      
|Reorganization value in excess of
amounts allocable to identifiable assets |                                                                 |   |              |       |            |   |               |       |           |   | 653.3    |   |  |   | 653.3    |      
|Other assets, net                                                          |                                                                 |   | 378.1         |       |            |   | (187.0         | )     |           |   |         |   |  |   | 191.1    |      
|                                                                           |                                                                 |   |               |       |            |   |                |       |           |   |          |   |  |   |          |      
|Total assets                                                               |                                                                 | $ | 13,041.4      |       |            | $ | (120.7         | )     |           | $ | (1,673.2 | ) |  | $ | 11,247.5 |      
|                                                                           |                                                                 |   |               |       |            |   |                |       |           |   |          |   |  |   |          |      
|Liabilities and shareholders (deficiency) equity                          |                                                                 |   |               |       |            |   |                |       |           |   |          |   |  |   |          |      
|Liabilities not subject to compromise                                      |                                                                 |   |               |       |            |   |                |       |           |   |          |   |  |   |          |      

F-13



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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to consolidated Financial Statements (continued)

|                                                        |                                        |   |               |           |            |   |                |          |           |   |          |           |   |   |          |         | 
|------------------------------------------------------- | -------------------------------------- | - | ------------- | --------- | ---------- | - | -------------- | -------- | --------- | - | -------- | --------- | - | - | -------- | ------- | 
|                                                        |                                        |   |               |           |            |   | Emergence from |          | Fresh-    |   |          |           |  
|                                                        |                                        |   | Historical    |           | Chapter 11 |   | Start          |          | Pro Forma
|                                                        |                                        |   |               |           |            |   |                |          |          
|                                                        |                                        |   | (in millions)
|Current liabilities:                                    |                                        |   |               |           |            |   |                |          |           |   |          |           |   |   |          |        
|                                                        | Accounts payable                       |   | $             | 385.8     |            |   | $              | 0.7      |           |   | $        |          |   |   | $        | 386.5   | 
|                                                        | Accrued expenses and other             |   |               | 780.5     |            |   |                | 6.6      |           |   |          | (32.7     | ) |   |          | 754.4   | 
|                                                        | Accrued construction costs             |   |               | 70.4      |            |   |                |         |           |   |          |          |   |   |          | 70.4    | 
|                                                        | Interest payable                       |   |               | 177.3     |            |   |                | 38.0     |           |   |          |          |   |   |          | 215.3   | 
|                                                        | Deferred revenue                       |   |               | 359.8     |            |   |                |         |           |   |          |          |   |   |          | 359.8   | 
|                                                        | Due to NTL Europe, Inc.                |   |               | 236.1     |            |   |                | (234.6   | )         |   |          |          |   |   |          | 1.5     | 
|                                                        | Current portion of long-term debt      |   |               | 5,955.4   |            |   |                | (5,952.3 | )         |   |          |          |   |   |          | 3.1     | 
|                                                        |                                        |   |               |           |            |   |                |          |           |   |          |           |   |   |          |        
|Total current liabilities                               |                                        |   | 7,965.3       |           |            |   | (6,141.6       | )        |           |   | (32.7    | )         |   |   | 1,791.0  |        
|Long-term debt                                          |                                        |   |              |           |            |   | 6,540.1        |          |           |   |         |           |   |   | 6,540.1  |        
|Long-term debt discount                                 |                                        |   |              |           |            |   |               |          |           |   | (221.3   | )         |   |   | (221.3   | )      
|Other                                                   |                                        |   |              |           |            |   |               |          |           |   | 47.2     |           |   |   | 47.2     |        
|Deferred income taxes                                   |                                        |   | 94.4          |           |            |   |               |          |           |   | 68.5     |           |   |   | 162.9    |        
|Commitments
and contingent liabilities                  |                                        |   |               |           |            |   |                |          |           |   |          |           |   |   |          |        
|Liabilities subject to compromise                       |                                        |   | 10,157.8      |           |            |   | (10,157.8      | )        |           |   |         |           |   |   |         |        
|Shareholders (deficiency) equity:                      |                                        |   |               |           |            |   |                |          |           |   |          |           |   |   |          |        
|                                                        | Common stock-old                       |   |               |          |            |   |                |         |           |   |          |          |   |   |          |        | 
|                                                        | Common stock-new                       |   |               |          |            |   |                | 0.5      |           |   |          |          |   |   |          | 0.5     | 
|                                                        | Additional paid-in capital             |   |               | 14,045.5  |            |   |                | 1,194.1  |           |   |          | (12,312.5 | ) |   |          | 2,927.1 | 
|                                                        | Accumulated other comprehensive (loss) |   |               | (653.6    | )          |   |                | 0.4      |           |   |          | 653.2     |   |   |          |        | 
|                                                        | (Deficit) retained earnings            |   |               | (18,568.0 | )          |   |                | 8,443.6  |           |   |          | 10,124.4  |   |   |          |        | 
|                                                        |                                        |   |               |           |            |   |                |          |           |   |          |           |   |   |          |        
|                                                        |                                        |   | (5,176.1      | )         |            |   | 9,638.6        |          |           |   | (1,534.9 | )         |   |   | 2,927.6  |        
|                                                        |                                        |   |               |           |            |   |                |          |           |   |          |           |   |   |          |        
|Total liabilities and shareholders
(deficiency) equity |                                        | $ | 13,041.4      |           |            | $ | (120.7         | )        |           | $ | (1,673.2 | )         |   | $ | 11,247.5 |        
|                                                        |                                        |   |               |           |            |   |                |          |           |   |          |           |   |   |          |         | 

F-14



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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

3.  Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States,
including AICPA Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code, (SOP 90-7). The Company had
determined that there was insufficient collateral to cover the interest portion
of scheduled payments on certain of its prepetition debt obligations. The
Company had therefore discontinued accruing interest on these obligations. For
the year ended December 31, 2002, contractual interest was $1,425.4 million,
which was $645.2 million in excess of reported interest expense.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Such estimates and assumptions impact,
among others, the following: the amount of uncollectible accounts and notes
receivable, the amount to be paid to terminate certain agreements included in
restructuring costs, the amount to be paid for other liabilities, the Companys
pension expense and pension funding requirements, estimates related
to the amount of costs to be capitalized in connection with the
construction and installation of our network and facilities and estimates related to the
value of investments, long-lived assets and goodwill. Actual results could
differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its
wholly-owned subsidiaries and entities where the Companys interest is greater
than 50%. Significant intercompany accounts and transactions have been
eliminated in consolidation.

Reclassification

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

Foreign Currency Translation

The financial statements of the Companys foreign subsidiaries have been
translated into U.S. dollars in accordance with Statement of Financial
Accounting Standards (SFAS) No. 52, Foreign Currency Translation. All
balance sheet accounts have been translated using the current exchange rates at
the respective balance sheet dates. Statement of operations amounts have been
translated using the average exchange rates for the respective years. The
translation gains or losses resulting from the change in exchange rates have
been reported as a component of accumulated other comprehensive (loss). Foreign
currency transaction losses and gains are included in the results of operations
as incurred.

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

Cash Equivalents

Cash equivalents are short-term highly liquid investments purchased with a
maturity of three months or less. Cash equivalents were $15.7 million and
$218.7 million at December 31, 2002 and 2001, respectively, which consisted
primarily of bank time deposits and corporate commercial paper. At December 31,
2002 and 2001, none and $188.7 million, respectively, of the cash equivalents
were denominated in foreign currencies.

Marketable Securities

Marketable securities at
December 31, 2002 consist of commercial paper. Marketable securities are classified as available-for-sale, which are carried
at fair value. Unrealized holding gains and losses on securities, net of tax,
would be carried as a component of accumulated other comprehensive (loss). The
amortized cost of debt securities is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization is included in interest
income.

F-15



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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Realized gains and losses and declines in value judged to be other than
temporary will be included in interest income. The cost of securities sold or
matured is based on the specific identification method. Interest on securities
is included in interest income.

3.  Significant Accounting Policies (continued)

During the years ended December 31, 2002, 2001 and 2000, there were no realized
gains or losses on sales of securities.

Fixed Assets

Fixed assets are stated at cost, which includes amounts capitalized for labor
and overhead expended in connection with the design and installation of
operating equipment. Internal costs directly related to the construction of
such facilities, including payroll and related costs of certain employees and
rent and other occupancy costs are capitalized. The internal costs capitalized
in the years ended December 31, 2002, 2001 and 2000 were approximately £115
million ($185.1 million), £251 million ($365.1 million) and £259 million
($387.4 million), respectively. The American Institute of Certified Public
Accountants issued an Exposure Draft of a Proposed Statement of Position on
Accounting for Certain Costs and Activities related to Property, Plant and
Equipment dated June 29, 2001. This Exposure Draft is not currently an
accounting principle generally accepted in the United States. However, if this
Exposure Draft is adopted, it would require among other things that rent and
other occupancy costs are charged to expense as incurred. In the year ended
December 31, 2002, we capitalized approximately £9 million of such costs.

Depreciation is computed by the straight-line method over the estimated useful
lives of the assets. Estimated useful lives are as follows: operating equipment
 3 to 40 years and other equipment  3 to 40 years.

Intangible Assets

Intangible assets include goodwill, license acquisition costs, and customer
lists. Goodwill is the excess of the purchase price over the fair value of net
assets acquired in business combinations accounted for as purchases which
includes the portion of the purchase price allocated to the value of the
workforce in place. License acquisition costs represent the portion of
purchase price allocated to the cable television and telecommunications
licenses acquired in business combinations. Prior to the adoption of SFAS No.
142, Goodwill and Other Intangible Assets, goodwill was amortized on a
straight-line basis over the periods benefited of 3, 10, 15 or 30 years and
license acquisition costs were amortized on a straight-line basis up to 23 years. Upon the adoption of SFAS No. 142, goodwill and license
acquisition costs are no longer amortized. Instead these assets are reviewed
annually (or more frequently under certain conditions) for impairment in
accordance with this statement. Customer lists represent the portion of the
purchase price allocated to the value of the customer base. Customer lists are
amortized on a straight-line basis over 3 or 5 years.

Impairment of Long-Lived Assets

Long-lived assets, including fixed
assets and amortizable definite lived intangible assets, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the
sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset, a loss is recognized for the difference between the fair
value and the carrying value of the asset.

Equity Method Investments

All investments in which the Company has the ability to exercise significant
influence over the investee, but less than a controlling voting interest, are
accounted for using the equity method. Equity method investments are recorded
at original cost and adjusted periodically to recognize the Companys
proportionate share of the investees net income or losses after the date of
investment, additional contributions made and dividends received. Prior to the
adoption of SFAS No. 142, the difference between the Companys recorded
investment and its proportionate interest in the book value of the investees
net assets were being amortized on a straight-line basis over 10 years. The
Company evaluates the carrying value of its equity method investments and tests
for impairment in accordance with APB Opinion No. 18.

Deferred Financing Costs

Deferred financing costs of
$214.9 million and $249.0 million as of December 31,
2002 and 2001, respectively, are included in other assets. Deferred financing costs are incurred in connection with the issuance of debt
and are amortized over the term of the related debt.

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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Capitalized Interest

Interest is capitalized as a component of the cost of fixed assets constructed.
In 2002, 2001 and 2000, total interest incurred was $826.5 million, $1,308.5
million and $981.4 million, respectively, of which interest of $46.3 million,
$67.7 million and $95.1 million, respectively, was capitalized.

F-17



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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

3.  Significant Accounting Policies (continued)

Revenue Recognition

Revenues are recognized at the time the service is rendered to the customer or
the performance of the service has been completed. Charges for services that
are billed in advance are deferred and recognized when earned. Rental revenues
are recognized when earned on a monthly basis. Installation and maintenance
service revenues are recognized when the performance of the service has been
completed.

Cable Television System Costs, Expenses and Revenues

The Company accounts for costs, expenses and revenues applicable to the
construction and operation of its broadband communications networks in
accordance with SFAS No. 51, Financial Reporting by Cable Television
Companies.

Advertising Expense

The Company charges the cost of advertising to expense as incurred. Advertising
costs were $33.5 million, $77.9 million and $94.0 million in 2002, 2001 and
2000, respectively.

Stock-Based Compensation

The Company follows the disclosure-only provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. The Company
applies APB Opinion No.
25, Accounting for Stock Issued to Employees and related interpretations in
accounting for its stock option plans.

Had compensation for stock options granted by the Companys former ultimate
parent company been determined consistent with the provisions of SFAS No. 123,
the effect on the Companys net loss would have been changed to the following
pro forma amounts (See Note 17):

|                                           |  |                                 |          |      |  |               |           |   |  |   |          |  
|------------------------------------------ |  | ------------------------------- | -------- | ---- |  | ------------- | --------- | - |  | - | -------- | -
|                                           |  | For the Year Ended December 31,
|                                           |  |                                
|                                           |  | 2002                            |          | 2001 |  | 2000         
|                                           |  |                                 |          |      |  |              
|                                           |  |                                 |          |      |  | (in millions) |           |   |  |  
|Non-cash compensation expense, as reported |  | $                               |         |      |  | $             | 30.6      |   |  | $ |         |  
|                                           |  |                                 |          |      |  |               |           |   |  |   |          |  
|Non-cash compensation expense, pro forma   |  | $                               | 255.9    |      |  | $             | 259.9     |   |  | $ | 248.6    |  
|                                           |  |                                 |          |      |  |               |           |   |  |   |          |  
|Net loss, as reported                      |  | $                               | (2,375.8 | )    |  | $             | (11,837.0 | ) |  | $ | (2,388.1 | )
|                                           |  |                                 |          |      |  |               |           |   |  |   |          |  
|Net loss, pro forma                        |  | $                               | (2,631.7 | )    |  | $             | (12,096.9 | ) |  | $ | (2,636.7 | )
|                                           |  |                                 |          |      |  |               |           |   |  |   |          |  

Derivative Financial Instruments

The Company has used financial instruments to hedge a portion, but not all, of
its exposure from floating interest rate debt and from movements in foreign
exchange rates. Gains and losses on these instruments were deferred and
recognized in the statement of operations when the related hedged transactions
were recognized. To date, premiums paid for these contracts have not been
material. The Company does not use derivative financial instruments for trading
or speculative purposes.

The Company sometimes uses British pound forward foreign exchange contracts to
reduce its exposure to foreign currency risk. A forward foreign exchange
contract obligates the Company to exchange predetermined amounts of specified
foreign currencies at specified exchange rates on specified dates or to make an
equivalent U.S. dollar payment equal to the value of such exchange. These
contracts do not qualify for hedge accounting under SFAS No. 133 (as amended).
Any changes in fair value are recorded in results of operations.

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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

4.   Recent Accounting Pronouncements

On December 31, 2002, the Company adopted SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure. SFAS No. 148 amends
SFAS No. 123, Accounting for Stock Based Compensation, to provide alternative
methods of transition to SFAS No. 123s fair value method of accounting for
stock-based employee compensation. SFAS No. 148 also amends the disclosure
provisions of SFAS No. 123 and APB Opinion No. 28, Interim Financial
Reporting.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS No. 146 replaces Emerging Issues Task
Force Issue No. 94-3 Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring). SFAS No. 146 requires that a liability for costs
associated with an exit or disposal activity is recognized when the liability
is incurred. Under Issue No. 94-3, a liability for an exit cost as defined is
recognized at the date of a commitment to an exit or disposal plan. SFAS No.
146 is effective for exit or disposal activities that are initiated after
December 31, 2002. The adoption of this standard is not expected to have a
significant effect on the results of operations, financial condition or cash
flows of the Company.

In April 2002, the FASB issued SFAS
No. 145, Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections,
which is effective for the Company on January 1, 2003. The adoption of SFAS
No. 145 will require any gain or loss recognized on the extinguishment of debt
to be classified as income or loss from continuing operations. Prior to SFAS
No. 145, gain or loss recognized on the extinguishment of debt was classified
as an extraordinary item.

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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

4.   Recent Accounting Pronouncements (continued)

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which was 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.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, which is 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 adoption of this new standard is not
expected to have a
significant effect on the results of operations, financial condition or cash
flows of the Company.

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. 141 and 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 result in an impairment upon adoption. Amortization of goodwill
and license acquisition costs ceased effective January 1, 2002.
See Note 8.

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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession ) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

5.   Asset Impairments

Asset impairment charges were $445.1 million in the year ended December 31,
2002. These charges are non-cash charges to write-down certain assets to their
estimated fair values based on an assessment that their carrying value was not
recoverable. These charges include fixed assets of $56.0 million, license
acquisition costs of $29.0 million and goodwill of
$360.1 million. The charge with respect to fixed assets was
estimated based upon the technological obsolescence of certain network and other equipment. The charge with
respect to license acquisition costs and goodwill was determined in
accordance with SFAS No. 142. The
aggregate asset impairment charge of $445.1 million related to the Companys
business segments as follows: $434.5 million Consumer, $5.3 million Business
and $5.3 million Shared.

As of December 31, 2001, the Company performed an analysis of the carrying
values of its long-lived assets including goodwill. During 1999 and 2000,
acquisitions were made against a background of increasing consolidation and
record valuations in the telecommunications industry. This analysis was
initiated because of the decline in NTL Europe, Inc.s (formerly NTL
Incorporateds) stock price and significantly lower valuations for companies
within its industry. Additionally, at the time of the Companys analysis, the
book value of NTL Europe, Inc.s (formerly NTL Incorporateds) net assets
significantly exceeded its market capitalization. Accordingly, the Company
performed an analysis of the recoverability of its long-lived assets and
associated goodwill. The fair value of the Companys assets was determined by
discounting the Companys estimates of the expected future cash flows related
to these investments when the non-discounted cash flows indicated that the
long-lived assets would not be
recoverable. The Company recorded a write-down of $8,161.6 million in the
fourth quarter of 2001 as a result of this analysis and review, of which
$8,160.6 million is included in asset impairments and $1.0 million is included
in share of losses from equity investments. The asset impairment charge of
$8,160.6 million included goodwill of $8,077.8 million, license acquisition
costs of $58.8 million, customer lists of $9.1 million and other intangibles of
$14.9 million. The aggregate asset impairment charge of $8,161.6 million
related to the Companys business segments as follows: $6,048.1 million
Consumer, $2,113.0 million Business and $0.5 million Broadcast.

6.   Acquisitions

On May 30, 2000, NTL Europe acquired the consumer cable telephone, Internet and
television operations of ConsumerCo for an aggregate purchase price of
approximately $13.1 billion, including intangibles of approximately $8.9
billion. The Company subsequently acquired ConsumerCo from NTL Europe. The
acquisition was accounted for as a purchase, and accordingly, the net assets
and results of operations of ConsumerCo are included in the consolidated
financial statements beginning in May 2000.

The pro forma unaudited consolidated results of operations for the year ended
December 31, 2000 assuming consummation of the acquisition of ConsumerCo as of
January 1, 2000 is as follows (in millions).

|              |  |                   |          |  
|------------- |  | ----------------- | -------- | -
|              |  | Year Ended       
|              |  | December 31, 2000
|              |  |                  
|Total revenue |  | $                 | 2,953.4  |  
|Net (loss)    |  |                   | (2,973.5 | )

In November 2001, the Company sold a portion of the indirect access customers
acquired from Cable & Wireless Communications plc in May 2000. The sales price
was £10.2 million ($14.8 million) which does not include contingent payments
for the collection of certain future service revenues and existing receivables.
The Company recognized a loss on this sale of $88.5 million, after deducting
$102.0 million of unamortized intangibles. The value assigned to these assets
upon acquisition was $135.9 million.

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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

7.   Fixed Assets

Fixed assets consist of:

|                         |  |               |          |      |  |   |          |  
|------------------------ |  | ------------- | -------- | ---- |  | - | -------- | -
|                         |  | December 31, 
|                         |  |              
|                         |  | 2002          |          | 2001
|                         |  |               |          |     
|                         |  | (in millions)
|Operating equipment      |  | $             | 13,659.9 |      |  | $ | 11,620.8 |  
|Other equipment          |  |               | 1,295.6  |      |  |   | 922.4    |  
|Construction-in-progress |  |               | 1,027.8  |      |  |   | 1,267.5  |  
|                         |  |               |          |      |  |   |          |  
|                         |  |               | 15,983.3 |      |  |   | 13,810.7 |  
|Accumulated depreciation |  |               | (4,894.4 | )    |  |   | (2,970.4 | )
|                         |  |               |          |      |  |   |          |  
|                         |  | $             | 11,088.9 |      |  | $ | 10,840.3 |  
|                         |  |               |          |      |  |   |          |  

8.   Intangible Assets

Intangible assets consist of:

|                                               |                                                                                   |   |               |      |      |   |       |      | 
|---------------------------------------------- | --------------------------------------------------------------------------------- | - | ------------- | ---- | ---- | - | ----- | ---- | 
|                                               |                                                                                   |   | December 31, 
|                                               |                                                                                   |   |              
|                                               |                                                                                   |   | 2002          |      | 2001
|                                               |                                                                                   |   |               |      |     
|                                               |                                                                                   |   | (in millions)
|Intangible assets not subject to amortization: |                                                                                   |   |               |      |      |   |       |     
|                                               | License acquisition costs                                                         |   | $             | 23.6 |      |   | $     | 54.7 | 
|Intangible assets subject to amortization:     |                                                                                   |   |               |      |      |   |       |     
|                                               | Customer lists, net of accumulated amortization of
$121.0 (2002) and $78.1 (2001) |   |               | 41.1 |      |   |       | 64.8 | 
|                                               |                                                                                   |   |               |      |      |   |       |     
|                                               |                                                                                   | $ | 64.7          |      |      | $ | 119.5 |     
|                                               |                                                                                   |   |               |      |      |   |       |     

The change in the carrying amount of goodwill during the year ended December
31, 2002 is as follows:

|                                                  |  |   |        |  
|------------------------------------------------- |  | - | ------ | -
|Goodwill  December 31, 2001                      |  | $ | 647.8  |  
|Impairment charge                                 |  |   | (360.1 | )
|Foreign currency exchange translation adjustments |  |   | 42.9   |  
|                                                  |  |   |        |  
|Goodwill  December 31, 2002                      |  | $ | 330.6  |  
|                                                  |  |   |        |  

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 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.

Estimated aggregate amortization expense for each of the five succeeding fiscal
years from December 31, 2002, as adjusted for the Companys emergence from
Chapter 11 reorganization and the adoption of fresh-start reporting, is as
follows: $200.2 million in 2003, $200.2 million in 2004, $200.2 million in
2005, $198.7 million in 2006 and $197.7 million in 2007.

