##### 









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K/A


(Mark One)


|  |                                              
|- | ---------------------------------------------
|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31,
2001

or



|  |                                                  
|- | -------------------------------------------------
|o | 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 Communications Corp.

(Exact name of registrant as specified in its
charter)


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

(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:

None


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  o  No  þ

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

As of April 12, 2002, there were 12 shares
of the Registrants common stock outstanding. The
Registrant is an indirect wholly-owned subsidiary of NTL
Incorporated, and there is no market for the Registrants
common stock.



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Documents Incorporated by Reference

None




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Table of Contents

|         |  |                                                                                           |  |      |    | 
|-------- |  | ----------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                           |  | Page
|         |  |                                                                                           |  |     
|PART I   |  |                                                                                           |  |      |    | 
|Item 1.  |  | Business                                                                                  |  |      | 5  | 
|Item 2.  |  | Properties                                                                                |  |      | 24 | 
|Item 3.  |  | Legal Proceedings                                                                         |  |      | 24 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
    Holders                                   |  |      | 24 | 
|        
|PART II  |  |                                                                                           |  |      |    | 
|Item 5.  |  | Market for the Registrants Common Equity
    and Related Stockholder Matters             |  |      | 24 | 
|Item 6.  |  | Selected Financial Data                                                                   |  |      | 25 | 
|Item 7.  |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |  |      | 26 | 
|Item 7a. |  | Quantitative and Qualitative Disclosures About
    Market Risk                            |  |      | 44 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                               |  |      | 50 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
    accounting and Financial Disclosure  |  |      | 50 | 
|        
|PART III |  |                                                                                           |  |      |    | 
|Item 10. |  | Directors and Officers of the Registrant                                                  |  |      | 51 | 
|Item 11. |  | Executive Compensation                                                                    |  |      | 53 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
    and Management                        |  |      | 58 | 
|Item 13. |  | Certain Relationships and Related Transactions                                            |  |      | 60 | 
|        
|PART IV  |  |                                                                                           |  |      |    | 
|Item 14. |  | Exhibits, Financial Statement Schedules, and
    Reports on Form 8-K                      |  |      | 61 | 

This Annual Report on Form 10-K/A for the
year ended December 31, 2001, at the time of filing with
the Securities and Exchange Commission, modifies and supersedes
all prior documents filed pursuant to Sections 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/A, the words, believe,
    anticipate, should, intend,
    plan, will, expects,
    estimates, projects,
    positioned, strategy, and similar
    expressions identify such forward-looking statements. Such
    forward-looking statements involve known and unknown risks,
    uncertainties and other factors that may cause the actual
    results, performance or achievements of the Registrant, or
    industry results, to be materially different from those
    contemplated or projected, forecasted, estimated or budgeted,
    whether expressed or implied, by such forward-looking
    statements. Such factors include, among others, those set forth
    under the caption Risk Factors in this
    Form 10-K/ A as well as: the ability of the Company to
    continue as a going concern; the ability of the Company to
    obtain trade credit and shipments and terms with vendors and
    service providers for current orders; the Companys ability
    to maintain contracts that are critical to its operations;
    potential adverse developments with respect to the
    Companys liquidity or results of operations; the ability
    to fund and execute its business plan; the ability to attract,
    retain and compensate key executives and associates; the ability
    of the Company to attract and retain customers; general economic
    and business conditions; technological developments; the
    Companys ability to continue to design networks; install
    facilities; obtain and maintain any required governmental
    licenses or approvals; and finance construction and development,
    all in a timely manner at reasonable costs and on satisfactory

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| |                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | terms and conditions, as well as assumptions
    about customer acceptance, churn rates, overall market
    penetration and competition from providers of alternative
    services, the impact of restructuring and integration actions,
    the impact of new business opportunities requiring significant
    up-front investment and interest rate and currency exchange rate
    fluctuations.

In this Report on Form 10-K/A, references to
(pound sterling) pounds sterling,
(pound), pence or p are to
the lawful currency of the UK, references to (euro)
or Euro are to the lawful currency of the European
Monetary Union, references to IR(pounds) or
Irish punts are to the historically lawful currency
of the Republic of Ireland, and references to U.S.
dollars, dollars, $ or
(cent) are to the lawful currency of the United
States. Solely for the convenience of the reader, this
Form 10-K/A contains translations of some foreign currency
amounts into U.S. dollars and some U.S. dollar amounts
into foreign currencies. You should not construe these
transactions as representations that the foreign currency
amounts actually represent such U.S. dollar amounts or vice
versa or could have been or could be or will be converted into
U.S. dollars or foreign currencies, as the case may be, at
the rate indicated or at any other rate. Unless otherwise
indicated, the translations of foreign currencies into
U.S. dollars and U.S. dollars into foreign currencies
have been made at $1.4543 per UK (pound) 1.00, $.8901 per (euro)
1.00 and $1.1337 per IR (punt) 1.00, the noon buying rates in
the City of New York for cable transfers as certified for
customs purposes by the Federal Reserve Bank of New York on
December 31, 2001. On March 31, 2002, the Noon Buying
Rate was $1.4250 per (pound) 1.00, $.8717 per (euro) 1.00 and
$1.2539 per IR (punt) 1.00.

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PART I

NTL CORPORATE STRUCTURE

NTL Incorporated, a Delaware corporation, was
incorporated in February 1999, to effect a reorganization into a
holding company structure under Section 251(g) of the
Delaware General Corporation Law. The holding company structure,
which was implemented to pursue opportunities outside of the
U.K. and Ireland, was accomplished through a merger. The
stockholders of NTL Communications (formerly
NTL Incorporated), at the effective time of the merger
became stockholders of the new holding company, and
NTL Communications became a subsidiary of the new holding
company. The new holding company took the name
NTL Incorporated.

NTL Incorporated completed a second
reorganization in May 2000. A new holding company structure,
which was implemented in connection with the acquisition of the
residential assets of Cable & Wireless Communications
plc (CWC) (the operations acquired from CWC are
called ConsumerCo), was accomplished through a
merger. The stockholders of NTL (Delaware), Inc. (formerly
NTL Incorporated), at the effective time of the merger
became stockholders of the new holding company, and NTL
(Delaware), Inc. became a subsidiary of the new holding company.
The new holding company then took the name NTL Incorporated.

On February 21, 2001, NTL Incorporated
contributed the assets of ConsumerCo to NTL Communications
and NTL (Delaware), Inc. (NTL Delaware)
contributed the assets of NTL Business Limited
(NTL Business) (formerly Workplace
Technologies plc) to NTL Communications.
NTL Group Limited, a wholly-owned indirect subsidiary of
NTL Communications, which was acquired in 1996, has a
30-year history in the United Kingdom as a provider of
reliable communications services. NTL Communications
conducts its operations through direct and indirect wholly-owned
subsidiaries. NTL Communications principal executive
office is located at 110 East 59th Street,
New York, New York 10022, and its telephone number is
(212) 906-8440.

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NTL INCORPORATED FLOWCHART

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|        |         
|------- | --------
|Item 1. | Business

RECENT DEVELOPMENTS

Recapitalization Process

On January 31, 2002, NTL Incorporated
(NTL Incorporated and, together with its
consolidated subsidiaries, NTL), the ultimate parent
company of NTL Communications Corp., announced that it had
appointed Credit Suisse First Boston, JP Morgan and Morgan
Stanley to advise on strategic and recapitalization alternatives
to strengthen its balance sheet, reduce debt and put an
appropriate capital structure in place for its business. Since
then, it has been evaluating various recapitalization
alternatives to effect a comprehensive consensual
recapitalization in a timely manner and to minimize negative
effects on its business operations. NTL has been engaged in
discussions with an unofficial committee of bondholders, the
members of which hold a majority in principal amount of the
public debt of NTL Incorporated and its subsidiaries, and
France Telecom, which owns a significant amount of NTL
Incorporateds common and preferred stock. On
April 16, NTL Incorporated announced that it and
certain of its subsidiaries had reached an agreement in
principle with the unofficial committee on a comprehensive
recapitalization of NTL.

The following business description does not
address the possible risks or negative impacts that could result
from the recapitalization process and our liquidity position.
See Item 7 Managements Discussion and Analysis
of Financial Condition and Results of Operations 
Liquidity and Capital Resources and Risk
Factors for a more detailed description of the proposed
recapitalization plan and the associated uncertainties.

ABOUT NTL COMMUNICATIONS

In this Annual Report,
NTL Communications, the Company,
we, us and our refer to
NTL Communications Corp. and its consolidated subsidiaries
except where we expressly state that we are only referring to
NTL Communications Corp. The Company is a leading broadband
communications company in the U.K. and the Republic of Ireland
based on aggregate subscriber numbers as of December 31,
2001.

The Companys predominant lines of business
are:



| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | CONSUMER SERVICES including residential
    telephony, cable television, Internet access and interactive
    services;                                                                                        
|
| |  | BUSINESS SERVICES including business telephony,
    national and international carrier telecommunications, Internet
    services and radio communications services; and                                       
|
| |  | BROADCAST TRANSMISSION AND TOWER SERVICES
    including digital and analog television and radio broadcasting,
    wireless network management, tower and site leasing and
    satellite distribution services.

In 2001, Consumer Services accounted for 64.9% of
our consolidated revenues, Business Services accounted for 26.2%
of our consolidated revenues and Broadcast and Transmission and
Tower Services accounted for 8.9% of our revenues. In 2001,
98.0% of our consolidated revenues were generated from our
operations in the UK and 2.0% of our consolidated revenues were
generated from our operations in Ireland. We believe that our
operational success to date has been due largely to our focus on
customer service and the development of services that emphasize
value rather than simply low prices. Our product offerings
incorporate our fundamental proposition of providing our
customers with a full range of choices.

