SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                F O R M 10-K/A-1
(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, 1997

                                       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
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                     52-1822078
---------------------------------           ------------------------------------
  (State or other jurisdiction              (I.R.S. Employer Identification No.)
of incorporation or organization)

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

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

                                   -----------

           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 $.01 per share
                     --------------------------------------
                                (Title of Class)


<PAGE>


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 whether  disclosure by 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 amendment to this
Form 10-K.[ ]

The  aggregate   market  value  of  the   registrant's   voting  stock  held  by
non-affiliates  at March 20, 1998,  valued in all cases in  accordance  with the
NASDAQ/NMS   closing   sale  price  for  the   Registrant's   Common  Stock  was
approximately $1,289,800,000.

Number of shares of Common Stock outstanding as at March 20, 1998: 32,294,900

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

           Document                               Part of 10-K in which
                                                       Incorporated

Definitive proxy statement for the 
1998 Annual Meeting of the Stockholders
of NTL Incorporated:                                     Part III

                                  * * * * * *
This Annual  Report on Form 10-K for the year ended  December 31,  1997,  at the
time of  filing  with the  Securities  and  Exchange  Commission,  modifies  and
supersedes all prior documents filed pursuant to Section 13, 14 and 15(d) of the
Securities  Exchange  Act of 1934 for  purposes  of any  offers  or sales of any
securities after the date of such filing pursuant to any Registration  Statement
or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by
reference this Annual Report.

         "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,  forecast,  estimated or budgeted in or expressed or
implied by such forward-looking  statements. Such factors include, among others:
general  economic  and business  conditions,  industry  trends,the  Registrant's
ability to continue to design network  routes,  install  facilities,  obtain and
maintain any required government licenses or approvals and finance  construction
and development, all in a timely manner, at reasonable costs and on satisfactory
terms and conditions,  as well as assumptions about customer  acceptance,  churn
rates,  overall market penetration and competition from providers of alternative
services, and availability, terms and deployment of capital.
<PAGE>


                                TABLE OF CONTENTS
                                                                         Page
PART I
------

Item 1   Business.....................................................     1 *

Item 2   Properties...................................................    46 *

Item 3   Legal Proceedings............................................    46 *

Item 4   Submission of Matters to a Vote of Stockholders..............    46 *

PART II
-------

Item 5   Market for the Registrant's Common Stock and Related
         Stockholder Matters..........................................    47 *

Item 6   Selected Financial Data......................................    48 *

Item 7   Management's Discussion and Analysis of Results of
         Operations and Financial Condition...........................    49
 
Item 7A  Quantitative and Qualitative Disclosure About Market Risk....    57 *

Item 8   Financial Statements and Supplementary Data..................    58 *

Item 9   Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure..........................    58 *

PART III
--------

Items 10, 11, 12, 13..................................................    59 *

PART IV
-------

Item 14  Exhibits, Financial Statement Schedules, and 
         Reports on Form 8-K..........................................    59 *

Exhibit Index.........................................................    60 *

Signatures............................................................    70 *

Index to Financial Statements.........................................   F-1


The Annual  Report on Form 10-K of NTL  Incorporated  for the fiscal  year ended
December  31,  1997 is being  amended by this Form  10-K/A-1  for the  following
reasons:  (1) to add information to the Results of Operations section of Item 7,
Management's  Discussion  and Analysis of Results of  Operations  and  Financial
Condition,  (2) to add  information  to  Note 3 of  the  Notes  to  Consolidated
Financial  Statements  in Item 14 and (3) to add  information  to Note 9  of the
Notes to  Consolidated  Financial  Statements  in Item 14. 

*  Previously filed

<PAGE>

                                   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.


                                        NTL INCORPORATED


                                        By: /s/ Gregg Gorelick
Dated:  October 12, 1998                --------------------------------------
                                        Name:   Gregg Gorelick
                                        Title:  Vice President-Controller    
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION.
--------------------------------------------------------------------------

                              RESULTS OF OPERATIONS

     As a result of the  acquisition  of NTL  Group  Limited  in May  1996,  the
Company  consolidated  the results of  operations  of NTL Group Limited from the
date of acquisition.

Years Ended December 31, 1997 and 1996
--------------------------------------

     Local  telecommunications and television revenues increased to $189,407,000
from  $89,209,000  as a result of customer  growth that  increased the Company's
current  revenue  stream.  The Company  expects  customer  growth to continue to
increase which will drive further  revenue  growth as the Company  completes the
construction  of its  dual  service  network  past  the  remaining  homes in its
franchise areas.

     National  and  international   telecommunications   revenues  increased  to
$162,738,000  from  $45,430,000  as a result  of the  acquisition  of NTL  Group
Limited in May 1996,  plus the new site  acquisition,  installation,  design and
construction  projects and additional  site sharing revenue in 1997. The Company
expects that site acquisition,  installation,  design and construction  projects
and site sharing  will not drive  revenue  growth in national and  international
telecommunications in the future. Instead, the Company expects Internet services
revenues and carrier services revenues to increase due to customer growth and an
expanded selling and marketing effort.

     Broadcast  transmission and other revenues  increased to $130,799,000  from
$83,618,000  as a result of the  acquisition  of NTL Group  Limited in May 1996,
plus the  revenues  from NTL Group  Limited's  ten-year  contract  to  broadcast
Channel 5 in the United  Kingdom which  commenced in 1997.  The Company  expects
that increases in broadcast  television and FM radio customers and accounts will
result in revenue  increases  that exceed price cap  reductions in the Company's
regulated services.

     Operating expenses  increased to $301,644,000 from $144,315,000.  NTL Group
Limited operating expenses in the year ended December 31, 1997 and in the period
from  May  9,  1996,  the  date  of  acquisition,  to  December  31,  1996  were
$185,995,000  and $71,871,000,  respectively.  The remainder of the increase was
primarily the result of increases in programming and interconnection costs.

     Selling, general and administrative expenses increased to $169,133,000 from
$114,992,000.  NTL Group Limited selling, general and administrative expenses in
the year ended December 31, 1997 and in the period from May 9, 1996, the date of
acquisition, to December 31, 1996 were $18,799,000 and $9,384,000, respectively.
The remainder of the increase was the result of increases in  telecommunications
and CATV sales and marketing  costs and in additional  personnel and overhead to
service the increasing customer base.

     Franchise   fees  of  $23,587,000   and   $13,117,000  in  1997  and  1996,
respectively,  are for the Northern Ireland  license.  Franchise fee expense was
incurred upon the start of operations in Northern Ireland in June 1996.

     Corporate expenses increased to $18,324,000 from $14,899,000  primarily due
to an increase in personnel and related costs. The 1997 and 1996 amounts include
$1,852,000  and  $2,906,000,   respectively,  of  non-cash  expense  related  to
non-compete agreements.


                                       49
<PAGE>


     Nonrecurring charges of $20,642,000 in 1997 include  restructuring costs of
$15,629,000  and deferred costs  written-off  of $5,013,000.  The deferred costs
written-off  arose in  connection  with the Company's  unsuccessful  bid for DTT
multiplex licenses.  Restucturing costs relate to the Company's  announcement in
September 1997 of a reorganization of certain of its operations.  The Company is
consolidating the Customer Operations departments that serve its three franchise
areas in England into one department and is consolidating certain operations and
management  groups within the Broadcast  Services  division,  as well as certain
other  consolidations  or  cessation  of  activities.  This charge  consisted of
employee severance and related benefit costs of $6,726,000 for approximately 280
employees to be  terminated,  lease exit costs of  $6,539,000  and  penalties of
$2,364,000  associated  with the  cancellation of contractual  obligations.  The
entire $15,629,000 restructuring charge will require a cash outlay which will be
funded using cash on hand. The consolidations are expected to be completed in 12
months,  the lease exit costs are for leases  that extend over a number of years
and the contract  cancellations are expected to be completed in 12 months. As of
December  31,  1997,  $5,441,000  of the  provision  has  been  used,  including
$2,916,000  for severance  and related  benefit  costs,  $324,000 for lease exit
costs  and  $2,201,000  for  penalties   associated  with  the  cancellation  of
contractual  obligations,  and 118 employees had been  terminated.  There was no
other adjustment to the liability.

     Depreciation  and  amortization  expense  increased  to  $150,509,000  from
$98,653,000.  The increase was primarily due to an increase in  depreciation  of
telecommunications and CATV equipment.  Depreciation and amortization expense of
NTL Group Limited and  amortization  of goodwill as a result of the  acquisition
was  $37,724,000  and $20,339,000 in the year ended December 31, 1997 and in the
period  from May 9,  1996,  the  date of  acquisition,  to  December  31,  1996,
respectively.

     Interest  expense  increased to $202,570,000  from  $137,032,000 due to the
issuance  of the 10% Senior  Notes in  February  1997,  the  issuance  of the 7%
Convertible Subordinated Notes in June 1996 and the increase in accretion of the
original  issue discount on the deferred  coupon notes.  Interest of $78,817,000
and  $37,889,000  was paid in the  years  ended  December  31,  1997  and  1996,
respectively.

     Other gains of  $21,497,000  in 1997 include a gain on sale of fixed assets
of $11,497,000 and a $10,000,000  payment from LeGroupe  Videotron Ltee pursuant
to the settlement of a lawsuit.

     In connection with the repayment of debt, a subsidiary of NTL Group Limited
recorded an  extraordinary  loss in 1997 of  $4,500,000  from the  write-off  of
unamortized deferred financing costs.

Years Ended December 31, 1996 and 1995
--------------------------------------

     Local  telecommunications  and television revenues increased to $89,209,000
from  $24,804,000  as a result of customer  growth that  increased the Company's
current revenue stream.

     National  and  international   telecommunications   revenues  increased  to
$45,430,000 from none as a result of the acquisition of NTL Group Limited.

     Broadcast  transmission  and other revenues  increased to $83,618,000  from
none as a result of the acquisition of NTL Group Limited.

     Operating  expenses  increased to $144,315,000 from $24,415,000.  NTL Group
Limited  operating  expenses from May 9, 1996, the date of acquisition,  through
December 31, 1996 were $71,871,000. The remainder of the increase was the result
of increases in programming costs,  interconnection costs and costs of operating
the telecommunications and CATV network.

     Selling, general and administrative expenses increased to $114,992,000 from
$57,932,000. NTL Group Limited selling, general and administrative expenses from
May 9, 1996, the date of acquisition, through December 31, 1996 were $9,384,000.
The remainder of the increase was the


                                       50
<PAGE>


result of increases in telecommunications and CATV sales and marketing costs and
in additional personnel and overhead to service the increasing customer base.

     Franchise fees of $13,117,000 in 1996 are for the Northern  Ireland license
and were payable to the ITC beginning in January 1997. Franchise fee expense was
incurred upon the start of operations in Northern Ireland in June 1996.

     Corporate  expenses  increased to $14,899,000  from  $14,697,000  due to an
increase in  personnel  and related  costs.  The 1996 and 1995  amounts  include
$2,906,000  and  $3,256,000,   respectively,  of  non-cash  expense  related  to
non-compete agreements.

     Depreciation  and  amortization   expense  increased  to  $98,653,000  from
$29,823,000.  Depreciation  and  amortization  expense of NTL Group  Limited and
amortization of goodwill as a result of the acquisition was $20,339,000 from May
9, 1996, the date of  acquisition,  through  December 31, 1996. The remainder of
the   increase   was   primarily   due  to  an  increase  in   depreciation   of
telecommunications and CATV equipment.

     Interest and other income  increased to $33,634,000 from $21,185,000 due to
an increase in funds available for short-term investment.

     Interest  expense  increased to  $137,032,000  from  $28,379,000 due to the
interest on the bank loan in connection  with the NTL Group Limited  acquisition
in 1996 plus the issuance of the 11-1/2% Series B Senior  Deferred  Coupon Notes
and the 7% Convertible  Subordinated Notes in 1996.  Interest of $37,889,000 and
$13,918,000  was paid  during  the  years  ended  December  31,  1996 and  1995,
respectively.

                         LIQUIDITY AND CAPITAL RESOURCES

     The  Company  will  continue to require  significant  amounts of capital to
finance  construction  of its local and national  networks,  for  connection  of
telephone,  telecommunications  and CATV  customers to the  networks,  for other
capital  expenditures,  as well as for  cash  interest  payments.  Based  on the
information  currently  available,  the Company  estimates that, from January 1,
1998 through  December 31, 1998 (assuming  conversion of the 7-1/4%  Convertible
Subordinated  Notes due to the March 1998 call for  redemption  in April  1998),
these  requirements  will aggregate 436 million pounds  sterling  (approximately
$720 million).  The Company  intends to fund its  requirements  from cash,  cash
equivalents  and marketable  securities on hand of $103.9 million as of December
31, 1997 and from the aggregate  proceeds of approximately  $1.25 billion (after
discounts,  commissions  and  expenses)  from  the  issuance  in  March  1998 of
125,000,000  pounds  sterling  principal  amount,  9-1/2% Senior Notes due 2008,
300,000,000 pounds sterling accreted value, 10-3/4% Senior Deferred Coupon Notes
due 2008 and $1,300,000,000  accreted value, 9-3/4% Senior Deferred Coupon Notes
due 2008 (together the "New Notes"). The Company's commitments for equipment and
services at December 31, 1997 of  approximately  $78 million are included in the
anticipated requirements.


                                       51
<PAGE>


     In 1997, NTL (UK) Group,  Inc., a  wholly-owned  subsidiary of the Company,
which is the holding  company for its United  Kingdom  operations and the parent
company of NTLIH,  and NTLIH entered into an agreement with The Chase  Manhattan
Bank pursuant to which Chase has agreed to fully underwrite a 555 million pounds
sterling,  eight-year  term loan  facility with an initial  four-year  revolving
period (the "New Credit  Facility").  By April 14, 1999, Chase's commitment will
be reduced to no less than 480,000,000 pounds sterling or such greater amount as
is necessary to ensure that the Company's United Kingdom operations remain fully
funded by reference to an agreed  business plan. The New Credit Facility will be
used to finance  capital  expenditures  and working  capital  for the  Company's
United   Kingdom   operations,   including   its   local   broadband,   national
telecommunications  and national digital television  networks.  A portion of the
New Credit  Facility  (75  million  pounds  sterling)  is  conditional  upon the
execution of contracts to provide digital  television  transmission  services to
certain third parties.  Chase has provided a portion of the New Credit  Facility
in the form of a 350 million pounds sterling facility to the Company on the same
terms as to restrictions,  covenants, guarantees and security as the 555 million
pounds  sterling  facility.  As of March 20,  1998,  the  Company had 10 million
pounds sterling outstanding under the New Credit Facility.  The principal amount
outstanding  under the 350 million  pounds  sterling  facility is required to be
repaid on December 31, 2005.  Interest is payable either  monthly,  quarterly or
semi-annually,  at the option of NTLIH,  at LIBOR plus, at a maximum,  2.25% per
annum.  The commitment  fee is .375% per annum on the unutilized  portion of the
350 million pounds sterling  facility and is payable  quarterly in arrears.  The
New Credit  Facility is secured by first  fixed and  floating  charges  over all
present and future assets and  undertakings of the United Kingdom group. The New
Credit Facility contains customary financial covenants, and certain restrictions
relating to, among other things:  (i) incurrence of additional  indebtedness  or
guarantees,  (ii)  investments,  acquisitions and mergers and (iii) dividend and
other payment restrictions. In the absence of a default, the New Credit Facility
generally  permits  payments to the Company to pay  interest  and  principal  of
existing indebtedness of the Company.