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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

The following table shows the Companys net loss as adjusted for the adoption
of SFAS No. 142, had SFAS No. 142 been in effect on January 1 of each period
(unaudited) (in millions):

|                         |                           |   |          |   |      |   |              |         |  |   |          |       | 
|------------------------ | ------------------------- | - | -------- | - | ---- | - | ------------ | ------- |  | - | -------- | ----- | 
|                         |                           |   |          |   |      |   | Year Ended   |         |  |   |         
|                         |                           |   |          |   |      |   | December 31, |         |  |   |         
|                         |                           |   |         
|                         |                           |   | 2002     |   | 2001 |   | 2000        
|                         |                           |   |          |   |      |   |             
|Net
(loss) - as reported |                           | $ | (2,375.8 | ) |      | $ | (11,837.0    | )       |  | $ | (2,388.1 | )    
|Amortization of:         |                           |   |          |   |      |   |              |         |  |   |          |      
|                         | Goodwill                  |   |          |  |      |   |              | 1,067.3 |  |   |          | 668.5 | 
|                         | License acquisition costs |   |          |  |      |   |              | 36.9    |  |   |          | 81.1  | 
|                         | Other                     |   |          |  |      |   |              | 0.7     |  |   |          | 0.7   | 
|                         |                           |   |          |   |      |   |              |         |  |   |          |      
|                         |                           |   |         |   |      |   | 1,104.9      |         |  |   | 750.3    |      
|                         |                           |   |          |   |      |   |              |         |  |   |          |      
|Net (loss)  as adjusted |                           | $ | (2,375.8 | ) |      | $ | (10,732.1    | )       |  | $ | (1,637.8 | )    
|                         |                           |   |          |   |      |   |              |         |  |   |          |      

9.   Liabilities Subject to Compromise

Liabilities subject to compromise consist of the following:

|                        |                                                         |   |                   |         | 
|----------------------- | ------------------------------------------------------- | - | ----------------- | ------- | 
|                        |                                                         |   | December 31, 2002
|                        |                                                         |   |                  
|                        |                                                         |   | (in millions)    
|Accounts payable        |                                                         | $ | 0.6               |        
|Interest payable        |                                                         |   | 316.8             |        
|Due to NTL Europe, Inc. |                                                         |   | 25.2              |        
|Accrued expenses        |                                                         |   | 1.0               |        
|Long-term debt:         |                                                         |   |                   |        
|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 |   |                   | 200.8   | 
|                        | 10 3/4% Senior Deferred Coupon Sterling Notes           |   |                   | 439.2   | 
|                        | 9 3/4% Senior Deferred Coupon Notes                     |   |                   | 1,193.3 | 
|                        | 9 3/4% Senior Deferred Coupon Sterling Notes            |   |                   | 441.6   | 
|                        | 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                                |   |                   | 262.1   | 
|                        | 9 7/8% Senior Euro Notes                                |   |                   | 367.0   | 
|                        | 11 1/2% Senior Deferred Coupon Euro Notes               |   |                   | 166.1   | 
|                        | 11 7/8% Senior Notes, less unamortized discount         |   |                   | 491.7   | 
|                        | 12 3/8% Senior Euro Notes, plus unamortizd premium      |   |                   | 315.3   | 
|                        | 6 3/4% Convertible Senior Notes                         |   |                   | 1,150.0 | 
|Diamond Cable:          |                                                         |   |                   |        
|                        | 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                               |   |                   | 217.3   | 
|                        | 9 1/8% Senior Notes                                     |   |                   | 110.0   | 
|                        |                                                         |   |                   |        
|Total                   |                                                         | $ | 10,157.8          |        
|                        |                                                         |   |                   |        

Upon emergence from Chapter 11 reorganization and in accordance with the Plan,
all of the outstanding public notes of NTL Communications Corp. were canceled,
and all of the outstanding public notes of Diamond Cable Communications Limited
were acquired by NTL Communications Corp. The Diamond Holdings Notes remain
outstanding.

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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp. )(Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

10.   Long-Term Debt

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

|                                                      |                                                         |  |  |     |  |   |               |         |      |   |          |         | 
|----------------------------------------------------- | ------------------------------------------------------- |  |  | --- |  | - | ------------- | ------- | ---- | - | -------- | ------- | 
|                                                      |                                                         |  |  |     |  |   | December 31, 
|                                                      |                                                         |  |  |     |  |   |              
|                                                      |                                                         |  |  |     |  |   | 2002          |         | 2001
|                                                      |                                                         |  |  |     |  |   |               |         |     
|                                                      |                                                         |  |  |     |  |   | (in millions)
|NTL Incorporated (formerly NTL Communications Corp.): |                                                         |  |  |     |  |   |               |         |      |   |          |        
|                                                      | 12 3/4% Senior Deferred Coupon Notes                    |  |  | (a) |  |   | $             |        |      |   | $        | 277.8   | 
|                                                      | 11 1/2% Senior Deferred Coupon Notes                    |  |  | (b) |  |   |               |        |      |   |          | 1,050.0 | 
|                                                      | 10% Senior Notes                                        |  |  | (c) |  |   |               |        |      |   |          | 400.0   | 
|                                                      | 9 1/2% Senior Sterling Notes, less unamortized discount |  |  | (d) |  |   |               |        |      |   |          | 181.4   | 
|                                                      | 10 3/4% Senior Deferred Coupon Sterling Notes           |  |  | (e) |  |   |               |        |      |   |          | 382.3   | 
|                                                      | 9 3/4% Senior Deferred Coupon Notes                     |  |  | (f) |  |   |               |        |      |   |          | 1,153.8 | 
|                                                      | 9 3/4% Senior Deferred Coupon Sterling Notes            |  |  | (g) |  |   |               |        |      |   |          | 385.9   | 
|                                                      | 11 1/2% Senior Notes                                    |  |  | (h) |  |   |               |        |      |   |          | 625.0   | 
|                                                      | 12 3/8% Senior Deferred Coupon Notes                    |  |  | (i) |  |   |               |        |      |   |          | 364.9   | 
|                                                      | 7% Convertible Subordinated Notes                       |  |  | (j) |  |   |               |        |      |   |          | 489.8   | 
|                                                      | 9 1/4% Senior Euro Notes                                |  |  | (k) |  |   |               |        |      |   |          | 222.5   | 
|                                                      | 9 7/8% Senior Euro Notes                                |  |  | (l) |  |   |               |        |      |   |          | 311.5   | 
|                                                      | 11 1/2% Senior Deferred Coupon Euro Notes               |  |  | (m) |  |   |               |        |      |   |          | 135.6   | 
|                                                      | 11 7/8% Senior Notes, less unamortized discount         |  |  | (n) |  |   |               |        |      |   |          | 490.7   | 
|                                                      | 12 3/8% Senior Euro Notes, less unamortized premium     |  |  | (o) |  |   |               |        |      |   |          | 267.8   | 
|                                                      | 6 3/4% Convertible Senior Notes                         |  |  | (p) |  |   |               |        |      |   |          | 1,150.0 | 
|Communications Cable Funding Corp.:                   |                                                         |  |  |     |  |   |               |         |      |   |          |        
|                                                      | DIP Facility                                            |  |  |     |  |   |               | 229.0   |      |   |          |        | 
|NTL Communications Limited and subsidiaries:          |                                                         |  |  |     |  |   |               |         |      |   |          |        
|                                                      | Senior Credit Facility                                  |  |  | (w) |  |   |               | 4,482.1 |      |   |          | 4,050.0 | 
|                                                      | Working Capital Credit Facility                         |  |  | (w) |  |   |               | 657.1   |      |   |          | 145.4   | 
|                                                      | Other                                                   |  |  |     |  |   |               | 63.2    |      |   |          | 58.6    | 
|NTL Triangle:                                         |                                                         |  |  |     |  |   |               |         |      |   |          |        
|                                                      | 11.2% Senior Discount Debentures                        |  |  | (q) |  |   |               | 517.3   |      |   |          | 517.3   | 
|                                                      | Other                                                   |  |  |     |  |   |               | 3.6     |      |   |          | 4.5     | 
|Diamond Cable:                                        |                                                         |  |  |     |  |   |               |         |      |   |          |        
|                                                      | 13 1/4% Senior Discount Notes                           |  |  | (r) |  |   |               |        |      |   |          | 285.1   | 
|                                                      | 11 3/4% Senior Discount Notes                           |  |  | (s) |  |   |               |        |      |   |          | 531.0   | 
|                                                      | 10 3/4% Senior Discount Notes                           |  |  | (t) |  |   |               |        |      |   |          | 415.1   | 
|Diamond Holdings:                                     |                                                         |  |  |     |  |   |               |         |      |   |          |        
|                                                      | 10% Senior Sterling Notes                               |  |  | (u) |  |   |               |        |      |   |          | 196.3   | 
|                                                      | 9 1/8% Senior Notes                                     |  |  | (v) |  |   |               |        |      |   |          | 110.0   | 
|                                                      | Other                                                   |  |  |     |  |   |               | 3.1     |      |   |          | 3.6     | 
|                                                      |                                                         |  |  |     |  |   |               |         |      |   |          |        
|                                                      |                                                         |  |  |     |  |   | 5,955.4       |         |      |   | 14,205.9 |        
|Less current portion                                  |                                                         |  |  |     |  |   | 5,955.4       |         |      |   | 14,205.9 |        
|                                                      |                                                         |  |  |     |  |   |               |         |      |   |          |        
|                                                      |                                                         |  |  |     |  | $ |              |         |      | $ |         |        
|                                                      |                                                         |  |  |     |  |   |               |         |      |   |          |        

F-24



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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

10.   Long-Term Debt (continued)

DIP Facility

In connection with the Plan, some members of the official unsecured creditors
committee of bondholders committed to provide up to $500.0 million of new debt
financing to enable the business operations of our former parent company and
some of its subsidiaries to have access to sufficient liquidity to continue
ordinary operations during the Chapter 11 process. The Bankruptcy Court
approved a DIP facility in the principal amount of $630.0 million (including a
$130.0 million commitment from NTL (Delaware), Inc. and the $500.0 million from
certain members of the creditors committee) in an order entered 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 the Company to provide $630.0
million in financing to Communications Cable Funding Corp.

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

In connection with the closing of the DIP facility, NTL Europe, Inc. and its
debtor subsidiaries paid a closing fee to the DIP lenders equal to 2% of the
$630.0 million commitment ($12.6 million) in July 2002.

Each term loan under the DIP facility incurred 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 increased incrementally by 1% over the immediately preceding three month
period but will not exceed 18% per annum for any three month period. Interest
was payable in cash at least monthly. The DIP facility also included an
unutilized commitment fee of 1/2% per annum on the aggregate principal amount
of unutilized commitments which is payable in cash each month.

The $229.0 million balance outstanding under the DIP facility was repaid on
January 10, 2003.

Outstanding Public Notes

Upon emergence from Chapter 11 reorganization and in accordance with the Plan,
all of the outstanding public notes of NTL Communications Corp. were canceled,
and all of the outstanding public notes of Diamond Cable Communications Limited
were acquired by NTL Communications Corp. The NTL Triangle and Diamond
Holdings Notes remain outstanding.



|(a) |  | 12 3/4% 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;                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | 11 1/2% 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;                           
|   
|(c) |  | 10% 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;                              
|   
|(d) |  | 9 1/2% Sterling Notes due April 1, 2008, principal amount at maturity of
£125.0 million ($201.2 million), interest payable semiannually from
October 1, 1998, redeemable at the Companys option on or after April 1,
2003;         
|   
|(e) |  | 10 3/4% Sterling Notes due April 1, 2008, principal amount at maturity of
£300.0 million ($482.9 million), interest payable semiannually beginning
on October 1, 2003, redeemable at the Companys option on or after April
1, 2003;
|   
|(f) |  | 9 3/4% 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;                         

F-25



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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

10.   Long-Term Debt (continued)



|(g) |  | 9 3/4% Sterling Notes due April 15, 2009, principal amount at maturity of
£330.0 million ($531.1 million), interest payable semiannually beginning
on October 15, 2004, redeemable at the Companys option on or after April
15, 2004;                                                                                                                                                                                                                        
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(h) |  | 11 1/2% 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;                                                                                                                                                                                                                                                          
|   
|(i) |  | 12 3/8% 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;                                                                                                                                                                                                                                                  
|   
|(j) |  | 7% Convertible Notes due December 15, 2008, principal amount at maturity
of $489.8 million, interest payable semiannually from June 15, 1999,
redeemable at the Companys option on or after December 15, 2001,
convertible into shares of NTL Incorporated common stock at a conversion
price of $39.20 per share (there are approximately 12.5 million shares of
NTL Incorporated common stock reserved for issuance upon conversion);                      
|   
|(k) |  | 9 1/4% Euro Notes due November 15, 2006, principal amount at maturity of
250.0 million, ($262.1 million), interest payable semiannually from May
15, 2000;                                                                                                                                                                                                                                                                                                   
|   
|(l) |  | 9 7/8% Euro Notes due November 15, 2009, principal amount at maturity of
350.0 million, ($367.0 million), interest payable semiannually from May
15, 2000, redeemable at the Companys option on or after November 15,
2004;                                                                                                                                                                                                                                 
|   
|(m) |  | 11 1/2% Deferred Euro Notes due November 15, 2009, principal amount at
maturity of 210.0 million ($220.1 million), interest payable semiannually
beginning on May 15, 2005, redeemable at the Companys option on or after
November 15, 2004;                                                                                                                                                                                                                
|   
|(n) |  | 11 7/8% 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;                                                                                                                                                                                                                                                          
|   
|(o) |  | 12 3/8% Senior Euro Notes due February 1, 2008, issued in January and
February 2001, principal amount at maturity of 300.0 million ($314.6
million), interest payable semiannually from August 1, 2001;                                                                                                                                                                                                                                                      
|   
|(p) |  | 6 3/4% Convertible Notes due May 15, 2008, issued in May 2001, principal
amount at maturity of $1,150.0 million, interest payable semiannually from
November 15, 2001, redeemable at the Companys option on or after May 20,
2004, convertible into shares of NTL Incorporated common stock at a
conversion price of $32.728 per share (there were approximately 35.1
million shares of NTL Incorporated common stock reserved for issuance upon
conversion);
|   
|(q) |  | 11.2% 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;                                                                                                                                                                                                                                                         
|   
|(r) |  | 13 1/4% 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 on or after September 30, 1999;                                                                                                                                                                                                                                                       
|   
|(s) |  | 11 3/4% 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;                                                                                                                                                                                                                                                          
|   
|(t) |  | 10 3/4% 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;                                                                                                                                                                                                                                                

F-26



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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

10.   Long-Term Debt (continued)



|(u) |  | 10% Sterling Notes due February 1, 2008, issued by Diamond Holdings plc,
principal amount at maturity of £135.0 million ($217.3 million), interest
payable semiannually from August 1, 1998, redeemable at Diamond Holdings
option on or after February 1, 2003; and
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(v) |  | 9 1/8% Notes due February 1, 2008, issued by Diamond Holdings plc,
principal amount of $110.0 million, interest payable semiannually from
August 1, 1998, redeemable at Diamond Holdings option on or after
February 1, 2003.                                       

During 2002, 2001 and 2000, the Company recognized $96.7 million, $284.7
million and $473.1 million, respectively, of original issue discount as
interest expense.

In addition to the notes described above, subsidiaries of the Company have the
following bank credit agreements outstanding:



|(w) |  | Senior Credit Facility originally dated May 30, 2000 (and subsequently
amended and restated) of £2,784.8 million ($4,482.1 million), all of which
was outstanding as of December 31, 2002; comprising a revolving facility
of £2,584.8 million ($4,160.2 million) and a term facility of £200.0
million ($321.9 million); interest payable at least every six months at
LIBOR plus mandatory costs plus a margin rate which, in the case of the
revolving facility, is fixed at 3.50% per annum for six months from
January 10, 2003 and which then varies, depending upon satisfaction of a
financial covenant over six monthly periods, between 4.00% and 2.50% per
annum and which, in the case of the term facility, is fixed at 5.50% per
annum; effective interest rate on the revolving facility of 6.26% and
6.73% per annum at December 31, 2002 and 2001, respectively; effective
interest rate on the term facility of 7.76% and 8.06% per annum at
December 31, 2002 and 2001, respectively; the unused portion of the
commitment to make the revolving facility available 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 then outstanding under
the revolving facility is due in full on September 30, 2005; principal
under the term facility is due in six quarterly installments beginning on
June 30, 2006 and increasing from £5.0 million repayments due on the first
two repayment dates to £10.0 million repayments due on the next three
repayment dates with the balance being due on September 30, 2007; and
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Working Capital Credit Facility originally dated May 30, 2000 (and
subsequently amended and restated) of approximately £408.3 million ($657.1
million), all of which was outstanding as of December 31, 2002; originally
for £1,300.0 million ($2,092.4 million); following the issuance of new
debt beginning in October 2000, the commitment has been reduced to the
aforementioned amount; interest payable at least every six months at LIBOR
plus mandatory costs plus a margin rate which commenced at 4.50% per annum
and increases by 0.50% per annum at the end of each quarter after the date
upon which the facility was first utilized (subject to a cap on total
interest of 16% per annum and a cap on total interest payable in cash of
14% per annum (any excess being added to principal)); effective interest
rate of 11.76% and 9.57% per annum at December 31, 2002 and 2001,
respectively; principal is due in full on March 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

In February 2001, $109.5 million principal amount of 7% Convertible
Subordinated Notes due December 15, 2008 were converted into 2.8 million shares
of NTL Europe, Inc. common stock at the applicable conversion price of $39.20
per share. The Company issued as a premium on the conversion an additional 0.5
million shares which were valued at NTL Europe, Inc. closing common stock price
on the dates of conversion. The premium, which amounted to $17.6 million, is
included in interest expense. Additionally accrued and unpaid interest of $1.2
million at the time of the conversion was waived by the holders of the
convertible notes.

The bank credit facilities, as well as the NTL Triangle and Diamond Holdings
notes, restrict the payment of cash dividends and loans to the Company. At
December 31, 2002, restricted net assets were $3,670.6 million.

F-27



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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

10.   Long-Term Debt (continued)

In connection with the Companys emergence from Chapter 11 reorganization, the
Company and certain of its subsidiaries issued $558.249 million aggregate
principal face amount of 19% Senior Secured Notes due 2010 (the Exit Notes)
on January 10, 2003. Initial purchasers of the Companys Exit Notes also
purchased 500,000 shares of the Companys common stock on that date. The gross
proceeds from the sale of the Exit Notes and such shares totaled $500.0
million. The proceeds were used in part to repay amounts outstanding under the
DIP facility and to purchase from NTL Delaware a £90.0 million note of NTL (UK)
Group Inc. and to repay certain other obligations. The Exit Notes are due on
January 1, 2010. The Exit Notes are redeemable at the Companys option after
January 10, 2003. Interest on the Exit Notes is payable in cash semiannually
from July 1, 2003, with respect to the interest payment due on July 1, 2003,
the Company may elect to pay any portion of the interest in cash or by issuance
of additional pay-in-kind notes. With respect to the interest payments due on
January 1, 2004 and July 1, 2004, the Company may make a similar election based
on its Available Cash, as defined.

The purchasers of the Companys
Exit Notes are entitled to registration rights with respect to such
notes pursuant to the Exchange and Registration Rights Agreement.
Under the Exchange and Registration Rights Agreement, the Company
agreed, among other things, to file with the Securities and Exchange
Commission a registration statement with respect to an offer to
exchange the Exit Notes for new notes registered under the Securities
Act with terms substantially identical to those of the unregistered
notes. If the Company fails to file such registration statement with the
Securities and Exchange Commission on or before April 15, 2003 or if
certain other registration default events described in the Exchange
and Registration Rights Agreement occur, then the Company will be
required to pay special interest to each holder of the Exit Notes,
pursuant to provisions of the Exchange and Registration Rights
Agreement, during the period of one or more of such registration
default events. The Company would pay such special interest at a rate
of 0.5% per annum, which increases to 1.0% per annum after the first
120-day period following the occurrence of the first such
registration default. In addition, the Companys failure to
register the notes in compliance with the Exchange and Registration
Rights Agreement would result in an event of default under the
Indenture governing the Exit Notes.

Long-term debt repayments, excluding capital leases, are due as follows (in
millions). The table reflects the Companys contractual obligations as of
December 31, 2002 as adjusted for the emergence from Chapter 11 reorganization.

|                         |  |   |         |  |  |  | 
|------------------------ |  | - | ------- |  |  |  | 
|Year ending December 31: |  |   |         | 
|2003                     |  | $ | 0.4     | 
|2004                     |  |   | 0.4     | 
|2005                     |  |   | 4,160.6 | 
|2006                     |  |   | 689.7   | 
|2007                     |  |   | 807.4   | 
|Thereafter               |  |   | 886.6   | 
|                         |  |   |         | 
|Total debt repayments    |  |   | 6,545.1 | 
|Less: current portion    |  |   | 0.4     | 
|                         |  |   |         | 
|                         |  | $ | 6,544.7 | 
|                         |  |   |         | 

11.   Derivative Financial Instruments

Effective January 1, 2001, the Company adopted SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended by SFAS Nos. 137 and
138. The new accounting standard requires that all derivative instruments be
recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in the results of operations or in other
comprehensive loss, depending on whether a derivative is designated as a fair
value or cash flow hedge. The ineffective portion of all hedges is recognized
in the results of operations. Beginning in October 1, 2001, the Company has
recorded the change in the fair value of derivatives related to changes in time
value each period in other comprehensive loss for certain qualifying cash flow
hedges.

On January 1, 2001, the Company recorded all of its outstanding derivative
instruments at their fair value. The outstanding derivative instruments were
comprised of cross currency swaps to hedge exposure to movements in the British
pound/ U.S. dollar exchange rate, and a number of zero cost collars to hedge
exposure to floating interest rates on certain of its debt. The aggregate fair
value on January 1, 2001 was a liability of $2.2 million, which was recorded as
other comprehensive loss.

In 2001, the Company entered into cross currency swaps to hedge exposure to
movements in the Euro/British pound exchange rate. In the year ended December
31, 2001, the Company recorded other comprehensive loss of $1.4 million as a
result of changes in the fair values. The aggregate fair value at December 31,
2001 was a net liability of $3.6 million. 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.

In September 2001, the Company entered into a British pound forward foreign
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. As of December 31, 2001, the
fair value of this instrument was a liability of $0.3 million.
In March 2002,
this agreement was closed out and the Company received cash of £0.5 million.