Our business is underpinned by the
$13.0 billion investment we, and companies we have
acquired, have made in our network infrastructure. We provide
our broad range of services over local, national and
international networks. This network infrastructure consists of:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Broadband Communications Networksin the UK that currently pass
    approximately 8.4 million homes and can be expanded to
    cover over 11 million homes in our regional UK franchise areas.
    These high-capacity two-way local broadband fiber networks serve
    entire communities throughout these regional franchise areas.
    Our fiber optic cables pass a significant number of businesses
    in these areas and are connected to distribution points, or
    nodes, which are typically within approximately 500 meters
    of each

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| |  |                                                                                                                                                                                                              
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | of the 500 homes typically served by each
    node. Each home is then connected by a cable allowing us to
    deliver telephone, cable television and Internet services over a
    single integrated network.



| |  |                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Additionally, we have broadband cable networks in
    the Republic of Ireland that currently pass approximately
    440,000 million homes. These primarily analog cable
    television networks are in the process of being upgraded to
    allow for higher capacity signals and a suite of new products
    including digital television, cable modem Internet access and
    voice telephony.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A National/ International Synchronous Digital
    Hierarchy, known as SDH, Fiber Optic Telecommunications Networkin the UK which connects all of the
    major population centers in the UK to Ireland, continental
    Europe and the United States. SDH allows high speed data
    transmission and redirects transmissions in the event of a
    problem to prevent any disruption. This backbone network
    utilizes Asynchronous Transfer Mode, known as ATM, technology, a
    high speed, high bandwidth technology, and was built with
    sufficient duct capacity to accommodate over 2,300 fibers
    on the majority of the network. We designed this network to
    allow us to place the active components, such as routing
    devices, close to our customers, allowing us to offer a broad
    range of voice and data services.



| |  |                                                                                                                                                                                                                                                              
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We do not insure the underground portion of our
    cable network. As substantially all of our cable network is
    constructed underground, any catastrophe that affects our
    underground cable network could result in substantial uninsured
    losses.



| |   |                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | National Broadcast Transmission and Tower
    Network Infrastructurein the UK,
    which provide national, regional and local broadcast and
    wireless communications coverage. We own, lease, manage, or have
    access to, over 2,300 multi-user sites in the UK. Our fixed line
    and tower networks in the UK are interconnected at numerous
    sites.

NTL Communications Businesses in the
UK

We spent 2001 integrating our UK operations
following several years of acquisition and growth. Between 1998
and 2000, we expanded our UK operations significantly,
predominantly through acquisitions. Between June 1998 and July
1999, we acquired the UK broadband operations of Comcast
UK Cable Partners, Diamond Cable and ComTel as well as the
Westminster and Milton Keynes cable franchises of British
Telecommunications, or BT. In May 2000, we further increased our
UK operations by completing our acquisition of the
residential broadband and business cable operations of
Cable & Wireless Communications, also known as
Consumer Co.

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



| |   |                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | ntl: home,
    delivering broadband services to residential markets comprising
    residential telephone, analog and digital cable television,
    narrowband and broadband Internet access and interactive
    services;
|
| |  | ntl: business,
    comprising business telecommunications, national and
    international carrier telecommunications, Internet services and
    radio communication services;                                            
|
| |  | ntl: broadcast,
    delivering digital and analog television and radio broadcast
    transmission services, wireless network management, tower site
    rental and satellite and media services.                         

ntl:
home

We are the largest provider of broadband services
in the UK. As of December 31, 2001, we had approximately
2.8 million residential cable television and telephony
customers and over 4.97 million revenue generating units,
which we refer to as RGUs. At such date, our penetration rates
were approximately 35% telephone penetration,
29% cable television penetration and 37% customer
penetration.

Throughout 2001, we worked to streamline our
subscriber base, removing a backlog of approximately 45,000
non-paying and non-profitable customers in the second half of
the year. We are planning to remove an additional 14,000 in the
first quarter of 2002. We remove non-paying and non-profitable
customers if our standard collections procedures do not achieve
a satisfactory result. The action taken to remove non-paying

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customers provides us with a stronger customer
base. Our average churn rate for the quarter ending
December 31, 2001 was 21.3% on an annualized basis. Our
average churn rate for the same period excluding involuntary
disconnects would have been 17.7% on an annualized basis.


Broadband Internet usage by residential customers
is a relatively new and undeveloped market. However, we believe
the most effective strategy to maximize revenues and penetration
for our residential offerings is to bundle together telephone,
cable television and Internet services. Our product and pricing
strategies emphasize choice, value and quality and are designed
to encourage subscription to multiple services to maximize
customer retention and average revenue per customer.

Including capital expenditures made by the
companies and businesses acquired by NTL, we have spent
approximately $12.8 billion on our network infrastructure
in the UK.

Our core network consists of optical fiber
connected to distribution points, or nodes, each typically
serving up to 500 homes, from which we provide coaxial
cable and two copper pair telephone wires into each home. This
cabling enables the provision of two telephone lines, an analog
or digital television service and a high speed cable modem
service to each customers home.

Our fiber network has the capability to carry
telephone services as well as high speed data services. The
fiber network is capable of supporting digital subscriber lines,
or DSL, which consist of a bi-directional 2Mb/s connection
capable of supporting 30 voice channels and enable the
provision of higher capacity services to business customers. We
are able to support digital and interactive services as well as
advanced video services over our network through cable modems
that enable Internet access at almost 10 times the speed of
conventional dial up access.

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

Internet
access

In March 2000, we announced a plan to offer our
residential customers throughout the UK free, unlimited Internet
access via their personal computers or, where available,
televisions. This Internet service is called
ntlworld and became available to some of our
customers beginning in April 2000. As of December 31, 2001,
we had approximately 695,000 ntlworld customers within our local
franchises and 29,000 customers who used our service via digital
TV access. We have decided to begin charging our customers
for this service; however, we believe that we remain highly
competitive in this segment of the market.

Since the launch of ntlworld, the trend in
UK Internet pricing has been towards offering unlimited
Internet access for a higher fixed charge, as Internet
penetration has grown and Internet usage has increased. In
January 2002, we announced our decision to begin charging
our customers for service and the launch of two new packages:
Pay as you go, a metered service at 1p per
minute; and Unlimited, an unmetered service at
£10 per month. All subscribers to the free ntlworld
service will be transferred to either Pay as you go
or Unlimited during the first half of 2002. Existing
ntlworld customers will benefit from a £5 per month
price for Unlimited for a period of time.

In 1999, we were the first communications
provider in the UK to launch a high-speed cable modem Internet
service, which links customers of our local cable franchise
networks to the Internet at up to ten times the speed
possible over standard telephone lines. As of December 31,
2001, we had approximately 118,000 cable modem customers.
Approximately 80% of our networks are currently able to
provide this service to our customers. Our high-speed Internet
service currently operates at a speed of up to 2.0 Mb/s and
is offered at minimum delivery speeds of 128 Kb/s, 512Kb/s or
1Mb/s. The service is an always on service, removing
logging-on delays and the need to log off while using the
telephone. It uses the hybrid fiber coaxial

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cable portion of our broadband network, which
allows customers who also subscribe to a telephony service to
simultaneously make or receive telephone calls while accessing
the Internet. The 128 Kb/s and 512 Kb/s services are currently
offered at flat rates of £14.99 and £24.99 per month,
respectively, including the rental of a cable modem. This
compares with the newly announced prices for Freeserve and
BTOpenworld 512Kb/s ADSL services of £29.99 per month plus
purchase of the modem. In the first quarter of 2002, we launched
a 1 Mb/s modem offer at a price of £49.99 per month.
We are currently the only provider offering 1 Mb/s service
in the UK.




| |                    
| | -------------------
| | Franchise customers

We first introduced a bundled cable service to
our franchise customers in 1996, when we implemented a
promotional pricing and packaging structure called
Choices. Since then, we have continued to refine and
enhance our offering. The packages we currently offer to our UK
residential franchise customers, excluding customers in Milton
Keynes and Westminster, where we plan to launch broadband in
2002, and in some former Cable & Wireless Communications
franchises which only offer cable television, comprise:



| |   |                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | telephone service, including a second telephone
    line for an additional charge unless the customer decides not to
    take television (99% of potential customers are now offered the
    3-2-1 simplified telephone rate plan);
|
| |  | narrowband Internet access service, if the
    customer takes a telephone service (97% of potential customers
    can subscribe for ntlworld flat rate narrowband Internet
    service);                                             
|
| |  | broadband Internet access service (two thirds of
    potential customers can subscribe for 128 Kb/s or
    512 Kb/s broadband Internet service);                                                                                     
|
| |  | all of the current terrestrial television
    channels and access to multi-channel television, including pay
    per view; and                                                                                                       
|
| |  | interactive television services.                                                                                                                                                                                                     

Our packaging and pricing are designed to
encourage our customers to use multiple services such as dual
telephone and broadband, dual telephone and narrowband, dual
telephone and TV, or triple telephone, TV and Internet access.
Only telephone, with its low capital expenditure requirements
and high margins, is available widely as a stand-alone single
product. Of our competitors, only Telewest, which does not offer
its services in our franchise areas, is able to offer the full
range of services we provide (see table below).



|         |  |          |   |    |  |           |   |  |  |  |   | 
|-------- |  | -------- | - | -- |  | --------- | - |  |  |  | - | 
|         |  | Internet |   | TV |  | Telephone
|         |  |          |   |    |  |          
|NTL      |  |          | # |    |  |           | # |  |  |  | # | 
|BT       |  |          | # |    |  |           | X |  |  |  | # | 
|BskyB    |  |          | X |    |  |           | # |  |  |  | # | 
|Telewest |  |          | # |    |  |           | # |  |  |  | # | 



| |                 
| | ----------------
| | Cable television

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

8



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Entertainment (Columbia/ Tri-Star), the Walt
Disney Company (Walt Disney Studios, Miramax, Hollywood Pictures
and Touchstone), Dreamworks, MGM and Universal.




| |                     
| | --------------------
| | Interactive services

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

We have established relationships with over
75 content providers to deliver a wide range of interactive
services, including education, shopping and banking, finance,
travel, entertainment, games, news, sports and local content.
Interactive content is organized into channels, including news,
sports, travel, lifestyle, money, entertainment and shopping.
Our partners include Sainsburys, Iceland, QVC, W.H. Smith
and Dominos Pizza. The travel channel includes content
partners such as Go Airlines, Thomas Cook Travel Select and
Teletext and the money channel features content partners such as
Abbey National, The Halifax and Bloomberg.