     In  connection  with the New Credit  Facility,  the Company  entered into a
European  Currency  Option with a bank in which the Company  may  purchase  U.S.
dollars at a fixed rate of 1 pound sterling to $1.40.  The option is exercisable
on specified dates through June 2001 for specified amounts of U.S. dollars.  The
dates and U.S. dollar amounts correspond to the Company's interest payment dates
and amounts for its U.S.  dollar  denominated  debt and  anticipated  amounts of
parent company expenses.

     The Company is highly leveraged. After giving effect to the issuance of the
New Notes,  the  accreted  value at  December  31, 1997 of the  Company's  total
long-term   indebtedness   (including   the  Redeemable   Preferred   Stock)  is
approximately   $3.4   billion,   representing   approximately   102%  of  total
capitalization. The following tables summarizes the terms of those


                                       52
<PAGE>


notes and redeemable preferred stock issued by the Company.

<TABLE>
<CAPTION>
  
                                                                                                         
                                    11-1/2%             12-3/4%             10-7/8%              10-3/4%               9-3/4%
                                Series B Senior     Series A Senior     Senior Deferred      Senior Sterling           Senior
                                Deferred Coupon     Deferred Coupon          Coupon          Deferred Coupon      Deferred Coupon
                                    Notes               Notes                Notes                Notes               Notes
<S>                              <C>                 <C>                 <C>                  <C>                  <C> 

Denomination................     $                   $                   $                    Pounds Sterling      $
Net Proceeds (in 000's).....     582,000             145,125             119,797              170,584              778,340
Issue Date..................     January 30, 1996    April 20, 1995      October 7, 1993      March 13, 1998       March 13, 1998
Issue Price(1)..............     57.155%             53.995%             58.873%              58.62%               61.724%

Aggregate Principal Amount
  at Maturity (in 000's)....     1,050,000           277,803             212,000              300,000              1,300,000
Maturity Date...............     February 1, 2006    April 15, 2005      October 15, 2003     April 1, 2008        April 1, 2008
Yield or Interest Rate(2)...     11-1/2%             12-3/4%             10-7/8%              10-3/4%              9-3/4%
 
Interest or Dividend             February 1 and      April 15 and        April 15 and         April 1 and          April 1 and
  Payment                        August 1            October 15          October 15           October 1            October 1
  Dates.....................     from 8-1-01         from 10-15-00       From 4-15-99         from 10-1-2003       from 10-1-2003
Earliest Optional
  Redemption Date(4)........     February 1, 2001    April 15, 2000      October 15, 1998     April 1, 2003        April 1, 2003
Redemption                       105.75 (2001)       103.64 (2000)       103.107 (1998)       105.375 (2003)       104.875 (2003)
  Price(%)(5)...............     to 100 (2003)       to 100 (2002)       to  100 (2000)       to 100 (2006)        to 100 (2006)
                        
Conversion Price(6).........     N/A                 N/A                 N/A                  N/A                  N/A
Senior/Subordinated.........     Senior              Senior              Senior               Senior               Senior

</TABLE>

(table continues on the following page)


                                       53
<PAGE>


<TABLE>
<CAPTION>


                                      7%                7-1/4%
                                 Convertible          Convertible             9-1/2%              10%             Redeemable
                                 Subordinated        Subordinated        Senior Sterling        Series B          Preferred
                                    Notes               Notes (7)             Notes           Senior Notes           Stock
                                                    
<S>                              <C>                 <C>                 <C>                 <C>                  <C> 
Denomination................     $                   $                   Pounds Sterling     $                    $
Net Proceeds (in 000's).....     267,437             186,065             121,161             389,000              96,625
Issue Date..................     June 12, 1996       April 20, 1995      March 13, 1998      February 14, 1997    February 14, 1997
Issue Price(1)..............     100%                100%                99.670%             100%                 100%

Aggregate Principal Amount
  at Maturity (in 000's)....     275,000             191,750             125,000             400,000              100,000
Maturity Date...............     June 15, 2008       April 15, 2005      April 1, 2008       February 15, 2007    February 15, 2009
Yield or Interest Rate(2)...     7%                  7-1/4%              9-1/2%              10%                  13%
 
Interest or Dividend             June 15 and         April 15 and        April 1 and         February 15 and      May 15, August 15,
  Payment                        December 15         October 15          October 1           August 15            November 15 and
  Dates.....................     from 12-15-96       from 10-15-95       From 10-1-98        from 8-15-97         February 15
                                                                                                                  from 5-15-97(3)
Earliest Optional
  Redemption Date(4)........     June 15, 1999       April 15, 1998      April 1, 2003       February 15, 2002    February 15, 2002
Redemption                       104.9 (1999)        105.08 (1998)       104.75 (2003)       105 (2002)           106.5 (2002) 
  Price(%)(5)...............     to 100 (2006)       to 100.73 (2004)    to 100 (2006)       to 100 (2005)        to 100 (2005)
                                      
Conversion Price(6).........     37.875              27.56               N/A                 N/A                  N/A
Senior/Subordinated.........     Subordinated        Subordinated        Senior              Senior               N/A

-------------------------

(1) Percent of aggregate principal amount at maturity (or aggregate liquidation preference in the case of the Redeemable Preferred
    Stock).
(2) Percent per annum.
(3) Dividend payments on the Redeemable Preferred Stock are payable in cash or additional shares of Redeemable Preferred Stock, at
    the Company's option. From May 15, 2004, dividend payments are payable in cash.
(4) This is the first date when redeemable at the Company's option. The Redeemable Preferred Stock is mandatorily redeemable for
    cash on February 15, 2009.
(5) Expressed as a percentage of principal amount or liquidation preference, as applicable, plus, in each case, accrued and unpaid 
    interest or dividends thereon to the applicable redemption date.
(6) This is the conversion price per share of the Company's common stock, adjusted for the four-for-three stock split in August 1995
    and subject to further adjustments in certain events.
(7) These notes have been called for redemption effective April 20, 1998, unless converted on or prior to April 19, 1998.
</TABLE>


     Pursuant  to the  terms of the  Northern  Ireland  LDL,  CableTel  Northern
Ireland Limited (a  wholly-owned  subsidiary of the Company) is required to make
annual cash payments to the ITC for fifteen years in the amount of approximately
14.4 million pounds sterling  (subject to adjustments  for inflation).  CableTel
Northern  Ireland  Limited began making  payments of 1.2 million pounds sterling
per month in January 1997.  Such payments are in addition to the  percentages of
qualifying  revenue  already set by the ITC of 0% for the first ten years and 2%
for the last five years of the fifteen  year


                                       54
<PAGE>


license.  Pursuant to the terms of the Glamorgan and Gwent LDL,  CableTel  South
Wales  Limited (a  wholly-owned  subsidiary  of the Company) is required to make
annual cash payments to the ITC for fifteen years,  commencing in the first full
calendar  year after the start of  operations,  in the amount of 104,188  pounds
sterling (subject to adjustment for inflation). Such payments are in addition to
the percentages of qualifying revenue already set by the ITC of 0% for the first
five  years,  2% for the second five years and 4% for the last five years of the
fifteen year license.

     The Company has significant capital  requirements for the completion of its
telephone,  telecommunications  and CATV  network  passed the total of 2,090,000
homes required by its regulatory build  schedules,  for its LDL payments and for
scheduled  cash interest and principal  payments,  as well as  requirements  for
other capital expenditures.  The Company expects to fund these requirements with
cash on hand,  proceeds from the New Notes,  funds from the New Credit  Facility
and  cash  from  operations.   There  can  be  no  assurance  that:  (i)  actual
construction  costs will not exceed the  amounts  estimated  or that  additional
funding  substantially in excess of the amounts  estimated will not be required,
(ii)  conditions  precedent to advances  under the New Credit  Facility  will be
satisfied when funds are required,  (iii) the Company and its subsidiaries  will
be  able  to  generate   sufficient   cash  from   operations  to  meet  capital
requirements, debt service and other obligations as they fall due when required,
(iv) the Company  will be able to access such cash flow or (v) the Company  will
not incur losses from its exposure to exchange rate fluctuations or be adversely
affected by interest rate fluctuations.

     The  Company's  operations  are  conducted  through its direct and indirect
wholly-owned   subsidiaries.   As  a  holding  company,  the  Company  holds  no
significant   assets  other  than  its   investments  in  and  advances  to  its
subsidiaries.  The Company is therefore dependent upon the receipt of sufficient
funds  from its  subsidiaries  to meet  its own  obligations.  Accordingly,  the
Company's ability to make scheduled  interest and principal payments when due to
holders of  indebtedness  of the Company and the  Company's  ability to pay cash
dividends to its  stockholders is dependent upon the receipt of sufficient funds
from its subsidiaries.

     To the extent that the Company  obtains  financing in United States dollars
and incurs costs in the  construction  and operation of the  Company's  regional
systems in the United  Kingdom in British  pounds  sterling,  it will  encounter
currency   exchange  rate  risks.   At  December  31,  1997,   the  Company  had
approximately  $42 million in pounds sterling cash accounts to reduce this risk.
In  addition,  the  Company's  New  Credit  Facility  and  the  pounds  sterling
denominated  New Notes will also reduce this risk.  Furthermore,  the  Company's
revenues are generated  primarily in British pounds  sterling while its interest
and  principal  obligations  with  respect  to  most of the  Company's  existing
indebtedness  are  payable in dollars.  The  Company has entered  into an option
agreement  to hedge some of the risk of exchange  rate  fluctuations  related to
interest payments on U.S. dollar denominated debt.

     The information in the preceding  paragraphs does not include the impact of
the proposed Partners acquisition. In addition, the information in the preceding
paragraphs includes projections; in reviewing such information it should be kept
in  mind  that  actual  results  may  differ   materially  from  those  in  such
projections.  These  projections  were based on various factors and were derived
utilizing  numerous  assumptions.  Important  assumptions and factors that could


                                       55
<PAGE>


cause  actual  results  to differ  materially  from  those in these  projections
include  the  Company's   ability  to  continue  to  design  networks,   install
facilities,  obtain and maintain any required governmental licenses or approvals
and finance  construction and development,  all in a timely manner at reasonable
costs and on  satisfactory  terms and conditions,  as well as assumptions  about
customer  acceptance,  churn rates,  overall market  penetration and competition
from providers of alternative  services.  The failure of such  assumptions to be
realized  as well as other  factors  may also  cause  actual  results  to differ
materially  from those  projected.  The Company assumes no obligations to update
these  projections to reflect actual results,  changes in assumptions or changes
in other factors affecting such projections.

YEAR 2000

     Many computer systems  experience  problems  handling dates beyond the year
1999.  Therefore,  some computer  hardware and software will need to be modified
prior to the year 2000 in order to remain  functional.  The Company is assessing
both the internal  readiness of its computer  systems and the  compliance of the
computer systems of certain  significant  customers and vendors for handling the
year 2000.  The  Company  expects to  implement  successfully  the  systems  and
programming  changes necessary to address year 2000 issues, and does not believe
that the  cost of such  actions  will  have a  material  adverse  effect  on the
Company. There can be no assurance,  however, that there will not be a delay in,
or increased costs associated with, the implementation of such changes,  and the
Company's  inability to implement  such changes could have an adverse  effect on
the Company.  In addition,  the failure of certain of the Company's  significant
customers  and  vendors  to address  the year 2000  issue  could have a material
adverse effect on the Company.

CONSOLIDATED STATEMENTS OF CASH FLOWS

     Cash used in operating  activities was  $17,271,000  and $21,405,000 in the
years ended December 31, 1997 and 1996, respectively.  The decrease in cash used
in  operating  activities  is primarily  due to changes in operating  assets and
liabilities.

     Purchases of fixed assets were  $503,656,000  in 1997 and  $505,664,000  in
1996 as a result of the continuing  fixed asset  purchases and  construction  in
1997. In May 1997, the Company paid  $57,330,000 to the former  shareholders  of
NTL Group Limited in respect of the final payment of deferred purchase price.


                                       56
<PAGE>


     Proceeds  from  borrowings  and sale of preferred  stock,  net of financing
costs,  of  $490,302,000 in 1997 is comprised of the proceeds from the 10% Notes
and the  Redeemable  Preferred  Stock of  $500,000,000,  net of financing  costs
incurred of $15,660,000, plus proceeds from borrowings under the NTLIH Term Loan
and Revolving  Facility (the "NTLIH Facility") of $13,104,000 less $7,142,000 of
financing  costs  paid in  connection  with the New Credit  Facility.  Principal
payments of  $242,424,000  represent the repayment of the NTLIH Facility  (which
was a requirement of the New Credit Facility).







                                       57
<PAGE>

                        Form 10-K - Item 14(a)(1) and (2)

                        NTL Incorporated and Subsidiaries

                   Index of Consolidated Financial Statements
                        and Financial Statement Schedules


The  following   consolidated  financial  statements  of  NTL  Incorporated  and
Subsidiaries are included in Item 8:


Report of Independent Auditors...........................................    F-2
Consolidated Balance Sheets - December 31, 1997 and 1996.................    F-3
Consolidated Statements of Operations - Years ended
   December 31, 1997, 1996 and 1995......................................    F-5
Consolidated Statement of Shareholders' Equity (Deficiency) - 
   Years ended December 31, 1997, 1996 and 1995..........................    F-6
Consolidated Statements of Cash Flows - Years ended
   December 31, 1997, 1996 and 1995......................................    F-7
Notes to Consolidated Financial Statements...............................    F-9


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

Schedule I - Condensed Financial Information of Registrant ..............   F-35
Schedule II - Valuation and Qualifying Accounts..........................   F-41

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
<PAGE>


                         Report of Independent Auditors


The Board of Directors and Shareholders
NTL Incorporated

We  have  audited  the  consolidated  balance  sheets  of NTL  Incorporated  and
Subsidiaries  as of  December  31, 1997 and 1996,  and the related  consolidated
statements of operations,  shareholders'  equity (deficiency) and cash flows for
each of the three years in the period ended  December 31, 1997.  Our audits also
included the financial  statement  schedules  listed in the Index at Item 14(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  generally   accepted  auditing
standards.  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   and   Subsidiaries  at  December  31,  1997  and  1996,  and  the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity  with generally
accepted  accounting  principles.  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.