12.   Non-Cash Compensation

In July 2001, the Compensation and Option Committee of the Board of Directors
of the Companys former ultimate parent company approved modifications to
certain stock options. The latest possible expiration date of options to
purchase an aggregate

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##### Table of Contents



NTL Incorporated (formerly NTL
Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

of approximately 4.7 million shares of NTL Europe, Inc.s common stock with
exercise prices from $0.17 to $14.76 per share was extended from July 30, 2001
to October 2004, as applicable, to January 30, 2006. The Company recognized
non-cash compensation expense of $30.6 million based on the excess of the
quoted market price of NTL Europe, Inc.s common stock on the date of the
modification of $12.05 per share over the exercise price per share. All
options to purchase shares of our former ultimate parent companys common stock
were cancelled on the Effective Date pursuant to the Plan.

13.   Other Charges Including Restructuring Charges

Other charges of $389.2 million in 2002 include restructuring charges of $104.8
million and non-cash charges of $284.4 million primarily for allowances for the
cancellation of receivables from our former ultimate parent company and certain
of its subsidiaries in accordance with the Plan. Other charges of $297.9
million in 2001 include restructuring charges of $202.8 million and costs of
$95.1 million incurred primarily to integrate the acquired companies, mostly
related to information technology integration, as well as costs incurred for
business rationalization consulting. Other charges of $92.7 million in 2000
include restructuring charges of $65.9 million and costs of $26.8 million
incurred primarily to integrate the acquired companies, mostly related to
information technology integration, as well as costs incurred for business
rationalization consulting.

Restructuring charges of $104.8 million, $202.8 million and $65.9 million for
the years ended December 31, 2002, 2001 and 2000, respectively, relate to the
Companys actions to reorganize, re-size and reduce operating costs and create
greater efficiency in various areas. An aggregate of $7.5 million of the 2002
restructuring charges and $57.9 million of the 2001 restructuring charges were
for the write-off of equipment and other assets that are not in use and will
not require any future cash outlays. The employee severance and related costs
in 2000 were for approximately 2,300 employees to be terminated, none of whom
are still employed by the Company as of December 31, 2002. These costs in 2001
were for approximately 5,200 employees to be terminated, of which approximately
20 employees were still employed by the Company as of December 31, 2002. These
costs in 2002 were for approximately 740 employees to be terminated, of which
approximately 350 employees were still employed by the Company as of December
31, 2002.

F-29



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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

13.   Other Charges Including Restructuring Charges (continued)

The following table summarizes the restructuring charges incurred and utilized
in 2000, 2001 and 2002:

|                           |  |                   |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |   |        |  
|-------------------------- |  | ----------------- | ----- | ----- |  | ------------- | ----- | ------ |  | ----- | ----- | ----- |  | - | ----- | - |  | - | --- |  |  | - | ------ | -
|                           |  | Employee          |       | Lease |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     | 
|                           |  | Severance         |       | Exit  |  | Agreement     |       | Fixed  |  |       |       |       |  |   |       |  
|                           |  | and Related Costs |       | Costs |  | Modifications |       | Assets |  | Other |       | Total
|                           |  |                   |       |       |  |               |       |        |  |       |       |      
|Charged to expense         |  | $                 | 47.9  |       |  | $             | 18.0  |        |  | $     |      |       |  | $ |      |   |  | $ |    |  |  | $ | 65.9   |  
|Utilized                   |  |                   |      |       |  |               |      |        |  |       |      |       |  |   |      |   |  |   |    |  |  |   |       |  
|                           |  |                   |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |   |        |  
|Balance, December 31, 2000 |  |                   | 47.9  |       |  |               | 18.0  |        |  |       |      |       |  |   |      |   |  |   |    |  |  |   | 65.9   |  
|2000 provision utilized    |  |                   | (41.3 | )     |  |               | (9.6  | )      |  |       |      |       |  |   |      |   |  |   |    |  |  |   | (50.9  | )
|2000 provision released    |  |                   | (6.6  | )     |  |               | (7.3  | )      |  |       |      |       |  |   |      |   |  |   |    |  |  |   | (13.9  | )
|Charged to expense         |  |                   | 98.7  |       |  |               | 32.4  |        |  |       | 27.7  |       |  |   | 57.9  |   |  |   |    |  |  |   | 216.7  |  
|2001 provision utilized    |  |                   | (26.2 | )     |  |               |      |        |  |       |      |       |  |   | (57.9 | ) |  |   |    |  |  |   | (84.1  | )
|                           |  |                   |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |   |        |  
|Balance, December 31, 2001 |  |                   | 72.5  |       |  |               | 33.5  |        |  |       | 27.7  |       |  |   |      |   |  |   |    |  |  |   | 133.7  |  
|2000 provision utilized    |  |                   |      |       |  |               | (1.1  | )      |  |       |      |       |  |   |      |   |  |   |    |  |  |   | (1.1   | )
|2001 provision utilized    |  |                   | (71.9 | )     |  |               | (17.3 | )      |  |       | (16.2 | )     |  |   |      |   |  |   |    |  |  |   | (105.4 | )
|2001 provision released    |  |                   | (0.6  | )     |  |               | (15.1 | )      |  |       | (11.5 | )     |  |   |      |   |  |   |    |  |  |   | (27.2  | )
|Charged to expense         |  |                   | 35.2  |       |  |               | 78.9  |        |  |       | 1.2   |       |  |   | 7.5   |   |  |   | 9.2 |  |  |   | 132.0  |  
|2002 provision utilized    |  |                   | (23.3 | )     |  |               | (0.2  | )      |  |       |      |       |  |   | (7.5  | ) |  |   |    |  |  |   | (31.0  | )
|                           |  |                   |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |   |        |  
|Balance, December 31, 2002 |  | $                 | 11.9  |       |  | $             | 78.7  |        |  | $     | 1.2   |       |  | $ |      |   |  | $ | 9.2 |  |  | $ | 101.0  |  
|                           |  |                   |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |     |  |  |   |        |  

14.   Income Taxes

The (benefit) expense for income taxes consists of the following:

|               |                 |   |                         |       |      |   |       |       |  |   |       |       |  
|-------------- | --------------- | - | ----------------------- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- | -
|               |                 |   | Year Ended December 31,
|               |                 |   |                        
|               |                 |   | 2002                    |       | 2001 |   | 2000 
|               |                 |   |                         |       |      |   |      
|               |                 |   | (in millions)          
|Current:       |                 |   |                         |       |      |   |       |       |  |   |       |      
|               | Federal         |   | $                       |      |      |   | $     |      |  |   | $     |      |  
|               | State and local |   |                         | (1.2  | )    |   |       | 1.2   |  |   |       |      |  
|               |                 |   |                         |       |      |   |       |       |  |   |       |       |  
|               | Foreign         |   |                         |      |      |   |       | 0.5   |  |   |       | 0.9   |  
|               |                 |   |                         |       |      |   |       |       |  |   |       |       |  
|Total current  |                 |   | (1.2                    | )     |      |   | 1.7   |       |  |   | 0.9   |      
|               |                 |   |                         |       |      |   |       |       |  |   |       |       |  
|Deferred:      |                 |   |                         |       |      |   |       |       |  |   |       |      
|               | Foreign         |   |                         | (24.5 | )    |   |       | 116.4 |  |   |       | (80.8 | )
|               |                 |   |                         |       |      |   |       |       |  |   |       |       |  
|Total deferred |                 |   | (24.5                   | )     |      |   | 116.4 |       |  |   | (80.8 | )    
|               |                 |   |                         |       |      |   |       |       |  |   |       |       |  
|               |                 | $ | (25.7                   | )     |      | $ | 118.1 |       |  | $ | (79.9 | )    
|               |                 |   |                         |       |      |   |       |       |  |   |       |       |  

The Companys tax benefit relates
primarily to operating loss carryforwards for which a benefit was recognized to
the extent of deferred tax liabilities.

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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

14.   Income Taxes (continued)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the deferred tax liabilities and assets are as follows:

|                                            |                                 |   |               |         |      |   |          |         | 
|------------------------------------------- | ------------------------------- | - | ------------- | ------- | ---- | - | -------- | ------- | 
|                                            |                                 |   | December 31, 
|                                            |                                 |   |              
|                                            |                                 |   | 2002          |         | 2001
|                                            |                                 |   |               |         |     
|                                            |                                 |   | (in millions)
|Deferred tax liabilities:                   |                                 |   |               |         |      |   |          |        
|                                            | Intangibles                     |   | $             | 20.9    |      |   | $        | 34.5    | 
|                                            | Depreciation and amortization   |   |               | 209.0   |      |   |          | 354.2   | 
|                                            |                                 |   |               |         |      |   |          |         | 
|Total deferred tax liabilities              |                                 |   | 229.9         |         |      |   | 388.7    |        
|Deferred tax assets:                        |                                 |   |               |         |      |   |          |        
|                                            | Net operating losses            |   |               | 2,108.2 |      |   |          | 1,932.9 | 
|                                            | Capital losses                  |   |               | 2,716.7 |      |   |          |        | 
|                                            | Net deferred interest expense   |   |               | 245.8   |      |   |          | 239.9   | 
|                                            | Depreciation and amortization   |   |               | 705.8   |      |   |          | 401.5   | 
|                                            | Inventory                       |   |               | 3.0     |      |   |          | 15.9    | 
|                                            | Purchase accounting liabilities |   |               | 44.1    |      |   |          | 16.5    | 
|                                            | Allowance for doubtful accounts |   |               | 54.2    |      |   |          |        | 
|                                            | Other                           |   |               | 102.4   |      |   |          | 51.9    | 
|                                            |                                 |   |               |         |      |   |          |         | 
|Total deferred tax assets                   |                                 |   | 5,980.2       |         |      |   | 2,658.6  |        
|Valuation allowance for deferred tax assets |                                 |   | (5,844.7      | )       |      |   | (2,383.7 | )      
|                                            |                                 |   |               |         |      |   |          |         | 
|Net deferred tax assets                     |                                 |   | 135.5         |         |      |   | 274.9    |        
|                                            |                                 |   |               |         |      |   |          |         | 
|Net deferred tax liabilities                |                                 | $ | 94.4          |         |      | $ | 113.8    |        
|                                            |                                 |   |               |         |      |   |          |         | 

At December 31, 2002 and 2001, the Company had a valuation allowance against
its deferred tax assets to the extent it was not more likely than not that such
assets would be realized in the future.

At December 31, 2002, the Company had net operating loss carryforwards of
approximately $1.2 billion for U.S. federal income tax purposes that expire in
varying amounts commencing in 2009. This excludes net operating loss
carryforwards of companies that are resident in both the U.S. and the United
Kingdom. In addition, the Company has capital loss carryforwards of
approximately $7.7 billion for U.S. federal income tax purposes that expire in
2007. The Company also has United Kingdom net operating loss carryforwards of
approximately $5.5 billion that have no expiration date. Pursuant to United
Kingdom law, these losses are only available to offset income of the separate
entity that generated the loss. A portion of the United Kingdom net operating
loss carryforward relates to dual resident companies, of which the U.S net
operating loss carryforward amount is approximately $1.7 billion.

As discussed in Note 1, the Company emerged from Chapter 11 bankruptcy on
January 10, 2003. A restructuring of the Companys debt will give rise to
cancellation of indebtedness income (COD) in 2003, which will be non-taxable
since the debt cancellation is in connection with a bankruptcy reorganization.
However, to the extent that such amount is excluded from U.S. taxable income,
certain tax attributes are subject to reduction, including certain U.S. net
operating loss carryforwards and U.S. capital loss carryforwards. The
reduction of tax attributes should have no material impact on the Companys
financial statement position since the deferred tax assets related to these tax
attributes are offset by a corresponding valuation allowance. Furthermore, the
reorganization will cause an ownership change pursuant to Internal Revenue Code
Section 382. Section 382 will severely limit the Companys ability to utilize
any remaining U.S. net operating loss carryforwards and may limit the Companys
ability to deduct any built-in losses recognized within the subsequent
five-year period.

In 2002, the Internal Revenue Service completed its federal income tax audit of
the Company for the years 1996, 1997 and 1998. The audit resulted in a
reduction in U.S. net operating loss carryforwards that had no material impact
on the Company.

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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

14.   Income Taxes (continued)

The reconciliation of income taxes computed at U.S. federal statutory rates to
income tax expense is as follows:

|                                          |                                                    |   |                         |       |      |   |          |         |  |   |        |       | 
|----------------------------------------- | -------------------------------------------------- | - | ----------------------- | ----- | ---- | - | -------- | ------- |  | - | ------ | ----- | 
|                                          |                                                    |   | Year Ended December 31,
|                                          |                                                    |   |                        
|                                          |                                                    |   | 2002                    |       | 2001 |   | 2000    
|                                          |                                                    |   |                         |       |      |   |         
|                                          |                                                    |   | (in millions)          
|(Benefit) at federal statutory rate (35%) |                                                    | $ | (840.5                  | )     |      | $ | (4,101.6 | )       |  | $ | (863.8 | )    
|Add:                                      |                                                    |   |                         |       |      |   |          |         |  |   |        |      
|                                          | Non-deductible asset impairments                   |   |                         | 126.0 |      |   |          | 2,856.6 |  |   |        |      | 
|                                          | Foreign losses with no benefit                     |   |                         | 531.0 |      |   |          | 809.7   |  |   |        | 568.6 | 
|                                          | U.S. losses with no benefit                        |   |                         | 159.0 |      |   |          | 436.6   |  |   |        | 215.3 | 
|                                          | Prior year accelerated depreciation                |   |                         |      |      |   |          | 116.3   |  |   |        |      | 
|                                          | State and local income tax, net of federal benefit |   |                         | (1.2  | )    |   |          | 0.5     |  |   |        |      | 
|                                          |                                                    |   |                         |       |      |   |          |         |  |   |        |       | 
|                                          |                                                    | $ | (25.7                   | )     |      | $ | 118.1    |         |  | $ | (79.9  | )    
|                                          |                                                    |   |                         |       |      |   |          |         |  |   |        |       | 

15.   Fair Values of Financial Instruments

The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:

Cash and cash equivalents: The carrying amounts reported in the consolidated
balance sheets approximate fair value.

Marketable securities:The carrying amounts reported in the consolidated
balance sheets approximate fair value.

Long-term debt:The carrying amounts of the bank credit facilities approximate
their fair values. The fair values of the Companys other debt in the following
table are based on the quoted market prices.

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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

15.   Fair Values of Financial Instruments (continued)

The carrying amounts and fair values of the Companys financial instruments are
as follows:

|                          |                                 |   |                   |         |                   |   |          |         |       |   |       |         |  |   |       |         | 
|------------------------- | ------------------------------- | - | ----------------- | ------- | ----------------- | - | -------- | ------- | ----- | - | ----- | ------- |  | - | ----- | ------- | 
|                          |                                 |   | December 31, 2002 |         | December 31, 2001
|                          |                                 |   |                   |         |                  
|                          |                                 |   | Carrying          |         | Fair              |   | Carrying |         | Fair 
|                          |                                 |   | Amount            |         | Value             |   | Amount   |         | Value
|                          |                                 |   |                   |         |                   |   |          |         |      
|                          |                                 |   | (in millions)    
|Cash and cash equivalents |                                 | $ | 502.0             |         |                   | $ | 502.0    |         |       | $ | 251.1 |         |  | $ | 251.1 |        
|Marketable securities     |                                 |   | 5.2               |         |                   |   | 5.2      |         |       |   |      |         |  |   |      |        
|Long-term debt:           |                                 |   |                   |         |                   |   |          |         |       |   |       |         |  |   |       |        
|                          | 12-3/4% Notes                   |   |                   | 277.8   |                   |   |          | 30.6    |       |   |       | 277.8   |  |   |       | 91.7    | 
|                          | 11-1/2% Notes                   |   |                   | 1,050.0 |                   |   |          | 115.5   |       |   |       | 1,050.0 |  |   |       | 336.0   | 
|                          | 10% Notes                       |   |                   | 400.0   |                   |   |          | 44.0    |       |   |       | 400.0   |  |   |       | 120.0   | 
|                          | 9-1/2% Sterling Notes           |   |                   | 200.8   |                   |   |          | 20.1    |       |   |       | 181.4   |  |   |       | 60.1    | 
|                          | 10-3/4% Sterling Notes          |   |                   | 439.2   |                   |   |          | 41.0    |       |   |       | 382.3   |  |   |       | 124.3   | 
|                          | 9-3/4% Notes                    |   |                   | 1,193.3 |                   |   |          | 130.0   |       |   |       | 1,153.8 |  |   |       | 338.0   | 
|                          | 9-3/4% Sterling Notes           |   |                   | 441.6   |                   |   |          | 37.2    |       |   |       | 385.9   |  |   |       | 124.8   | 
|                          | 11-1/2% Notes                   |   |                   | 625.0   |                   |   |          | 68.8    |       |   |       | 625.0   |  |   |       | 200.0   | 
|                          | 12-3/8% Notes                   |   |                   | 380.6   |                   |   |          | 49.5    |       |   |       | 364.9   |  |   |       | 108.0   | 
|                          | 7% Convertible Notes            |   |                   | 489.8   |                   |   |          | 58.8    |       |   |       | 489.8   |  |   |       | 53.9    | 
|                          | 9-1/4% Euro Notes               |   |                   | 262.1   |                   |   |          | 26.2    |       |   |       | 222.5   |  |   |       | 74.6    | 
|                          | 9-7/8% Euro Notes               |   |                   | 367.0   |                   |   |          | 36.7    |       |   |       | 311.5   |  |   |       | 104.4   | 
|                          | 11-1/2% Euro Notes              |   |                   | 166.1   |                   |   |          | 15.4    |       |   |       | 135.6   |  |   |       | 44.9    | 
|                          | 11-7/8% Notes                   |   |                   | 491.7   |                   |   |          | 80.0    |       |   |       | 490.7   |  |   |       | 160.0   | 
|                          | 12-3/8% Euro Notes              |   |                   | 315.3   |                   |   |          | 31.5    |       |   |       | 267.8   |  |   |       | 90.8    | 
|                          | 6-3/4% Convertible Notes        |   |                   | 1,150.0 |                   |   |          | 184.0   |       |   |       | 1,150.0 |  |   |       | 353.6   | 
|                          | DIP Facility                    |   |                   | 229.0   |                   |   |          | 229.0   |       |   |       |        |  |   |       |        | 
|                          | Senior Credit Facility          |   |                   | 4,482.1 |                   |   |          | 4,482.1 |       |   |       | 4,050.0 |  |   |       | 4,050.0 | 
|                          | Working Capital Credit Facility |   |                   | 657.1   |                   |   |          | 657.1   |       |   |       | 145.4   |  |   |       | 145.4   | 
|                          | 11.2% Debentures                |   |                   | 517.3   |                   |   |          | 372.5   |       |   |       | 517.3   |  |   |       | 367.3   | 
|                          | 13-1/4% Notes                   |   |                   | 285.1   |                   |   |          | 34.2    |       |   |       | 285.1   |  |   |       | 77.0    | 
|                          | 11-3/4% Notes                   |   |                   | 531.0   |                   |   |          | 63.7    |       |   |       | 531.0   |  |   |       | 132.8   | 
|                          | 10-3/4% Notes                   |   |                   | 420.5   |                   |   |          | 50.5    |       |   |       | 415.1   |  |   |       | 100.9   | 
|                          | 10% Sterling Notes              |   |                   | 217.3   |                   |   |          | 173.8   |       |   |       | 196.3   |  |   |       | 143.4   | 
|                          | 9-1/8% Notes                    |   |                   | 110.0   |                   |   |          | 77.0    |       |   |       | 110.0   |  |   |       | 71.5    | 

16.   Related Party Transactions

On the Effective Date, the Company entered into a Transitional Services
Agreement with NTL Europe. Under the Transitional Services Agreement, the
Company has agreed to provide NTL Europe with certain administrative and technical support
 for a limited period of time where its personnel had
previously been providing support to the companies now comprised within
the NTL Europe group of companies. The Company has agreed to provide
NTL Europe with support if and when requested in the following areas: accounting, payroll and financial reporting support, technical
assistance to NTL Europes Spanish business, access to the Companys internal
legal and tax advisors with respect to historic matters and continued support
in the management and monitoring of certain of the joint ventures in
which NTL
Europe has investments. This agreement provides that the Companys employees shall, as
appropriate, prioritize work performed for the Company ahead of work performed
on behalf of NTL Europe.

In addition, under the Transitional Services Agreement, the Company provides
the services of five of its employees to NTL Europe seconded on a full-time
basis for a period of up to two years (at NTL Europes option) and permit NTL
Europe and its group companies to continue to use the NTL name for a period
of up to one year, in the case of NTL Europe, and three years, in the case of
certain other of its subsidiaries.

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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

16.   Related Party Transactions (continued)

NTL Europe pays the Company pre-determined charges set out in the Transitional
Services Agreement in respect of the services provided by the Company and its
subsidiaries under the agreement based on the amount of time spent by the
relevant personnel in carrying out such work.

Other charges in 2002 include $129.6 million of non-cash expense for allowances
for the cancellation of receivables from NTL Europe in accordance with the Plan
which were payable to United Kingdom subsidiaries of the Company.

On September 28, 2001, the Company loaned NTL Europe $150.0 million in cash and
received 15.0% Promissory Notes due September 30, 2004. Interest was payable
monthly in cash at a rate of 15.0% per annum beginning on October 31, 2001.
Interest income  NTL Europe, Inc. includes $8.0 million and $5.8 million in
2002 and 2001, respectively, from such notes. Upon emergence from Chapter 11
reorganization and in accordance with the Plan, these notes were canceled.
Other charges in 2002 include $152.3 million of expense for allowances for the
cancellation of these notes.

On April 5, 2002, following receipt of the proceeds from the sale of NTL
Australia, NTL Delaware 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. Interest on the note was at 23% per annum, compounded
semiannually, and was 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 had been reduced from 23% per annum to 11% per
annum. Interest expense  NTL Europe, Inc. includes $14.8 million from such
loan. Upon emergence from Chapter 11 reorganization and in accordance with the
Plan, such debt was repaid.

NTL Delaware was a lender under the
DIP facility. Interest expense  NTL
Europe, Inc. includes $2.9 of fees paid to NTL Delaware under this facility.

Pursuant to the DIP facility, all funding needs of the debtors were funded
through the proceeds of the DIP facility, in accordance with a budget and the
terms of the DIP facility agreement. Communications Cable Funding Corp. had
entered into intercompany note agreements with NTL Europe and NTL (Delaware),
Inc. to evidence such transactions. The notes earned 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 increased incrementally by 1% over the immediately preceding
three month period but will not exceed 18% per annum for any three month
period. Interest income  NTL Europe, Inc. includes $0.8 million of interest
due from NTL Europe, Inc. for such notes. Upon emergence from Chapter 11
reorganization and in accordance with the Plan, such debt in the amount of
$69.3 million was repaid.