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



| |          
| | ---------
| | Telephony

In 1999, we launched the NTL 3-2-1
call plan for our residential franchise customers where national
and local calls cost only three pence per minute during the day,
evening calls cost two pence per minute and weekend calls cost
one pence per minute. We are able to offer this plan by using
our national telecommunications and local networks and bypassing
a portion of the wholesale long distance fees which would
otherwise be charged by BT and other carriers for carrying calls
to and from our local franchise networks. In 2002, we have begun
the roll-out of our Talk Unlimited service, whereby
customers can make unlimited calls on evenings and weekends to
local and national fixed line numbers for a flat fee of
£8 per month in addition to their standard line rental.



| |                
| | ---------------
| | Indirect access

On November 7, 2001, we announced our sale
of the right to offer services to approximately 230,000 indirect
access telephone customers to Innogy for approximately
£23 million ($33 million) including the
collection of certain future service revenues and existing
receivables.

We acquired these indirect access customers as
part of the acquisition of the residential businesses of
Cable & Wireless Communications in May 2000. However,
as these customers were not connected to our national backbone
network, they could not benefit from our simplified calling
tariffs, cost base or dial-up Internet service. Rather than risk
the substantial churn associated with the process of migrating
the customers to the NTL Communications network and
services, we determined that the sale of the customer base would
result in the highest realizable value of the asset.

As of December 31, 2001, we had
approximately 118,000 off-net customers of which approximately
89,000 are also customers of our ntlworld Internet service. We
do not incur the unfavorable interconnect costs that were
related to servicing the Cable & Wireless indirect access
telephony base because these indirect access customers are
served by our national network.

9



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| |                            
| | ---------------------------
| | Customer management systems

For most of our franchise areas, we use advanced
billing and customer management systems which enable us to
control all aspects of a customers account for both
telecommunication and television products. We currently operate
a number of billing systems inherited from the different
operations we have acquired. We are in the process of merging
these different systems onto a single platform, which we expect
will reduce costs and improve customer satisfaction.



| |           
| | ----------
| | Premium TV

Premium TV Limited, which is an indirect
wholly owned subsidiary of NTL Incorporated, has a joint
venture with Eurosport, the pan-European basic tier sports
channel, to develop British Eurosport, a version of Eurosport
tailored to appeal to UK viewers. This channel is now
available to all of the NTLs UK pay television homes.

Premium TV has also entered into long-term joint
ventures with a number of UK football (soccer) teams
including Rangers, Leicester, Middlesbrough and Newcastle, as
well as the Football League, which represents 76 teams, and
has entered into a five-year operating agreement with Aston
Villa. These joint ventures are intended to develop the football
teams Internet and broadband rights which may include
audio-visual footage of matches on a delayed basis and live
audio coverage of matches.

Premium TV is developing a Classic Sports
television channel, and has a contractual arrangement with the
BBC permitting Premium TV to show historical football
(soccer) matches from the BBCs library.



| |              
| | -------------
| | ntl: business

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

Our existing customer base incorporates both
private and public sector organizations. Within the private
sector we focus on the areas of finance, utilities and travel.
Within the public sector we have a substantial share of the
market in emergency services, local government and education
telecommunications requirements.

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

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

Since August 1, 2001, ntl: business has been
structured with three key business units within the overall UK
communications market. These business units are Retail, Managed
Network Services (incorporating Mobile, Enterprise, Public
Safety and VISP) and Carrier Services. The segmentation enables
us to develop a deeper understanding of our customers
businesses which enables us to craft specific solutions and
trading alliances appropriate for each specific market. The
discussions below reflect the old structure of ntl: business.

10



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##### 



Following our analysis of published OFTEL
statistics for telecommunications services, and Gartner Group
statistics for other communications services, we estimate the
size of the market in which we compete to be in excess of
£24.5 billion for the year 2002. Of the total
communications market, we estimate that approximately
£17.5 billion represents business telecommunications
and £7 billion represents carrier telecommunications
services.

Our network already passes within 200 meters of
more than 570,000 business premises in the UK. However, as a
result of the reach of our national network, we can serve a
substantial portion of the UKs approximately
1.2 million business premises through means such as
indirect access. These premises host approximately
1.5 million business customers. We believe that the
architecture and reach of our network infrastructure has
positioned ntl: business to play a leading role in the delivery
of broadband services to UK businesses going forward. We plan to
exploit demand for broadband services primarily through our
broadband cable modem product which was launched in the second
quarter of 2001, and our E-1 Direct Internet Access
Service. We will continue to market our standard products and
services ranging from telephony and Internet access to data and
e-commerce and managed services. These services will be
delivered via copper wire, coaxial cable, fiber and wireless.



| |                      
| | ---------------------
| | Retail and Enterprise

In our local direct markets (retail), our
approach is to think nationally but act locally. In
our business markets, our approach is to enable businesses to
become more efficient and effective. Our focus is on small to
medium sized businesses.

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

Across these market sectors, we plan to utilize
our national capabilities and the expertise of our market
focused account management and technical support teams to target
specific business sectors and increase penetration.

As of December 31, 2001, we had
approximately 76,000 business customers with an average of 5.1
lines per customer for a total of approximately 380,000 retail
business telephony lines installed in the UK.

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



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Access Servicesthat
    connect our customers to us for inbound and outbound voice and
    data calls. These access services include additional analog
    business exchange lines, or BELs, and digital business exchange
    lines, or DELs. DEL services include basic rate access, also
    known as ISDN2, and primary rate access, also known as ISDN30.
    We believe these and other direct and indirect access services
    are priced competitively and are often in competition with
    similar services provided by a number of other direct and
    indirect suppliers. In the second quarter of 2001, we launched a
    business cable modem service that enables the delivery of
    broadband services to our business customers.
|
| |  | Managed Voice Services/ Virtual Private
    Networksthat are best illustrated by
    our central exchange Centrex service. Through this
    service we provide our customers with business exchange lines
    configured as a virtual PABX, where we provide the
    services normally associated with a traditional PABX located at
    a customers premises. We provide these services on a
    rental basis which allows our customers to avoid the expense
    associated with an outright capital purchase and maintenance
    costs.                                                                                                                                                                                                    
|
| |  | Managed Data Servicesthat include point to point private
    circuits at speeds of multiples of 64 Kb/s and individually
    tailored 100 Mb/s and 155 Mb/s services. Other
    services include the provision of inter-site data services with
    particular transmission protocols, such as Internet Protocol
    also known as TCP/IP, Frame Relay and ATM.                                                                                                                                                                                                                                                                                                                                                                                    

11



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Managed Local Area Networks
    (LANs), in order to support the
    developing needs of our business market, we have established
    significant capabilities that enable us to fully manage LANs or
    to design, project manage and integrate new LAN platforms for
    our customers.                                                                                                                                                                                                  
|
| |  | 08xx Servicesthat
    include free local and national call services together with a
    range of other routing features based on our network. These
    services enable our customers to manage inbound calls and
    establish varying tariffs for their customers to contact them.                                                                                                                                                                                                       
|
| |  | Internet Services,
    in order to provide our customers with the tools they require to
    build their e-business services including dedicated, high-speed
    Internet access services, web hosting services, and specific
    individually tailored applications securing and protecting their
    e-businesses. The range of services we provide also includes the
    provision of simple, inexpensive software to enable our
    customers to begin doing business over the Internet.

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



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Obtaining permits to construct telecommunications
    networks, and building out our network to reach our customers.
    Although this is often the most costly means of reaching a
    customer, the expense can be justified in the case of larger
    customers or where a significant level of traffic is obtained
    from a customer. For example, we have extended our fiber optic
    network within London to reach and support CNNs facilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Leasing circuits on the local networks of other
    service providers to connect to our customers premises.
    Although this may reduce the operating margin on a particular
    account, it requires significantly less capital expenditure than
    a direct connection, can often be put in place relatively
    quickly and can be replaced at a later date if traffic volumes
    justify it.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Connecting customers to our national
    telecommunications network by implementing microwave radio links
    which utilize our significant tower infrastructure to connect
    our network to our customers, using digital point to point
    microwave radio links. Alternatively, we believe our license to
    operate radio fixed access services on a national basis
    throughout the UK at the 10 Ghz frequency, could enable us
    to use wireless local loop technology to connect our
    network to our customers, although we are not currently
    utilizing this approach. Either of these two methods requires
    the installation of a mini-tower site on the roof of the
    customers premises to receive and broadcast data.
    Wireless local loop connectivity would enable a
    radial transmission to a number of sites surrounding the
    mini-tower whereas point to point connectivity enables
    transmission between two points only.



| |              
| | -------------
| | Public Safety

In addition to meeting the traditional voice and
data requirements of businesses throughout the UK, our Radcomms
business offers a full range of communications services,
including the design and operation of radio networks and the
provision of support, maintenance and facility management
services to customers who provide public safety services to the
community. Our customers include primary providers such as
police, fire and ambulance and secondary providers such as
H.M. Prison Service, the Coast Guard and the Royal National
Lifeboat Association. We have been servicing a substantial
portion of the radio installation and maintenance market for
public safety in the UK for many years and our public safety
customers provide us with a relatively steady source of revenue.