                                                               ERNST & YOUNG LLP

New York, New York
March 20, 1998


                                      F-2
<PAGE>


                        NTL Incorporated and Subsidiaries
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                       DECEMBER 31
                                                                 1997              1996
                                                            --------------    --------------
<S>                                                         <C>               <C>
ASSETS
Current assets:
   Cash and cash equivalents                                $   98,902,000    $  445,884,000
   Marketable securities                                         4,998,000                 -
   Accounts receivable - trade, less allowance for
     doubtful accounts of $8,056,000 (1997) and 
     $3,870,000 (1996)                                          66,022,000        28,340,000
   Other                                                        67,232,000        66,817,000
                                                            --------------    --------------
Total current assets                                           237,154,000       541,041,000

Fixed assets, net                                            1,756,985,000     1,459,528,000
Intangible assets, net                                         364,479,000       392,933,000
Other assets, net of accumulated amortization 
   of $25,889,000 (1997) and $21,789,000  (1996)                63,021,000        61,109,000
                                                            ==============    ==============
Total assets                                                $2,421,639,000    $2,454,611,000
                                                            ==============    ==============
</TABLE>



                                      F-3
<PAGE>


                        NTL Incorporated and Subsidiaries
                     Consolidated Balance Sheets (continued)
<TABLE>
<CAPTION>

                                                                       DECEMBER 31
                                                                 1997              1996
                                                            --------------    --------------
<S>                                                         <C>               <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
   Accounts payable                                         $   45,475,000    $   57,960,000
   Accrued expenses and other                                  181,605,000       101,228,000
   Accrued construction costs                                   26,930,000        62,723,000
   Deferred revenue                                             35,060,000        16,491,000
   Deferred purchase price                                               -        60,537,000
                                                            --------------    --------------
Total current liabilities                                      289,070,000       298,939,000

Long-term debt                                               2,015,057,000     1,732,168,000
Other                                                              428,000           459,000
Commitments and contingent liabilities
Deferred income taxes                                           70,218,000        94,931,000
Senior redeemable exchangeable preferred stock,
   $.01 par value, plus accreted dividends; 
   liquidation preference $107,000,000; less
   unamortized discount of $3,444,000 (1997);
   issued and outstanding 110,000 shares (1997)
   and none (1996)                                             108,534,000                 -

Shareholders' equity (deficiency):
   Series preferred stock - $.01 par value;
      authorized 2,500,000 shares; liquidation
      preference $78,000,000; issued and 
      outstanding 780 shares (1997 and 1996)                             -                 -
   Common stock - $.01 par value; authorized
      100,000,000 shares; issued and outstanding
      32,210,000 (1997) and 32,066,000 (1996) shares               322,000           321,000
   Additional paid-in capital                                  538,054,000       548,647,000
   Cumulative translation adjustment                           117,008,000       163,141,000
   (Deficit)                                                  (717,052,000)     (383,995,000)
                                                            --------------    --------------
                                                               (61,668,000)      328,114,000
                                                            --------------    --------------
Total liabilities and shareholders' equity (deficiency)     $2,421,639,000    $2,454,611,000
                                                            ==============    ==============
</TABLE>

See accompanying notes.


                                      F-4
<PAGE>


                        NTL Incorporated and Subsidiaries
                      Consolidated Statements of Operations
<TABLE>
<CAPTION>

                                                                          YEAR ENDED DECEMBER 31
                                                                 1997              1996              1995
                                                            --------------    --------------    --------------
<S>                                                         <C>               <C>               <C>
REVENUES
Local telecommunications and television                     $  189,407,000    $   89,209,000    $   24,804,000
National and international telecommunications                  162,738,000        45,430,000                 -
Broadcast transmission and other                               130,799,000        83,618,000                 -
Other telecommunications                                         8,831,000        10,086,000         8,937,000
                                                            --------------    --------------    --------------
                                                               491,775,000       228,343,000        33,741,000

COSTS AND EXPENSES
Operating expenses                                             301,644,000       144,315,000        24,415,000
Selling, general and administrative expenses                   169,133,000       114,992,000        57,932,000
Franchise fees                                                  23,587,000        13,117,000                 -
Corporate expenses                                              18,324,000        14,899,000        14,697,000
Nonrecurring charges                                            20,642,000                 -                 -
Depreciation and amortization                                  150,509,000        98,653,000        29,823,000
                                                            --------------    --------------    --------------
                                                               683,839,000       385,976,000       126,867,000
                                                            --------------    --------------    --------------
Operating (loss)                                              (192,064,000)     (157,633,000)      (93,126,000)

OTHER INCOME (EXPENSE)
Interest and other income                                       28,415,000        33,634,000        21,185,000
Interest expense                                              (202,570,000)     (137,032,000)      (28,379,000)
Other gains                                                     21,497,000                 -                 -
Foreign currency transaction gains                                 574,000         2,408,000            84,000
                                                            --------------    --------------    --------------
(Loss) before income taxes, minority interests
   and extraordinary item                                     (344,148,000)     (258,623,000)     (100,236,000)
Income tax benefit (provision)                                  15,591,000        (7,653,000)        2,477,000
                                                            --------------    --------------    --------------
(Loss) before minority interests and 
   extraordinary item                                         (328,557,000)     (266,276,000)      (97,759,000)
Minority interests                                                       -        11,822,000         6,974,000
                                                            --------------    --------------    --------------
(Loss) before extraordinary item                              (328,557,000)     (254,454,000)      (90,785,000)
Loss from early extinguishment of debt                          (4,500,000)                -                 -
                                                            --------------    --------------    --------------
Net (loss)                                                  $ (333,057,000)   $ (254,454,000)   $  (90,785,000)
                                                            ==============    ==============    ==============


Basic and diluted net (loss) per common share:
   (Loss) before extraordinary item                                $(10.60)           $(8.20)           $(3.01)
   Extraordinary item                                                 (.14)                -                 -
                                                            --------------    --------------    --------------
   Net (loss) per common share                                     $(10.74)           $(8.20)           $(3.01)
                                                            ==============    ==============    ==============

</TABLE>

See accompanying notes.


                                      F-5
<PAGE>


                        NTL Incorporated and Subsidiaries
           Consolidated Statement of Shareholders' Equity (Deficiency)

<TABLE>
<CAPTION>

                                           SERIES               COMMON STOCK -                         
                                       PREFERRED STOCK         $.01 PAR VALUE        ADDITIONAL      CUMULATIVE
                                      ------------------   ----------------------     PAID-IN        TRANSLATION
                                       SHARES     PAR        SHARES        PAR        CAPITAL        ADJUSTMENT       (DEFICIT)
                                      -------------------------------------------------------------------------------------------
<S>                                   <C>       <C>        <C>          <C>         <C>             <C>             <C>
Balance, December 31, 1994                                 22,635,000   $ 226,000   $ 462,197,000   $ 12,867,000    $ (38,756,000)
Exercise of stock options                                      20,000       1,000         101,000
Stock split                                                 7,547,000      75,000         (75,000)
Net loss for the year ended                                                                                           
   December 31, 1995                                                                                                  (90,785,000) 
Currency translation adjustment                                                                       (6,594,000)
                                      -------------------------------------------------------------------------------------------
Balance, December 31, 1995                                 30,202,000     302,000     462,223,000      6,273,000     (129,541,000)
Exercise of stock options                                     396,000       4,000       1,362,000     
Exercise of warrants                                           53,000       1,000         298,000
Issuance of warrants in connection
   with consent solicitations                                                           1,641,000
Shares issued for acquisitions        780       $  -        1,415,000      14,000      83,123,000
Net loss for the year ended
   December 31, 1996                                                                                                 (254,454,000)
Currency translation adjustment                                                                      156,868,000
                                      -------------------------------------------------------------------------------------------
Balance, December 31, 1996            780          -       32,066,000     321,000     548,647,000    163,141,000     (383,995,000)
Exercise of stock options                                     119,000       1,000       1,532,000
Exercise of warrants                                           25,000                     138,000
Accreted dividends on senior 
   redeemable exchangeable 
   preferred stock                                                                    (11,978,000)
Accretion of discount on senior 
   redeemable exchangeable
   preferred stock                                                                       (285,000)
Net loss for the year ended
   December 31, 1997                                                                                                 (333,057,000)
Currency translation adjustment                                                                      (46,133,000)
                                      -------------------------------------------------------------------------------------------
Balance, December 31, 1997            780       $  -       32,210,000   $ 322,000    $538,054,000   $117,008,000    $(717,052,000)
                                      ===========================================================================================
</TABLE>
See accompanying notes.


                                      F-6
<PAGE>


                        NTL Incorporated and Subsidiaries
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                    YEAR ENDED DECEMBER 31
                                                                        1997                 1996                 1995
                                                                  ---------------------------------------------------------
<S>                                                               <C>                  <C>                   <C>
OPERATING ACTIVITIES
Net loss                                                          $ (333,057,000)      $ (254,454,000)       $ (90,785,000)
Adjustment to reconcile net loss to net cash
   (used in) operating activities:
      Depreciation and amortization                                  150,509,000           98,653,000           29,823,000
      Loss from early extinguishment of debt                           4,500,000                    -                    -
      Amortization of non competition agreements                       1,852,000            2,906,000            3,256,000
      Provision for losses on accounts receivable                      6,891,000            2,597,000              709,000
      Minority interests                                                       -          (11,822,000)          (6,974,000)
      Deferred income taxes                                          (16,852,000)           5,063,000                    -
      Amortization of original issue discount                        122,639,000          104,264,000           29,379,000
      Other                                                           (8,148,000)           8,578,000            6,229,000
      Changes in operating assets and liabilities, net
        of effect from business acquisitions:
           Accounts receivable                                       (30,430,000)          10,050,000           (6,496,000)
           Other current assets                                       (6,563,000)         (20,316,000)          (6,749,000)
           Other assets                                                2,303,000              (24,000)            (123,000)
           Accounts payable                                           (4,615,000)          (2,869,000)          20,583,000
           Accrued expenses and other                                 74,706,000           35,691,000            9,926,000
           Deferred revenue                                           18,994,000              278,000            1,075,000
                                                                  ----------------------------------------------------------
Net cash (used in)  operating activities                             (17,271,000)         (21,405,000)         (10,147,000)

INVESTING ACTIVITIES
Purchase of fixed assets                                            (503,656,000)        (505,664,000)        (445,550,000)
Payment of deferred purchase price                                   (57,330,000)                   -                    -
Increase in other assets                                              (4,322,000)          (6,013,000)          (3,361,000)
Acquisitions of subsidiaries and minority 
   interests, net of cash acquired                                             -         (332,693,000)         (12,412,000)
Purchase of marketable securities                                   (145,939,000)                   -                    -
Proceeds from sales of marketable securities                         142,596,000                    -                    -
                                                                  ----------------------------------------------------------
Net cash (used in) investing activities                             (568,651,000)        (844,370,000)        (461,323,000)
</TABLE>



                                      F-7
<PAGE>


                        NTL Incorporated and Subsidiaries
                Consolidated Statements of Cash Flows (continued)

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31
                                                                        1997                1996                   1995
                                                                  ----------------------------------------------------------
<S>                                                               <C>                  <C>                   <C>   
FINANCING ACTIVITIES
Proceeds from borrowings and sale of preferred
   stock,  net of financing costs                                 $  490,302,000       $1,146,190,000        $ 326,166,000
Principal payments                                                  (242,424,000)         (95,283,000)          (9,963,000)
Cash released from escrow                                                      -            1,600,000            2,810,000
Capital contribution from minority partner                                     -                    -           12,626,000
Proceeds from borrowings from minority partner                                 -           31,232,000           19,065,000
Proceeds from exercise of stock options and warrants                   1,671,000            1,665,000              102,000
                                                                  ----------------------------------------------------------
Net cash provided by financing activities                            249,549,000        1,085,404,000          350,806,000

Effect of exchange rate changes on cash                              (10,609,000)          50,972,000            1,345,000
                                                                  ----------------------------------------------------------
Increase (decrease) in cash and cash equivalents                    (346,982,000)         270,601,000         (119,319,000)
Cash and cash equivalents at beginning of year                       445,884,000          175,283,000          294,602,000
                                                                  ----------------------------------------------------------
Cash and cash equivalents at end of year                          $   98,902,000       $  445,884,000       $  175,283,000
                                                                  ==========================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest exclusive
   of amounts capitalized                                         $   72,047,000       $   27,595,000       $    1,735,000
Income taxes paid                                                      1,107,000              367,000            1,695,000

SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Accretion of dividends and discount on senior redeemable
   exchangeable preferred stock                                   $   12,263,000       $            -       $            -
Warrants issued in connection with consent solicitations                       -            1,641,000                    -
Common stock issued for acquisition                                            -           34,137,000                    -
Preferred stock issued for acquisition of minority interest,
   including notes payable to minority partner                                 -           49,000,000                    -
Liabilities incurred in connection with acquisitions                           -           81,906,000                    -

</TABLE>

See accompanying notes.


                                      F-8
<PAGE>


                        NTL Incorporated and Subsidiaries
                   Notes to Consolidated Financial Statements

1.  ORGANIZATION

NTL Incorporated  (the "Company"),  through its subsidiaries and joint ventures,
owns and operates television and radio broadcasting, cable television, telephone
and telecommunications  systems in the United Kingdom and provides long-distance
telephone  service in the United  States.  Based on  revenues  and  identifiable
assets,  the Company's  predominant  lines of business are  television and radio
broadcasting, cable television, telephone and telecommunications services in the
United Kingdom.

2.  SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
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.

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 gains
or  losses  resulting  from the  change in  exchange  rates  have been  reported
separately as a component of shareholders' equity (deficiency).

CASH EQUIVALENTS

Cash  equivalents  are  short-term  highly liquid  investments  purchased with a
maturity  of three  months  or  less.  Cash  equivalents  were  $55,894,000  and
$339,249,000  at  December  31,  1997 and 1996,  respectively,  which  consisted
primarily of repurchase  agreements and corporate  commercial paper. At December
31, 1997 and 1996, none and $238,862,000, respectively, of such cash equivalents
were denominated in British pounds sterling.


                                      F-9
<PAGE>


                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

MARKETABLE SECURITIES

Marketable securities are classified as available-for-sale, which are carried at
fair value.  Unrealized holding gains and losses on securities,  net of tax, are
carried  as a separate  component  of  shareholders'  equity  (deficiency).  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.  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.

Marketable  securities  at December  31, 1997 consist of federal  agency  notes.
During the year ended December 31, 1997,  there were no realized gains or losses
on sales of securities. All of the marketable securities as of December 31, 1997
had a contractual maturity of less than one year.

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.  Depreciation is computed by the straight-line method over
the estimated useful lives of the assets. Estimated useful lives are as follows:
operating equipment - 5 to 40 years and other equipment - 3 to 22.5 years.

Long-lived  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.