The Companys President  Chief Executive Officer is also the Chairman of ATX
Communications, Inc. (ATX) (formerly known as CoreComm Holdco, Inc.). Until
January 2003, ATX shared resources with the Company related specifically to
corporate activity, including corporate employees and a corporate office. In
conjunction with these arrangements, the Company provided ATX with management,
financial, legal and administrative support services through the use of
employees, as well as access to office space and equipment and use of supplies
and related office services. The salaries of employees providing service to
ATX were charged to ATX by the Company based on the allocation of their time
spent providing services to ATX.

Amounts charged to ATX by the Company consist of direct costs allocated to ATX
where indentifiable and a percentage of the portion of the Companys corporate
overhead which cannot be specifically allocated to the Company. Effective
January 1, 2001, the percentage used to allocate corporate overhead was
reduced. The Companys charges to ATX commenced in October 1998. It is not
practicable to determine the amounts of these expenses that would have been
incurred had ATX operated as an unaffiliated entity. In the opinion of
management, this allocation method is reasonable. For the years ended December
31, 2002, 2001 and 2000, the Company charged ATX $0.4 million,
$0.4 million and
$1.2 million, respectively, which reduced the Companys corporate expenses.

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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

16.   Related Party Transactions (continued)

On April 12, 2002, our former ultimate parent company purchased $15.0 million
of an unsecured convertible note from ATX and received warrants to purchase
770,000 shares of ATX common stock at an exercise price of $0.01 per share that
expire in April 2011. In addition, concurrently with the note purchase and
without additional compensation, the Company entered into a network and
software agreement with ATX. Under the agreement, ATX will provide U.S.
network for Internet traffic from the Companys UK customers for three years,
as well as a royalty free license to use certain billing and provisioning
software and know-how.

The Company obtains billing and software development services from ATX. ATX
billed the Company $2.9 million, $3.4 million and $5.9 million in the years
ended December 31, 2002, 2001 and 2000, respectively for these services. In
2001, the Company entered into a license agreement with ATX whereby the Company
was granted an exclusive irrevocable, perpetual license to billing software
developed by ATX for telephony rating, digital television events rating, fraud
management and other tasks. The sales price was cash of $9.8 million for the
development costs expended by ATX plus a fixed amount of $3.0 million
representing the one-time perpetual license fee. The billing software was
being used by the Company at the time of this agreement, and was being
maintained and modified by ATX under an ongoing software maintenance and
development outsourcing agreement between the companies.

In March 2000, the Company and ATX announced that they had entered into an
agreement to link their networks in order to create an international Internet
backbone that commenced operations in February 2001. The Company incurred
costs of $0.3 million for network usage in the year ended December 31, 2001.
The Company has not incurred any additional costs subsequent to 2001.

At December 31, 2002 and 2001, the Company had a receivable from ATX of $2.5
million and $1.1 million, respectively.

17.   Shareholders Equity

The following description of
authorized capital stock, common stock, stockholder rights plan and
stock options reflects changes as a result of the Company's emergence
from Chapter 11 reorganization.

Authorized Capital Stock

Pursuant to the Companys reorganization, the Companys authorized capital
stock consists of 400,000,000 shares of common stock, par value $0.01 per share
and 5,000,000 shares of preferred stock, par value $0.01 per share.

Common Stock

On the Effective Date, the Company issued to certain of its stakeholders
50,000,969 shares of common stock and 8,750,496 Series A Warrants, each of
which entitles the holder thereof to purchase one share of the Companys common
stock at an initial exercise price of $309.88, subject to adjustment. The
Series A Warrants expire on January 10, 2011. In addition, the Company issued
500,000 shares of common stock to initial purchases of the Exit Notes.

Stockholder Rights Plan

The Companys Rights Agreement provides that a Right will be issued with each
share of common stock issued. The Rights are exercisable upon the occurrence
of certain potential takeover events and will expire in January 2013 unless
previously redeemed or exchanged by the Company. When exercisable, each Right
entitles the owner to purchase from the Company one one-thousandth of a share
of Series A Junior Participating Preferred Stock (Rights Preferred Stock) at
the Stockholder Rights purchase price, subject to adjustment.

The Rights Preferred Stock will be entitled to a quarterly dividend payment
equal to the greater of $10.00 and 1,000 times the aggregate amount per share
of all dividends declared on the common stock since the immediately preceding
dividend payment date. In the event of liquidation, the holders of Rights
Preferred Stock will be entitled to the greater of $1,000 for each share of
Rights Preferred Stock held, plus any accrued and unpaid dividends or
distributions on those shares and the aggregate amount per share equal to 1,000
times the aggregate amount to be distributed per share to holders of common
stock. Each share of Rights Preferred Stock will have 1,000 votes and will
vote together with the common stock. In the event of any merger, consolidation
or other transaction in which shares of common stock are changed or exchanged,
each share of Rights Preferred Stock will be entitled to receive common stock
of the acquiring Company valued at two times the exercise price of the
Stockholder Right. The Rights are protected by customary antidilution
provisions.

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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Stock Options

Upon approval by the compensation committee of the board of directors, the
Company will adopt the NTL Incorporated 2003 Stock Option Plan (the Stock
Option Plan). The Stock Option Plan is intended to provide incentives to
certain employees of the Company and its subsidiaries to foster and promote the
long term growth and performance of the Company and to better align such
employees interests with the stockholders of the Company. Under the Stock
Option Plan, options to purchase up to 10% of the issued and outstanding shares
of the Companys common stock as of the Effective Date may be granted from time
to time to certain employees of the Company and its subsidiaries. Accordingly,
the Company has reserved 5 million shares of common stock for issuance under
the Stock Option Plan.

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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Stock Options (continued)

The Companys employees participated in the various stock option plans of its
former ultimate parent company. All options to purchase shares of the
Companys former ultimate parent companys common stock were cancelled on the
Effective Date pursuant to the Plan.

There were none, 13.7 million and 34.8 million options granted under these
plans for the years ended December 31, 2002, 2001 and 2000, respectively.

Pro forma information regarding net loss has been determined as if the Company
had accounted for its former ultimate parents employee stock options under the
fair value method of SFAS No. 123. The fair value for these options was
estimated at the date of grant using the Black-Scholes option pricing model
with the following weighted-average assumptions for 2002, 2001 and 2000:
risk-free interest rates of 4.47%, 4.47% and 5.30%, respectively, dividend
yield of 0%, volatility factor of the expected market price of the Companys
former ultimate parents common stock of .702, .702, and .385, respectively,
and a weighted-average expected life of the option of 10 years
in 2002, 2001 and
2000.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because these stock options have characteristics significantly different from
those of traded options and because changes in the subjective input assumptions
can materially affect the fair value estimate, in managements opinion, the
existing models do not necessarily provide a reliable single measure of the
fair value of its stock options.

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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Stock Options (continued)

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options vesting period. The effects of applying SFAS No. 123 on pro forma
disclosures of net loss for the years ended December 31, 2002, 2001 and 2000
are not likely to be representative of the pro forma effects on net loss in
future years. Following is the Companys pro forma information as if the
Company and not its former ultimate parent had issued the stock options:

|                     |  |               |          |      |  |      |           |   |  |   |          |  
|-------------------- |  | ------------- | -------- | ---- |  | ---- | --------- | - |  | - | -------- | -
|                     |  | Year Ended   
|                     |  | December 31, 
|                     |  |              
|                     |  | 2002          |          | 2001 |  | 2000
|                     |  |               |          |      |  |     
|                     |  | (in millions)
|Net (loss)           |  | $             | (2,375.8 | )    |  | $    | (11,837.0 | ) |  | $ | (2,388.1 | )
|Pro forma net (loss) |  | $             | (2,631.7 | )    |  | $    | (12,096.9 | ) |  | $ | (2,636.7 | )

18.   Employee Benefit Plans

Certain subsidiaries of the Company operate defined benefit pension plans in
the United Kingdom. The assets of the Plans are held separately from those of
the Company and are invested in specialized portfolios under the management of
an investment group. The pension cost is calculated using the attained age
method. The Companys policy is to fund amounts to the defined benefit plans
necessary to comply with the funding requirements as prescribed by the laws and
regulations in the United Kingdom.

At December 31, 2002, the projected benefit obligations of the Companys
defined benefit pension plans exceeded the fair value of the plan assets by
$121.3 million. Each of the Companys four defined benefit
pension plans had accumulated benefit obligations in excess of the fair value of plan
assets at December 31, 2002. The projected benefit obligations,
accumulated benefit obligations and fair value of plan assets for
these four plans were $333.5 million, $289.4 million and
$212.2 million, respectively, at December 31, 2002.

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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

18.   Employee Benefit Plans (continued)

|                                                                      |  |               |        |      |  |   |       |  
|--------------------------------------------------------------------- |  | ------------- | ------ | ---- |  | - | ----- | -
|                                                                      |  | Year Ended   
|                                                                      |  | December 31, 
|                                                                      |  |              
|                                                                      |  | 2002          |        | 2001
|                                                                      |  |               |        |     
|                                                                      |  | (in millions)
|Change in benefit obligation                                          |  |               |        |      |  |   |       |  
|Benefit obligation at beginning of year                               |  | $             | 200.3  |      |  | $ | 201.8 |  
|Acquisition                                                           |  |               | 20.8   |      |  |   |      |  
|Service cost                                                          |  |               | 10.8   |      |  |   | 9.9   |  
|Interest cost                                                         |  |               | 17.3   |      |  |   | 11.3  |  
|Actuarial losses (gains)                                              |  |               | 85.3   |      |  |   | (7.0  | )
|Benefits paid                                                         |  |               | (10.1  | )    |  |   | (6.3  | )
|Curtailments/settlements                                              |  |               | (1.8   | )    |  |   |      |  
|Other                                                                 |  |               | 1.9    |      |  |   |      |  
|Foreign currency exchange rate changes                                |  |               | 9.0    |      |  |   | (9.4  | )
|                                                                      |  |               |        |      |  |   |       |  
|Benefit obligation at end of year                                     |  | $             | 333.5  |      |  | $ | 200.3 |  
|                                                                      |  |               |        |      |  |   |       |  
|Change in plan assets                                                 |  |               |        |      |  |   |       |  
|Fair value of plan assets at beginning of year                        |  | $             | 229.2  |      |  | $ | 269.1 |  
|Acquisition                                                           |  |               | 17.3   |      |  |   |      |  
|Actual return on plan assets                                          |  |               | (43.5  | )    |  |   | (31.0 | )
|Company contributions                                                 |  |               | 8.9    |      |  |   | 8.0   |  
|Plan participants contributions                                      |  |               | 3.0    |      |  |   | 3.0   |  
|Benefits paid                                                         |  |               | (10.1  | )    |  |   | (6.3  | )
|Curtailments/settlements                                              |  |               | (1.4   | )    |  |   |      |  
|Other                                                                 |  |               | (1.3   | )    |  |   |      |  
|Foreign currency exchange rates changes                               |  |               | 10.1   |      |  |   | (13.6 | )
|                                                                      |  |               |        |      |  |   |       |  
|Fair value of plan assets at end of year                              |  | $             | 212.2  |      |  | $ | 229.2 |  
|                                                                      |  |               |        |      |  |   |       |  
|Funded status of the plan                                             |  | $             | (121.3 | )    |  | $ | 28.9  |  
|Unrecognized net actuarial (gains) losses                             |  |               | 136.5  |      |  |   | (12.4 | )
|Unrecognized transition obligation                                    |  |               | 5.6    |      |  |   | 5.0   |  
|                                                                      |  |               |        |      |  |   |       |  
|Net
amount recognized                                                 |  | $             | 20.8   |      |  | $ | 21.5  |  
|                                                                      |  |               |        |      |  |   |       |  
|Amounts
recognized in the statement of financial position
consist of: |  |               |        |      |  |   |       |  
|Prepaid
benefit cost                                                  |  | $             |       |      |  | $ | 16.5  |  
|Accrued
benefit liability                                             |  |               | (88.5  | )    |  |   |      |  
|Intangible
asset                                                      |  |               | 5.6    |      |  |   | 5.0   |  
|Accumulated
other comprehensive loss                                  |  |               | 103.7  |      |  |   |      |  
|                                                                      |  |               |        |      |  |   |       |  
|Net
amount recognized                                                 |  | $             | 20.8   |      |  | $ | 21.5  |  
|                                                                      |  |               |        |      |  |   |       |  

|                       |                                                  |  |                         |              |      |  |  |              |  
|---------------------- | ------------------------------------------------ |  | ----------------------- | ------------ | ---- |  |  | ------------ | -
|                       |                                                  |  | Year Ended December 31,
|                       |                                                  |  |                        
|                       |                                                  |  | 2002                    |              | 2001
|                       |                                                  |  |                         |              |     
|Actuarial assumptions: |                                                  |  |                         |              |      |  |  |             
|                       | Discount rate                                    |  |                         | 5.50% - 5.90 | %    |  |  | 6.00         | %
|                       | Rate of compensation increase                    |  |                         | 3.30% - 5.20 | %    |  |  | 3.50% - 4.00 | %
|                       | Expected long-term rate of return on plan assets |  |                         | 6.60% - 7.50 | %    |  |  | 7.00% - 7.50 | %

F-39



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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

18.   Employee Benefit Plans (continued)

The components of net pension costs are as follows:

|                               |  |                         |       |      |  |      |       |   |  |   |       |  
|------------------------------ |  | ----------------------- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                               |  | Year Ended December 31,
|                               |  |                        
|                               |  | 2002                    |       | 2001 |  | 2000
|                               |  |                         |       |      |  |     
|                               |  | (in millions)          
|Service cost                   |  | $                       | 10.8  |      |  | $    | 9.9   |   |  | $ | 10.7  |  
|Interest cost                  |  |                         | 17.3  |      |  |      | 11.3  |   |  |   | 11.3  |  
|Curtailments/settlements       |  |                         | 1.8   |      |  |      |      |   |  |   |      |  
|Expected return on plan assets |  |                         | (20.0 | )    |  |      | 31.0  |   |  |   | (2.0  | )
|Net amortization and deferral  |  |                         | 0.7   |      |  |      | (51.9 | ) |  |   | (20.6 | )
|                               |  |                         |       |      |  |      |       |   |  |   |       |  
|                               |  | $                       | 10.6  |      |  | $    | 0.3   |   |  | $ | (0.6  | )
|                               |  |                         |       |      |  |      |       |   |  |   |       |  

19.   Leases

A summary of assets held under capital lease are as follows (in millions):

|                               |  |              |       |      |  |   |       |  
|------------------------------ |  | ------------ | ----- | ---- |  | - | ----- | -
|                               |  | December 31,
|                               |  |             
|                               |  | 2002         |       | 2001
|                               |  |              |       |     
|Land, buildings and equipment  |  | $            | 89.0  |      |  | $ | 100.2 |  
|Less: accumulated depreciation |  |              | (26.9 | )    |  |   | (28.5 | )
|                               |  |              |       |      |  |   |       |  
|                               |  | $            | 62.1  |      |  | $ | 71.7  |  
|                               |  |              |       |      |  |   |       |  

Future minimum annual payments at December 31, 2002 are as follows (in
millions). The table reflects the Companys contractual obligations.

|                                         |  |         |        |           |  |   |       | 
|---------------------------------------- |  | ------- | ------ | --------- |  | - | ----- | 
|                                         |  | Capital |        | Operating
|                                         |  | Leases  |        | Leases   
|                                         |  |         |        |          
|Year ending December 31:                 |  |         |        |           |  |   |       | 
|2003                                     |  | $       | 9.3    |           |  | $ | 84.0  | 
|2004                                     |  |         | 9.0    |           |  |   | 70.5  | 
|2005                                     |  |         | 8.0    |           |  |   | 60.8  | 
|2006                                     |  |         | 7.1    |           |  |   | 53.7  | 
|2007                                     |  |         | 6.7    |           |  |   | 52.8  | 
|Thereafter                               |  |         | 166.7  |           |  |   | 394.5 | 
|                                         |  |         |        |           |  |   |       | 
|Total minimum lease payments             |  |         | 206.8  |           |  | $ | 716.3 | 
|                                         |  |         |        |           |  |   |       | 
|Less: amount representing interest       |  |         | (140.0 | )         |  |   |       | 
|                                         |  |         |        |           |  |   |       | 
|Present value of net minimum obligations |  |         | 66.8   |           |  |   |       | 
|Less: current portion                    |  |         | (66.8  | )         |  |   |       | 
|                                         |  |         |        |           |  |   |       | 
|                                         |  | $       |       |           |  |   |       | 
|                                         |  |         |        |           |  |   |       | 

Leases for buildings, office space and equipment extend through 2031. Total
rental expense for the years ended December 31, 2002, 2001 and 2000 under
operating leases was $140.1 million, $74.5 million and $46.2 million,
respectively.

F-40



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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

20.   Commitments and Contingent Liabilities

At December 31, 2002, the Company was committed to pay approximately $1,422.0
million for equipment and services and for investments in and loans to
affiliates. This amount includes approximately $984.4 million for operations
and maintenance contracts and other commitments from January 1,
2004 to 2013. The aggregate amount of the fixed and determinable
portion of these obligations for the succeeding fiscal years is as
follows (in millions):

|                         |  |   |      
|------------------------ |  | - | -----
|Year Ending December 31: |  |   |      
|                         |  |   |      
|2003                     |  | $ | 437.6
|2004                     |  |   | 109.7
|2005                     |  |   | 109.4
|2006                     |  |   | 109.4
|2007                     |  |   | 109.4
|                         |  |  
|                         |  | $ | 875.5
|                         |  |  

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.

21.   Summarized Financial Information About NTL Incorporated (formerly NTL
Communications Corp.)

In connection with the Companys emergence from Chapter 11 reorganization, the
Company and certain of its subsidiaries (the Guarantors) issued the Exit
Notes. The Exit Notes are guaranteed on a senior basis by the following
subsidiaries of the Company: NTL Digital (US) Inc., CableTel Ventures Limited,
Bearsden Nominees, Inc., CableTel Programming, Inc., NTL International
Services, Inc. and NTL Funding (NJ), Inc. (collectively referred to as the
Senior Guarantors). The Exit Notes are guaranteed on a subordinated basis by
Communications Cable Funding Corp. (referred to as the Subordinated Guarantor
and together with the Senior Guarantors, the Guarantors).

The following condensed consolidating financial information of the Company as
of December 31, 2002 and 2001 and for the years ended December 31, 2002, 2001
and 2000 is being provided pursuant to Article 3-10(c) of Regulation S-X and
SOP 90-7.

F-41



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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

21.   Summarized Financial Information about NTL Incorporated (formerly NTL
Communications Corp.) (continued)



|                                                                      |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  
|--------------------------------------------------------------------- |  | ---------------------------- | -------- | ------- |  | -------------- | ------ | -------------- |  | ----------- | ------ | ----- |  | - | -------- | - |  | - | ---- | -
|                                                                      |  | Year Ended December 31, 2002
|                                                                      |  |                             
|                                                                      |  |                              |          |         |  | Communications |        |                |  |             |        |       |  |   |          |   |  |  
|                                                                      |  | NTL                          |          | Cable   |  |                |        |                |  | Entities in |        | Other
|Statement of Operations                                               |  | Incorporated                 |          | Funding |  | Diamond        |        | Reorganization |  | Guarantors 
|                                                                      |  |                              |          |         |  |                |        |                |  |            
|                                                                      |  | (in millions)               
|Revenue                                                               |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  
|Consumer telecommunications and
television                            |  | $                            |         |         |  | $              |       |                |  | $           |       |       |  | $ |         |   |  | $ |     |  
|Business telecommunications                                           |  |                              |         |         |  |                |       |                |  |             |       |       |  |   |         |   |  |   |     |  
|Broadcast transmission and other                                      |  |                              |         |         |  |                |       |                |  |             |       |       |  |   |         |   |  |   |     |  
|                                                                      |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  
|                                                                      |  |                              |         |         |  |                |       |                |  |             |       |       |  |   |         |   |  |   |     |  
|Costs and expenses                                                    |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  
|Operating expenses (exclusive of
depreciation shown separately
below) |  |                              |         |         |  |                |       |                |  |             |       |       |  |   |         |   |  |   | 0.8  |  
|Selling, general and
administrative expenses                          |  |                              |         |         |  |                |       |                |  |             |       |       |  |   |         |   |  |   | 0.3  |  
|Asset impairments                                                     |  |                              |         |         |  |                |       |                |  |             |       |       |  |   |         |   |  |   |     |  
|Non-cash compensation                                                 |  |                              |         |         |  |                |       |                |  |             |       |       |  |   |         |   |  |   |     |  
|Other charges                                                         |  |                              | 154.8    |         |  |                |        |                |  |             |       |       |  |   | 154.8    |   |  |   |     |  
|Corporate expenses                                                    |  |                              | 37.9     |         |  |                | (22.3  | )              |  |             |       |       |  |   | 15.6     |   |  |   |     |  
|Depreciation                                                          |  |                              | 0.5      |         |  |                |       |                |  |             |       |       |  |   | 0.5      |   |  |   |     |  
|Amortization                                                          |  |                              | 26.2     |         |  |                |       |                |  |             | 4.2    |       |  |   | 30.4     |   |  |   |     |  
|                                                                      |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  
|                                                                      |  |                              | 219.4    |         |  |                | (22.3  | )              |  |             | 4.2    |       |  |   | 201.3    |   |  |   | 1.1  |  
|                                                                      |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  
|Operating (loss)                                                      |  |                              | (219.4   | )       |  |                | 22.3   |                |  |             | (4.2   | )     |  |   | (201.3   | ) |  |   | (1.1 | )
|Other income (expense)                                                |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  
|Interest income and other, net                                        |  |                              | 0.3      |         |  |                | 110.0  |                |  |             | 198.9  |       |  |   | 309.2    |   |  |   | 5.0  |  
|Interest
income  NTL Europe, Inc.                                    |  |                              | 8.0      |         |  |                | 0.8    |                |  |             |       |       |  |   | 8.8      |   |  |   |     |  
|Interest expense                                                      |  |                              | (280.3   | )       |  |                | (128.0 | )              |  |             | (84.5  | )     |  |   | (492.8   | ) |  |   | (4.4 | )
|Interest expense  NTL Europe, Inc.                                   |  |                              |         |         |  |                | (2.9   | )              |  |             |       |       |  |   | (2.9     | ) |  |   |     |  
|Share of (losses) from equity
investments                             |  |                              | (1,516.9 | )       |  |                |       |                |  |             | (247.2 | )     |  |   | (1,764.1 | ) |  |   | (3.4 | )
|Other gains (losses)                                                  |  |                              |         |         |  |                |       |                |  |             |       |       |  |   |         |   |  |   |     |  
|Foreign currency transaction
(losses) gains                           |  |                              | (282.0   | )       |  |                |       |                |  |             | (11.7  | )     |  |   | (293.7   | ) |  |   | 0.8  |  
|                                                                      |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  
|Income (loss) before
recapitalization
items and income taxes          |  |                              | (2,290.3 | )       |  |                | 2.2    |                |  |             | (148.7 | )     |  |   | (2,436.8 | ) |  |   | (3.1 | )
|Recapitalization items, net                                           |  |                              | (86.7    | )       |  |                |       |                |  |             | (5.8   | )     |  |   | (92.5    | ) |  |   |     |  
|                                                                      |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  
|Income (loss) before income taxes                                     |  |                              | (2,377.0 | )       |  |                | 2.2    |                |  |             | (154.5 | )     |  |   | (2,529.3 | ) |  |   | (3.1 | )
|Income tax benefit                                                    |  |                              | 1.2      |         |  |                |       |                |  |             | (1.4   | )     |  |   | (0.2     | ) |  |   |     |  
|                                                                      |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  
|Net income (loss)                                                     |  | $                            | (2,375.8 | )       |  | $              | 2.2    |                |  | $           | (155.9 | )     |  | $ | (2,529.5 | ) |  | $ | (3.1 | )
|                                                                      |  |                              |          |         |  |                |        |                |  |             |        |       |  |   |          |   |  |   |      |  