We intend to position ourselves to increase our
activities in the public safety sector from facilities and
maintenance activities into complete outsourcing arrangements.
We believe we are at the forefront of managed communication
services in the public safety sector, and we believe that the
majority of the British Public Safety Services will move from
their current service arrangements into outsourcing and the
provision of fully managed services. We believe we have already
established a strong position in outsourcing services and
facility management for these mission critical customers, and
plan to continue to build on our existing relationships with
current customers. An example is the Metropolitan Police
Authority (New Scotland Yard), for which we manage
communications services for over 25,000 police officers.

12



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| |                                                  
| | -------------------------------------------------
| | Wholesale (Carrier Services, Mobile and
    VISP)

Our wholesale markets groups main focus is
the supply of UK infrastructure and bandwidth to national and
international telecommunications operators. Our national and
local networks are used to interconnect these carriers to cities
in the UK and Ireland. NTL Communications wholesale has seen
continued growth over the last five years, and has successfully
positioned itself as a key supplier of wholesale services. We
expect to continue to serve the wholesale marketplace through
our strategy of providing high quality and competitively priced
services which can be customized where necessary.

Our customers include fixed wire line and mobile
telecommunications operators and Internet service providers, or
ISPs, such as AOL, COLT, Worldcom, other cable operators, and
various information technology and facilities management
companies. A dedicated team addresses the needs of the UK mobile
operators, and we are a major supplier to Vodafone and Orange.
We have developed a successful business supplying core
interswitch network capacity to UK mobile operators and have
commercial relationships with the four incumbent mobile
operators.

We have been instrumental in developing a new
commercial and technical model for the supply of networks to the
mobile operators. These developments culminated in our being
awarded, in April 2000, a five-year £150 million
contract by Orange. A key element of the contract, by which
Orange outsources the maintenance and provisioning of that
network, is the extension of our existing core network. All five
third generation mobile operators in the UK will need to
implement network and services to support 3G services, and we
will work to define and co-ordinate our strategy for supporting
3G services.

A growing area of our wholesale business is
selling voice termination services to a wider mix of operators,
and using these relationships to reduce the cost-base for our
telephony traffic by:



| |   |                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------
| |  | creating a self sustaining revenue stream,                                                                                           
|
| |  | establishing commercial relationships with
    wholesale customers thus enabling us to cross-sell and up-sell
    other products, and
|
| |  | generating revenue and cost reduction
    opportunities for other parts of NTL.                                                      

The growth in the number of international
operators building and operating submarine cable systems in
recent years has been substantial, with many of the cables
crossing the UK. We have considerably increased physical
connectivity to UK international cable landing stations and
developed products to address the needs of the international
cable operators for carrier services between the cable landing
sites and the major UK international nodes such as Telehouse,
London, which services are also known as backhaul
services.

Utilizing our ATM national network, we have
developed Frame Relay and ATM wholesale products to meet demand
for high-speed data connectivity. Additionally, our core data
network, local loop infrastructure and connectivity to the main
international nodes, will allow us to address the needs of
international operators for the termination of UK-bound and
origination of UK-generated data traffic.

In addition to wholesale telecommunications and
data services, we also offer wholesale Internet access solutions
including network services, call center operations and customer
provisioning and billing to UK ISPs and other corporate
customers that would like to expand their Internet presence.
This service was launched in 1995.



| |               
| | --------------
| | ntl: broadcast

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

We have a proven history of developing new
products and services to meet the needs of our customers and
drive the growth of our business. These developments include the
implementation of Teletext, a text based

13



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data service transmitted with the analog
television signal, the implementation of NICAM in the 1980s
enabling the transmission of digital stereo and Dolby audio over
analog television transmissions, and most recently the design
and implementation of the worlds first digital terrestrial
television and digital audio broadcasting networks and services
for our UK broadcast customers.


We provide products and services to three
distinct market areas:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Site Leasing and Services.We operate the second largest
    independent portfolio of wireless towers and sites available for
    lease in the UK. In total, we operate over 2,370 multi-user
    sites in the UK as of December 31, 2001, up from
    approximately 600 sites in May 1996. As of December 31,
    2001, we leased space on our towers to over 4,200 lessees
    including all of the major wireless operators in the UK and also
    offer unique services such as In-Building a wireless
    connectivity that can enhance their wireless coverage in
    high-traffic areas such as shopping malls, office buildings and
    conference centers.                                 
|
| |  | Broadcast Transmission and Services.We own and operate one of two
    television broadcasting infrastructure networks in the UK.
    Additionally, we have national, regional, and local radio
    broadcast infrastructure networks in the UK. We developed the
    first commercial digital terrestrial television service in 1998
    and the first commercial digital radio station in 1999. Because,
    unlike broadcasters in the United States, we own and operate not
    only the towers but also the broadcast transmission
    infrastructure, our broadcast customers rely on our network and
    package of integrated turn-key services to distribute and
    broadcast their content.
|
| |  | Satellite and Media Services.We provide satellite and media
    services in the UK and value-added services such as playout,
    fixed and mobile satellite up-linking, and a wide range of
    occasional & outside broadcast services to generate
    incremental revenue. Our ability to offer a full range of
    services from content gathering, distribution & transmission
    is unique in the UK market.                                                                                                                                                                                                                                                                                   

Our broadcast and wireless customers generally
hold long term licenses and enter into service agreements with
us that typically last 10 to 15 years.



| |                          
| | -------------------------
| | Site Leasing and Services

We operate a UK wireless infrastructure network
of approximately 2,370 multi-user sites as of December 31,
2001. We own, lease or manage approximately 1,570 UK sites and
have access to approximately 800 undeveloped sites. Our primary
business is the leasing of antenna space on our sites to a
diverse range of wireless service providers, including providers
of mobile telephony, paging, specialized mobile radio, or SMR,
and wireless local loop services. We have also developed a range
of complementary services that utilizes our tower expertise,
including infrastructure services, site selection and
acquisition, design and construction, antenna installation,
network planning and management, and tower maintenance.

Our network in the UK is national in scope and
includes most of the major population centers and highways. Our
wireless customers currently include all of the UK mobile
telephony operators, including Vodafone AirTouch, mmO(2)
(formerly known as BT Cellnet UK), Orange, One2One and
Hutchison 3G, all the major paging companies, and many of
the UKs largest wireless telephony carriers, including BT,
Cable & Wireless, and Thus plc. We also serve several
utility companies and emergency service organizations including
British Gas, London Ambulance and Her Majestys Customs and
Excise.

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

14



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The dramatic growth of wireless communications
necessitates good cellular coverage in all commercial areas,
leading to a requirement for reliable wireless communications
infrastructure inside buildings. We believe this creates a new
type of radio site which, unlike towers, will exist within
commercial buildings, transport hubs, shopping malls and other
large buildings. Our analysis shows that there are approximately
2,000 of these types of commercial properties in the UK. As at
December 31, 2001, we had built shared coverage systems in
26 large buildings including Bluewater, Britains largest
shopping complex and Canada Square, part of Londons Canary
Wharf complex.

Building on the technology we developed for
In-Building services, we are exploring with UK mobile operators
ways of using our fiber network to solve the distance, coverage
and power problems associated with 3G rollout in urban areas.
Although in an early stage of development, we believe that a
solution utilizing small low-profile antennas, positioned on
buildings and other street level infrastructure and connected
via our fiber network to remote base stations, could improve
coverage and service quality compared to more traditional
rooftop sites for 3G technology.



| |                                        
| | ---------------------------------------
| | Broadcast Transmission and
    Services

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

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

Television broadcasting.We provide digital and analog
broadcast transmission services for national and regional
television broadcasters. The analog network provides coverage to
99.8% of the UK population, with approximately 3,500 broadcast
transmitters. Our extensive television broadcast customer base
includes all of the UK commercial terrestrial television
broadcast companies consisting of the ITV national network of
15 affiliated stations, the national services of
Channel 4 and Channel 5, as well as the regional
service S4C in the UK.

We provide digital terrestrial broadcast
transmission for two of the three commercial national digital
television services in the UK. These services carry up to
12 separate channels, including the ITV network,
Channel 4, Channel 5 and a range of new digital
channels and services such as pay per view. As of December 2001,
we were operating 80 digital terrestrial television transmitting
stations reaching approximately 88% of the UK population.

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

Radio broadcasting.We are one of two major companies
providing transmission sites and services to the radio industry
in the UK. We offer a range of services to radio broadcasters
including: target service area planning; site location;
installation and commissioning; and equipment selection,
procurement, operation, monitoring and maintenance. We believe
that we are a supplier of transmission services to a substantial
portion of the addressable market. Our radio broadcast customer
base includes two of the three national

15



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commercial stations: Classic FM and Talk Radio,
over 200 metropolitan, regional and local stations and the first
all digital radio station, Digital One, of which we are a
founding equity partner with a 37% equity interest. We have a
contract for the transmission of Digital One with a lifetime
value in excess of $75 million. The UK government has
embarked on a program of licensing a number of new regional and
local digital radio multiplexes. As of December 31, 2001 we
have secured contracts to build transmission and supporting
network for 24 of the 27 licenses awarded so far.




| |                             
| | ----------------------------
| | Satellite and media services

We own and operate satellite up-linking
facilities consisting of over 30 fixed satellite up-link dishes
able to access over 50 satellites with global coverage, a
network of mobile and transportable up-links, management and
control systems and all associated operations and maintenance.
We provide our satellite customers with program and content
distribution services for over 160 full-time channels via
satellite and fiber. In addition, we have facilities for playout
services, remote satellite news gathering, and full outside
broadcast. Through an alliance with Williams Vyvx, a Williams
Co. company, our customers also have access to 48 cities in the
United States.