INTANGIBLE ASSETS

Intangible assets include goodwill and license  acquisition  costs.  Goodwill is
the excess of the purchase  price over the fair value of net assets  acquired in
business  combinations  accounted for as  purchases.  Goodwill is amortized on a
straight-line  basis over the periods benefited,  principally 30 years.  License
acquisition costs represent the portion of purchase price allocated to the cable
television and  telecommunications  licenses acquired in business  combinations.
License  acquisition  costs are  amortized  on a  straight-line  basis  over the
remaining  life of the license as follows:  cable  television  license - 7 to 12
years and telecommunications license - 23 years. The Company continually reviews
the  recoverability  of the  carrying  value  of  these  assets  using  the same
methodology that it uses for the evaluation of its other long-lived assets.

                                      F-10
<PAGE>


                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

OTHER ASSETS

Other assets consist primarily of noncompetition agreements obtained in exchange
for the  issuance of warrants to  purchase  an  aggregate  of 899,000  shares of
common stock and deferred  financing costs. The  noncompetition  agreements were
valued at the  difference  between the fair market  value of the common stock on
the date of grant and the exercise  price of the  warrants.  The  noncompetition
agreements are being expensed on a straight-line  basis over the  noncompetition
period of  primarily  five  years.  Deferred  financing  costs were  incurred in
connection  with the  issuance  of debt and are  amortized  over the term of the
related debt.

CAPITALIZED INTEREST

Interest is capitalized as a component of the cost of fixed assets  constructed.
In 1997, 1996 and 1995,  interest of $6,770,000,  $10,294,000  and  $12,183,000,
respectively, was capitalized.

REVENUE RECOGNITION

Revenues are recognized at the time the service is provided to the customer.

CABLE TELEVISION SYSTEM COSTS, EXPENSES AND REVENUES

The  Company  accounts  for  costs,  expenses  and  revenues  applicable  to the
construction   and   operation   of  its   cable   television,   telephone   and
telecommunications  systems in accordance with SFAS No. 51, "Financial Reporting
by Cable Television Companies."

ADVERTISING EXPENSE

The Company expenses the cost of advertising as incurred. Advertising costs were
$31,003,000, $22,727,000 and $10,370,000 in 1997, 1996 and 1995, respectively.

NET (LOSS) PER SHARE

In February 1997, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings Per Share".  SFAS 128 replaced the calculation of primary and
fully  diluted  earnings  per share with basic and diluted  earnings  per share.
Unlike  primary  earnings  per share,  basic  earnings  per share  excludes  any
dilutive  effects of  options,  warrants  and  convertible  securities.  Diluted
earnings  per share is very similar to the  previously  reported  fully  diluted
earnings per share. The Company adopted SFAS No. 128 for each of the three years
in the period ended December 31, 1997.

                                      F-11
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION

The  Company  has  adopted  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.

RECLASSIFICATIONS

Certain  prior  year  amounts  have been  reclassified  to  conform  to the 1997
presentation.

3.  RECENT ACCOUNTING PRONOUNCEMENTS

COMPREHENSIVE INCOME

In June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive  Income".
SFAS No. 130 requires  that all items that are required to be  recognized  under
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial statements. SFAS No. 130 is effective for fiscal years beginning after
December  15,  1997.  The Company  will adopt SFAS No. 130 in the first  interim
period for its fiscal year ending December 31, 1998.

SEGMENT REPORTING

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  about Segments of an
Enterprise and Related Information".  SFAS No. 131 establishes standards for the
way that public business enterprises report information about operating segments
in annual  financial  statements  and  requires  that those  enterprises  report
selected  information  about  operating  segments in interim  financial  reports
issued to shareholders.  It also establishes  standards for related  disclosures
about products and services, geographic areas, and major customers. SFAS No. 131
is effective for financial  statements for periods  beginning after December 15,
1997.  The Company  will adopt SFAS No. 131 for its fiscal year ending  December
31, 1998. The Company is currently  evaluating the effect that the adoption will
have on its financial statements.

4.  CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES

NEED FOR ADDITIONAL FINANCING

The Company will  require  additional  financing in the future.  There can be no
assurance that the required financing will be obtainable on acceptable terms.


                                      F-12
<PAGE>


                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


4.  CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES (CONTINUED)

REQUIREMENTS TO MEET BUILD MILESTONES

The  telecommunications  license  for each  United  Kingdom  franchise  contains
specific  construction   milestones.   Based  on  current  network  construction
scheduling,  the Company  believes it will be able to satisfy its  milestones in
the future,  but there can be no assurance that such  milestones will be met. If
the Company is unable to meet the construction milestones required by any of its
licenses and is unable to obtain  modifications to the milestones,  the relevant
licenses could be revoked.

CONCENTRATIONS

The  Company's  television  and radio  broadcasting  business  is  substantially
dependent  upon  contracts  with a small  group of  companies  for the  right to
broadcast  their  programming,  and upon a site  sharing  agreement  for a large
number of its transmission  sites. The loss of any one of these contracts or the
site sharing  agreement could have a material  adverse effect on the business of
the Company.

LIMITED ACCESS TO PROGRAMMING

The  Company's  ability  to make a  competitive  offering  of  cable  television
services is dependent on the Company's  ability to obtain access to  programming
at a reasonable  cost.  There can be no  assurance  that the  Company's  current
programming  will continue to be available on acceptable  commercial terms or at
all.

CURRENCY RISK

To the extent that the Company  obtains  financing in United States  dollars and
incurs  construction  and operating  costs in British pounds  sterling,  it will
encounter currency exchange rate risks. In addition,  the Company's revenues are
generated  primarily in British pounds sterling while its interest and principal
obligations  with respect to most of the  Company's  existing  indebtedness  are
payable  in United  States  dollars.  The  Company  has  entered  into an option
agreement  to hedge some of the risk of exchange  rate  fluctuations  related to
interest payments on United States dollar denominated debt.


                                  F-13
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


5.  FIXED ASSETS

Fixed assets consists of:

                                                     DECEMBER 31
                                            1997                      1996
                                     ------------------------------------------
Operating equipment                    $1,612,440,000            $1,080,135,000
Other equipment                           225,514,000               197,368,000
Construction-in-progress                  134,795,000               305,372,000
                                     ------------------------------------------
                                        1,972,749,000             1,582,875,000
Accumulated depreciation                 (215,764,000)             (123,347,000)
                                     ------------------------------------------
                                       $1,756,985,000            $1,459,528,000
                                     ==========================================

6.  INTANGIBLE ASSETS

Intangible assets consists of:

                                                      DECEMBER 31
                                            1997                      1996
                                     ------------------------------------------
License acquisition costs, net
  of accumulated amortization
  of $46,620,000 (1997) and 
  $34,894,000 (1996)                     $123,116,000              $134,909,000
Goodwill, net of accumulated
  amortization of $13,449,000
  (1997) and $5,986,000 (1996)            241,363,000               258,024,000
                                     ------------------------------------------
                                         $364,479,000              $392,933,000
                                     ==========================================

In October  1996,  the Company  acquired the  remaining  40% interest it did not
already own in  CableTel  Newport in  exchange  for 780 shares of the  Company's
Series A Preferred Stock.  CableTel Newport owns and operates cable  television,
telephone  and  telecommunications  franchises  in  South  Wales.  The  Series A
Preferred Stock was valued at $49,000,000,  based on an appraisal as of the date
of issuance.  The fair value of the net tangible  assets acquired of $67,710,000
exceeded the aggregate  purchase price of $49,062,000  (including costs incurred
of $62,000)  by  $18,648,000,  which is  classified  as a  reduction  to license
acquisition costs.

In September 1996, the Company  acquired the remaining 30% minority  interest of
English  Cable  Enterprises,  Inc.  ("ECE")  that the  Company  did not own,  in
exchange  for  1,415,000   shares  of  its  common  stock.   ECE,   through  its
subsidiaries,  owns four  cable  television,  telephone  and  telecommunications
licenses in the northern  suburbs of London.  The value of the shares,  based on
the market price on the date of issuance,  of $34,137,000 plus costs incurred of
$204,000  exceeded  the  fair  value  of the net  tangible  assets  acquired  by
$28,649,000, which is classified as license acquisition costs.


                                      F-14
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


6.  INTANGIBLE ASSETS (CONTINUED)

In May 1996, an indirect wholly-owned  subsidiary of the Company, NTL Investment
Holdings  Limited  ("NTLIH"),   acquired  NTL  Group  Limited  for  payments  of
approximately 204,000,000 pounds sterling at closing, 17,100,000 pounds sterling
in October 1996 and  35,000,000  pounds  sterling in May 1997. NTL Group Limited
provides  television  and  radio  transmission  services  and a range  of  other
services in the broadcasting and telecommunications industries. This acquisition
has been  accounted  for as a  purchase,  and,  accordingly,  the net assets and
results  of   operations  of  NTL  Group  Limited  have  been  included  in  the
consolidated  financial  statements from the date of acquisition.  The aggregate
purchase price of 256,100,000 pounds sterling ($439,000,000) plus costs incurred
of  $3,700,000  exceeded the fair value of the net tangible  assets  acquired by
$263,000,000, which is classified as goodwill.

The pro forma  unaudited  consolidated  results of operations for the year ended
December 31, 1996 assuming  consummation of the above mentioned  transactions as
of January 1, 1996 is as follows:


      Total revenue                                      $289,638,000
      Net loss                                           (265,180,000)
      Basic and diluted net loss per share                      (8.31)


In October 1995,  CableTel  South Wales Limited,  a  wholly-owned  subsidiary of
CableTel  Newport,  acquired  the cable  television  business  of Metro Cable TV
Limited in South Wales  ("Metro  Wales"),  and  CableTel  Central  Hertfordshire
Limited,  a  wholly-owned  subsidiary  of ECE,  acquired  the  cable  television
business  of Metro Cable TV Limited in  Hertfordshire  ("Metro  Herts"),  for an
aggregate  consideration of $12,125,000.  These acquisitions have been accounted
for as purchases, and, accordingly,  the net assets and results of operations of
Metro Wales and Metro Herts have been  included  in the  consolidated  financial
statements from the date of acquisition.  The aggregate  purchase price exceeded
the fair value of the net  tangible  assets  acquired by  $10,167,000,  which is
classified  as license  acquisition  costs.  In 1996,  the Metro  Wales  license
acquisition costs were reduced by $565,000.


                                      F-15
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


7.  LONG-TERM DEBT

Long-term debt consists of:
<TABLE>
<CAPTION>

                                                                               DECEMBER 31
                                                                      1997                     1996
                                                           ---------------------------------------------------
<S>                                                             <C>                      <C>
10-7/8% Senior Deferred Coupon Notes
   ("10-7/8% Notes") (a)                                        $  194,959,000           $  175,368,000
12-3/4% Series A Senior Deferred Coupon Notes
   ("12-3/4% Notes") (b)                                           209,387,000              185,043,000
11-1/2% Series B Senior Deferred Coupon Notes                                     
   ("11-1/2% Notes") (c)                                           743,961,000              665,257,000
10% Series B Senior Notes ("10% Notes") (d)                        400,000,000                        -
7-1/4% Convertible Subordinated Notes
   ("7-1/4 Convertible Notes") (e)                                 191,750,000              191,750,000
7% Convertible Subordinated Notes
   ("7% Convertible Notes") (f)                                    275,000,000              275,000,000
Term Loan and Revolving Facility (g)                                         -              239,750,000
                                                           ---------------------------------------------------
                                                                $2,015,057,000           $1,732,168,000
                                                           ========================== ========================
</TABLE>


(a)  In October 1993, the Company issued $212,000,000 aggregate principal amount
     of 10-7/8%  Senior  Deferred  Coupon Notes due 2003. The 10-7/8% Notes were
     issued at a price to the  public of 58.873% or  $124,811,000.  The  Company
     incurred  $5,019,000  in fees and  expenses  which is  included in deferred
     financing  costs. The original issue discount on the 10-7/8% Notes accretes
     at a rate of 10-7/8%,  compounded  semiannually,  to an aggregate principal
     amount of $212,000,000 by October 15, 1998. Interest will thereafter accrue
     at 10-7/8% per annum,  payable  semiannually  beginning  on April 15, 1999.
     During 1997, 1996 and 1995, the Company recognized $19,591,000, $17,620,000
     and $15,851,000,  respectively,  of the original issue discount as interest
     expense.

     The 10-7/8% Notes are  effectively  subordinated to all existing and future
     indebtedness  and  other  liabilities  and  commitments  of  the  Company's
     subsidiaries. The 10-7/8% Notes may be redeemed at the Company's option, in
     whole or in part,  at any time on or after October 15, 1998 at 103.107% the
     first year, 101.554% the second year and 100% thereafter,  plus accrued and
     unpaid  interest to the date of  redemption.  The  indenture  governing the
     10-7/8% Notes contains  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.


                                      F-16
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


7.  LONG-TERM DEBT (CONTINUED)

(b)  In April 1995, the Company issued  $277,803,500  aggregate principal amount
     of 12-3/4%  Senior  Deferred  Coupon Notes due 2005. The 12-3/4% Notes were
     issued at a price to the  public of 53.995% or  $150,000,000.  The  Company
     incurred $6,192,000 in fees and expenses in connection with the issuance of
     12-3/4% Notes which is included in deferred  financing  costs. The original
     issue discount accretes at a rate of 12-3/4%,  compounded semiannually,  to
     an aggregate  principal amount of $277,803,500 by April 15, 2000.  Interest
     will thereafter accrue at 12-3/4% per annum, payable semiannually beginning
     on October 15, 2000.  During 1997,  1996 and 1995,  the Company  recognized
     $24,344,000,  $21,515,000 and $13,528,000,  respectively, of original issue
     discount as interest expense.

     The 12-3/4% Notes are  effectively  subordinated to all existing and future
     indebtedness  and  other  liabilities  and  commitments  of  the  Company's
     subsidiaries, rank pari passu in right of payment with all senior unsecured
     indebtedness  and  rank  senior  in right of  payment  to all  subordinated
     indebtedness  of the  Company.  The  12-3/4%  Notes may be  redeemed at the
     Company's  option,  in whole or in part,  at any time on or after April 15,
     2000  at  103.64%  the  first  year,  101.82%  the  second  year  and  100%
     thereafter, plus accrued and unpaid interest to the date of redemption. The
     indenture  governing the 12-3/4% Notes contains  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.

(c)  In January 1996,  the Company  issued  $1,050,000,000  aggregate  principal
     amount of  11-1/2%  Series B Senior  Deferred  Coupon  Notes due 2006.  The
     11-1/2%  Notes  were  issued  at a price to  investors  of  57.155%  of the
     aggregate  principal  amount  at  maturity  or  $600,127,500.  The  Company
     incurred  $19,273,000 in fees and expenses in connection  with the issuance
     of the 11-1/2%  Notes which is included in deferred  financing  costs.  The
     original  issue  discount  accretes  at  a  rate  of  11-1/2%,   compounded
     semiannually,  to  an  aggregate  principal  amount  of  $1,050,000,000  by
     February 1, 2001.  Interest  will  thereafter  accrue at 11-1/2% per annum,
     payable semiannually beginning on August 1, 2001. During 1997 and 1996, the
     Company  recognized  $78,704,000 and $65,129,000 of original issue discount
     as interest expense.