[Additional columns below]

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

|                                                                      |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|--------------------------------------------------------------------- |  | ---------------------------- | -------- | -------------- |  | ----------- | -------- | ------------ |  | --- | ------- | ------------ |  | - | -------- | -
|                                                                      |  | Year Ended December 31, 2002
|                                                                      |  |                             
|                                                                      |  |                              |          |                |  | Entities    |          |              |  |     |         | Consolidated
|                                                                      |  | All Other                    |          | Not in         |  |             |          |              |  | NTL
|Statement of Operations                                               |  | Subsidiaries                 |          | Reorganization |  | Adjustments |          | Incorporated
|                                                                      |  |                              |          |                |  |             |          |             
|                                                                      |  | (in millions)               
|Revenue                                                               |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Consumer telecommunications and
television                            |  | $                            | 2,074.1  |                |  | $           | 2,074.1  |              |  | $   |        |              |  | $ | 2,074.1  |  
|Business telecommunications                                           |  |                              | 880.1    |                |  |             | 880.1    |              |  |     |        |              |  |   | 880.1    |  
|Broadcast transmission and other                                      |  |                              | 310.9    |                |  |             | 310.9    |              |  |     |        |              |  |   | 310.9    |  
|                                                                      |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|                                                                      |  |                              | 3,265.1  |                |  |             | 3,265.1  |              |  |     |        |              |  |   | 3,265.1  |  
|Costs and expenses                                                    |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Operating expenses (exclusive of
depreciation shown separately
below) |  |                              | 1,501.7  |                |  |             | 1,502.5  |              |  |     |        |              |  |   | 1,502.5  |  
|Selling, general and
administrative expenses                          |  |                              | 769.8    |                |  |             | 770.1    |              |  |     | (0.3    | )            |  |   | 769.8    |  
|Asset impairments                                                     |  |                              | 445.1    |                |  |             | 445.1    |              |  |     |        |              |  |   | 445.1    |  
|Non-cash compensation                                                 |  |                              |         |                |  |             |         |              |  |     |        |              |  |   |         |  
|Other charges                                                         |  |                              | 234.4    |                |  |             | 234.4    |              |  |     |        |              |  |   | 389.2    |  
|Corporate expenses                                                    |  |                              | 3.1      |                |  |             | 3.1      |              |  |     |        |              |  |   | 18.7     |  
|Depreciation                                                          |  |                              | 1,477.4  |                |  |             | 1,477.4  |              |  |     |        |              |  |   | 1,477.9  |  
|Amortization                                                          |  |                              | 33.3     |                |  |             | 33.3     |              |  |     |        |              |  |   | 63.7     |  
|                                                                      |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|                                                                      |  |                              | 4,464.8  |                |  |             | 4,465.9  |              |  |     | (0.3    | )            |  |   | 4,666.9  |  
|                                                                      |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Operating (loss)                                                      |  |                              | (1,199.7 | )              |  |             | (1,200.8 | )            |  |     | 0.3     |              |  |   | (1,401.8 | )
|Other income (expense)                                                |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Interest income and other, net                                        |  |                              | 19.4     |                |  |             | 24.4     |              |  |     | (312.6  | )            |  |   | 21.0     |  
|Interest income  NTL Europe, Inc.                                    |  |                              |         |                |  |             |         |              |  |     |        |              |  |   | 8.8      |  
|Interest expense                                                      |  |                              | (696.6   | )              |  |             | (701.0   | )            |  |     | 431.3   |              |  |   | (762.5   | )
|Interest expense  NTL Europe, Inc.                                   |  |                              | (14.8    | )              |  |             | (14.8    | )            |  |     |        |              |  |   | (17.7    | )
|Share of (losses) from equity
investments                             |  |                              |         |                |  |             | (3.4     | )            |  |     | 1,764.1 |              |  |   | (3.4     | )
|Other gains (losses)                                                  |  |                              |         |                |  |             |         |              |  |     |        |              |  |   |         |  
|Foreign currency transaction
(losses) gains                           |  |                              | 199.6    |                |  |             | 200.4    |              |  |     | (0.8    | )            |  |   | (94.1    | )
|                                                                      |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Income (loss) before
recapitalization
items and income taxes          |  |                              | (1,692.1 | )              |  |             | (1,695.2 | )            |  |     | 1,882.3 |              |  |   | (2,249.7 | )
|Recapitalization items, net                                           |  |                              | (59.3    | )              |  |             | (59.3    | )            |  |     |         |              |  |   | (151.8   | )
|                                                                      |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Income (loss) before income taxes                                     |  |                              | (1,751.4 | )              |  |             | (1,754.4 | )            |  |     | 1,882.3 |              |  |   | (2,401.5 | )
|Income tax benefit                                                    |  |                              | 25.9     |                |  |             | 25.9     |              |  |     |        |              |  |   | 25.7     |  
|                                                                      |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Net income (loss)                                                     |  | $                            | (1,725.5 | )              |  | $           | (1,728.6 | )            |  | $   | 1,882.3 |              |  | $ | (2,375.8 | )
|                                                                      |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  

F-42



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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

21.   Summarized Financial Information about NTL Incorporated (formerly NTL
Communications Corp.) (continued)



|                                                                      |  |                              |           |         |  |                |   |                |  |             |        |       |  |   |           |   |  |   |       |  
|--------------------------------------------------------------------- |  | ---------------------------- | --------- | ------- |  | -------------- | - | -------------- |  | ----------- | ------ | ----- |  | - | --------- | - |  | - | ----- | -
|                                                                      |  | Year Ended December 31, 2001
|                                                                      |  |                             
|                                                                      |  |                              |           |         |  | Communications |   |                |  |             |        |       |  |   |           |   |  |  
|                                                                      |  | NTL                          |           | Cable   |  |                |   |                |  | Entities in |        | Other
|Statement of Operations                                               |  | Incorporated                 |           | Funding |  | Diamond        |   | Reorganization |  | Guarantors 
|                                                                      |  |                              |           |         |  |                |   |                |  |            
|                                                                      |  | (in millions)               
|Revenue                                                               |  |                              |           |         |  |                |   |                |  |             |        |       |  |   |           |   |  |   |       |  
|Consumer telecommunications and
television                            |  | $                            |          |         |  | $              |  |                |  | $           |       |       |  | $ |          |   |  | $ |      |  
|Business telecommunications                                           |  |                              |          |         |  |                |  |                |  |             |       |       |  |   |          |   |  |   |      |  
|Broadcast transmission and other                                      |  |                              |          |         |  |                |  |                |  |             |       |       |  |   |          |   |  |   |      |  
|                                                                      |  |                              |           |         |  |                |   |                |  |             |        |       |  |   |           |   |  |   |       |  
|                                                                      |  |                              |          |         |  |                |  |                |  |             |       |       |  |   |          |   |  |   |      |  
|Costs and expenses                                                    |  |                              |           |         |  |                |   |                |  |             |        |       |  |   |           |   |  |   |       |  
|Operating expenses (exclusive of
depreciation shown separately
below) |  |                              |          |         |  |                |  |                |  |             |       |       |  |   |          |   |  |   | 0.8   |  
|Selling, general and
administrative expenses                          |  |                              | 3.2       |         |  |                |  |                |  |             |       |       |  |   | 3.2       |   |  |   | (0.1  | )
|Asset impairments                                                     |  |                              |          |         |  |                |  |                |  |             |       |       |  |   |          |   |  |   |      |  
|Non-cash compensation                                                 |  |                              | 30.6      |         |  |                |  |                |  |             |       |       |  |   | 30.6      |   |  |   |      |  
|Other charges                                                         |  |                              |          |         |  |                |  |                |  |             |       |       |  |   |          |   |  |   |      |  
|Corporate expenses                                                    |  |                              | 24.3      |         |  |                |  |                |  |             |       |       |  |   | 24.3      |   |  |   |      |  
|Depreciation                                                          |  |                              | 0.5       |         |  |                |  |                |  |             |       |       |  |   | 0.5       |   |  |   |      |  
|Amortization                                                          |  |                              | 24.5      |         |  |                |  |                |  |             | 4.0    |       |  |   | 28.5      |   |  |   | 0.5   |  
|                                                                      |  |                              |           |         |  |                |   |                |  |             |        |       |  |   |           |   |  |   |       |  
|                                                                      |  |                              | 83.1      |         |  |                |  |                |  |             | 4.0    |       |  |   | 87.1      |   |  |   | 1.2   |  
|                                                                      |  |                              |           |         |  |                |   |                |  |             |        |       |  |   |           |   |  |   |       |  
|Operating (loss)                                                      |  |                              | (83.1     | )       |  |                |  |                |  |             | (4.0   | )     |  |   | (87.1     | ) |  |   | (1.2  | )
|Other income (expense)                                                |  |                              |           |         |  |                |   |                |  |             |        |       |  |   |           |   |  |   |       |  
|Interest income and other, net                                        |  |                              | 13.6      |         |  |                |  |                |  |             | 184.1  |       |  |   | 197.7     |   |  |   | 3.5   |  
|Interest income  NTL Europe, Inc.                                    |  |                              | 5.8       |         |  |                |  |                |  |             |       |       |  |   | 5.8       |   |  |   |      |  
|Interest expense                                                      |  |                              | (762.8    | )       |  |                |  |                |  |             | (170.9 | )     |  |   | (933.7    | ) |  |   | (4.2  | )
|Interest expense  NTL Europe, Inc.                                   |  |                              |          |         |  |                |  |                |  |             |       |       |  |   |          |   |  |   |      |  
|Share of (losses) from equity
investments                             |  |                              | (11,067.5 | )       |  |                |  |                |  |             | (985.4 | )     |  |   | (12,052.9 | ) |  |   | (14.3 | )
|Other (losses)                                                        |  |                              |          |         |  |                |  |                |  |             |       |       |  |   |          |   |  |   |      |  
|Foreign currency transaction gains
(losses)                           |  |                              | 58.2      |         |  |                |  |                |  |             | (0.8   | )     |  |   | 57.4      |   |  |   | (3.6  | )
|                                                                      |  |                              |           |         |  |                |   |                |  |             |        |       |  |   |           |   |  |   |       |  
|(Loss) before income taxes                                            |  |                              | (11,835.8 | )       |  |                |  |                |  |             | (977.0 | )     |  |   | (12,812.8 | ) |  |   | (19.8 | )
|Income tax expense                                                    |  |                              | (1.2      | )       |  |                |  |                |  |             |       |       |  |   | (1.2      | ) |  |   |      |  
|                                                                      |  |                              |           |         |  |                |   |                |  |             |        |       |  |   |           |   |  |   |       |  
|Net (loss)                                                            |  | $                            | (11,837.0 | )       |  | $              |  |                |  | $           | (977.0 | )     |  | $ | (12,814.0 | ) |  | $ | (19.8 | )
|                                                                      |  |                              |           |         |  |                |   |                |  |             |        |       |  |   |           |   |  |   |       |  

[Additional columns below]

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

|                                                                      |  |                              |           |                |  |             |           |              |  |     |          |              |  |   |           |  
|--------------------------------------------------------------------- |  | ---------------------------- | --------- | -------------- |  | ----------- | --------- | ------------ |  | --- | -------- | ------------ |  | - | --------- | -
|                                                                      |  | Year Ended December 31, 2001
|                                                                      |  |                             
|                                                                      |  |                              |           |                |  | Entities    |           |              |  |     |          | Consolidated |  |  
|                                                                      |  | All Other                    |           | Not in         |  |             |           |              |  | NTL
|Statement of Operations                                               |  | Subsidiaries                 |           | Reorganization |  | Adjustments |           | Incorporated
|                                                                      |  |                              |           |                |  |             |           |             
|                                                                      |  | (in millions)               
|Revenue                                                               |  |                              |           |                |  |             |           |              |  |     |          |              |  |   |           |  
|Consumer telecommunications and
television                            |  | $                            | 2,069.2   |                |  | $           | 2,069.2   |              |  | $   |         |              |  | $ | 2,069.2   |  
|Business telecommunications                                           |  |                              | 836.8     |                |  |             | 836.8     |              |  |     |         |              |  |   | 836.8     |  
|Broadcast transmission and other                                      |  |                              | 283.6     |                |  |             | 283.6     |              |  |     |         |              |  |   | 283.6     |  
|                                                                      |  |                              |           |                |  |             |           |              |  |     |          |              |  |   |           |  
|                                                                      |  |                              | 3,189.6   |                |  |             | 3,189.6   |              |  |     |         |              |  |   | 3,189.6   |  
|Costs and expenses                                                    |  |                              |           |                |  |             |           |              |  |     |          |              |  |   |           |  
|Operating expenses (exclusive of
depreciation shown separately
below) |  |                              | 1,563.5   |                |  |             | 1,564.3   |              |  |     |         |              |  |   | 1,564.3   |  
|Selling, general and
administrative expenses                          |  |                              | 970.1     |                |  |             | 970.0     |              |  |     |         |              |  |   | 973.2     |  
|Asset impairments                                                     |  |                              | 8,160.6   |                |  |             | 8,160.6   |              |  |     |         |              |  |   | 8,160.6   |  
|Non-cash compensation                                                 |  |                              |          |                |  |             |          |              |  |     |         |              |  |   | 30.6      |  
|Other charges                                                         |  |                              | 297.9     |                |  |             | 297.9     |              |  |     |         |              |  |   | 297.9     |  
|Corporate expenses                                                    |  |                              |          |                |  |             |          |              |  |     |         |              |  |   | 24.3      |  
|Depreciation                                                          |  |                              | 1,360.9   |                |  |             | 1,360.9   |              |  |     |         |              |  |   | 1,361.4   |  
|Amortization                                                          |  |                              | 1,149.9   |                |  |             | 1,150.4   |              |  |     |         |              |  |   | 1,178.9   |  
|                                                                      |  |                              |           |                |  |             |           |              |  |     |          |              |  |   |           |  
|                                                                      |  |                              | 13,502.9  |                |  |             | 13,504.1  |              |  |     |         |              |  |   | 13,591.2  |  
|                                                                      |  |                              |           |                |  |             |           |              |  |     |          |              |  |   |           |  
|Operating (loss)                                                      |  |                              | (10,313.3 | )              |  |             | (10,314.5 | )            |  |     |         |              |  |   | (10,401.6 | )
|Other income (expense)                                                |  |                              |           |                |  |             |           |              |  |     |          |              |  |   |           |  
|Interest income and other, net                                        |  |                              | 16.0      |                |  |             | 19.5      |              |  |     | (188.4   | )            |  |   | 28.8      |  
|Interest income  NTL Europe, Inc.                                    |  |                              |          |                |  |             |          |              |  |     |         |              |  |   | 5.8       |  
|Interest expense                                                      |  |                              | (947.0    | )              |  |             | (951.2    | )            |  |     | 644.1    |              |  |   | (1,240.8  | )
|Interest expense  NTL Europe, Inc.                                   |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Share of (losses) from equity
investments                             |  |                              | (8.9      | )              |  |             | (23.2     | )            |  |     | 12,052.9 |              |  |   | (23.2     | )
|Other (losses)                                                        |  |                              | (88.5     | )              |  |             | (88.5     | )            |  |     |         |              |  |   | (88.5     | )
|Foreign currency transaction gains
(losses)                           |  |                              | (53.2     | )              |  |             | (56.8     | )            |  |     |         |              |  |   | 0.6       |  
|                                                                      |  |                              |           |                |  |             |           |              |  |     |          |              |  |   |           |  
|(Loss) before income taxes                                            |  |                              | (11,394.9 | )              |  |             | (11,414.7 | )            |  |     | 12,508.6 |              |  |   | (11,718.9 | )
|Income tax expense                                                    |  |                              | (116.9    | )              |  |             | (116.9    | )            |  |     |         |              |  |   | (118.1    | )
|                                                                      |  |                              |           |                |  |             |           |              |  |     |          |              |  |   |           |  
|Net (loss)                                                            |  | $                            | (11,511.8 | )              |  | $           | (11,531.6 | )            |  | $   | 12,508.6 |              |  | $ | (11,837.0 | )
|                                                                      |  |                              |           |                |  |             |           |              |  |     |          |              |  |   |           |  

F-43



---



##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

21.   Summarized Financial Information about NTL Incorporated (formerly NTL
Communications Corp.) (continued)



|                                                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |       |  
|-------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | ------- |  | -------------- | - | -------------- |  | ----------- | ------ | ----- |  | - | -------- | - |  | - | ----- | -
|                                                                                       |  | Year Ended December 31, 2000
|                                                                                       |  |                             
|                                                                                       |  |                              |          |         |  | Communications |   |                |  |             |        |       |  |   |          |   |  |  
|                                                                                       |  | NTL                          |          | Cable   |  |                |   |                |  | Entities in |        | Other
|Statement of Operations                                                                |  | Incorporated                 |          | Funding |  | Diamond        |   | Reorganization |  | Guarantors 
|                                                                                       |  |                              |          |         |  |                |   |                |  |            
|                                                                                       |  | (in millions)               
|Revenue                                                                                |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |       |  
|Consumer telecommunications and
television                                             |  | $                            |         |         |  | $              |  |                |  | $           |       |       |  | $ |         |   |  | $ |      |  
|Business telecommunications                                                            |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|Broadcast transmission and other                                                       |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|                                                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |       |  
|                                                                                       |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|Costs and expenses                                                                     |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |       |  
|Operating expenses (exclusive of
depreciation and amortization
shown separately below) |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|Selling, general and
administrative expenses                                           |  |                              | 5.9      |         |  |                |  |                |  |             |       |       |  |   | 5.9      |   |  |   | 0.4   |  
|Asset impairments                                                                      |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|Non-cash compensation                                                                  |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|Other charges                                                                          |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|Corporate expenses                                                                     |  |                              | 23.7     |         |  |                |  |                |  |             |       |       |  |   | 23.7     |   |  |   |      |  
|Depreciation                                                                           |  |                              | 0.5      |         |  |                |  |                |  |             |       |       |  |   | 0.5      |   |  |   |      |  
|Amortization                                                                           |  |                              | 19.2     |         |  |                |  |                |  |             | 4.0    |       |  |   | 23.2     |   |  |   | 0.5   |  
|                                                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |       |  
|                                                                                       |  |                              | 49.3     |         |  |                |  |                |  |             | 4.0    |       |  |   | 53.3     |   |  |   | 0.9   |  
|                                                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |       |  
|Operating (loss)                                                                       |  |                              | (49.3    | )       |  |                |  |                |  |             | (4.0   | )     |  |   | (53.3    | ) |  |   | (0.9  | )
|Other income (expense)                                                                 |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |       |  
|Interest income and other, net                                                         |  |                              | 14.5     |         |  |                |  |                |  |             | 174.9  |       |  |   | 189.4    |   |  |   | (0.6  | )
|Interest income  NTL Europe, Inc.                                                     |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|Interest expense                                                                       |  |                              | (599.4   | )       |  |                |  |                |  |             | (163.6 | )     |  |   | (763.0   | ) |  |   | (0.3  | )
|Interest expense  NTL Europe,
Inc.                                                    |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|Share of (losses) from equity
investments                                              |  |                              | (1,821.7 | )       |  |                |  |                |  |             | (444.5 | )     |  |   | (2,266.2 | ) |  |   | (22.9 | )
|Other (losses)                                                                         |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|Foreign currency transaction
gains (losses)                                            |  |                              | 67.8     |         |  |                |  |                |  |             | (3.6   | )     |  |   | 64.2     |   |  |   | 3.7   |  
|                                                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |       |  
|(Loss) before income taxes                                                             |  |                              | (2,388.1 | )       |  |                |  |                |  |             | (440.8 | )     |  |   | (2,828.9 | ) |  |   | (21.0 | )
|Income tax benefit                                                                     |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |      |  
|                                                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |       |  
|Net (loss)                                                                             |  | $                            | (2,388.1 | )       |  | $              |  |                |  | $           | (440.8 | )     |  | $ | (2,828.9 | ) |  | $ | (21.0 | )
|                                                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |       |  

[Additional columns below]