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



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

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

NTLs Businesses and Investments in the
Republic of Ireland

In July 1999, we acquired Cablelink Ltd. in the
Republic of Ireland, which then had over 400,000 franchise homes
in Dublin, Galway and Waterford.

This company provides cable television services
in Dublin, Galway and Waterford to over 370,000 subscribers. As
of December 31, 2001, the company had an 83.4% penetration
rate over its broadband cable network, which passes over 440,000
homes. The company holds licenses to provide analog and digital
television services in its franchises for the next 12 years
with exclusive rights for the next two years. It also has a full
service license allowing it to provide public telephony,
Internet and other value-added services throughout Ireland.

Among our 2001 highlights, Cablelink:



| |   |                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | developed and successfully rolled out our digital
    television service in Dublin, Galway and Waterford;                                                                             
|
| |  | met all of our regulatory milestones for the
    provision of digital television;                                                                                                     
|
| |  | integrated our residential and business to
    business divisions in Ireland to create a single operating
    entity  thus deriving extra operational efficiencies
    and synergies;
|
| |  | migrated 95% of our customer base onto a new
    customer relationship management system; and                                                                                         
|
| |  | made all systems fully Euro compliant for the
    introduction of the Euro.                                                                                                           

16



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The following table illustrates our holdings in
the UK and Ireland:

UK and Ireland Customer Statistics as of
December 31, 2001

|                                 |                              |                                  |          |           |   |       |       |       |   |  |          |         |  
|-------------------------------- | ---------------------------- | -------------------------------- | -------- | --------- | - | ----- | ----- | ----- | - |  | -------- | ------- | -
|                                 |                              | NTL                              |          | NTL       |   |      
|                                 |                              | (UK)                             |          | (Ireland) |   | Total
|                                 |                              |                                  |          |           |   |      
|                                 |                              |                                 
|                                 |                              | (Subscriber totals in thousands)
|RESIDENTIAL                      |                              |                                  |          |           |   |       |       |       |   |  |          |        
|Ownership Interest               |                              |                                  | 100      | %         |   |       | 100   | %     |   |  |          |        
|Homes in Franchise               |                              |                                  | 11,411.2 |           |   |       | 443.8 |       |   |  | 11,855.0 |        
|Homes passed                     |                              |                                  | 8,404.1  |           |   |       | 443.8 |       |   |  | 8,847.9  |        
|Homes marketed (Telco)           |                              |                                  | 7,506.4  |           |   |       | 20.0  |       |   |  | 7,526.4  |        
|Homes marketed (CATV)            |                              |                                  | 7,729.8  |           |   |       | 443.2 |       |   |  | 8,173.0  |        
|Customers                        |                              |                                  | 2,840.0  |           |   |       | 369.8 |       |   |  | 3,209.8  |        
|                                 | Dual/ Triple RGU             |                                  |          | 2,038.2   |   |       |       | 5.3   |   |  |          | 2,043.5 |  
|                                 | Single RGU                   |                                  |          | 801.8     |   |       |       | 364.5 |   |  |          | 1,166.3 |  
|Cable Television (CATV)          |                              |                                  | 2,261.9  |           |   |       | 369.8 |       |   |  | 2,631.7  |        
|                                 | Digital                      |                                  |          | 1,253.5   |   |       |       | 7.7   |   |  |          | 1,261.2 |  
|                                 | Analog                       |                                  |          | 1,008.4   |   |       |       | 340.6 |   |  |          | 1,349.0 |  
|                                 | Antenna                      |                                  |          |          |   |       |       | 21.5  |   |  |          | 21.5    |  
|Telephone                        |                              |                                  | 2,589.3  |           |   |       | 5.3   |       |   |  | 2,594.6  |        
|Internet (INT)                   |                              |                                  | 845.0    |           |   |       | 1.5   |       |   |  | 846.5    |        
|                                 | Dial-Up (ntlworld and other) |                                  |          | 698.4     |   |       |       | 1.4   |   |  |          | 699.8   |  
|                                 | Digital TV Access            |                                  |          | 28.5      |   |       |       |      |   |  |          | 28.5    |  
|                                 | Broadband (BB)               |                                  |          | 118.1     |   |       |       | 0.1   |   |  |          | 118.2   |  
|RGUs (CATV, Telco, BB)           |                              |                                  | 4,969.3  |           |   |       | 375.2 |       |   |  | 5,344.5  |        
|Service Units (CATV, Telco, Int) |                              |                                  | 5,696.2  |           |   |       | 376.6 |       |   |  | 6,072.8  |        
|RGUs/ Customer                   |                              |                                  | 1.75     | x         |   |       | 1.01  | x     |   |  | 1.67     | x      
|Service Units/ Customer          |                              |                                  | 2.01     | x         |   |       | 1.02  | x     |   |  | 1.89     | x      
|Penetration:                     |                              |                                  |          |           |   |       |       |       |   |  |          |        
|                                 | CATV                         |                                  |          | 29.3      | % |       |       | 83.4  | % |  |          | 32.2    | %
|                                 | Telephone                    |                                  |          | 34.5      | % |       |       | 26.5  | % |  |          | 34.5    | %
|                                 | Customer                     |                                  |          | 36.7      | % |       |       | 83.4  | % |  |          | 39.3    | %
|                                 | RGU                          |                                  |          | 64.3      | % |       |       | 84.7  | % |  |          | 65.4    | %
|                                 | Service Unit                 |                                  |          | 73.7      | % |       |       | 85.0  | % |  |          | 74.3    | %
|                                 | Dual/ Triple                 |                                  |          | 71.8      | % |       |       | 1.4   | % |  |          | 63.7    | %
|Quarterly Growth:                |                              |                                  |          |           |   |       |       |       |   |  |          |        
|                                 | Customers                    |                                  |          | (41.8     | ) |       |       | (4.8  | ) |  |          | (46.6   | )
|                                 | RGUs                         |                                  |          | (51.5     | ) |       |       | (5.8  | ) |  |          | (57.3   | )
|Off-Net Telephony                |                              |                                  | 118.3    |           |   |       | 2.8   |       |   |  | 121.1    |        
|                                 | Telephone                    |                                  |          | 29.1      |   |       |       |      |   |  |          | 29.1    |  
|                                 | Telephone and Internet       |                                  |          | 89.2      |   |       |       | 2.8   |   |  |          | 92.0    |  
|BUSINESS DIVISION                |                              |                                  |          |           |   |       |       |       |   |  |          |        
|Business Customers               |                              |                                  | 76.2     |           |   |       | 0.2   |       |   |  | 76.4     |        
|Business Lines                   |                              |                                  | 389.7    |           |   |       | 1.9   |       |   |  | 391.6    |        
|Wholesale Internet Subscribers   |                              |                                  | 1,210.7  |           |   |       | 0.2   |       |   |  | 1,210.9  |        

17



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##### 



|                    |  |                                  |         |           |  |       |       |  |  |  |         | 
|------------------- |  | -------------------------------- | ------- | --------- |  | ----- | ----- |  |  |  | ------- | 
|                    |  | NTL                              |         | NTL       |  |      
|                    |  | (UK)                             |         | (Ireland) |  | Total
|                    |  |                                  |         |           |  |      
|                    |  |                                 
|                    |  | (Subscriber totals in thousands)
|Total Customers     |  |                                  | 4,245.2 |           |  |       | 373.0 |  |  |  | 4,618.2 | 
|Total Service Units |  |                                  | 7,504.1 |           |  |       | 384.3 |  |  |  | 7,888.4 | 

Competition

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



| |                  
| | -----------------
| | Consumer Services

We compete primarily with BT in providing
telephone services to residential customers in the UK. BT
occupies an established market position and manages fully built
networks and has resources substantially greater than ours.
According to the Office of Telecommunications, or OFTEL, in
September 2001, BT serviced 81.29% of UK residential telephone
exchange line customers. Our growth in telecommunications
services, therefore, depends upon our ability to convince
BTs customers to switch to our telecommunications
services. We believe that value for money is currently one of
the most important factors influencing the decision of UK
customers to switch from BT to a competing telecommunications
service. BT has, however, introduced price reductions in some
categories of calls and, due to regulatory price controls, BT
will be making further reductions in its telecommunications
prices. Accordingly, although we intend to remain competitive,
in the future we may be unable to offer residential telephone
services at rates lower than those offered by BT. In this case,
we may not achieve desired penetration rates and may experience
a decline in total revenues. There can be no assurance that any
such decline in revenues or penetration rates will not adversely
affect us. In addition to BT, other telecommunications
competitors could prevent us from increasing our share of the
residential telecommunications market. In particular, carrier
pre-selection for all calls (except for some special categories)
was launched in 2001 which may increase the appeal of indirect
access operators, whose discounted call charges may undercut us.