     The 11-1/2% Notes are  effectively  subordinated to all existing and future
     indebtedness  and  other  liabilities  and  commitments  of  the  Company's
     subsidiaries, rank pari passu in right of payment with all senior unsecured
     indebtedness  and  rank  senior  in right of  payment  to all  subordinated
     indebtedness  of the  Company.  The  11-1/2%  Notes may be  redeemed at the
     Company's  option, in whole or in part, at any time on or after February 1,
     2001 at  105.75%  the  first  year,  102.875%  the  second  year  and  100%
     thereafter, plus accrued and unpaid interest to the date of redemption. The
     indenture  governing the 11-1/2% Notes contains  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.


                                      F-17
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


7.  LONG-TERM DEBT (CONTINUED)

(d)  In February  1997,  the Company  issued  $400,000,000  aggregate  principal
     amount of 10% Senior Notes due 2007.  The Company  received net proceeds of
     $389,000,000  after discounts and commissions  from the issuance of the 10%
     Notes.  Discounts,  commissions  and other fees incurred of $11,885,000 are
     included in deferred  financing costs. The 10% Notes accrue interest at 10%
     per annum, payable semiannually as of August 15, 1997.

     The 10% Notes are  effectively  subordinated  to all  existing  and  future
     indebtedness  and  other  liabilities  and  commitments  of  the  Company's
     subsidiaries.  The 10% Notes may be redeemed at the  Company's  option,  in
     whole or in part, at any time on or after February 15, 2002 at a redemption
     price of 105% that declines annually to 100% in 2005, in each case together
     with accrued and unpaid  interest to the date of redemption.  The indenture
     governing  the 10% Notes  contains  restrictions  relating  to, among other
     things:  (i)  incurrence  of  additional  indebtedness  and the issuance of
     preferred  stock,  (ii) dividend and other payment  restrictions  and (iii)
     mergers, consolidations and sales of assets.

(e)  In April and May 1995, the Company issued $191,750,000  principal amount of
     7-1/4% Convertible  Subordinated Notes due 2005. Interest payments began on
     October 15, 1995 and interest is payable every six months  thereafter.  The
     7-1/4%  Convertible  Notes  will  mature  on April  15,  2005.  The  7-1/4%
     Convertible  Notes are  unsecured  obligations  convertible  into shares of
     common stock prior to maturity at a  conversion  price of $27.56 per share,
     subject to adjustment.  There are approximately  6,958,000 shares of common
     stock reserved for issuance upon the  conversion of the 7-1/4%  Convertible
     Notes. The 7-1/4% Convertible Notes are redeemable, in whole or in part, at
     the option of the  Company  at any time on or after  April 15,  1998,  at a
     redemption  price of 105.08% that declines  annually to 100.73% in 2004, in
     each case  together  with  accrued  interest to the  redemption  date.  The
     Company  incurred  $6,822,000 in fees and expenses in  connection  with the
     issuance  of the 7-1/4%  Convertible  Notes,  which is included in deferred
     financing costs.

     In March 1998, the Company announced that it was calling for redemption all
     of the 7-1/4%  Convertible Notes. The redemption date is April 20, 1998 and
     the redemption price is 105.08% of the principal  amount,  plus accrued and
     unpaid interest through the date of redemption.

(f)  In June 1996, the Company issued $275,000,000 aggregate principal amount of
     7%  Convertible  Subordinated  Notes due 2008.  Interest  payments began on
     December 15, 1996 and interest is payable every six months thereafter.  The
     7% Convertible  Notes mature on June 15, 2008. The 7% Convertible Notes are
     unsecured  obligations  convertible  into  shares of common  stock prior to
     maturity at a conversion price of $37.875 per share, subject to adjustment.
     There are  approximately  7,261,000  shares of common  stock  reserved  for
     issuance upon  conversion of the 7% Convertible  Notes.  The 7% Convertible
     Notes are redeemable,  in whole or in part, at the option of the Company at
     any time on or after June 15, 1999,  at a  redemption  price of 104.9% that
     declines annually to 100% in 2006, in


                                      F-18
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


7.  LONG-TERM DEBT (CONTINUED)

     each case together with accrued and unpaid interest to the redemption date.
     The Company incurred $8,616,000 in fees and expenses in connection with the
     issuance  of the 7%  Convertible  Notes,  which  is  included  in  deferred
     financing costs.

(g)  To  finance  a  substantial  portion  of the  purchase  price for NTL Group
     Limited,  NTLIH  obtained from a syndicate of lenders  senior  secured loan
     facilities  (the  "NTLIH  Facility")  of  a  maximum  principal  amount  of
     165,000,000  pounds sterling comprised of: (i) a long-term loan facility of
     140,000,000  pounds  sterling  and  (ii) a  revolving  credit  facility  of
     25,000,000 pounds sterling. One of the Lenders also made available to NTLIH
     a  secured  loan  facility  of  60,000,000  pounds  sterling  (the  "Bridge
     Facility")  to finance  the  remainder  of the  payment  due at closing and
     acquisition  costs  and  expenses  due at  closing.  Loans  under the NTLIH
     Facility  incurred  interest at an annual rate equal to LIBOR plus a margin
     that  varied  from  0.75% per annum to 1.75% per  annum,  based on  certain
     financial  ratios of NTLIH and certain of its  subsidiaries.  Interest  was
     payable either monthly, quarterly or semiannually,  at the option of NTLIH.
     The effective  interest rate on the NTLIH Facility at December 31, 1996 was
     7.972%.  The Bridge  Facility was repaid in full in August 1996. In October
     1997,  the  principal  and  accrued  interest  outstanding  under the NTLIH
     Facility of 140,138,000  pounds  sterling  ($231,466,000)  was repaid using
     cash on hand.

In 1997, NTL (UK) Group, Inc., a wholly-owned  subsidiary of the Company,  which
is the holding company for the United Kingdom  operations and the parent company
of NTLIH,  and NTLIH  entered into an agreement  with The Chase  Manhattan  Bank
pursuant  to which Chase has agreed to fully  underwrite  a  555,000,000  pounds
sterling,  eight-year  term loan  facility with an initial  four-year  revolving
period.  By April 14, 1999,  Chase's  commitment will be reduced to no less than
480,000,000  pounds  sterling or such  greater  amount as is necessary to ensure
that the Company's United Kingdom operations remain fully funded by reference to
an  agreed  business  plan.  The  facility  will  be  used  to  finance  capital
expenditures  and working capital for the Company's  United Kingdom  operations,
including its local broadband,  national telecommunications and national digital
television  networks.  A portion of the facility (75,000,000 pounds sterling) is
conditional  upon the  execution  of  contracts  to provide  digital  television
transmission services to certain third parties.  Chase has provided a portion of
the  555,000,000  pounds sterling  facility in the form of a 350,000,000  pounds
sterling  facility  to  the  Company  on  the  same  terms  as to  restrictions,
covenants,  guarantees and security as the 555,000,000 pounds sterling facility.
As of March 20, 1998,  10,000,000  pounds sterling  ($16,517,000) is outstanding
under the 350,000,000 pounds sterling facility. The principal amount outstanding
under the  350,000,000  pounds  sterling  facility  is  required to be repaid on
December  31,  2005.   Interest  is  payable   either   monthly,   quarterly  or
semi-annually,  at the option of NTLIH,  at LIBOR plus, at a maximum,  2.25% per
annum.  The commitment  fee is .375% per annum on the unutilized  portion of the
350,000,000  pounds sterling facility and is payable  quarterly in arrears.  The
facility is secured by first  fixed and  floating  charges  over all present and
future assets and undertakings of the United Kingdom group. The facility


                                      F-19
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

7.  LONG-TERM DEBT (CONTINUED)

contains customary financial covenants,  and certain  restrictions  relating to,
among other things:  (i)  incurrence of additional  indebtedness  or guarantees,
(ii) investments,  acquisitions and mergers and (iii) dividend and other payment
restrictions.  In the  absence  of a default,  the  facility  generally  permits
payments to the Company to pay interest and  principal of existing  indebtedness
of the Company.  At December 31, 1997,  restricted net assets were approximately
$1,861,000,000.

In  March  1998,  the  Company  issued  125,000,000  pounds  sterling  aggregate
principal  amount of 9-1/2% Senior Notes due 2008 (the "Sterling Senior Notes"),
300,000,000  pounds  sterling  aggregate  principal  amount  of  10-3/4%  Senior
Deferred  Coupon  Notes due 2008 (the  "Sterling  Deferred  Coupon  Notes")  and
$1,300,000,000 aggregate principal amount of 9-3/4% Senior Deferred Coupon Notes
due 2008 (the "Dollar  Deferred Coupon Notes")  (together the "New Notes").  The
Sterling  Senior Notes,  Sterling  Deferred Coupon Notes and the Dollar Deferred
Coupon  Notes  were  issued at a price to the  public  of 99.67% or  124,588,000
pounds  sterling,   58.62%  or  175,860,000   pounds  sterling  and  61.724%  or
$802,412,000,  respectively.  The Company  received net proceeds of  121,161,000
pounds sterling,  170,584,000 pounds sterling and $778,340,000,  after discounts
and  commissions,  from the issuance of the Sterling Senior Notes,  the Sterling
Deferred Coupon Notes and the Dollar Deferred Coupon Notes, respectively.

The original issue discount of the Sterling  Deferred Coupon Notes accretes at a
rate of 10-3/4%,  compounded  semiannually,  to an aggregate principal amount of
300,000,000 pounds sterling by April 1, 2003. The original issue discount of the
Dollar  Deferred  Coupon  Notes  accretes  at  a  rate  of  9-3/4%,   compounded
semiannually,  to an aggregate  principal amount of  $1,300,000,000  by April 1,
2003.  Interest on each of the  Sterling  Deferred  Coupon  Notes and the Dollar
Deferred Coupon Notes will thereafter accrue at 10-3/4% per annum and 9-3/4% per
annum,  respectively,  payable  semiannually,  beginning on October 1, 2003. The
Sterling Senior Notes accrue interest at 9-1/2% per annum, payable semiannually,
beginning on October 1, 1998.

The  New  Notes  are  effectively   subordinated  to  all  existing  and  future
indebtedness   and  other   liabilities   and   commitments   of  the  Company's
subsidiaries,  rank pari passu in right of payment  with each other and with all
senior unsecured indebtedness of the Company and rank senior in right of payment
to all subordinated indebtedness of the Company.

The New Notes may be redeemed at the Company's  option,  in whole or in part, at
any time on or  after  April 1,  2003,  at a  redemption  price of  104-3/4%  to
105-3/8%  that  declines  annually to 100% in 2006,  in each case  together with
accrued and unpaid interest to the date of redemption.

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


                                      F-20
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

8.  REDEEMABLE PREFERRED STOCK

In February 1997, the Company issued  $100,000,000 of its 13% Senior  Redeemable
Exchangeable  Preferred Stock (the "Redeemable  Preferred  Stock").  The Company
received net proceeds of $96,625,000  after discounts and  commissions  from the
issuance of the Redeemable  Preferred  Stock.  Discounts,  commissions and other
fees incurred of $3,729,000 were recorded as unamortized discount at issuance.

Of the 2,500,000  authorized shares of Series Preferred Stock, 100,000 shares of
Redeemable Preferred Stock were issued.  Dividends accrue at 13% per annum ($130
per share) and are payable  quarterly in arrears as of May 15, 1997.  Dividends,
whether or not earned or declared,  will accrue without  interest until declared
and paid,  which  declaration  may be for all or part of the accrued  dividends.
Dividends  accruing on or prior to  February  15, 2004 may, at the option of the
Company,  be paid in cash,  by the issuance of additional  Redeemable  Preferred
Stock or in any  combination  of the  foregoing.  As of December 31,  1997,  the
Company has  accrued  $11,978,000  for  dividends  and has issued  approximately
10,000  shares  for  $10,187,000  of  such  accrued  dividends.  The  Redeemable
Preferred Stock may be redeemed,  at the Company's  option, in whole or in part,
at any time on or after February 15, 2002 at a redemption price of 106.5% of the
liquidation  preference  of $1,000 per share that  declines  annually to 100% in
2005, in each case together with accrued and unpaid  dividends to the redemption
date.  The  Redeemable  Preferred  Stock is subject to mandatory  redemption  on
February 15, 2009. On any scheduled  dividend  payment date, the Company may, at
its  option,  exchange  all of the  shares of  Redeemable  Preferred  Stock then
outstanding for the Company's 13% Subordinated Exchange Debentures due 2009 (the
"Subordinated Debentures").

The Subordinated Debentures,  if issued, will bear interest at a rate of 13% per
annum, payable semiannually in arrears on February 15 and August 15 of each year
commencing  with the  first  such  date to  occur  after  the date of  exchange.
Interest  accruing  on or prior to  February  15, 2004 may, at the option of the
Company, be paid in cash, by the issuance of additional  Subordinated Debentures
or in any  combination of the foregoing.  The  Subordinated  Debentures  will be
redeemable,  at the Company's  option, in whole or in part, on or after February
15, 2002 at a redemption price of 106.5% that declines annually to 100% in 2005,
in each case together with accrued and unpaid interest to the redemption date.

9.  NONRECURRING CHARGES INCLUDING RESTRUCTURING CHARGES

Nonrecurring  charges of $20,642,000 in 1997 include deferred costs  written-off
of  $5,013,000  and  restructuring  costs of  $15,629,000.  The  deferred  costs
written-off relate to the Company's  unsuccessful bid for United Kingdom digital
terrestrial  television  multiplex  licenses.  Restructuring costs relate to the
Company's  announcement in September 1997 of a reorganization  of certain of its
operations.  The Company is consolidating  the Customer  Operations  departments
that serve its three  franchise  areas in England  into one  department,  and is
consolidating  certain  operations  and  management  groups within the Broadcast
Services division,


                                      F-21
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

9.  NONRECURRING CHARGES INCLUDING RESTRUCTURING CHARGES (CONTINUED)

as well as certain other consolidations or cessations of activities. This charge
consisted  of  employee   severance  and  related   costs  of   $6,726,000   for
approximately 280 employees to be terminated, lease exit costs of $6,539,000 and
penalties  of  $2,364,000   associated  with  the  cancellation  of  contractual
obligations. As of December 31, 1997, $5,441,000 of the provision has been used,
including  $2,916,000 for severance and related  costs,  $324,000 for lease exit
costs  and  $2,201,000  for  penalties   associated  with  the  cancellation  of
contractual  obligations,  and 118 employees had been  terminated.  There was no
other adjustment to the liability.

10.  OTHER GAINS

Other gains of $21,497,000 in 1997 include a legal settlement of $10,000,000 and
a gain on the sale of fixed assets of  $11,497,000.  In October 1997,  following
the U.S.  District Court's decision to dismiss the Company's  complaint  against
LeGroupe  Videotron  Ltee  and  its  subsidiary,  the  Company  entered  into  a
Settlement  Agreement  dismissing  the  Company's  complaint  in exchange  for a
payment of $10,000,000.  In December 1997, a U.S. subsidiary of the Company sold
its  fixed and other  assets  utilized  in its  microwave  transmission  service
business and recognized a gain of $11,497,000.