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

|                                                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|-------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | -------------- |  | ----------- | -------- | ------------ |  | --- | ------- | ------------ |  | - | -------- | -
|                                                                                       |  | Year Ended December 31, 2000
|                                                                                       |  |                             
|                                                                                       |  |                              |          |                |  | Entities    |          |              |  |     |         | Consolidated
|                                                                                       |  | All Other                    |          | Not in         |  |             |          |              |  | NTL
|Statement of Operations                                                                |  | Subsidiaries                 |          | Reorganization |  | Adjustments |          | Incorporated
|                                                                                       |  |                              |          |                |  |             |          |             
|                                                                                       |  | (in millions)               
|Revenue                                                                                |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Consumer telecommunications and
television                                             |  | $                            | 1,518.2  |                |  | $           | 1,518.2  |              |  | $   |        |              |  | $ | 1,518.2  |  
|Business telecommunications                                                            |  |                              | 702.2    |                |  |             | 702.2    |              |  |     |        |              |  |   | 702.2    |  
|Broadcast transmission and other                                                       |  |                              | 263.8    |                |  |             | 263.8    |              |  |     |        |              |  |   | 263.8    |  
|                                                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|                                                                                       |  |                              | 2,484.2  |                |  |             | 2,484.2  |              |  |     |        |              |  |   | 2,484.2  |  
|Costs and expenses                                                                     |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Operating expenses (exclusive of
depreciation and amortization
shown separately below) |  |                              | 1,223.2  |                |  |             | 1,223.2  |              |  |     |        |              |  |   | 1,223.2  |  
|Selling, general and
administrative expenses                                           |  |                              | 962.8    |                |  |             | 963.2    |              |  |     |        |              |  |   | 969.1    |  
|Asset impairments                                                                      |  |                              |         |                |  |             |         |              |  |     |        |              |  |   |         |  
|Non-cash compensation                                                                  |  |                              |         |                |  |             |         |              |  |     |        |              |  |   |         |  
|Other charges                                                                          |  |                              | 92.7     |                |  |             | 92.7     |              |  |     |        |              |  |   | 92.7     |  
|Corporate expenses                                                                     |  |                              |         |                |  |             |         |              |  |     |        |              |  |   | 23.7     |  
|Depreciation                                                                           |  |                              | 873.9    |                |  |             | 873.9    |              |  |     |        |              |  |   | 874.4    |  
|Amortization                                                                           |  |                              | 802.6    |                |  |             | 803.1    |              |  |     |        |              |  |   | 826.3    |  
|                                                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|                                                                                       |  |                              | 3,955.2  |                |  |             | 3,956.1  |              |  |     |        |              |  |   | 4,009.4  |  
|                                                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Operating (loss)                                                                       |  |                              | (1,471.0 | )              |  |             | (1,471.9 | )            |  |     |        |              |  |   | (1,525.2 | )
|Other income (expense)                                                                 |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Interest income and other, net                                                         |  |                              | 11.2     |                |  |             | 10.6     |              |  |     | (174.2  | )            |  |   | 25.8     |  
|Interest income  NTL Europe, Inc.                                                     |  |                              |         |                |  |             |         |              |  |     |        |              |  |   |         |  
|Interest expense                                                                       |  |                              | (320.9   | )              |  |             | (321.2   | )            |  |     | 197.9   |              |  |   | (886.3   | )
|Interest expense  NTL Europe,
Inc.                                                    |  |                              |         |                |  |             |         |              |  |     |        |              |  |   |         |  
|Share of (losses) from equity
investments                                              |  |                              | (1.3     | )              |  |             | (24.2    | )            |  |     | 2,266.2 |              |  |   | (24.2    | )
|Other (losses)                                                                         |  |                              |         |                |  |             |         |              |  |     |        |              |  |   |         |  
|Foreign currency transaction
gains (losses)                                            |  |                              | (126.0   | )              |  |             | (122.3   | )            |  |     |        |              |  |   | (58.1    | )
|                                                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|(Loss) before income taxes                                                             |  |                              | (1,908.0 | )              |  |             | (1,929.0 | )            |  |     | 2,289.9 |              |  |   | (2,468.0 | )
|Income tax benefit                                                                     |  |                              | 79.9     |                |  |             | 79.9     |              |  |     |        |              |  |   | 79.9     |  
|                                                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Net (loss)                                                                             |  | $                            | (1,828.1 | )              |  | $           | (1,849.1 | )            |  | $   | 2,289.9 |              |  | $ | (2,388.1 | )
|                                                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  

F-44



---



##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

21.   Summarized Financial Information about NTL Incorporated (formerly NTL
Communications Corp.) (continued)



|                                                        |  |                   |          |         |  |                |          |                |  |             |         |       |  |   |          |  |  |   |       |  
|------------------------------------------------------- |  | ----------------- | -------- | ------- |  | -------------- | -------- | -------------- |  | ----------- | ------- | ----- |  | - | -------- |  |  | - | ----- | -
|                                                        |  | December 31, 2002
|                                                        |  |                  
|                                                        |  |                   |          |         |  | Communications |          |                |  |             |         |       |  |   |          |  |  |  
|                                                        |  | NTL               |          | Cable   |  |                |          |                |  | Entities in |         | Other
|Balance Sheet                                           |  | Incorporated      |          | Funding |  | Diamond        |          | Reorganization |  | Guarantors 
|                                                        |  |                   |          |         |  |                |          |                |  |            
|                                                        |  | (in millions)    
|Current assets                                          |  | $                 | 47.4     |         |  | $              | 454.3    |                |  | $           | 0.8     |       |  | $ | 502.5    |  |  | $ | 2.5   |  
|Investments in and loans to
affiliates, net             |  |                   | 3,413.9  |         |  |                | 18,645.8 |                |  |             | 941.5   |       |  |   | 23,001.2 |  |  |   | 8.4   |  
|Fixed and noncurrent assets                             |  |                   | 128.7    |         |  |                | 162.8    |                |  |             | 15.6    |       |  |   | 307.1    |  |  |   | 102.2 |  
|                                                        |  |                   |          |         |  |                |          |                |  |             |         |       |  |   |          |  |  |   |       |  
|Total assets                                            |  | $                 | 3,590.0  |         |  | $              | 19,262.9 |                |  | $           | 957.9   |       |  | $ | 23,810.8 |  |  | $ | 113.1 |  
|                                                        |  |                   |          |         |  |                |          |                |  |             |         |       |  |   |          |  |  |   |       |  
|Current liabilities                                     |  | $                 | 245.8    |         |  | $              | 122.6    |                |  | $           |        |       |  | $ | 368.4    |  |  | $ | 0.4   |  
|Noncurrent liabilities                                  |  |                   |         |         |  |                | 2,784.3  |                |  |             | 1.5     |       |  |   | 2,785.8  |  |  |   | 135.2 |  
|Liabilities subject to compromise                       |  |                   | 8,520.3  |         |  |                |         |                |  |             | 1,656.9 |       |  |   | 10,177.2 |  |  |   |      |  
|Shareholders (deficiency) equity                       |  |                   | (5,176.1 | )       |  |                | 16,356.0 |                |  |             | (700.5  | )     |  |   | 10,479.4 |  |  |   | (22.5 | )
|                                                        |  |                   |          |         |  |                |          |                |  |             |         |       |  |   |          |  |  |   |       |  
|Total liabilities and
shareholders (deficiency)
equity |  | $                 | 3,590.0  |         |  | $              | 19,262.9 |                |  | $           | 957.9   |       |  | $ | 23,810.8 |  |  | $ | 113.1 |  
|                                                        |  |                   |          |         |  |                |          |                |  |             |         |       |  |   |          |  |  |   |       |  

[Additional columns below]

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

|                                                        |  |                   |          |                |  |             |          |              |  |     |           |              |  |   |          |  
|------------------------------------------------------- |  | ----------------- | -------- | -------------- |  | ----------- | -------- | ------------ |  | --- | --------- | ------------ |  | - | -------- | -
|                                                        |  | December 31, 2002
|                                                        |  |                  
|                                                        |  |                   |          |                |  | Entities    |          |              |  |     |           | Consolidated
|                                                        |  | All Other         |          | Not in         |  |             |          |              |  | NTL
|Balance Sheet                                           |  | Subsidiaries      |          | Reorganization |  | Adjustments |          | Incorporated
|                                                        |  |                   |          |                |  |             |          |             
|                                                        |  | (in millions)    
|Current assets                                          |  | $                 | 1,032.9  |                |  | $           | 1,035.4  |              |  | $   | (367.2    | )            |  | $ | 1,170.7  |  
|Investments in and loans to
affiliates, net             |  |                   |         |                |  |             | 8.4      |              |  |     | (23,001.2 | )            |  |   | 8.4      |  
|Fixed and noncurrent assets                             |  |                   | 11,555.0 |                |  |             | 11,657.2 |              |  |     | (102.0    | )            |  |   | 11,862.3 |  
|                                                        |  |                   |          |                |  |             |          |              |  |     |           |              |  |   |          |  
|Total assets                                            |  | $                 | 12,587.9 |                |  | $           | 12,701.0 |              |  | $   | (23,470.4 | )            |  | $ | 13,041.4 |  
|                                                        |  |                   |          |                |  |             |          |              |  |     |           |              |  |   |          |  
|Current liabilities                                     |  | $                 | 1,823.7  |                |  | $           | 1,824.1  |              |  | $   | 5,772.8   |              |  | $ | 7,965.3  |  
|Noncurrent liabilities                                  |  |                   | 12,804.7 |                |  |             | 12,939.9 |              |  |     | (15,631.3 | )            |  |   | 94.4     |  
|Liabilities subject to compromise                       |  |                   |         |                |  |             |         |              |  |     | (19.4     | )            |  |   | 10,157.8 |  
|Shareholders (deficiency) equity                       |  |                   | (2,040.5 | )              |  |             | (2,063.0 | )            |  |     | (13,592.5 | )            |  |   | (5,176.1 | )
|                                                        |  |                   |          |                |  |             |          |              |  |     |           |              |  |   |          |  
|Total liabilities and
shareholders (deficiency)
equity |  | $                 | 12,587.9 |                |  | $           | 12,701.0 |              |  | $   | (23,470.4 | )            |  | $ | 13,041.4 |  
|                                                        |  |                   |          |                |  |             |          |              |  |     |           |              |  |   |          |  



|                                                 |  |                   |          |         |  |                |   |                |  |             |         |       |  |   |          |   |  |   |       |  
|------------------------------------------------ |  | ----------------- | -------- | ------- |  | -------------- | - | -------------- |  | ----------- | ------- | ----- |  | - | -------- | - |  | - | ----- | -
|                                                 |  | December 31, 2001
|                                                 |  |                  
|                                                 |  |                   |          |         |  | Communications |   |                |  |             |         |       |  |   |          |   |  |  
|                                                 |  | NTL               |          | Cable   |  |                |   |                |  | Entities in |         | Other
|Balance Sheet                                    |  | Incorporated      |          | Funding |  | Diamond        |   | Reorganization |  | Guarantors 
|                                                 |  |                   |          |         |  |                |   |                |  |            
|                                                 |  | (in millions)    
|Current assets                                   |  | $                 | 90.0     |         |  | $              |  |                |  | $           | 0.4     |       |  | $ | 90.4     |   |  | $ | 1.9   |  
|Investments in and loans to
affiliates, net      |  |                   | 4,462.6  |         |  |                |  |                |  |             | 1,061.0 |       |  |   | 5,523.6  |   |  |   | 4.4   |  
|Fixed and noncurrent assets                      |  |                   | 305.4    |         |  |                |  |                |  |             | 18.2    |       |  |   | 323.6    |   |  |   | 98.3  |  
|                                                 |  |                   |          |         |  |                |   |                |  |             |         |       |  |   |          |   |  |   |       |  
|Total assets                                     |  | $                 | 4,858.0  |         |  | $              |  |                |  | $           | 1,079.6 |       |  | $ | 5,937.6  |   |  | $ | 104.6 |  
|                                                 |  |                   |          |         |  |                |   |                |  |             |         |       |  |   |          |   |  |   |       |  
|Current liabilities                              |  | $                 | 8,037.0  |         |  | $              |  |                |  | $           | 1,561.8 |       |  | $ | 9,598.8  |   |  | $ | 0.2   |  
|Noncurrent liabilities                           |  |                   |         |         |  |                |  |                |  |             |        |       |  |   |         |   |  |   | 124.2 |  
|Shareholders (deficiency)                       |  |                   | (3,179.0 | )       |  |                |   |                |  |             | (482.2  | )     |  |   | (3,661.2 | ) |  |   | (19.8 | )
|                                                 |  |                   |          |         |  |                |   |                |  |             |         |       |  |   |          |   |  |   |       |  
|Total liabilities and
shareholders (deficiency) |  | $                 | 4,858.0  |         |  | $              |  |                |  | $           | 1,079.6 |       |  | $ | 5,937.6  |   |  | $ | 104.6 |  
|                                                 |  |                   |          |         |  |                |   |                |  |             |         |       |  |   |          |   |  |   |       |  

[Additional columns below]

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

|                                                 |  |                   |          |                |  |             |          |              |  |     |          |              |  |   |          |  
|------------------------------------------------ |  | ----------------- | -------- | -------------- |  | ----------- | -------- | ------------ |  | --- | -------- | ------------ |  | - | -------- | -
|                                                 |  | December 31, 2001
|                                                 |  |                  
|                                                 |  |                   |          |                |  | Entities    |          |              |  |     |          | Consolidated
|                                                 |  | All Other         |          | Not in         |  |             |          |              |  | NTL
|Balance Sheet                                    |  | Subsidiaries      |          | Reorganization |  | Adjustments |          | Incorporated
|                                                 |  |                   |          |                |  |             |          |             
|                                                 |  | (in millions)    
|Current assets                                   |  | $                 | 924.0    |                |  | $           | 925.9    |              |  | $   | (3.3     | )            |  | $ | 1,013.0  |  
|Investments in and loans to
affiliates, net      |  |                   |         |                |  |             | 4.4      |              |  |     | (5,523.6 | )            |  |   | 4.4      |  
|Fixed and noncurrent assets                      |  |                   | 11,689.4 |                |  |             | 11,787.7 |              |  |     | (98.3    | )            |  |   | 12,013.0 |  
|                                                 |  |                   |          |                |  |             |          |              |  |     |          |              |  |   |          |  
|Total assets                                     |  | $                 | 12,613.4 |                |  | $           | 12,718.0 |              |  | $   | (5,625.2 | )            |  | $ | 13,030.4 |  
|                                                 |  |                   |          |                |  |             |          |              |  |     |          |              |  |   |          |  
|Current liabilities                              |  | $                 | 6,587.8  |                |  | $           | 6,588.0  |              |  | $   | (100.1   | )            |  | $ | 16,086.7 |  
|Noncurrent liabilities                           |  |                   | 6,036.5  |                |  |             | 6,160.7  |              |  |     | (6,038.0 | )            |  |   | 122.7    |  
|Shareholders (deficiency)                       |  |                   | (10.9    | )              |  |             | (30.7    | )            |  |     | 512.9    |              |  |   | (3,179.0 | )
|                                                 |  |                   |          |                |  |             |          |              |  |     |          |              |  |   |          |  
|Total liabilities and
shareholders (deficiency) |  | $                 | 12,613.4 |                |  | $           | 12,718.0 |              |  | $   | (5,625.2 | )            |  | $ | 13,030.4 |  
|                                                 |  |                   |          |                |  |             |          |              |  |     |          |              |  |   |          |  

F-45



---



##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

21.   Summarized Financial Information about NTL Incorporated (formerly NTL
Communications Corp.) (continued)



|                                                       |  |                              |       |         |  |                |        |                |  |             |       |       |  |   |        |   |  |   |      |  
|------------------------------------------------------ |  | ---------------------------- | ----- | ------- |  | -------------- | ------ | -------------- |  | ----------- | ----- | ----- |  | - | ------ | - |  | - | ---- | -
|                                                       |  | Year Ended December 31, 2002
|                                                       |  |                             
|                                                       |  |                              |       |         |  | Communications |        |                |  |             |       |       |  |   |        |   |  |  
|                                                       |  | NTL                          |       | Cable   |  |                |        |                |  | Entities in |       | Other
|Statement of Cash Flows                                |  | Incorporated                 |       | Funding |  | Diamond        |        | Reorganization |  | Guarantors 
|                                                       |  |                              |       |         |  |                |        |                |  |            
|                                                       |  | (in millions)               
|Net cash provided by
(used in) operating
activities    |  | $                            | 52.9  |         |  | $              | (33.7  | )              |  | $           | (36.6 | )     |  | $ | (17.4  | ) |  | $ | 6.3  |  
|Net cash (used in)
investing activities                |  |                              | (99.1 | )       |  |                | (162.8 | )              |  |             | 16.3  |       |  |   | (245.6 | ) |  |   | (6.2 | )
|Net cash provided by
financing activities              |  |                              | 3.9   |         |  |                | 216.4  |                |  |             | 20.1  |       |  |   | 240.4  |   |  |   |     |  
|Effect of exchange
rate changes on cash                |  |                              |      |         |  |                |       |                |  |             |      |       |  |   |       |   |  |   |     |  
|                                                       |  |                              |       |         |  |                |        |                |  |             |       |       |  |   |        |   |  |   |      |  
|(Decrease) increase in
cash and cash
equivalents       |  |                              | (42.3 | )       |  |                | 19.9   |                |  |             | (0.2  | )     |  |   | (22.6  | ) |  |   | 0.1  |  
|Cash and cash
equivalents at the
beginning of the year |  |                              | 78.5  |         |  |                |       |                |  |             | 0.4   |       |  |   | 78.9   |   |  |   | 0.1  |  
|                                                       |  |                              |       |         |  |                |        |                |  |             |       |       |  |   |        |   |  |   |      |  
|Cash and cash
equivalents at the end
of the year       |  | $                            | 36.2  |         |  | $              | 19.9   |                |  | $           | 0.2   |       |  | $ | 56.3   |   |  | $ | 0.2  |  
|                                                       |  |                              |       |         |  |                |        |                |  |             |       |       |  |   |        |   |  |   |      |  

[Additional columns below]

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

|                                                       |  |                              |        |                |  |             |        |              |  |     |       |              |  |   |        |  
|------------------------------------------------------ |  | ---------------------------- | ------ | -------------- |  | ----------- | ------ | ------------ |  | --- | ----- | ------------ |  | - | ------ | -
|                                                       |  | Year Ended December 31, 2002
|                                                       |  |                             
|                                                       |  |                              |        |                |  | Entities    |        |              |  |     |       | Consolidated
|                                                       |  | All Other                    |        | Not in         |  |             |        |              |  | NTL
|Statement of Cash Flows                                |  | Subsidiaries                 |        | Reorganization |  | Adjustments |        | Incorporated
|                                                       |  |                              |        |                |  |             |        |             
|                                                       |  | (in millions)               
|Net cash provided by
(used in) operating
activities    |  | $                            | 326.8  |                |  | $           | 333.1  |              |  | $   | (57.0 | )            |  | $ | 258.7  |  
|Net cash (used in)
investing activities                |  |                              | (669.4 | )              |  |             | (675.6 | )            |  |     | 77.0  |              |  |   | (844.2 | )
|Net cash provided by
financing activities              |  |                              | 580.2  |                |  |             | 580.2  |              |  |     | (20.0 | )            |  |   | 800.6  |  
|Effect of exchange
rate changes on cash                |  |                              | 35.8   |                |  |             | 35.8   |              |  |     |      |              |  |   | 35.8   |  
|                                                       |  |                              |        |                |  |             |        |              |  |     |       |              |  |   |        |  
|(Decrease) increase in
cash and cash
equivalents       |  |                              | 273.4  |                |  |             | 273.5  |              |  |     |      |              |  |   | 250.9  |  
|Cash and cash
equivalents at the
beginning of the year |  |                              | 172.1  |                |  |             | 172.2  |              |  |     |      |              |  |   | 251.1  |  
|                                                       |  |                              |        |                |  |             |        |              |  |     |       |              |  |   |        |  
|Cash and cash
equivalents at the end
of the year       |  | $                            | 445.5  |                |  | $           | 445.7  |              |  | $   |      |              |  | $ | 502.0  |  
|                                                       |  |                              |        |                |  |             |        |              |  |     |       |              |  |   |        |  



|                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |      |  
|------------------------------------------------------ |  | ---------------------------- | -------- | ------- |  | -------------- | - | -------------- |  | ----------- | ------ | ----- |  | - | -------- | - |  | - | ---- | -
|                                                       |  | Year Ended December 31, 2001
|                                                       |  |                             
|                                                       |  |                              |          |         |  | Communications |   |                |  |             |        |       |  |   |          |   |  |  
|                                                       |  | NTL                          |          | Cable   |  |                |   |                |  | Entities in |        | Other
|Statement of Cash Flows                                |  | Incorporated                 |          | Funding |  | Diamond        |   | Reorganization |  | Guarantors 
|                                                       |  |                              |          |         |  |                |   |                |  |            
|                                                       |  | (in millions)               
|Net cash (used in)
provided by operating
activities    |  | $                            | (406.7   | )       |  | $              |  |                |  | $           | (55.4  | )     |  | $ | (462.1   | ) |  | $ | 3.2  |  
|Net cash (used in)
investing activities                |  |                              | (1,099.1 | )       |  |                |  |                |  |             | (201.3 | )     |  |   | (1,300.4 | ) |  |   | (4.2 | )
|Net cash provided by
financing activities              |  |                              | 1,416.1  |         |  |                |  |                |  |             | 256.6  |       |  |   | 1,672.7  |   |  |   |     |  
|Effect of exchange
rate changes on cash                |  |                              |         |         |  |                |  |                |  |             |       |       |  |   |         |   |  |   |     |  
|                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |      |  
|(Decrease) in cash and
cash equivalents                |  |                              | (89.7    | )       |  |                |  |                |  |             | (0.1   | )     |  |   | (89.8    | ) |  |   | (1.0 | )
|Cash and cash
equivalents at the
beginning of the year |  |                              | 168.2    |         |  |                |  |                |  |             | 0.5    |       |  |   | 168.7    |   |  |   | 1.1  |  
|                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |      |  
|Cash and cash
equivalents at the end
of the year       |  | $                            | 78.5     |         |  | $              |  |                |  | $           | 0.4    |       |  | $ | 78.9     |   |  | $ | 0.1  |  
|                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |      |  

[Additional columns below]

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

|                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|------------------------------------------------------ |  | ---------------------------- | -------- | -------------- |  | ----------- | -------- | ------------ |  | --- | ------- | ------------ |  | - | -------- | -
|                                                       |  | Year Ended December 31, 2001
|                                                       |  |                             
|                                                       |  |                              |          |                |  | Entities    |          |              |  |     |         | Consolidated
|                                                       |  | All Other                    |          | Not in         |  |             |          |              |  | NTL
|Statement of Cash Flows                                |  | Subsidiaries                 |          | Reorganization |  | Adjustments |          | Incorporated
|                                                       |  |                              |          |                |  |             |          |             
|                                                       |  | (in millions)               
|Net cash (used in)
provided by operating
activities    |  | $                            | 786.8    |                |  | $           | 790.0    |              |  | $   | (886.5  | )            |  | $ | (558.6   | )
|Net cash (used in)
investing activities                |  |                              | (1,695.3 | )              |  |             | (1,699.5 | )            |  |     | 1,141.8 |              |  |   | (1,858.1 | )
|Net cash provided by
financing activities              |  |                              | 834.7    |                |  |             | 834.7    |              |  |     | (255.3  | )            |  |   | 2,252.1  |  
|Effect of exchange
rate changes on cash                |  |                              | (7.8     | )              |  |             | (7.8     | )            |  |     |        |              |  |   | (7.8     | )
|                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|(Decrease) in cash and
cash equivalents                |  |                              | (81.6    | )              |  |             | (82.6    | )            |  |     |        |              |  |   | (172.4   | )
|Cash and cash
equivalents at the
beginning of the year |  |                              | 253.7    |                |  |             | 254.8    |              |  |     |        |              |  |   | 423.5    |  
|                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Cash and cash
equivalents at the end
of the year       |  | $                            | 172.1    |                |  | $           | 172.2    |              |  | $   |        |              |  | $ | 251.1    |  
|                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  