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

We believe that we have a competitive advantage
in the residential market because we offer integrated telephone,
cable television, telecommunications services (including
Internet, interactive and on-line services) and multi-product
packages designed to encourage customers to subscribe to
multiple services. The packages we currently offer to our UK
residential franchise customers (excluding customers in Milton
Keynes and Westminster, where we plan to launch broadband in
2002, and in some former Cable & Wireless Communications
franchises which only offer cable television) comprise telephone
service, narrowband Internet access service, broadband Internet
access services, all of the current terrestrial television
channels and access to multi-channel television, including pay
per view and interactive television services. Our packaging and
pricing are designed to encourage our customers to use multiple
services such as dual telephone and broadband, dual telephone
and narrowband, dual telephone and TV, or triple telephone, TV
and Internet access. Of our competitors, only Telewest, which
does not offer its services in our franchise areas, is able to
offer the full range of services we provide. However, there can
be no assurance that this competitive advantage will continue.
Indeed, BT and all other operators have been permitted to
provide and convey cable television services throughout the UK
from January 1, 2001, and exclusive franchises will no
longer be awarded.

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

Our cable television systems compete with direct
reception over-the-air terrestrial broadcast television, DTH
satellite services (i.e., BSkyB) and satellite master antenna
systems. In addition, pay television and pay-

18



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##### 



per-view services offered by us compete to
varying degrees with other communications and entertainment
media, including home video, cinema exhibition of feature films,
live theater and newly emerging multimedia services. We expect
that, in the future, we may face competition from programming
provided by video-on-demand services.


We offer our broadband Internet service at flat
rates of £14.99 and £24.99 per month for 128Kb/s and
512Kb/s, respectively, including the rental of a cable modem.
This compares with the newly announced prices for Freeserve and
BTOpenworld 512Kb/s ADSL services of £29.99 per month plus
purchase of the modem.



| |                            
| | ---------------------------
| | Business Telecommunications

BT and Cable & Wireless are our principal
competitors in providing business telecommunications services.
In the future, we may compete with additional entrants to the
business telecommunications market. Competition is based on
price, range and quality of services, and we expect price
competition to intensify if existing and other new market
entrants compete aggressively. Most of these competitors have
substantial resources and there can be no assurance that these
or other competitors will not expand their businesses in our
existing markets or that we will be able to continue to compete
successfully with such competitors in the business
telecommunications market.



| |                                              
| | ---------------------------------------------
| | Broadcast Transmission and Tower
    Services

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

Although Crown is our direct competitor, we each
have reciprocal rights to use each others sites for
broadcast transmission usage in order to enable each of us to
achieve the necessary country-wide coverage. This relationship
is formalized by the site-sharing agreement entered into in 1991
when those towers were privatized.

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

All four UK mobile operators own site
infrastructure and lease space to other users. Their openness to
sharing with direct competitors varies by operator. BT Cellnet
(now called mm0(2)) and Vodafone have agreed to cut site costs
by jointly developing and acquiring sites in the Scottish
Highlands. BT and Cable & Wireless are both major
site-sharing customers but also compete by leasing their own
sites to third parties. BTs position in the market is even
larger when considered in combination with its interest in
mm0(2).

Several other companies compete in the market for
site rental. These include British Gas, Racal Network Systems,
Aerial Sites Plc, Relcom Aerial Services and the Royal
Automobile Club. Some companies own sites initially developed
for their own networks, while others are developing sites
specifically to exploit this market.

Regulation

NTL Communications is subject to both UK and
European Union competition regulations which prohibit companies
from engaging in anti-competitive behavior in violation of these
regulations. In addition as a provider of telecommunications
services, the Company is subject to the regulatory oversight of
OFTEL, which regulates telecommunications in the United Kingdom.
OFTEL regulations are designed to ensure the fair and efficient
delivery of such services to customers. The Company must be
compliant with these

19



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##### 



regulations in its product offerings and in its
dealings with customers and suppliers. Failure to comply with
these regulations could result in administrative or other legal
proceedings, as a result of which the Company could be ordered
to stop activities which violate the applicable regulations,
modify its behavior to comply with applicable regulations or
could be subject to fines or civil damages.


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



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

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



| |                 
| | ----------------
| | Price Regulation

BT is currently subject to controls over the
prices it may charge customers. In particular, BT may not
increase charges for certain services by more than the amount of
the percentage change in the retail price index. In Autumn 1999,
OFTEL began the process of examining what price controls, if
any, should apply to BT after 2001. In February 2001, OFTEL
announced that current retail price controls would be extended
until July 2002 with a roll over provision for a further year.
In January 2002, OFTEL issued a new consultation setting out
proposals for the progressive removal of price controls along
with certain new measures to stimulate further retail
competition.

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



| |                   
| | ------------------
| | Number Portability

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



| |                      
| | ---------------------
| | Local Loop Unbundling

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

20



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##### 



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

In February 2002, BT announced reductions in its
wholesale charges to ISPs (including its own tied ISP) for
wholesale ADSL services. These reductions will lead to
commensurate reductions in retail rates.



| |                
| | ---------------
| | Interconnection

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



| |                                        
| | ---------------------------------------
| | Open Access to Cable
    Infrastructure

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



| |      
| | -----
| | BSkyB

In December 2000, the Office of Fair Trading
(OFT) announced that it was commencing an investigation under
the UK Competition Act into BSkyBs activities, in
particular the wholesale prices offered to rival distributors of
pay television services. This investigation is ongoing. In
December 2001, the OFT announced its preliminary finding that
BSkyB had been abusing its market power through its pricing
practices. The OFT also said that it was aiming to complete the
investigation into BSkyBs pricing by summer 2002.

In addition, in February 2002, the OFT announced
that it had decided not to give a decision on whether an
agreement entered into by us with BSkyB for the carriage of
programming at discounted rates, notice of which was given to
the OFT in October 2000, was anti-competitive. As a result, we
have not been able to proceed under this agreement and will not
be able to do so until the OFT renders a favorable decision. The
terms of this agreement provided that the agreement would not
come into effect unless OFT approval was granted within six
months of the agreement. Although extended for a period, this
deadline has now passed. Therefore, even if the OFT approval is
granted, we will not be obligated to perform this agreement and
as a result, we may negotiate a different agreement with BSkyB
or may elect not to enter into any agreement with BSkyB.

The OFTs investigation into BSkyBs
behavior continues.



| |                     
| | --------------------
| | Competition Act 1998

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

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

The Competition Act, as well as OFTELs
regulations, limit the types of agreements and arrangements the
Company can enter into. For example, the Company may be
prohibited from establishing pricing

21



---



##### 



arrangements or purchasing arrangements which
have the effect of reducing competition in the market or forcing
companies to behave in a certain way dictated by the Company.




| |                                     
| | ------------------------------------
| | Mobile Phone Termination
    Charges

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

The Competition Commission investigation is
expected to conclude in December 2002.



| |                   
| | ------------------
| | Broadcast Services

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



| |                                                         
| | --------------------------------------------------------
| | Telecommunications Act and Broadcasting Act
    Licenses

NTLs licenses contain conditions and
provisions which, among other things:



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



| |                 
| | ----------------
| | Price Cap Review

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

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

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

22



---



##### 



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

In April 2002, OFTEL agreed with NTL
Communications an extension of the existing price control until
July 31, 2003. A review is expected to take place in early
2003 to examine whether any additional price control beyond that
point is justified.



| |                           
| | --------------------------
| | European Union Legislation

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



| |                    
| | -------------------
| | Communications Bill

A White Paper issued in December 2000 
A New Future for Communications  proposed the
creation of a new body OFCOM to regulate the
communications industry. This will merge the functions of, among
others, OFTEL, the Radiocommunications Agency and ITC and it is
intended that it will provide a more flexible framework for
regulating a converging industry.

Research and Development

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

Patents, Copyrights and Licenses

We do not have any material patents or copyrights
nor do we believe that patents play a material role in our
business. We are substantially dependent on the licenses and
franchises granted by the legislative agencies which regulate
our respective businesses. The loss of any one or more of our
licenses or franchises could have a material adverse effect on
our business and financial condition.

Customers

No material part of our business is dependent
upon a single customer or a few customers, the loss of any one
or more of which would have a materially adverse effect on us.
In our broadcast services business, 28.8% of revenues from the
broadcast services business was derived from contracts with the
ITV companies, Channel 4/S4C and Channel 5 in the UK
in 2001.

Employees

At December 31, 2001, we had approximately
17,300 employees, approximately 15,000 of whom are permanent and
approximately 2,300 of whom are temporary or contract employees.
We believe that our relationship with our employees is good.

23



---



##### 





|        |           
|------- | ----------
|Item 2. | Properties

In the UK and Ireland, we own, lease or occupy
under license 126 business unit and regional offices, our
corporate head offices in each of Hook and Dublin, and
9 retail shops. In addition, we own or lease approximately
655 switching centers/ head-ends and operational hub-sites
together with warehouses and other non-operational properties,
as well as various cable television, telephone and
telecommunications equipment housed on public and private sites.

In addition, in the UK, for the purposes of our
site leasing and broadcast transmission businesses, we own,
lease, contract to lease, or occupy under license approximately
1,370 properties. For these businesses, we also are the licensee
of approximately 680 transmitter sites which are owned by Castle
Transmission and shared between the two organizations pursuant
to a site sharing agreement.

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



|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

We are involved in, or have been involved in,
certain disputes and litigation arising in the ordinary course
of business, including claims involving contractual disputes and
claims for damages to property and personal injury resulting
from the construction of our networks and the maintenance and
servicing of our transmission masts, none of which are expected
to have a material adverse effect on our financial position or
results of operations or cash flows.



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

There were no matters that were submitted to a
vote of NTL Communications stockholders during the quarter ended
December 31, 2001.