11.  INCOME TAXES

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


                                             YEAR ENDED DECEMBER 31
                                  1997               1996              1995
                            ---------------------------------------------------
  Current:
     Federal                 $          -        $        -       $  (181,000)
     State and local            1,261,000           344,000           167,000
     Foreign                            -         2,246,000        (2,463,000)
                            ---------------------------------------------------
  Total current                 1,261,000         2,590,000        (2,477,000)
                            ---------------------------------------------------

  Deferred:
     Federal                            -                 -                 -
     State and local                    -                 -                 -
     Foreign                  (16,852,000)        5,063,000                 -
                            ---------------------------------------------------
  Total deferred              (16,852,000)        5,063,000                 -
                            ---------------------------------------------------
                             $(15,591,000)       $7,653,000       $(2,477,000)
                            ===================================================

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


                                      F-22
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

11.  INCOME TAXES (CONTINUED)

income tax purposes.  Significant components of the deferred tax liabilities and
assets are as follows:


                                                           DECEMBER 31
                                                      1997             1996
                                               ---------------------------------
Deferred tax liabilities:
   Fixed assets                                 $  68,380,000     $  78,433,000
   Depreciation and amortization                            -        30,623,000
   Other                                            4,894,000         6,018,000
                                               ---------------------------------
Total deferred tax liabilities                     73,274,000       115,074,000
Deferred tax assets:
   Net operating losses                           107,208,000        99,227,000
   Net deferred interest expense                   94,689,000        51,770,000
   Depreciation and amortization                   16,935,000                 -
   Other                                           18,164,000        10,396,000
                                               ---------------------------------
Total deferred tax assets                         236,996,000       161,393,000
Valuation allowance for deferred
   tax assets                                    (233,940,000)     (141,250,000)
                                               ---------------------------------
Net deferred tax assets                             3,056,000        20,143,000
                                               ---------------------------------
Net deferred tax liabilities                    $  70,218,000     $  94,931,000
                                               =================================

At December  31,  1997,  the Company had net  operating  loss  carryforwards  of
approximately  $56,000,000  for U.S.  federal income tax purposes that expire as
follows:  $500,000 in 2008, $1,100,000 in 2009, $21,000,000 in 2010, $27,700,000
in 2011 and  $5,700,000  in  2012.  The  Company  also has  United  Kingdom  net
operating  loss  carryforwards  of  approximately  $290,000,000  which  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.

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

                                               YEAR ENDED DECEMBER 31
                                        1997            1996             1995
                                   ---------------------------------------------
Provision (benefit) at 
  federal statutory rate (35%)     $(120,452,000)   $(90,518,000)  $(35,083,000)
Add (deduct):
  State and local income tax,
    net of federal benefit               820,000         224,000        109,000
  Foreign losses with no benefit      59,804,000      44,610,000      6,699,000
  Amortization of goodwill and
    license acquisition costs          3,925,000       4,031,000      3,696,000
  U.S. losses with no benefit         40,312,000      49,184,000     22,507,000
  Other                                        -         122,000       (405,000)
                                   ---------------------------------------------
                                   $ (15,591,000)     $7,653,000    $(2,477,000)
                                   =============================================


                                      F-23
<PAGE>

                        NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


12.  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.

     Long-term  debt: The fair values of the 10-7/8%  Notes,  the 12-3/4% Notes,
     the 11-1/2% Notes, the 10% Notes, the 7-1/4%  Convertible  Notes and the 7%
     Convertible  Notes are based on the quoted market price.  The fair value of
     the Term Loan and Revolving  Facility is estimated  using  discounted  cash
     flow  analysis,  based  on the  Company's  incremental  borrowing  rate for
     similar types of borrowing arrangements.

     Redeemable  Preferred  Stock:  The fair value is based on the quoted market
     price.

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

<TABLE>
<CAPTION>

                                                      DECEMBER 31, 1997                     DECEMBER 31, 1996
                                             -------------------------------     ----------------------------------
                                                CARRYING                              CARRYING
                                                 AMOUNT          FAIR VALUE            AMOUNT           FAIR VALUE
                                             ----------------------------------------------------------------------
<S>                                          <C>               <C>                 <C>                <C>
Cash and cash equivalents                    $  98,902,000     $  98,902,000       $ 445,884,000      $ 445,884,000
Long-term debt:
    10-7/8% Notes                              194,959,000       199,810,000         175,368,000        179,140,000
    12-3/4% Notes                              209,387,000       230,577,000         185,043,000        202,797,000
    11-1/2% Notes                              743,961,000       819,000,000         665,257,000        714,000,000
    10% Notes                                  400,000,000       422,000,000                   -                  -
    7-1/4% Convertible Notes                   191,750,000       212,843,000         191,750,000        206,611,000
    7% Convertible Notes                       275,000,000       264,688,000         275,000,000        251,625,000
    Term Loan and Revolving Facility                     -                 -         239,750,000        239,750,000
    Redeemable Preferred Stock                 108,534,000       121,846,000                   -                  -
</TABLE>

13.  RELATED PARTY TRANSACTIONS

On  July  25,  1990,   Cellular   Communications,   Inc.  ("CCI")  and  AirTouch
Communications,  Inc.  ("AirTouch")  entered  into a Merger  and  Joint  Venture
Agreement,  as  amended  as of  December  14,  1990.  In  connection  with  this
agreement,  on July 31, 1991, CCI distributed to its  shareholders  the stock of
the Company.


                                      F-24
<PAGE>

                    NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

13.  RELATED PARTY TRANSACTIONS (CONTINUED)

Through  August 1996, CCI provided  management,  financial and legal services to
the  Company.  Amounts  charged  to the  Company  included  direct  costs  where
identifiable,  and  indirect  costs  allocated  utilizing  direct labor hours as
reported by the common  officers and  employees of CCI and the Company.  For the
years ended December 31, 1996 and 1995, CCI charged $1,194,000,  and $1,644,000,
respectively,  which is included in corporate expenses. In August 1996, upon the
merger  of CCI  with  AirTouch,  the  Company  commenced  providing  management,
financial,   legal   and   technical   services   to   Cellular   Communications
International,  Inc. ("CCII") and CoreComm Incorporated  ("CoreComm").  In 1996,
the Company charged CCII and CoreComm $351,000 and $200,000, respectively, which
included direct costs where identifiable and allocated  corporate overhead based
upon the amount of time  incurred  on CCII and  CoreComm  business by the common
officers and employees of the Company, CCII and CoreComm.  These charges reduced
corporate expenses in 1996.

In  January  1997,  the  Company,  CoreComm  and CCII  agreed to a change in the
Company's  fee for the  provision  of  services.  In 1997,  the Company  charged
CoreComm and CCII $1,492,000 and $871,000,  respectively, for direct costs where
identifiable  and a fixed  percentage of its corporate  overhead.  These charges
reduced  corporate  expenses.  In the opinion of management of the Company,  the
allocation methods are reasonable.

As of December  31, 1997 and 1996,  the Company had  receivables  of $69,000 and
$586,000 from CCII and $71,000 and $102,000 from CoreComm, respectively.

In  1993,  the  Company  entered  into  a  consulting   agreement  with  Insight
Communications Company, L.P. ("Insight U.S."), under which Insight U.S. provided
advice and  assistance  to the  Company  with  respect to its cable  television,
telephone and  telecommunications  operations in the United Kingdom. Two members
of the Company's Board of Directors are partners in Insight U.S. Pursuant to the
consulting agreement,  which had a term of three years, the Company paid Insight
U.S. a fee of $50,000  per month for the first  year,  $40,000 per month for the
second year and  $30,000  per month for the third  year.  The fees for the years
ended  December 31, 1996 and 1995 of $270,000 and  $450,000,  respectively,  are
included in corporate expenses.


                                      F-25
<PAGE>

                    NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

14.  NET LOSS PER COMMON SHARE

The following table sets forth the computation of basic and diluted net loss per
share:

<TABLE>
<CAPTION>

                                                                   YEAR ENDED DECEMBER 31
                                                   1997                     1996                    1995
                                              --------------------------------------------------------------
<S>                                           <C>                     <C>                      <C> 
Numerator:
Loss before extraordinary item                $(328,557,000)          $(254,454,000)           $(90,785,000)
Preferred stock dividend                        (11,978,000)                       -                      -
                                              --------------------------------------------------------------
                                               (340,535,000)            (254,454,000)           (90,785,000)
Extraordinary item                               (4,500,000)                       -                      -
                                              --------------------------------------------------------------
Loss available to common shareholders         $(345,035,000)           $(254,454,000)          $(90,785,000)
                                              --------------------------------------------------------------

Denominator for basic net loss
   per common share                              32,117,000               31,041,000             30,190,000
Effect of dilutive securities                             -                        -                      -
                                              --------------------------------------------------------------
Denominator for diluted net loss
   per common share                              32,117,000               31,041,000             30,190,000
                                              --------------------------------------------------------------

Basic and diluted net loss per common share:
   Loss before extraordinary item                   $(10.60)                  $(8.20)                $(3.01)
   Extraordinary item                                  (.14)                       -                      -
                                              --------------------------------------------------------------
   Net (loss)                                       $(10.74)                  $(8.20)                $(3.01)
                                              ==============================================================

</TABLE>

Stock  options,  warrants  and  convertible  securities  are  excluded  from the
calculation of net loss per common share as their effect would be antidilutive.

15.  SHAREHOLDERS' EQUITY (DEFICIENCY)

STOCK SPLIT

On July 25,  1995,  the Company  declared a 4-for-3  stock split by way of stock
dividend,  which was paid on August  11,  1995.  All  common  stock  data in the
Consolidated Financial Statements give effect to the stock split.

SERIES PREFERRED STOCK

In October  1996,  the Board of Directors  created and  authorized  for issuance
2,000 shares of 5% Non-Voting  Convertible  Preferred Stock, Series A ("Series A
Preferred  Stock"),  of which 780  shares  were  issued in  connection  with the
CableTel  Newport  acquisition.  Each  share of Series A  Preferred  Stock has a
stated value of $100,000, subject to certain exceptions. The holders of


                                      F-26
<PAGE>

                    NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

15.  SHAREHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)

Series A Preferred Stock are entitled to receive cumulative  dividends beginning
in October 2001 at the rate of 5% of the stated value, payable  semi-annually in
arrears,  subject  to certain  exceptions.  Dividends  may be paid,  in the sole
discretion of the Board of Directors,  in cash, in common stock or in additional
shares of Series A Preferred  Stock.  The Company has the right,  exercisable at
any time, to redeem all or some of the Series A Preferred Stock at a price equal
to the  aggregate  stated value of the shares to be redeemed,  together with all
accrued and unpaid dividends, in cash or in shares of common stock (based on the
average  market price of the common stock,  as defined).  The holder of Series A
Preferred Stock has the right to convert shares of Series A Preferred Stock into
common stock equal to the  aggregate  stated  value of Series A Preferred  Stock
divided  by the  greater of (a) $40.00 or (b) the  average  market  price of the
common  stock,  as  defined.  The  Series A  Preferred  Stock has a  liquidation
preference  equal  to the  stated  value  per  share  plus  accrued  and  unpaid
dividends.

WARRANTS

In 1993, the Company issued  warrants to purchase an aggregate of  approximately
899,000  shares of common stock at an initial  exercise price of $8.35 per share
in  connection  with  certain  noncompetition  agreements.  The  exercise  price
decreased to $6.96 per share in the second year after the grant and to $5.57 per
share  thereafter.  The  warrants  were valued at  $13,193,000,  the  difference
between the fair market value of the common stock on the date of grant and $5.57
per share. The warrants expire in 2000.

In 1996,  pursuant to the terms of the consent  solicitations  to the holders of
the 10-7/8%  Notes and to the holders of the  12-3/4%  Notes to gain  consent to
modify certain indenture provisions, the Company paid an aggregate of $3,592,000
in consent  payments and issued  warrants to purchase  164,000  shares of common
stock at an  exercise  price of $23.78 per share in lieu of  additional  consent
payments of $1,641,000. The warrants expire in 2006.

SHAREHOLDER RIGHTS PLAN

The Rights  Agreement  provides that one Right will be issued with each share of
common stock issued on or after  October 13,  1993.  The Rights are  exercisable
upon the  occurrence  of certain  potential  takeover  events and will expire in
October 2003 unless previously redeemed by the Company.  When exercisable,  each
Right  entitles the owner to purchase  from the Company one  one-hundredth  of a
share of  Series A  Junior  Participating  Preferred  Stock  ("Rights  Preferred
Stock") at a purchase price of $100.


                                      F-27
<PAGE>

                    NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

15.  SHAREHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)

The Rights Preferred Stock will be entitled to a minimum preferential  quarterly
dividend payment of $.01 per share and will be entitled to an aggregate dividend
of 100 times the dividend,  if any,  declared per share of common stock.  In the
event of liquidation,  the holders of Rights Preferred Stock will be entitled to
a minimum preferential  liquidation payment of $1 per share and will be entitled
to an aggregate payment of 100 times the payment made per share of common stock.
Each share of Rights  Preferred Stock will have 100 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  100 times the amount
received  per share of common  stock.  These  rights are  protected by customary
antidilution provisions.

There  are  2,500,000  authorized  shares  of  Series  Preferred  Stock of which
1,000,000 shares are designated Rights Preferred Stock.

STOCK OPTIONS

There are 2,164,000  shares of common stock reserved for issuance under the OCOM
Corporation (a  wholly-owned  subsidiary of the Company) 1991 Stock Option Plan.
The plan provides that incentive  stock options  ("ISOs") be granted at the fair
market value of OCOM's common stock on the date of grant, and nonqualified stock
options  ("NQSOs")  be granted at not less than 85% of the fair market  value of
OCOM's common stock on the date of grant.  Options are  exercisable as to 20% of
the shares subject thereto on the date of grant and become  exercisable as to an
additional 20% of the shares subject thereto on each January 1 thereafter, while
the optionee  remains an employee of the Company.  Options will expire ten years
after the date of the grant.

There are 6,653,000  shares of common stock  reserved for issuance under the NTL
Incorporated  1993 Stock  Option Plan.  The exercise  price of an ISO may not be
less than 100% of the fair market  value of the  Company's  common  stock on the
date of grant,  and the exercise price of a NQSO may not be less than 85% of the
fair market value of the  Company's  common stock on the date of grant.  Options
are exercisable as to 20% of the shares subject thereto on the date of grant and
become exercisable as to an additional 20% of the shares subject thereto on each
January 1  thereafter,  while the  optionee  remains an employee of the Company.
Options will expire ten years after the date of the grant.