F-46



---



##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

21.   Summarized Financial Information about NTL Incorporated (formerly NTL
Communications Corp.) (continued)



|                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |      |  
|------------------------------------------------------ |  | ---------------------------- | -------- | ------- |  | -------------- | - | -------------- |  | ----------- | ------ | ----- |  | - | -------- | - |  | - | ---- | -
|                                                       |  | Year Ended December 31, 2000
|                                                       |  |                             
|                                                       |  |                              |          |         |  | Communications |   |                |  |             |        |       |  |   |          |   |  |  
|                                                       |  | NTL                          |          | Cable   |  |                |   |                |  | Entities in |        | Other
|Statement of Cash Flows                                |  | Incorporated                 |          | Funding |  | Diamond        |   | Reorganization |  | Guarantors 
|                                                       |  |                              |          |         |  |                |   |                |  |            
|                                                       |  | (in millions)               
|Net cash (used in)
provided by operating
activities    |  | $                            | (301.7   | )       |  | $              |  |                |  | $           | (88.1  | )     |  | $ | (389.8   | ) |  | $ | 3.8  |  
|Net cash (used in)
investing activities                |  |                              | (5,940.8 | )       |  |                |  |                |  |             | (103.1 | )     |  |   | (6,043.9 | ) |  |   | (3.2 | )
|Net cash provided by
financing activities              |  |                              | 5,707.3  |         |  |                |  |                |  |             | 7.0    |       |  |   | 5,714.3  |   |  |   |     |  
|Effect of exchange
rate changes on cash                |  |                              |         |         |  |                |  |                |  |             | (12.2  | )     |  |   | (12.2    | ) |  |   |     |  
|                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |      |  
|(Decrease) increase in
cash and cash
equivalents       |  |                              | (535.2   | )       |  |                |  |                |  |             | (196.4 | )     |  |   | (731.6   | ) |  |   | 0.6  |  
|Cash and cash
equivalents at the
beginning of the year |  |                              | 703.4    |         |  |                |  |                |  |             | 196.9  |       |  |   | 900.3    |   |  |   | 0.5  |  
|                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |      |  
|Cash and cash
equivalents at the end
of the year       |  | $                            | 168.2    |         |  | $              |  |                |  | $           | 0.5    |       |  | $ | 168.7    |   |  | $ | 1.1  |  
|                                                       |  |                              |          |         |  |                |   |                |  |             |        |       |  |   |          |   |  |   |      |  

[Additional columns below]

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

|                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|------------------------------------------------------ |  | ---------------------------- | -------- | -------------- |  | ----------- | -------- | ------------ |  | --- | ------- | ------------ |  | - | -------- | -
|                                                       |  | Year Ended December 31, 2000
|                                                       |  |                             
|                                                       |  |                              |          |                |  | Entities    |          |              |  |     |         | Consolidated
|                                                       |  | All Other                    |          | Not in         |  |             |          |              |  | NTL
|Statement of Cash Flows                                |  | Subsidiaries                 |          | Reorganization |  | Adjustments |          | Incorporated
|                                                       |  |                              |          |                |  |             |          |             
|                                                       |  | (in millions)               
|Net cash (used in)
provided by operating
activities    |  | $                            | 1,006.6  |                |  | $           | 1,010.4  |              |  | $   | (789.6  | )            |  | $ | (169.0   | )
|Net cash (used in)
investing activities                |  |                              | (5,191.3 | )              |  |             | (5,194.5 | )            |  |     | 1,731.7 |              |  |   | (9,506.7 | )
|Net cash provided by
financing activities              |  |                              | 4,278.4  |                |  |             | 4,278.4  |              |  |     | (942.1  | )            |  |   | 9,050.6  |  
|Effect of exchange
rate changes on cash                |  |                              | (13.4    | )              |  |             | (13.4    | )            |  |     |        |              |  |   | (25.6    | )
|                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|(Decrease) increase in
cash and cash
equivalents       |  |                              | 80.3     |                |  |             | 80.9     |              |  |     |        |              |  |   | (650.7   | )
|Cash and cash
equivalents at the
beginning of the year |  |                              | 173.4    |                |  |             | 173.9    |              |  |     |        |              |  |   | 1,074.2  |  
|                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  
|Cash and cash
equivalents at the end
of the year       |  | $                            | 253.7    |                |  | $           | 254.8    |              |  | $   |        |              |  | $ | 423.5    |  
|                                                       |  |                              |          |                |  |             |          |              |  |     |         |              |  |   |          |  

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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

22.   Industry Segments

The Company has four reportable segments: Broadcast Services, Consumer
Services, Business Services and Shared Services. The Broadcast Services segment
operates in the United Kingdom and includes digital and analog television and
radio broadcasting, rental of antenna space on the Companys owned and leased
towers and sites and associated services, and satellite and media services.
Consumer Services include telephony, cable television, Internet access and
interactive services in regional franchise areas in the United Kingdom and
Ireland. The Business Services segment operates in the United Kingdom
and includes telephony, national and international wholesale carrier
telecommunications, and radio communications services to the emergency services
community. Shared Services principally include network and information
technology management, finance, human resources and facilities management.
Shared Services also includes assets and related depreciation and amortization
that are not allocated to another segment.

The accounting policies of the segments are the same as those described in the
Significant Accounting Policies note. The Companys management evaluates
segment performance based on various financial and non-financial measurements.
The Companys primary measure of profit or loss is Operating EBITDA. The
results of operations data utilized in financial measurements are revenues and
Operating EBITDA, which is earnings before interest, taxes, depreciation,
amortization, asset impairments, non-cash compensation, other charges,
corporate expenses, share of (losses) from equity investments, other (losses),
foreign currency transaction (losses) gains and recapitalization items, net.
Certain selling, general and administrative expenses are allocated to segments
based on revenues. Management does not allocate costs of shared services
departments and jointly used assets for purposes of measuring segment
performance. The reportable segments are strategic business units that are
managed separately and offer different services.

The Companys primary measure of profit or loss for each reportable segment is
Operating EBITDA as defined above. The Company considers Operating 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. Operating EBITDA excludes the impact of
costs and expenses that do not directly effect cash flows such as depreciation,
amortization, asset impairments, non-cash compensation 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
Operating EBITDA rather than allocate these costs and expenses to multiple
reportable segments. Other charges, corporate expenses, and foreign currency
transactions are not directly related to a single segment. Operating 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 accounting principles.

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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

22.   Industry Segments (continued)

|                                   |  |               |       |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|---------------------------------- |  | ------------- | ----- | -------- |  | -------- | -------- | ------ |  | ----- | ------- |  |  | - | ------- | - |  | - | -------- | 
|                                   |  | Broadcast     |       | Consumer |  | Business |          | Shared |  | Total
|                                   |  |               |       |          |  |          |          |        |  |      
|                                   |  | (in millions)
|Year ended December 31, 2002       |  |               |       |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|Revenues                           |  | $             | 310.9 |          |  | $        | 2,074.1  |        |  | $     | 880.1   |  |  | $ |        |   |  | $ | 3,265.1  | 
|Depreciation and amortization      |  |               | 73.0  |          |  |          | 1,025.3  |        |  |       | 416.6   |  |  |   | 26.7    |   |  |   | 1,541.6  | 
|Operating EBITDA (1)               |  |               | 165.5 |          |  |          | 839.3    |        |  |       | 332.1   |  |  |   | (344.1  | ) |  |   | 992.8    | 
|Expenditures for long-lived assets |  |               | 64.2  |          |  |          | 485.3    |        |  |       | 141.4   |  |  |   | 185.0   |   |  |   | 875.9    | 
|Total assets (2)                   |  |               | 527.3 |          |  |          | 7,993.4  |        |  |       | 3,367.3 |  |  |   | 1,153.4 |   |  |   | 13,041.4 | 
|Year ended December 31, 2001       |  |               |       |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|Revenues                           |  | $             | 283.6 |          |  | $        | 2,069.2  |        |  | $     | 836.8   |  |  | $ |        |   |  | $ | 3,189.6  | 
|Depreciation and amortization      |  |               | 76.0  |          |  |          | 1,840.5  |        |  |       | 587.9   |  |  |   | 35.9    |   |  |   | 2,540.3  | 
|Operating EBITDA (1)               |  |               | 143.9 |          |  |          | 738.7    |        |  |       | 335.2   |  |  |   | (565.7  | ) |  |   | 652.1    | 
|Expenditures for long-lived assets |  |               | 131.8 |          |  |          | 1,151.3  |        |  |       | 321.5   |  |  |   | 43.8    |   |  |   | 1,648.4  | 
|Total assets (3)                   |  |               | 792.5 |          |  |          | 8,012.3  |        |  |       | 3,287.0 |  |  |   | 938.6   |   |  |   | 13,030.4 | 
|Year ended December 31, 2000       |  |               |       |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|Revenues                           |  | $             | 263.8 |          |  | $        | 1,518.2  |        |  | $     | 702.2   |  |  | $ |        |   |  | $ | 2,484.2  | 
|Depreciation and amortization      |  |               | 53.2  |          |  |          | 1,443.6  |        |  |       | 184.2   |  |  |   | 19.7    |   |  |   | 1,700.7  | 
|Operating EBITDA (1)               |  |               | 130.3 |          |  |          | 410.8    |        |  |       | 232.4   |  |  |   | (481.6  | ) |  |   | 291.9    | 
|Expenditures for long-lived assets |  |               | 70.0  |          |  |          | 1,088.5  |        |  |       | 724.6   |  |  |   | 276.1   |   |  |   | 2,159.2  | 
|Total assets (4)                   |  |               | 804.8 |          |  |          | 17,910.7 |        |  |       | 3,746.0 |  |  |   | 685.0   |   |  |   | 23,146.5 | 



|(1) |  | Represents earnings before interest, taxes, depreciation,
amortization, asset impairments, non-cash compensation, other
charges, corporate expenses, share of (losses) from equity
investments, other (losses), foreign currency transaction
(losses) gains and recapitalization items, net.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | At December 31, 2002, shared assets included $458.2 million of
cash, cash equivalents and marketable securities and $695.2
million of other assets.                                                                                                                                         
|   
|(3) |  | At December 31, 2001, shared assets included $189.8 million of
cash, cash equivalents and $748.8 million of other assets.                                                                                                                                                                   
|   
|(4) |  | At December 31, 2000, shared assets included $355.0 million of
cash, cash equivalents and marketable securities and $330.0
million of other assets.                                                                                                                                         

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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession) and Subsidiaries

Notes to Consolidated Financial Statements (continued)

22.   Industry Segments (continued)

The reconciliation of segment combined Operating EBITDA to (loss) before income
taxes is as follows:

|                                  |                                              |   |                         |         |      |   |           |         |   |   |          |       |  
|--------------------------------- | -------------------------------------------- | - | ----------------------- | ------- | ---- | - | --------- | ------- | - | - | -------- | ----- | -
|                                  |                                              |   | Year Ended December 31,
|                                  |                                              |   |                        
|                                  |                                              |   | 2002                    |         | 2001 |   | 2000     
|                                  |                                              |   |                         |         |      |   |          
|                                  |                                              |   | (in millions)          
|Segment combined Operating EBITDA |                                              | $ | 992.8                   |         |      | $ | 652.1     |         |   | $ | 291.9    |      
|(Add) Deduct:                     |                                              |   |                         |         |      |   |           |         |   |   |          |      
|                                  | Asset impairments                            |   |                         | 445.1   |      |   |           | 8,160.6 |   |   |          |      |  
|                                  | Non-cash compensation                        |   |                         |        |      |   |           | 30.6    |   |   |          |      |  
|                                  | Other charges                                |   |                         | 389.2   |      |   |           | 297.9   |   |   |          | 92.7  |  
|                                  | Corporate expenses                           |   |                         | 18.7    |      |   |           | 24.3    |   |   |          | 23.7  |  
|                                  | Depreciation                                 |   |                         | 1,477.9 |      |   |           | 1,361.4 |   |   |          | 874.4 |  
|                                  | Amortization                                 |   |                         | 63.7    |      |   |           | 1,178.9 |   |   |          | 826.3 |  
|                                  | Interest income and other, net               |   |                         | (21.0   | )    |   |           | (28.8   | ) |   |          | (25.8 | )
|                                  | Interest income  NTL Europe, Inc.           |   |                         | (8.8    | )    |   |           | (5.8    | ) |   |          |      |  
|                                  | Interest expense                             |   |                         | 762.5   |      |   |           | 1,240.8 |   |   |          | 886.3 |  
|                                  | Interest expense  NTL Europe, Inc.          |   |                         | 17.7    |      |   |           |        |   |   |          |      |  
|                                  | Shares of losses from equity investments     |   |                         | 3.4     |      |   |           | 23.2    |   |   |          | 24.2  |  
|                                  | Other losses                                 |   |                         |        |      |   |           | 88.5    |   |   |          |      |  
|                                  | Foreign currency transactions losses (gains) |   |                         | 94.1    |      |   |           | (0.6    | ) |   |          | 58.1  |  
|                                  | Recapitalization items, net                  |   |                         | 151.8   |      |   |           |        |   |   |          |      |  
|                                  |                                              |   |                         |         |      |   |           |         |   |   |          |      
|                                  |                                              |   | 3,394.3                 |         |      |   | 12,371.0  |         |   |   | 2,759.9  |      
|                                  |                                              |   |                         |         |      |   |           |         |   |   |          |      
|(Loss) before income taxes        |                                              | $ | (2,401.5                | )       |      | $ | (11,718.9 | )       |   | $ | (2,468.0 | )    
|                                  |                                              |   |                         |         |      |   |           |         |   |   |          |      

Geographic Information

|                  |  |               |       |         |  |         |          |       |  |   |       |  |  |   |          | 
|----------------- |  | ------------- | ----- | ------- |  | ------- | -------- | ----- |  | - | ----- |  |  | - | -------- | 
|                  |  | United        |       | United  |  |         |          |       |  |   |       | 
|                  |  | States        |       | Kingdom |  | Ireland |          | Total
|                  |  | (in millions)
|2002              |  |               |       |         |  |         |          |       |  |   |       |  |  |   |          | 
|Revenues          |  | $             |      |         |  | $       | 3,175.1  |       |  | $ | 90.0  |  |  | $ | 3,265.1  | 
|Long-lived assets |  |               | 163.6 |         |  |         | 11,569.2 |       |  |   | 137.9 |  |  |   | 11,870.7 | 
|2001              |  |               |       |         |  |         |          |       |  |   |       |  |  |   |          | 
|Revenues          |  | $             |      |         |  | $       | 3,127.3  |       |  | $ | 62.3  |  |  | $ | 3,189.6  | 
|Long-lived assets |  |               | 151.3 |         |  |         | 11,703.5 |       |  |   | 162.6 |  |  |   | 12,017.4 | 
|2000              |  |               |       |         |  |         |          |       |  |   |       |  |  |   |          | 
|Revenues          |  | $             |      |         |  | $       | 2,423.0  |       |  | $ | 61.2  |  |  | $ | 2,484.2  | 
|Long-lived assets |  |               | 1.6   |         |  |         | 21,658.5 |       |  |   | 155.4 |  |  |   | 21,815.5 | 

F-50



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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant
Condensed Balance Sheets
(in millions)

|                                                                                                  |                                        |   |              |           |      |   |          |           |  
|------------------------------------------------------------------------------------------------- | -------------------------------------- | - | ------------ | --------- | ---- | - | -------- | --------- | -
|                                                                                                  |                                        |   | December 31,
|                                                                                                  |                                        |   |             
|                                                                                                  |                                        |   | 2002         |           | 2001
|                                                                                                  |                                        |   |              |           |     
|Assets                                                                                            |                                        |   |              |           |      |   |          |          
|Current assets:                                                                                   |                                        |   |              |           |      |   |          |          
|                                                                                                  | Cash and cash equivalents              |   | $            | 36.2      |      |   | $        | 78.5      |  
|                                                                                                  | Marketable securities                  |   |              | 5.2       |      |   |          |          |  
|                                                                                                  | Other                                  |   |              | 6.0       |      |   |          | 11.5      |  
|                                                                                                  |                                        |   |              |           |      |   |          |           |  
|Total current assets                                                                              |                                        |   | 47.4         |           |      |   | 90.0     |          
|Office improvements and equipment, net of accumulated
depreciation of $2.2 (2002) and $1.7 (2001) |                                        |   | 0.8          |           |      |   | 1.3      |          
|Investments in and loans to affiliates, net                                                       |                                        |   | 3,413.9      |           |      |   | 4,462.6  |          
|Deferred financing costs, net of accumulated amortization of
$102.0 (2002) and $75.9 (2001)       |                                        |   | 127.9        |           |      |   | 154.1    |          
|Note receivable from NTL Europe, Inc.                                                             |                                        |   |             |           |      |   | 150.0    |          
|                                                                                                  |                                        |   |              |           |      |   |          |           |  
|Total assets                                                                                      |                                        | $ | 3,590.0      |           |      | $ | 4,858.0  |          
|                                                                                                  |                                        |   |              |           |      |   |          |           |  
|Liabilities and shareholders (deficiency)                                                        |                                        |   |              |           |      |   |          |          
|Liabilities not subject to compromise                                                             |                                        |   |              |           |      |   |          |          
|Current liabilities                                                                               |                                        | $ | 245.8        |           |      | $ | 8,037.0  |          
|Long-term debt                                                                                    |                                        |   |             |           |      |   |         |          
|Liabilities subject to compromise                                                                 |                                        |   | 8,520.3      |           |      |   |         |          
|Shareholders (deficiency):                                                                       |                                        |   |              |           |      |   |          |          
|                                                                                                  | Common stock                           |   |              |          |      |   |          |          |  
|                                                                                                  | Additional paid-in capital             |   |              | 14,045.5  |      |   |          | 13,917.7  |  
|                                                                                                  | Accumulated other comprehensive (loss) |   |              | (653.6    | )    |   |          | (904.5    | )
|                                                                                                  | (Deficit)                              |   |              | (18,568.0 | )    |   |          | (16,192.2 | )
|                                                                                                  |                                        |   |              |           |      |   |          |           |  
|                                                                                                  |                                        |   | (5,176.1     | )         |      |   | (3,179.0 | )        
|                                                                                                  |                                        |   |              |           |      |   |          |           |  
|Total liabilities and shareholders (deficiency)                                                  |                                        | $ | 3,590.0      |           |      | $ | 4,858.0  |          
|                                                                                                  |                                        |   |              |           |      |   |          |           |  

See accompanying notes.

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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession)
Condensed Statements of Operations
(in millions)

|                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|------------------------------------------------------------------------------------------- |  | ----------------------- | -------- | ---- |  | ---- | --------- | - |  | - | -------- | -
|                                                                                            |  | Year Ended December 31,
|                                                                                            |  |                        
|                                                                                            |  | 2002                    |          | 2001 |  | 2000
|                                                                                            |  |                         |          |      |  |     
|Cost and expenses                                                                           |  |                         |          |      |  |      |           |   |  |   |          |  
|Corporate expenses                                                                          |  | $                       | 37.9     |      |  | $    | 24.3      |   |  | $ | 23.7     |  
|General and administrative expenses                                                         |  |                         |         |      |  |      | 3.2       |   |  |   | 5.9      |  
|Non-cash compensation                                                                       |  |                         |         |      |  |      | 30.6      |   |  |   |         |  
|Other charges                                                                               |  |                         | 154.8    |      |  |      |          |   |  |   |         |  
|Depreciation                                                                                |  |                         | 0.5      |      |  |      | 0.5       |   |  |   | 0.5      |  
|Amortization                                                                                |  |                         | 26.2     |      |  |      | 24.5      |   |  |   | 19.2     |  
|                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|Operating (loss)                                                                            |  |                         | (219.4   | )    |  |      | (83.1     | ) |  |   | (49.3    | )
|Other income (expense)                                                                      |  |                         |          |      |  |      |           |   |  |   |          |  
|Interest income and other, net                                                              |  |                         | 0.3      |      |  |      | 13.6      |   |  |   | 14.5     |  
|Interest income  NTL Europe, Inc.                                                          |  |                         | 8.0      |      |  |      | 5.8       |   |  |   |         |  
|Interest expense (contractual interest of $831.3 (2002))                                    |  |                         | (280.3   | )    |  |      | (762.8    | ) |  |   | (599.4   | )
|Foreign currency transaction (losses) gains                                                 |  |                         | (282.0   | )    |  |      | 58.2      |   |  |   | 67.8     |  
|                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) before recapitalization items, income taxes and
equity in net (loss) of subsidiaries |  |                         | (773.4   | )    |  |      | (768.3    | ) |  |   | (566.4   | )
|Recapitalization items, net                                                                 |  |                         | (86.7    | )    |  |      |          |   |  |   |         |  
|                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) before income taxes and equity in net (loss) of
subsidiaries                         |  |                         | (860.1   | )    |  |      | (768.3    | ) |  |   | (566.4   | )
|Income tax benefit (expense)                                                                |  |                         | 1.2      |      |  |      | (1.2      | ) |  |   |         |  
|                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) before equity in net (loss) of subsidiaries                                          |  |                         | (858.9   | )    |  |      | (769.5    | ) |  |   | (566.4   | )
|Equity in net (loss) of subsidiaries                                                        |  |                         | (1,516.9 | )    |  |      | (11,067.5 | ) |  |   | (1,821.7 | )
|                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|Net (loss)                                                                                  |  | $                       | (2,375.8 | )    |  | $    | (11,837.0 | ) |  | $ | (2,388.1 | )
|                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  

See accompanying notes.