PART II



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

The Company is an indirect wholly-owned
subsidiary of NTL Incorporated and there is no market for the
Companys common stock.

Sales of Unregistered Securities

In May 2001, in reliance on the exemptions from
registration provided by Section 4(2) and Rule 144A of
the Securities Act, we issued $1,150.0 million aggregate
principal amount of 6 3/4% Convertible Senior Notes due
May 15, 2008 to qualified institutional buyers. We received
proceeds of approximately $1,114.8 million after placement
agents commission and other fees. Interest is payable
semiannually in cash at a rate of 6 3/4% per annum
beginning on November 15, 2001. These notes are convertible
into shares of common stock of our parent, NTL Incorporated, at
the option of the holder after August 13, 2001 at a
conversion price of $32.728 per share. After May 20, 2004,
the notes are redeemable, in whole or from time to time in part,
at NTL Incorporateds and our option. NTL Incorporated is a
co-obligator of the notes on a subordinated basis. Proceeds
raised from the issuance were used to reduce commitments under
the UK working capital facility, finance construction, capital
expenditure, working capital requirements and for general
corporate purposes.

24



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##### 





|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

The following table sets forth certain financial
data for the years ended December 31, 2001, 2000, 1999,
1998 and 1997. This information should be read in conjunction
with the consolidated financial statements and notes thereto
appearing elsewhere in this Form 10-K/A.

|                                 |  |                         |           |      |  |      |          |      |  |      |         |   |  |   |        |   |  |   |        |  
|-------------------------------- |  | ----------------------- | --------- | ---- |  | ---- | -------- | ---- |  | ---- | ------- | - |  | - | ------ | - |  | - | ------ | -
|                                 |  |                        
|                                 |  | Year Ended December 31,
|                                 |  |                        
|                                 |  | 2001                    |           | 2000 |  | 1999 |          | 1998 |  | 1997
|                                 |  |                         |           |      |  |      |          |      |  |     
|                                 |  | (1)                     |           | (2)  |  | (3)  |          | (4)  |  |     
|                                 |  |                        
|                                 |  | (In millions)          
|Income statement data:           |  |                         |           |      |  |      |          |      |  |      |         |   |  |   |        |   |  |   |        |  
|Operating revenues               |  | $                       | 3,189.6   |      |  | $    | 2,484.2  |      |  | $    | 1,537.1 |   |  | $ | 747.0  |   |  | $ | 491.8  |  
|(Loss) before extraordinary item |  |                         | (11,837.0 | )    |  |      | (2,388.1 | )    |  |      | (713.5  | ) |  |   | (503.9 | ) |  |   | (328.6 | )
|Net (loss)                       |  |                         | (11,837.0 | )    |  |      | (2,388.1 | )    |  |      | (716.5  | ) |  |   | (534.6 | ) |  |   | (333.1 | )

|                                  |  |                         |           |      |  |      |          |      |  |      |         |  |  |   |         |  |  |   |         |  
|--------------------------------- |  | ----------------------- | --------- | ---- |  | ---- | -------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | -
|                                  |  |                        
|                                  |  | As of December 31, 2000
|                                  |  |                        
|                                  |  | 2001                    |           | 2000 |  | 1999 |          | 1998 |  | 1997
|                                  |  |                         |           |      |  |      |          |      |  |     
|                                  |  | (1)                     |           | (2)  |  | (3)  |          | (4)  |  |     
|                                  |  |                        
|                                  |  | (In millions)          
|Balance sheet data:               |  |                         |           |      |  |      |          |      |  |      |         |  |  |   |         |  |  |   |         |  
|Working capital (deficiency)      |  | $                       | (15,073.6 | )    |  | $    | (946.3   | )    |  | $    | 423.9   |  |  | $ | 600.5   |  |  | $ | (52.3   | )
|Fixed assets, net                 |  |                         | 10,840.3  |      |  |      | 10,916.8 |      |  |      | 5,348.4 |  |  |   | 3,854.4 |  |  |   | 1,757.0 |  
|Total assets                      |  |                         | 13,026.1  |      |  |      | 23,146.5 |      |  |      | 9,733.0 |  |  |   | 6,194.1 |  |  |   | 2,421.6 |  
|Long-term debt                    |  |                         |          |      |  |      | 11,843.4 |      |  |      | 7,598.0 |  |  |   | 5,043.8 |  |  |   | 2,015.1 |  
|Redeemable preferred stock        |  |                         |          |      |  |      |         |      |  |      |        |  |  |   | 124.1   |  |  |   | 108.5   |  
|Shareholders equity (deficiency) |  |                         | (3,179.0  | )    |  |      | 9,012.2  |      |  |      | 1,066.0 |  |  |   | 355.2   |  |  |   | (61.7   | )



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As of December 31, 2001, all of the
    Companys debt has been classified as current due to the
    uncertainties about compliance with the terms and conditions of
    the Companys debt that would give the holders of the debt
    the right to accelerate payment. In the fourth quarter of 2001,
    the Company recorded asset impairments totaling
    $8,161.6 million including goodwill of
    $8,077.8 million, license acquisition costs of
    $58.8 million, customer lists of $9.1 million, other
    intangibles of $14.9 million and investments in affiliates
    of $1.0 million. In addition, in 2001 the Company recorded
    restructuring costs of $202.8 million, integration and
    consulting costs of $95.1 million and a loss on the sale of
    the ConsumerCo off-net indirect access customers of
    $88.5 million.                                                                 
|   
|(2) | In May 2000, NTL Incorporated purchased
    ConsumerCo for an aggregate purchase price of
    $13,111.0 million, including intangibles of
    $8,879.0 million. ConsumerCo was subsequently acquired by
    the Company from NTL Incorporated. The net assets and results of
    operations of ConsumerCo are included in the consolidated
    financial statements from May 2000, the date of the acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(3) | In March 1999, the Company purchased Diamond
    Cable Communications plc (Diamond) for an aggregate
    purchase price of $984.6 million, including intangibles
    aggregating $1,323.0 million. In July 1999, the Company
    acquired Cablelink Limited (Cablelink) for an
    aggregate purchase price of $700.5 million, including
    intangibles of $669.6 million. In September 1999, NTL
    Delaware acquired the shares of Workplace Technologies plc, for
    an aggregate purchase price of $175.0 million, including
    intangibles of $176.9 million. Workplace Technologies was
    subsequently acquired by the Company from NTL Delaware. The net
    assets and results of operations of Diamond, Cablelink and
    Workplace Technologies are included in the consolidated
    financial statements from March 1999, July 1999 and September
    1999, their respective dates of acquisition.
|   
|(4) | In June and September 1998, the Company purchased
    ComTel Limited and Telecential Communications (collectively
    Comtel) for an aggregate purchase price of
    $969 million, including intangibles aggregating $224
    million. In October 1998, the Company purchased Comcast U.K.
    Cable Partners Limited (Comcast U.K.) for an
    aggregate purchase price of $600 million, including
    intangibles of $130 million. In December 1998, the Company
    purchased Eastern Group Telecoms (EGT) for an                                                                                                                                                                                                                                                                                                                                                                                             

25



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##### 



| |                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | aggregate purchase price of $151 million,
    including intangibles of $45 million. The net assets and
    results of operations of ComTel, Comcast U.K. and EGT are
    included in the consolidated financial statements from their
    respective dates of acquisition.



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

Liquidity and Capital Resources



| |                                                                
| | ---------------------------------------------------------------
| | Recapitalization Process and Ability to
    Continue Operations

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

In addition, NTLs UK credit facilities are
fully drawn and NTLs Swiss subsidiaries are currently
unable to draw the remaining undrawn amounts under the Cablecom
credit facility. The Company did not pay cash interest on
certain series of its notes that was due on April 1, 2002
and April 15, 2002. NTL Incorporated and NTL Delaware, a
wholly-owned subsidiary of NTL Incorporated, also did not pay
cash interest and related fees on a series of their notes that
was due on April 15, 2002. As of December 31, 2001,
NTL had approximately $505 million in cash and cash
equivalents on hand and, on April 4, 2002, received
approximately $303 million net cash proceeds from the sale
of its Australian business. NTL and the Company will require
cash for working capital and capital expenditures in 2002. If
NTL makes scheduled and overdue interest payments on its notes,
then NTL will not have sufficient cash resources to meet its
liquidity needs through the third quarter of 2002.

The Company does not generate sufficient cash
flow from operations to fund its operational expenses and
interest payments. The Company has historically met its cash
requirements through equity from NTL Incorporated and issuances
of high yield debt securities. Given NTL Incorporateds
liquidity situation, it is likely that it will not be able to
provide the Company with cash at least for the short-term.

As of December 31, 2001,
$14,203.0 million of the Companys $14,205.9 million
of long-term debt had been classified as current due to the
uncertainties about compliance with the terms and conditions of
the Companys debt that would give the holders of the debt
the right to accelerate payment.

These liquidity concerns raise substantial doubt
about the Companys ability to continue as a going concern.
As a consequence, the Company, NTL Incorporated and certain of
its subsidiaries need to restructure their outstanding debt
and/or raise new funds through the issuance of equity or
additional debt.

On January 31, 2002, NTL Incorporated
announced that it had appointed Credit Suisse First Boston, JP
Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen NTLs balance
sheet and reduce debt and put an appropriate capital structure
in place for its business. Since then, NTL has been evaluating
various recapitalization alternatives to effect a comprehensive
consensual reorganization in a timely manner to minimize
negative effects on its business operations.

On April 16, 2002, NTL announced that it and
an unofficial committee of its public bondholders had reached an
agreement in principle on a comprehensive recapitalization of
NTL. The members of the

26



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##### 



committee hold in the aggregate over 50% of the
face value of NTL Incorporateds and its subsidiaries
public bonds. The recapitalization would result in a conversion
of approximately $10.6 billion in debt into equity.