There are 100,000  shares of common stock  reserved for issuance  under the OCOM
Corporation  Non-Employee Director Stock Option Plan. The plan provides that all
options be granted at the fair market  value of OCOM's  common stock on the date
of grant, and options will expire ten years after the date of the grant. Options
are exercisable as to 20% of the shares subject thereto on the date of grant and
become exercisable as to an additional 20% of the shares subject thereto on each
subsequent  anniversary of the grant date, while the optionee remains a director
of the Company. Options will expire ten years after the date of the grant.


                                      F-28
<PAGE>

                    NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

15.  SHAREHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)

There are 320,000  shares of common stock  reserved  for issuance  under the NTL
Incorporated  1993  Non-Employee  Director Stock Option Plan. Under the terms of
this plan,  options will be granted to members of the Board of Directors who are
not  employees of the Company or any of its  affiliates.  The plan provides that
all options be granted at the fair market value of the Company's common stock on
the date of grant,  and  options  will  expire  ten years  after the date of the
grant.  Options are  exercisable as to 20% of the shares subject  thereto on the
date of grant and  become  exercisable  as to an  additional  20% of the  shares
subject  thereto  on each  subsequent  anniversary  of the grant  date while the
optionee remains a director of the Company.  Options will expire ten years after
the date of the grant.

Pro forma  information  regarding net loss and net loss per share is required by
SFAS No. 123, and has been  determined  as if the Company had  accounted for its
employee stock options under the fair value method of that  Statement.  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 1997, 1996 and 1995:  risk-free  interest rates of 5.89%,  6.56%
and 6.61%, respectively, dividend yield of 0%, volatility factor of the expected
market price of the Company's common stock of .276, .255 and .255, respectively,
and a weighted-average expected life of the option of 10 years.

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
the Company's 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.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is  amortized  to expense over the  options'  vesting  period.  Following is the
Company's pro forma information:

 
                                              YEAR ENDED DECEMBER 31
                                       1997            1996              1995
                                 -----------------------------------------------

Pro forma net (loss)             $(343,850,000)   $(261,245,000)   $(93,688,000)
Basic and diluted pro 
   forma net (loss) per share          $(11.08)          $(8.42)         $(3.10)


                                      F-29
<PAGE>

                    NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

15.  SHAREHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)

A summary of the Company's stock option activity and related information for the
years ended December 31, follows:

<TABLE>
<CAPTION>

                                                1997                          1996                         1995
                                      ----------------------------------------------------------------------------------
                                                    WEIGHTED-                     WEIGHTED-                    WEIGHTED-
                                      NUMBER        AVERAGE         NUMBER        AVERAGE        NUMBER        AVERAGE
                                      OF            EXERCISE        OF            EXERCISE       OF            EXERCISE
                                      OPTIONS       PRICE           OPTIONS       PRICE          OPTIONS       PRICE
                                      ----------------------------------------------------------------------------------
<S>                                   <C>           <C>             <C>           <C>            <C>           <C>
Outstanding-beginning of year         6,738,000     $ 14.10         5,934,000     $11.04         4,795,000      $8.09
Granted                               1,571,000       23.97         1,390,000      25.94         1,164,000      23.07
Exercised                              (119,000)      12.85          (396,000)      3.44           (21,000)      4.78
Forfeited                               (33,000)      23.78          (190,000)     27.39            (4,000)     17.50
                                      ---------                     ---------                    ---------
Outstanding-end of year               8,157,000      $15.98         6,738,000     $14.10         5,934,000     $11.04
                                      =========                     =========                    =========

Exercisable at end of year            5,663,000      $12.39         4,258,000     $10.71         3,410,000     $ 8.22
                                      =========                     =========                    =========         
</TABLE>

Weighted-average  fair  value of  options,  calculated  using the  Black-Scholes
option pricing model,  granted during 1997, 1996 and 1995 is $12.74,  $13.98 and
$12.47, respectively.

The following table  summarizes the status of the stock options  outstanding and
exercisable at December 31, 1997:

<TABLE>
<CAPTION>

                                  STOCK OPTIONS OUTSTANDING                 STOCK OPTIONS EXERCISABLE
-------------------   -----------------------------------------------   ---------------------------------
                                          WEIGHTED-        WEIGHTED-                          WEIGHTED-
                          NUMBER          REMAINING        AVERAGE          NUMBER            AVERAGE
     RANGE OF             OF              CONTRACTUAL      EXERCISE         OF                EXERCISE
 EXERCISE PRICES          OPTIONS         LIFE             PRICE            OPTIONS           PRICE
-------------------   -----------------------------------------------   ---------------------------------
<S>                       <C>             <C>              <C>              <C>               <C>
 $0.19 to $0.56              77,000       3.6 Years         $0.245             77,000          $0.245
 $0.73 to $1.12             150,000       3.6 Years         $0.745            150,000          $0.745
 $1.53 to $2.69             356,000       3.6 Years         $2.157            356,000          $2.157
 $3.09 to $4.50              75,000       4.4 Years         $3.230             75,000          $3.230
 $8.81 to $14.63          3,312,000       5.4 Years         $8.873          3,305,000          $8.861
$15.19 to $22.88          1,498,000       7.4 Years        $21.685            882,000         $21.659
$23.06 to $32.38          2,689,000       8.9 Years        $25.038            818,000         $25.213
-------------------   -----------------------------------------------   ---------------------------------
      Total               8,157,000                                         5,663,000
===================   ===============================================   =================================
</TABLE>

The Company has 25,309,000 shares of its common stock reserved for issuance upon
the  exercise  of warrants  and stock  options  and the  conversion  of debt and
preferred stock.


                                      F-30
<PAGE>

                    NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

16.  EMPLOYEE BENEFIT PLANS

     Certain subsidiaries of NTL Group Limited operate a defined benefit pension
plan in the  United  Kingdom.  The assets of the Plan are held  separately  from
those of NTL Group Limited 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 plan necessary to comply with the funding  requirements as prescribed by
the laws and  regulations  in the United  Kingdom.  The change in the  projected
benefit obligation in 1997 is due to the change in actuarial assumptions used.

The components of net pension costs are as follows:

                                              YEAR ENDED DECEMBER 31
                                         1997                       1996
                                    --------------------------------------------
Service cost                        $  10,693,000                 $7,997,000
Interest cost                          12,765,000                 11,679,000
Actual return on plan assets          (30,852,000)               (16,103,000)
Net amortization and deferral          17,327,000                  4,241,000
                                    --------------------------------------------
                                    $   9,933,000                 $7,814,000
                                    ============================================

The  funded  status  (assets  exceed  accumulated  benefits)  of the  plan is as
follows:
<TABLE>
<CAPTION>
                                                                              DECEMBER 31
                                                                   1997                      1996
                                                               ---------------------------------------
<S>                                                            <C>                       <C>
Accumulated benefit obligation:
   Vested                                                      $178,828,000              $148,809,000
   Nonvested                                                              -                         -
                                                               ---------------------------------------
                                                               $178,828,000              $148,809,000
                                                               =======================================
Fair value of plan assets, 
   principally U.K. equity securities                          $195,226,000              $166,195,000
Projected benefit obligation                                    204,340,000               170,795,000
                                                               ---------------------------------------
Excess of projected benefit obligation over assets               (9,114,000)               (4,600,000)
Unrecognized net transition obligation                           10,203,000                11,541,000
Unrecognized net gain                                            (1,065,000)               (5,098,000)
                                                               ---------------------------------------
Prepaid pension cost                                           $     24,000                $1,843,000
                                                               =======================================
Actuarial assumptions:
   Weighted average discount rate                                      7.25%                     8.25%
   Weighted average rate of compensation increase                      8.00%                     8.00%
   Expected long-term rate of return on plan assets                    9.00%                     9.50%
 
</TABLE>

                                      F-31
<PAGE>

                    NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

17.  LEASES

Leases for  buildings,  office space and equipment  extend  through 2031.  Total
rental  expense  for the years  ended  December  31,  1997,  1996 and 1995 under
operating leases was $20,674,000, $14,886,000 and $2,607,000, respectively.

Future  minimum  lease  payments  under  noncancellable  operating  leases as of
December 31, 1997 are as follows:

     Year ended December 31:
             1998                            $21,169,000
             1999                             20,933,000
             2000                             20,572,000
             2001                             20,235,000
             2002                             16,352,000
             Thereafter                       82,420,000
                                            ------------
                                            $181,681,000
                                            ============

18.  COMMITMENTS AND CONTINGENT LIABILITIES

As of  December  31,  1997,  the  Company  was  committed  to pay  approximately
$78,000,000 for equipment and services.

The Company has licenses  issued by the United  Kingdom  Department of Trade and
Industry  ("DTI")  and the  United  Kingdom  Independent  Television  Commission
("ITC") for its cable television, telephone and telecommunications business. The
initial terms of the Company's licenses was 23 years for the DTI licenses and 15
years for the ITC licenses.  The Company's  licenses  expire in 2008 to 2016 for
the DTI licenses and 1999 to 2005 for the ITC licenses. The DTI requires a fixed
annual  renewal fee of 2,500  pounds  sterling  ($4,200)  per  license.  The ITC
requires an annual  license fee ranging from 1,300 pounds  sterling  ($2,200) to
7,900 pounds sterling  ($13,100) per license based on the number of homes in the
licensed area, which is subject to adjustment  annually.  The Company's  license
fees in 1997 were $316,000.

In addition, the Company was awarded certain newly issued licenses by the ITC in
1995.  Pursuant to the terms of the local delivery  license ("LDL") for Northern
Ireland  granted to a  wholly-owned  subsidiary  of the Company,  the Company is
required to make annual cash payments to the ITC for fifteen years commencing in
January  1997  in  the  amount  of  approximately   14,400,000  pounds  sterling
($23,800,000)  (subject to  adjustments  for  inflation).  Such  payments are in
addition to the  percentages of qualifying  revenue already set by the ITC of 0%
for the  first ten years  and 2% for the last  five  years of the  fifteen  year
license. The Company paid $23,587,000 in 1997.


                                      F-32
<PAGE>

                    NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

18.  COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)

Pursuant to the terms of the LDL for  Glamorgan  and Gwent,  Wales  granted to a
wholly-owned  subsidiary of the Company,  the Company is required to make annual
cash  payments  to the ITC for  fifteen  years,  commencing  in the  first  full
calendar  year after the start of  operations,  in the amount of 104,188  pounds
sterling  ($172,000).  Such  payments  are in  addition  to the  percentages  of
qualifying revenue already set by the ITC of 0% for the first five years, 2% for
the  second  five  years  and 4% for the last  five  years  of the  fifteen-year
license.

A significant  portion of NTL Group  Limited's  revenues is  attributable to the
provision of television and radio transmission and distribution services and the
provision of  telecommunications  services. In the United Kingdom, the provision
of such  services  is governed by the  Telecommunications  Act and The  Wireless
Telegraphy   Act  1949.   NTL  Group  Limited  holds  five  licenses  under  the
Telecommunications Act. The initial terms of these licenses were 10 or 25 years.
These  licenses  expire  in 2002 to 2021.  NTL Group  Limited  holds a number of
Wireless  Telegraphy Act licenses which continue in force primarily from year to
year unless  revoked or unless any of the license fees are not paid. The Company
paid $3,447,000 in 1997 in connection with these licenses.

The  Company is involved  in, or has been  involved  in,  certain  disputes  and
litigation  arising in the ordinary  course of its  business,  including  claims
involving  contractual  disputes and claims for damages to property and personal
injury  resulting  from  the  construction  of the  Company's  networks  and the
maintenance  and servicing of the Company's  transmission  masts.  None of these
matters  are  expected  to  have a  material  adverse  effect  on the  Company's
financial position, results of operations or cash flows.

19.  INDUSTRY SEGMENTS AND GEOGRAPHIC AREAS

The Company  operates its long distance  telephone  and  microwave  transmission
business in the United States and its television and radio  broadcasting,  cable
television,  telephone and telecommunications  businesses in the United Kingdom.
The Company  acquired  its national and  international  telecom  segment and its
broadcast transmission and other segment in 1996.  Identifiable corporate assets
consist  primarily  of cash and cash  equivalents.  The  industry  segments  and
geographic  area  information  as of and for the years ended  December 31, 1997,
1996 and 1995 are as follows:


                                      F-33
<PAGE>

                    NTL Incorporated and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

19.  INDUSTRY SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED)

<TABLE>
<CAPTION>
                                             Long
                                           Distance
                                          Telephone        Local          National        Broadcast
                                             and          Telecom           and          Transmission
                                          Microwave         and         International        and
                                         Transmission    Television       Telecom           Other       Corporate      Consolidated
                                        --------------------------------------------------------------------------------------------
                                                                       (In  thousands)
<S>                                     <C>              <C>            <C>             <C>             <C>            <C>
YEAR ENDED DECEMBER 31, 1997
Total revenues                          $  8,831         $   189,407    $162,738        $ 130,799       $       -      $  491,775
Operating income (loss)                   (1,207)           (208,815)     (5,327)          42,652         (19,367)       (192,064)
Depreciation and amortization              2,368             103,704      17,454           20,328           6,655         150,509
Identifiable assets                       27,623           1,579,044     350,704          358,302         105,966       2,421,639
Fixed asset additions                      1,541             333,037     101,088           38,984             156         474,806

YEAR ENDED DECEMBER 31, 1996
Total revenues                          $ 10,086         $    89,209    $ 45,430        $  83,618       $       -      $  228,343
Operating income (loss)                      773            (164,108)     (7,774)          26,376         (12,900)       (157,633)
Depreciation and amortization              2,744              69,200       8,601           13,152           4,956          98,653
Identifiable assets                       15,660           1,655,759     220,764          412,989         149,439       2,454,611
Fixed asset additions                        552             478,761      38,812           26,056           1,894         546,075

YEAR ENDED DECEMBER 31, 1995
Total revenues                          $  8,937         $    24,804    $      -        $       -       $       -      $   33,741
Operating (loss)                          (4,531)            (76,161)          -                -         (12,434)        (93,126)
Depreciation and amortization              2,729              25,650           -                -           1,444          29,823
Identifiable assets                       15,774             892,935           -                -         101,960       1,010,669
Fixed asset additions                      1,557             473,795           -                -               -         475,352
</TABLE>

20. SUBSEQUENT EVENT

In February 1998, the Company entered into an agreement and plan of amalgamation
(the "Agreement") with Comcast UK Cable Partners Limited ("Partners"). Under the
Agreement,  Partners'  shareholders  will receive 0.3745 shares of the Company's
Common Stock for each share of Partners Common Stock. Based on the closing price
of the Company's  Common Stock on the date of the Agreement,  the transaction is
valued at approximately  $600,000,000.  The Agreement  contains  provisions such
that if the purchase price per Partners  share falls below $10.00,  Partners has
the right to terminate the transaction, subject to the Company's right to adjust
the exchange  ratio such that  Partners'  shareholders  would receive $10.00 for
each Partners share. Under certain  circumstances,  the consideration payable to
Partners'  shareholders  may be adjusted  based on the proceeds of the potential
exercise of certain rights of first refusal with respect to Partners'  interests
in the  London and  Birmingham  franchises.  Completion  of the  transaction  is
subject  to a number  of  closing  conditions  including  regulatory  approvals,
shareholder  approvals  and  consents  from the  holders  of the  Company's  and
Partners' debt.