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##### Table of Contents



NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession)
Condensed Statements of Cash Flows
(in millions)

|                                                                 |  |                         |       |      |  |      |          |   |  |   |          |  
|---------------------------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | -------- | - |  | - | -------- | -
|                                                                 |  | Year Ended December 31,
|                                                                 |  |                        
|                                                                 |  | 2002                    |       | 2001 |  | 2000
|                                                                 |  |                         |       |      |  |     
|Net cash provided by (used in) operating activities              |  | $                       | 52.9  |      |  | $    | (406.7   | ) |  | $ | (301.7   | )
|Investing activities                                             |  |                         |       |      |  |      |          |   |  |   |          |  
|Purchase of office improvements and equipment                    |  |                         |      |      |  |      | (0.1     | ) |  |   | (0.5     | )
|Purchase of marketable securities                                |  |                         | (10.8 | )    |  |      | (9.9     | ) |  |   |         |  
|Proceeds from sales of marketable securities                     |  |                         | 5.6   |      |  |      | 10.0     |   |  |   | 5.0      |  
|Investments in and loans to affiliates                           |  |                         | (93.9 | )    |  |      | (949.1   | ) |  |   | (5,944.2 | )
|Increase in other assets                                         |  |                         |      |      |  |      |         |   |  |   | (1.1     | )
|Loan to NTL Incorporated                                         |  |                         |      |      |  |      | (150.0   | ) |  |   |         |  
|                                                                 |  |                         |       |      |  |      |          |   |  |   |          |  
|Net cash (used in) investing activities                          |  |                         | (99.1 | )    |  |      | (1,099.1 | ) |  |   | (5,940.8 | )
|Financing activities                                             |  |                         |       |      |  |      |          |   |  |   |          |  
|Distribution to NTL (Delaware), Inc.                             |  |                         |      |      |  |      | (10.6    | ) |  |   |         |  
|Contributions from NTL (Delaware), Inc                           |  |                         | 3.9   |      |  |      | 40.8     |   |  |   | 5,227.2  |  
|Proceeds from borrowings, net of financing costs                 |  |                         |      |      |  |      | 1,385.9  |   |  |   | 476.3    |  
|Principal payments                                               |  |                         |      |      |  |      |         |   |  |   | (73.7    | )
|Cash released from escrow for debt repayment                     |  |                         |      |      |  |      |         |   |  |   | 77.5     |  
|                                                                 |  |                         |       |      |  |      |          |   |  |   |          |  
|Net cash provided by financing activities                        |  |                         | 3.9   |      |  |      | 1,416.1  |   |  |   | 5,707.3  |  
|                                                                 |  |                         |       |      |  |      |          |   |  |   |          |  
|(Decrease) in cash and cash equivalents                          |  |                         | (42.3 | )    |  |      | (89.7    | ) |  |   | (535.2   | )
|Cash and cash equivalents at beginning of year                   |  |                         | 78.5  |      |  |      | 168.2    |   |  |   | 703.4    |  
|                                                                 |  |                         |       |      |  |      |          |   |  |   |          |  
|Cash and cash equivalents at end of year                         |  | $                       | 36.2  |      |  | $    | 78.5     |   |  | $ | 168.2    |  
|                                                                 |  |                         |       |      |  |      |          |   |  |   |          |  
|Supplemental disclosure of cash flow information                 |  |                         |       |      |  |      |          |   |  |   |          |  
|Cash paid for interest                                           |  | $                       | 96.4  |      |  | $    | 424.3    |   |  | $ | 240.2    |  
|Income taxes paid                                                |  |                         |      |      |  |      |         |   |  |   | 0.4      |  
|Supplemental schedule of non-cash financing activities           |  |                         |       |      |  |      |          |   |  |   |          |  
|Conversion of notes, net of unamortized deferred financing costs |  | $                       |      |      |  | $    | 109.5    |   |  | $ |         |  
|Contribution from NTL (Delaware), Inc                            |  |                         | 123.9 |      |  |      | 110.2    |   |  |   |         |  

See accompanying notes.

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##### Table of Contents



NTL Incorporated (formerly NTL Communication Corp.) (Debtor-in-Possession)
Notes to Condensed Financial Statements

1.  Corporate Restructuring

On May 8, 2002, NTL Incorporated (then known as NTL Communications Corp.), (the
Company) NTL Europe, Inc. (then known as NTL Incorporated) and certain of the
Companys and NTL Europe, Inc.s subsidiaries filed a pre-arranged joint
reorganization plan (the Plan) under Chapter 11 of the US Bankruptcy Code.
The Companys operating subsidiaries and those of NTL Europe, Inc. were not
included in the Chapter 11 filing. The Plan became effective on January 10,
2003, at which time the Company emerged from Chapter 11 reorganization.

Pursuant to the Plan, the entity formerly known as NTL Incorporated and its
subsidiaries and affiliates were split into two separate groups, and the
Company and NTL Europe, Inc. each emerged as independent public companies. The
entity formerly known as NTL Communications Corp. was renamed NTL
Incorporated and became the holding company for the former NTL groups
principal UK and Ireland assets. Prior to consummation of the Plan, the
Company was a wholly-owned subsidiary of the entity then known as NTL
Incorporated, which, pursuant to the Plan, was renamed NTL Europe, Inc. and
which became the holding company for the former NTL groups continental
European and certain other assets. Pursuant to the Plan, all of the
outstanding securities of the Companys former ultimate parent company (NTL
Europe) and certain of its subsidiaries, including the Company, were cancelled,
and the Company issued shares of its common stock and Series A warrants and NTL
Europe, Inc. issued shares of its common stock and preferred stock to various
former creditors and stockholders of the Companys former ultimate parent
company and its subsidiaries, including the Company. The precise mix of new
securities received by holders of each particular type of security of the
Companys former ultimate parent company and its subsidiaries was set forth in
the Plan. The outstanding notes of Diamond Holding Limited and NTL (Triangle)
LLC were not canceled and remain outstanding.

2.  Basis of Presentation

In the Companys condensed financial statements, the Companys investment in
subsidiaries is stated at cost plus equity in the undistributed earnings of the
subsidiaries. The Companys share of net loss of its subsidiaries is included
in net loss using the equity method of accounting. The condensed financial
statements should be read in conjunction with the Companys consolidated
financial statements.

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##### Table of Contents



NTL Incorporated (formerly NTL Communication Corp.) (Debtor-in-Possession)
Notes to Condensed Financial Statements

3.   Liabilities Subject to Compromise

Liabilities subject to compromise consist of the following:

|                                |                                                         |   |               |         | 
|------------------------------- | ------------------------------------------------------- | - | ------------- | ------- | 
|                                |                                                         |   | December 31, 
|                                |                                                         |   | 2002         
|                                |                                                         |   |              
|                                |                                                         |   | (in millions)
|Accounts payable                |                                                         | $ | 0.6           |        
|Interest payable                |                                                         |   | 243.2         |        
|Payable to NTL (Delaware), Inc. |                                                         |   | 25.2          |        
|Accrued expenses                |                                                         |   | 1.0           |        
|Long-term debt                  |                                                         |   |               |        
|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 |   |               | 200.8   | 
|                                | 10 3/4% Senior Deferred Coupon Sterling Notes           |   |               | 439.2   | 
|                                | 9 3/4% Senior Deferred Coupon Notes                     |   |               | 1,193.3 | 
|                                | 9 3/4% Senior Deferred Coupon Sterling Notes            |   |               | 441.6   | 
|                                | 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                                |   |               | 262.1   | 
|                                | 9 7/8% Senior Euro Notes                                |   |               | 367.0   | 
|                                | 11 1/2% Senior Deferred Coupon Euro Notes               |   |               | 166.1   | 
|                                | 11 7/8% Senior Notes, less unamortized discount         |   |               | 491.7   | 
|                                | 12 3/8% Senior Euro Notes, plus unamortized premium     |   |               | 315.3   | 
|                                | 6 3/4% Convertible Senior Notes                         |   |               | 1,150.0 | 
|                                |                                                         |   |               |        
|Total                           |                                                         | $ | 8,520.3       |        
|                                |                                                         |   |               |        

Upon emergence from Chapter 11 reorganization and in accordance with the Plan,
all of the outstanding public notes of the Company were canceled.

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##### Table of Contents



NTL Incorporated (formerly NTL Communication Corp.) (Debtor-in-Possession)
Notes to Condensed Financial Statements

4.   Long-Term Debt

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

|                                                         |  |  |    |   |  |               |   |      |  |   |         | 
|-------------------------------------------------------- |  |  | -- | - |  | ------------- | - | ---- |  | - | ------- | 
|                                                         |  |  |    |   |  | December 31, 
|                                                         |  |  |    |   |  |              
|                                                         |  |  |    |   |  | 2002          |   | 2001 | 
|                                                         |  |  |    |   |  |               |   |      |  |  
|                                                         |  |  |    |   |  | (in millions) |  
|12- 3/4% Senior Deferred Coupon Notes                    |  |  | (a | ) |  | $             |  |      |  | $ | 277.8   | 
|11- 1/2% Senior Deferred Coupon Notes                    |  |  | (b | ) |  |               |  |      |  |   | 1,050.0 | 
|10% Senior Notes                                         |  |  | (c | ) |  |               |  |      |  |   | 400.0   | 
|9- 1/2% Senior Sterling Notes, less unamortized discount |  |  | (d | ) |  |               |  |      |  |   | 181.4   | 
|10- 3/4% Senior Deferred Coupon Sterling Notes           |  |  | (e | ) |  |               |  |      |  |   | 382.3   | 
|9- 3/4% Senior Deferred Coupon Notes                     |  |  | (f | ) |  |               |  |      |  |   | 1,153.8 | 
|9- 3/4% Senior Deferred Coupon Sterling Notes            |  |  | (g | ) |  |               |  |      |  |   | 385.9   | 
|11- 1/2% Senior Notes                                    |  |  | (h | ) |  |               |  |      |  |   | 625.0   | 
|12- 3/8% Senior Deferred Coupon Notes                    |  |  | (i | ) |  |               |  |      |  |   | 364.9   | 
|7% Convertible Subordinated Notes                        |  |  | (j | ) |  |               |  |      |  |   | 489.8   | 
|9- 1/4% Senior Euro Notes                                |  |  | (k | ) |  |               |  |      |  |   | 222.5   | 
|9- 7/8% Senior Euro Notes                                |  |  | (l | ) |  |               |  |      |  |   | 311.5   | 
|11- 1/2% Senior Deferred Coupon Euro Notes               |  |  | (m | ) |  |               |  |      |  |   | 135.6   | 
|11- 7/8% Senior Notes, less unamortized discount         |  |  | (n | ) |  |               |  |      |  |   | 490.7   | 
|12- 3/8% Senior Euro Notes, plus unamortized premium     |  |  | (o | ) |  |               |  |      |  |   | 267.8   | 
|6-3/4% Convertible Senior Notes                          |  |  | (p | ) |  |               |  |      |  |   | 1,150.0 | 
|                                                         |  |  |    |   |  |               |   |      |  |   |         | 
|                                                         |  |  |    |   |  |               |  |      |  |   | 7,889.0 | 
|                                                         |  |  |    |   |  |               |  |      |  |   | 7,889.0 | 
|                                                         |  |  |    |   |  |               |   |      |  |   |         | 
|                                                         |  |  |    |   |  | $             |  |      |  | $ |        | 
|                                                         |  |  |    |   |  |               |   |      |  |   |         | 

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##### Table of Contents



NTL Incorporated (formerly NTL Communication Corp.) (Debtor-in-Possession)
Notes to Condensed Financial Statements (continued)

Outstanding Public Notes

Upon emergence from Chapter 11 reorganization and in accordance with the Plan,
all of the outstanding public notes of NTL Communications Corp. were canceled.



|(a) |  | 12-3/4% Notes due April 15, 2005, principal amount at maturity of $277.8
million, interest payable semiannually from on October 15, 2000,
redeemable at the Companys option on or after April 15, 2000;                                                                                                                                                                                                                                
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | 11-1/2% 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;                                                                                                                                                                                                                               
|   
|(c) |  | 10% 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;                                                                                                                                                                                                                                  
|   
|(d) |  | 9-1/2% Sterling Notes due April 1, 2008, principal amount at maturity of
£125.0 million ($201.2 million), interest payable semiannually from
October 1, 1998, redeemable at the Companys option on or after April 1,
2003;                                                                                                                                                                                                             
|   
|(e) |  | 10-3/4% Sterling Notes due April 1, 2008, principal amount at maturity of
£300.0 million ($482.9 million), interest payable semiannually beginning
on October 1, 2003, redeemable at the Companys option on or after April
1, 2003;                                                                                                                                                                                                    
|   
|(f) |  | 9-3/4% 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;                                                                                                                                                                                                                             
|   
|(g) |  | 9-3/4% Sterling Notes due April 15, 2009, principal amount at maturity of
£330.0 million ($531.1 million), interest payable semiannually beginning
on October 15, 2004, redeemable at the Companys option on or after April
15, 2004;                                                                                                                                                                                                  
|   
|(h) |  | 11-1/2% 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;                                                                                                                                                                                                                                    
|   
|(i) |  | 12-3/8% 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;                                                                                                                                                                                                                            
|   
|(j) |  | 7% Convertible 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 (there are approximately 12.5 million shares of NTL
Incorporated common stock reserved for issuance upon conversion);
|   
|(k) |  | 9- 1/4% Euro Notes due November 15, 2006, principal amount at maturity of
250.0 million ($262.1 million), interest payable semiannually from May
15, 2000;                                                                                                                                                                                                                                                                             
|   
|(l) |  | 9-7/8% Euro Notes due November 15, 2009, principal amount at maturity of
350.0 million ($367.0 million), interest payable semiannually from May
15, 2000, redeemable at the Companys option on or after November 15,
2004;                                                                                                                                                                                                            

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NTL Incorporated (formerly NTL Communication Corp.) (Debtor-in-Possession)
Notes to Condensed Financial Statements (continued)



|(m) |  | 11-1/2% Deferred Euro Notes due November 15, 2009, principal amount at
maturity of 210.0 million ($220.1 million), interest payable semiannually
beginning on May 15, 2005, redeemable at the Companys option on or after
November 15, 2004 and;                                                                                                                                                                                                                  
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(n) |  | 11-7/8% 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;                                                                                                                                                                                                                                                                
|   
|(o) |  | 12-3/8% Senior Euro Notes due February 1, 2008, issued in January and
February 2001, principal amount at maturity of 300.0 million ($314.6
million), interest payable semiannually from August 1, 2001;                                                                                                                                                                                                                                                            
|   
|(p) |  | 6-3/4% Convertible Senior Notes due May 15, 2008, issued in May 2001,
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 20, 2004 (there are
approximately 35.1 million shares of NTL Incorporated common stock
reserved for issuance upon conversion);

The indentures governing the notes contain restrictions relating to, among
other things: (i) incurrence of additional indebtedness and issuance of
preferred stock, (ii) dividend and other payment restrictions and (iii)
mergers, consolidations and sales of assets.

During 2002, 2001 and 2000, the Company recognized $96.7 million, $243.5
million and $334.3 million, respectively, of original issue discount as
interest expense.

In connection with the Companys emergence from Chapter 11 reorganization, the
Company and certain of its subsidiaries issued $558.249 million aggregate
principal face amount of 19% Senior Secured Notes due 2010 (the Exit Notes)
on January 10, 2003. Initial purchasers of the Companys Exit Notes also
purchased 500,000 shares of the Companys common stock on that date. The gross
proceeds from the sale of the Exit Notes and such shares totaled $500.0
million. The proceeds were used in part to repay amounts outstanding under the
DIP facility and to purchase from NTL Delaware a £90.0 million note of NTL (UK)
Group Inc. and to repay certain other obligations. The Exit Notes are due on
January 1, 2010. The Exit Notes are redeemable at the Companys option after
January 10, 2003. Interest on the Exit Notes is payable in cash semiannually
from July 1, 2003, with respect to the interest payment due on July 1, 2003,
the Company may elect to pay any portion of the interest in cash or by issuance
of additional pay-in-kind notes. With respect to the interest payments due on
January 1, 2004 and July 1, 2004, the Company may make a similar election based
on our Available Cash, as defined.

The purchasers of the Companys
Exit Notes are entitled to registration rights with respect to such
notes pursuant to the Exchange and Registration Rights Agreement.
Under the Exchange and Registration Rights Agreement, the Company
agreed, among other things, to file with the Securities and Exchange
Commission a registration statement with respect to an offer to
exchange the Exit Notes for new notes registered under the Securities
Act with terms substantially identical to those of the unregistered
notes. If the Company fails to file such registration statement with
the Securities and Exchange Commission on or before April 15,
2003 or if certain other registration default events described in the
Exchange and Registration Rights Agreement occur, then the Company
will be required to pay special interest to each holder of the Exit
Notes, pursuant to provisions of the Exchange and Registration Rights
Agreement, during the period of one or more of such registration
default events. The Company would pay such special interest at a rate
of 0.5% per annum, which increases to 1.0% per annum after the first
120-day period following the occurrence of the first such
registration default. In addition, the Companys failure to
register the notes in compliance with the Exchange and Registration
Rights Agreement would result in an event of default under the
Indenture governing the Exit Notes.

Long-term debt repayments are due as follows (in millions). The table reflects
the Companys contractual obligations as of December 31, 2002 as adjusted for
the emergence from Chapter 11 reorganization.

|                         |                       |   |       |       | 
|------------------------ | --------------------- | - | ----- | ----- | 
|Year ending December 31: |                       |   |       |      
|                         | 2003                  |   | $     |      | 
|                         | 2004                  |   |       |      | 
|                         | 2005                  |   |       |      | 
|                         | 2006                  |   |       |      | 
|                         | 2007                  |   |       |      | 
|                         | Thereafter            |   |       | 558.2 | 
|                         |                       |   |       |      
|                         | Total debt repayments |   |       | 558.2 | 
|                         | Less: current portion |   |       |      | 
|                         |                       |   |       |      
|                         |                       | $ | 558.2 |      
|                         |                       |   |       |      

5.   Leases

Leases for office space end in 2004. Total rental expense for the years ended
December 31, 2002, 2001 and 2000 under operating leases was $1.4 million, $1.8
million and $2.0 million, respectively.

Future minimum lease payments under noncancellable operating leases as of
December 31, 2002 are (in millions): $1.1 (2003) and $0.7 (2004).

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##### Table of Contents



6.     Other

On the Effective Date, the Company loaned Communications Cable Funding Corp.,
(a wholly-owned subsidiary), $160.6 million for the repayment of debt to NTL
Delaware, Inc. The loan is payable on demand. Interest is payable on demand
at a rate of 5.28516% per annum and will be increased to 15% per annum.

In addition, on the Effective Date, the Company acquired the public debt of
Diamond Cable Communications Limited aggregating $1,373.1 million (including
interest of $136.5 million).

On February 4, 2003, the Company released Diamond Cable Communications
Limited from its obligations under these notes.

On September 28, 2001, the Company loaned NTL Europe, Inc. $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 year beginning on October 31,
2001. Upon emergence from Chapter 11 reorganization and in accordance with the
Plan, these notes were canceled.

No cash dividends were paid to the registrant by subsidiaries for the years
ended December 31, 2002, 2001 and 2000.

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NTL Incorporated (formerly NTL Communications Corp.) (Debtor-in-Possession)
Schedule II - Valuation and Qualifying Accounts

|                             |                                 |        |            |          |           |          |           |          |                        |           |        |   |         |  |   |       |       |  |   |       | 
|---------------------------- | ------------------------------- | ------ | ---------- | -------- | --------- | -------- | --------- | -------- | ---------------------- | --------- | ------ | - | ------- |  | - | ----- | ----- |  | - | ----- | 
|Col. A                       |                                 | Col. B |            | Col. C   |           | Col. D   |           | Col. E  
|                             |                                 |        |            |          |           |          |           |         
|                             |                                 |        |            |          |           |          | Additions |          |                        |           |        |   |         |  |  
|                             |                                 |        |            |          |           |          |           |          |                        |           |        |   |         |  |  
|                             |                                 |        |            |          |           |          |           |          |                        |           | (2)    |   |         |  |   |       |       |  |  
|                             |                                 |        |            |          |           |          | (1)       |          | Charged                |           |        |   |         |  |   |       |      
|                             |                                 |        | Balance at |          | Charged   |          | to        |          |                        |           |        |   |         |  |  
|                             |                                 |        | Beginning  |          | to        |          | Other     |          |                        |           |        |   | Balance
|                             |                                 |        | of         |          | Costs and |          | Accounts  |          | (Deductions)/Additions |           | at End
|Description                  |                                 | Period |            | Expenses |           | Describe |           | Describe |                        | of Period
|                             |                                 |        |            |          |           |          |           |          |                        |          
|Year ended December 31, 2002 |                                 |        |            |          |           |          |           |          |                        |           |        |   |         |  |   |       |       |  |   |      
|                             | Allowance for doubtful accounts |        | $          | 126.1    |           |          | $         | 55.2     |                        |           | $      |  |         |  | $ | (88.6 | )(a)  |  | $ | 92.7  | 
|                             |                                 |        |            |          |           |          |           |          |                        |           |        |   |         |  |   |       |       |  |   |       | 
|Year ended December 31, 2001 |                                 |        |            |          |           |          |           |          |                        |           |        |   |         |  |   |       |       |  |   |      
|                             | Allowance for doubtful accounts |        | $          | 135.2    |           |          | $         | 58.3     |                        |           | $      |  |         |  | $ | (67.4 | )(b)  |  | $ | 126.1 | 
|                             |                                 |        |            |          |           |          |           |          |                        |           |        |   |         |  |   |       |       |  |   |       | 
|Year ended December 31, 2000 |                                 |        |            |          |           |          |           |          |                        |           |        |   |         |  |   |       |       |  |   |      
|                             | Allowance for doubtful accounts |        | $          | 84.9     |           |          | $         | 98.5     |                        |           | $      |  |         |  | $ | (48.2 | )(c)) |  | $ | 135.2 | 
|                             |                                 |        |            |          |           |          |           |          |                        |           |        |   |         |  |   |       |       |  |   |       | 

|    |  |                                                                                                                                                                                                                                                      
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Uncollectible accounts written-off, net of recoveries of $99.5
million, offset by $10.9 million foreign currency exchange translation
adjustments.                                                                                                   
|   
|(b) |  | Uncollectible accounts written-off, net of recoveries of $63.5
million and $3.9 million foreign currency translation adjustments.                                                                                                                    
|   
|(c) |  | Uncollectible accounts written-off, net of recoveries of $91.6
million and $5.7 million foreign currency exchange translation
adjustments, offset by $49.1 million allowance for doubtful accounts as
of acquisition dates of purchased subsidiaries.

F-60