                                      F-34
<PAGE>


                                NTL Incorporated
           Schedule I - Condensed Financial Information of Registrant
                            Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                                               DECEMBER 31
                                                                       1997                   1996
                                                                  -------------------------------------
<S>                                                               <C>                    <C> 
ASSETS
Current assets:
   Cash and cash equivalents                                      $   46,421,000         $  101,555,000
   Marketable securities                                               4,998,000                      -
   Other                                                               8,804,000              1,008,000
                                                                  -------------------------------------
Total current assets                                                  60,223,000            102,563,000

Office improvements and equipment, net of accumulated
   depreciation of $555,000 (1997) and $191,000 (1996)                 1,551,000              1,759,000
Investments in and loans to subsidiaries                           1,970,114,000          1,672,695,000
Deferred financing costs, net of accumulated amortization of
   $13,141,000 (1997) and $6,850,000 (1996)                           50,771,000             45,132,000
Other assets, net of accumulated amortization
   of $11,803,000 (1997) and $9,952,000 (1996)                         1,540,000              4,597,000
                                                                  -------------------------------------
Total assets                                                      $2,084,199,000         $1,826,746,000
                                                                  =====================================

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities                                               $   22,276,000         $    6,214,000
Long-term debt                                                     2,015,057,000          1,492,418,000
Senior redeemable exchangeable preferred stock                       108,534,000                      -

Shareholders' equity (deficiency):
   Series preferred stock                                                      -                      -
   Common stock                                                          322,000                321,000
   Additional paid-in capital                                        538,054,000            548,647,000
   Cumulative translation adjustment                                 117,008,000            163,141,000
   (Deficit)                                                        (717,052,000)          (383,995,000)
                                                                  -------------------------------------
                                                                     (61,668,000)           328,114,000
                                                                  -------------------------------------
Total liabilities and shareholders' equity (deficiency)           $2,084,199,000         $1,826,746,000
                                                                  =====================================

</TABLE>

See accompanying notes.


                                      F-35
<PAGE>


                                NTL Incorporated
     Schedule I - Condensed Financial Information of Registrant (continued)
                       Condensed Statements of Operations

<TABLE>
<CAPTION>

                                                                         YEAR ENDED DECEMBER 31
                                                             1997                 1996                 1995
                                                       --------------------------------------------------------
<S>                                                    <C>                   <C>                   <C>  
COSTS AND EXPENSES
Corporate expenses                                     $  12,811,000         $  14,144,000         $ 14,697,000
Depreciation and amortization                              6,655,000             4,954,000            1,445,000
                                                       --------------------------------------------------------
Operating (loss)                                         (19,466,000)          (19,098,000)         (16,142,000)

OTHER INCOME (EXPENSE)
Interest and other income                                  4,490,000             5,017,000            7,470,000
Interest expense                                        (191,124,000)         (128,755,000)         (39,033,000)
Other gain                                                10,000,000                     -                    -
Foreign currency transaction gains (losses)               (2,221,000)            1,376,000              (23,000)
                                                       --------------------------------------------------------
(Loss) before income taxes and equity in net
   (loss) of subsidiaries                               (198,321,000)         (141,460,000)         (47,728,000)
Income tax (provision)                                    (1,083,000)             (193,000)                   -
                                                       --------------------------------------------------------
(Loss) before equity in net (loss) of subsidiaries      (199,404,000)         (141,653,000)         (47,728,000)
Equity in net (loss) of subsidiaries                    (133,653,000)         (112,801,000)         (43,057,000)
                                                       --------------------------------------------------------
Net (loss)                                             $(333,057,000)        $(254,454,000)        $(90,785,000)
                                                       ========================================================

</TABLE>

See accompanying notes.

                                      F-36
<PAGE>


                                NTL Incorporated
     Schedule I - Condensed Financial Information of Registrant (continued)
                       Condensed Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                  YEAR ENDED DECEMBER 31
                                                                     1997                  1996                   1995
                                                              -----------------------------------------------------------
<S>                                                           <C>                    <C>                    <C>
Net cash (used in) operating activities                       $ (55,467,000)         $ (28,152,000)         $ (10,448,000)

INVESTING ACTIVITIES
Purchase of office improvements and equipment                      (156,000)            (1,891,000)                     -
Purchase of marketable securities                              (145,939,000)                     -                      -
Proceeds from sales of marketable securities                    142,596,000                      -                      -
Increase in investments in and loans to subsidiaries           (436,046,000)          (955,652,000)          (337,120,000)
                                                              -----------------------------------------------------------
Net cash (used in) investing activities                        (439,545,000)          (957,543,000)          (337,120,000)

FINANCING ACTIVITIES
Proceeds from borrowings and sale of preferred stock,           
   net of financing costs                                       484,340,000            842,820,000            328,731,000
Proceeds from exercise of stock options and warrants              1,671,000              1,665,000                102,000
                                                              -----------------------------------------------------------
Net cash provided by financing activities                       486,011,000            844,485,000            328,833,000
Effect of exchange rate changes on cash                         (46,133,000)           156,868,000             (6,594,000)
                                                              -----------------------------------------------------------
Increase (decrease) in cash and cash equivalents                (55,134,000)            15,658,000            (25,329,000)
Cash and cash equivalents at beginning of year                  101,555,000             85,897,000            111,226,000
                                                              -----------------------------------------------------------
Cash and cash equivalents at end of year                      $  46,421,000          $ 101,555,000          $  85,897,000
                                                              ===========================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest                      $  53,485,000          $  23,687,000          $           -
Income taxes paid                                                         -                193,000                      -

SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Accretion of dividends and discount on senior
   redeemable exchangeable preferred stock                    $  12,263,000          $           -          $           -
Warrants issued in connection with consent
   solicitations                                                          -              1,641,000                      -
Common stock issued for acquisition                                       -             34,137,000                      -
Preferred stock issued for acquisition of minority
   interest, including notes payable to minority partner                  -             49,000,000                      -
Liabilities incurred in connection with acquisitions                      -             81,906,000                      -
</TABLE>

See accompanying notes.


                                      F-37
<PAGE>

                                NTL Incorporated
           Schedule I - Condensed Financial Information of Registrant
                     Notes to Condensed Financial Statements


1.    BASIS OF PRESENTATION

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

2.    LONG-TERM DEBT

Long-term debt consists of:
<TABLE>
<CAPTION>

                                                                     DECEMBER 31
                                                            1997                    1996
                                                      --------------------------------------
<S>                                                   <C>                     <C>
10-7/8% Senior Deferred Coupon Notes
   ("10-7/8% Notes") (a)                              $  194,959,000          $  175,368,000
12-3/4% Series A Senior Deferred Coupon Notes
   ("12-3/4% Notes") (b)                                 209,387,000             185,043,000
11-1/2% Series B Senior Deferred Coupon Notes
   ("11-1/2% Notes") (c)                                 743,961,000             665,257,000
10% Series B Senior Notes ("10% Notes") (d)              400,000,000                       -
7-1/4% Convertible Subordinated Notes
   ("7-1/4 Convertible Notes") (e)                       191,750,000             191,750,000
7% Convertible Subordinated Notes
   ("7% Convertible Notes") (f)                          275,000,000             275,000,000
                                                      --------------------------------------
                                                      $2,015,057,000          $1,492,418,000
                                                      ======================================
</TABLE>


(a)  In October 1993, the Company issued $212,000,000 aggregate principal amount
     of 10-7/8%  Senior  Deferred  Coupon Notes due 2003. The 10-7/8% Notes were
     issued at a price to the public of 58.873% or $124,811,000.

(b)  In April 1995, the Company issued  $277,803,500  aggregate principal amount
     of 12-3/4%  Senior  Deferred  Coupon Notes due 2005. The 12-3/4% Notes were
     issued at a price to the public of 53.995% or $150,000,000.

(c)  In January 1996,  the Company  issued  $1,050,000,000  aggregate  principal
     amount of  11-1/2%  Series B Senior  Deferred  Coupon  Notes due 2006.  The
     11-1/2%  Notes  were  issued  at a price to  investors  of  57.155%  of the
     aggregate principal amount at maturity or $600,127,500.


                                      F-38
<PAGE>

                                NTL Incorporated
           Schedule I - Condensed Financial Information of Registrant
               Notes to Condensed Financial Statements (continued)


2.    LONG-TERM DEBT (CONTINUED)

(d)  In February  1997,  the Company  issued  $400,000,000  aggregate  principal
     amount of 10% Senior Notes due 2007.

(e)  In April and May 1995, the Company issued $191,750,000  principal amount of
     7-1/4% Convertible  Subordinated Notes due 2005. Interest payments began on
     October 15, 1995 and interest is payable every six months  thereafter.  The
     7-1/4% Convertible Notes will mature on April 15, 2005.

     In March 1998, the Company announced that it was calling for redemption all
     of the 7-1/4%  Convertible Notes. The redemption date is April 20, 1998 and
     the redemption price is 105.08% of the principal  amount,  plus accrued and
     unpaid interest through the date of redemption.

(f)  In June 1996, the Company issued $275,000,000 aggregate principal amount of
     7%  Convertible  Subordinated  Notes due 2008.  Interest  payments began on
     December 15, 1996 and interest is payable every six months thereafter.  The
     7% Convertible Notes mature on June 15, 2008.

In  March  1998,  the  Company  issued  125,000,000  pounds  sterling  aggregate
principal  amount of 9-1/2% Senior Notes due 2008 (the "Sterling Senior Notes"),
300,000,000  pounds  sterling  aggregate  principal  amount  of  10-3/4%  Senior
Deferred  Coupon  Notes due 2008 (the  "Sterling  Deferred  Coupon  Notes")  and
$1,300,000,000 aggregate principal amount of 9-3/4% Senior Deferred Coupon Notes
due 2008 (the  "Dollar  Deferred  Coupon  Notes").  The Sterling  Senior  Notes,
Sterling  Deferred Coupon Notes and the Dollar Deferred Coupon Notes were issued
at a price to the public of 99.67% or  124,588,000  pounds  sterling,  58.62% or
175,860,000 pounds sterling and 61.724% or $802,412,000, respectively.

3.    REDEEMABLE PREFERRED STOCK

In February 1997, the Company issued  $100,000,000 of its 13% Senior  Redeemable
Exchangeable  Preferred Stock (the "Redeemable  Preferred  Stock").  The Company
received net proceeds of $96,625,000  after discounts and  commissions  from the
issuance of the Redeemable  Preferred  Stock.  Discounts,  commissions and other
fees incurred of $3,729,000 were recorded as unamortized discount at issuance.

Of the 2,500,000  authorized shares of Series Preferred Stock, 100,000 shares of
Redeemable Preferred Stock were issued.  Dividends accrue at 13% per annum ($130
per share) and are payable  quarterly in arrears as of May 15, 1997.  Dividends,
whether or not earned or declared,  will accrue without  interest until declared
and paid, which declaration may be for all or part of


                                      F-39
<PAGE>

                                NTL Incorporated
           Schedule I - Condensed Financial Information of Registrant
               Notes to Condensed Financial Statements (continued)


3.    REDEEMABLE PREFERRED STOCK (CONTINUED)

the accrued dividends.  Dividends accruing on or prior to February 15, 2004 may,
at the option of the Company,  be paid in cash,  by the  issuance of  additional
Redeemable  Preferred  Stock  or in  any  combination  of the  foregoing.  As of
December 31, 1997,  the Company has accrued  $11,978,000  for  dividends and has
issued  approximately  10,000 shares for $10,187,000 of such accrued  dividends.
The Redeemable  Preferred  Stock is subject to mandatory  redemption on February
15,  2009.  On any  scheduled  dividend  payment  date,  the Company may, at its
option,   exchange  all  of  the  shares  of  Redeemable  Preferred  Stock  then
outstanding for the Company's 13% Subordinated Exchange Debentures due 2009.

4.    LEASES

Leases for office space extend through 2004.  Total rental expense for the years
ended  December 31, 1997,  1996 and 1995 under  operating  leases was  $503,000,
$220,000 and $22,000, respectively.

Future  minimum  lease  payments  under  noncancellable  operating  leases as of
December 31, 1997 are as follows:

        Year ended December 31:         
               1998                            $  565,000
               1999                               475,000
               2000                               462,000
               2001                               462,000
               2002                               462,000 
               Thereafter                         924,000
                                               ----------
                                               $3,350,000
                                               ==========

5.    OTHER GAIN

In October 1997,  following the U.S.  District  Court's  decision to dismiss the
Company's  complaint  against  LeGroupe  Videotron Ltee and its subsidiary,  the
Company entered into a Settlement  Agreement  dismissing the Company's complaint
in exchange for a payment of $10,000,000.

6.    OTHER

No cash dividends were paid to the registrant by subsidiaries in any of the last
three years.


                                      F-40
<PAGE>


                        NTL Incorporated and Subsidiaries

                 Schedule II - Valuation and Qualifying Accounts

<TABLE>
<CAPTION>

               COL. A                         COL. B                  COL. C                     COL. D             COL. E
-----------------------------------------------------------------------------------------------------------------------------
                                                                    ADDITIONS
                                                            --------------------------
                                                                                (2)
                                                               (1)           CHARGED
                                           BALANCE AT       CHARGED TO       TO OTHER                              BALANCE
                                           BEGINNING        COSTS AND        ACCOUNTS-         DEDUCTIONS          AT END
            DESCRIPTION                    OF PERIOD        EXPENSES         DESCRIBE          DESCRIBE            OF PERIOD
-----------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>              <C>              <C>               <C>                 <C>
Year ended December 31, 1997
   Allowance for doubtful accounts
                                           $3,870,000       $6,891,000       $      -          $(2,705,000)(a)     $8,056,000
                                           ==================================================================================

Year ended December 31, 1996:
   Allowance for doubtful accounts
                                           $  767,000       $2,597,000       $      -          $   506,000 (b)     $3,870,000
                                           ==================================================================================

Year ended December 31, 1995:
   Allowance for doubtful accounts
                                           $   22,000       $  709,000       $      -          $    36,000 (c)     $  767,000
                                           ==================================================================================
</TABLE>

(a)  Uncollectible  accounts  written-off,  net of recoveries of $2,604,000  and
     $101,000 foreign currency translation adjustments.

(b)  Uncollectible accounts written-off,  net of recoveries of $645,000,  offset
     by $804,000  allowance  for  doubtful  accounts as of  acquisition  date of
     purchased subsidiary and $347,000 foreign currency translation adjustments.

(c)  Recoveries  of  accounts  previously  written-off,   net  of  uncollectible
     accounts  written-off of $49,000 less $13,000 foreign currency  translation
     adjustments.


                                      F-41