To implement the proposed recapitalization, NTL
Incorporated, NTL Delaware, the Company, Diamond Cable
Communications Limited and Diamond Holdings Limited would file a
pre-negotiated recapitalization plan in a Chapter 11 case
under the U.S. Bankruptcy Code. NTLs operating
subsidiaries would not be included in the Chapter 11
filing. The agreement in principle is subject to various
conditions, including mutually acceptable terms with NTLs
bank lenders. The recapitalization transaction contemplates that
the bank debt will remain in place as part of the
recapitalization.

To facilitate the recapitalization, certain
members of the unofficial committee of bondholders would commit
to provide up to $500 million of new debt financing to
NTLs UK and Ireland operations during the Chapter 11
process and for the post-recapitalized NTL. The new financing
will ensure that NTLs business operations have access to
sufficient liquidity to continue ordinary operations.

Under the agreement in principle, NTL would be
split into two companies, one tentatively called NTL UK and
Ireland and holding all of its UK and Ireland assets, and one
tentatively called NTL Euroco and holding certain of its
continental European and other assets.

Holders of notes of NTL Incorporated, NTL
(Delaware), Inc., the Company and Diamond Cable Communications
Limited would in the aggregate receive 100% of the initial
common stock of NTL UK and Ireland and approximately 86.5% of
the initial common stock of NTL Euroco. NTL (Delaware), Inc.
bondholders would have the option to reinvest all or a portion
of NTL (Delaware), Inc. cash in additional shares of NTL common
stock, or to receive such cash in the recapitalization. Notes of
Diamond Holdings Limited and NTL Triangle would remain
outstanding and will be kept current in interest payments.
Current preferred and common stockholders, including France
Telecom, would participate in a package of rights (to be priced
at a $10.5 billion enterprise value) and warrants entitling
them to purchase primary common stock of NTL UK and Ireland at
the consummation of the proposed plan, in the case of the
rights, and for the duration of the eight-year warrants at
prescribed prices. If fully exercised, those rights and warrants
would entitle the current preferred stockholders to acquire
approximately 23.6% and the current common stockholders to
acquire approximately 8.9% of the entitys primary common
stock.

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

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

The Companys ability to meet its funding
requirements upon consummation of the reorganization plan is
dependent upon a number of factors, including the revenue
generated by its operating subsidiaries, its existing cash
balances, and its ability to draw upon an exit facility or any
alternative financing. There can be no assurance that these
sources of financing will be or will remain available. The
Company will require substantial funds for general corporate and
other expenses and may require additional funds for working
capital fluctuations. Failure to achieve profitability or
maintain or achieve various other financial performance levels
could in the future diminish the Companys ability to
sustain operations, obtain additional funds required for capital
expenditures or other purposes, and make required payments on
any indebtedness it has incurred, may incur or that may then, as
a result, become due. The Company can provide no assurance that
it will be successful in raising additional financing if
required, or if successful, that the terms of such financing
will be favorable to the Company.

27



---



##### 



The Company currently expects that it will
require approximately $620 million to fund its working capital
and capital expenditures, net of cash from operations, in the
twelve month period ending December 31, 2002 to fund the
expenditures mentioned above.

The Company believes that cash, cash equivalents
and marketable securities on hand at March 31, 2002 and the
cash expected to be available from the DIP Facility and the exit
facility, if the recapitalization is completed, will be
sufficient for its and its subsidiaries cash requirements for
the twelve months ending December 31, 2002.

Over the long term, the Company will continue to
require cash to fund operations, service its remaining debt and
implement its strategy. In order to fund these requirements, the
Company anticipates that it will use cash flow from operations
and may also need to issue additional debt or equity securities
or may need to secure additional bank financing. Given the
Companys current financial condition, there can be no
assurance that these sources of funds will be available to us.



| |             
| | ------------
| | Bank Waivers

Before NTL could commence negotiations with the
unofficial committee of bondholders, it was necessary to obtain
waivers from the lenders under its credit facilities. Effective
March 8, 2002, these lenders granted waivers which, until
March 29, 2002, provided that the commencement of
negotiations with bondholders with a view to rescheduling its
debt would not constitute an event of default under the credit
facilities.

But for the initial waivers, the commencement of
negotiations with bondholders would have been an event of
default under the credit facilities. If an event of default were
to occur, it would entitle the lenders under the credit
facilities to declare the principal amount of the outstanding
debt immediately due and payable. If this right was exercised,
it would result in an event of default under all of NTLs
outstanding notes, except for those issued by Diamond Cable
Communications, Diamond Holdings and NTL Triangle, entitling the
trustee or 25% of the holders of a series to accelerate the
repayment of that series of notes. NTL does not have sufficient
cash resources to repay its outstanding indebtedness if it is
declared immediately due and payable.

In connection with the granting of the initial
waivers, NTL agreed:



| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to provide the lenders with a 13 week
    rolling cash flow projection (updated every two weeks);                                                                                    
|
| |  | to keep the lenders informed of, and to provide
    documents in connection with, negotiations with bondholders or
    strategic investors or concerning proposed asset dispositions;
|
| |  | not to repurchase NTL notes; and                                                                                                                                                     
|
| |  | not to make an exchange offer for NTL notes or
    enter into an agreement with NTL bondholders, subject to some
    exceptions, without the consent of the lenders.                 

Effective March 28, 2002, the lenders under
the credit facilities agreed to amend the initial waivers. The
amendments to the initial waivers extend the duration of the
initial waivers to April 30, 2002 in the case of the UK
credit facilities or May 14, 2002 in the case of the
Cablecom facility, unless the missed interest payments on
April 1, 2002 are remedied or a sufficient number of
bondholders agree to forbear in respect of such non-payment, in
which case, the UK credit facilities waivers will be extended to
May 14, 2002. As a condition to the waivers
continuing effectiveness, the UK lenders required NTL Delaware
to loan £90 million to NTL (UK) Group, Inc.
following receipt of the proceeds from the sale of NTL
Australia. This loan is structurally senior to the outstanding
public notes issued by the Company but contractually
subordinated to the UK credit facilities. In connection with the
amendments to the waivers, NTL affirmed the provisions of the
initial waivers and in addition, NTL agreed, among other things,
to:



| |   |                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | provide the bank lenders a timeline setting forth
    the steps proposed to be taken in connection with the
    recapitalization and the dates by which such steps are to be
    taken;
|
| |  | use reasonable endeavors to consider with the
    lenders under the Cablecom credit facility possible means of
    credit enhancement;                                                 

28



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##### 





| |   |                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | provide the lenders under the Cablecom credit
    facility, by April 12, 2002, with an updated structure
    chart of NTL as well as a contingency business plan for Cablecom
    in the event that sufficient additional funding for Cablecom is
    not obtained; and
|
| |  | pay legal, accounting and other advisory fees of
    the agent or coordinators of the Cablecom credit facility.                                                                                                                                                        

The amended waivers prevent NTL from making an
exchange offer with respect to its outstanding notes or from
entering into an agreement with bondholders without the consent
of the lenders under each of the credit facilities. The amended
waivers also prohibit NTL from commencing voluntary dissolution
proceedings, including proceedings under Chapter 11 of the
U.S. bankruptcy code, without the consent of these lenders.

As a consequence, NTL cannot enter into a binding
agreement with the unofficial bondholder committee or implement
the proposed plan without the consent of its bank lenders.

Cablecom GmbH is the principal trading company of
NTLs Swiss group. There are a number of technical defaults
under the Swiss credit facility made available to Cablecom and
various of its subsidiaries. These technical defaults consisted
of the following, as of December 31, 2001:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. The requirement that members of the
    Cablecom group generating at least 95% of the groups
    EBITDA should guarantee the repayment of the loan outstanding
    under the credit agreement had not been satisfied.                                                                                                                                                                                                                                                                                                                                  
|
| | 2. Three companies within the Cablecom group
    had merged in contravention of restrictions in the credit
    agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | 3. Loans had been made by members of the
    Cablecom group to other group members and to a 10% affiliate in
    contravention of restrictions in the credit agreement. A related
    obligation to deliver quarterly certificates specifying the
    maximum levels of intra-group loans had not been complied with.                                                                                                                                                                                                                                      
|
| | 4. The requirement to ensure that the total
    interest cost in respect of at least 40% of the loan was capped
    at interest rates agreed with the facility agent had not been
    complied with.                                                                                                                                                                                                                                                                                                                                                       
|
| | 5. A mortgage securing a loan of CHF 600,000
    from United Bank of Switzerland was refinanced and the benefit
    of the existing mortgage was assigned to the refinancing lender.
    That assignment meant the mortgage was no longer permitted under
    the credit agreement.                                                                                                                                                                                                                                                                        
|
| | 6. Four per cent of the shares in FGS
    Hägendorf SA were acquired by Cablecom, making the company
    a wholly owned member of the Cablecom group. That acquisition
    was not permitted under the credit agreement.                                                                                                                                                                                                                                                                                                                                   
|
| | 7. One of the security documents in favor of
    the banks required specified details of receivables to be
    provided to the facility agent and all such receivables to be
    paid into bank accounts assigned by way of security to the
    banks. It also required a bank account to be set up for the
    purpose of receiving certain cash payments which may have to be
    applied in prepayment of the facility. That bank account also
    had to be assigned by way of security to the banks. These
    obligations had not been complied with.
|
| | 8. The following obligations imposed by the
    share pledges executed by various Cablecom group members in
    favour of the banks had not been satisfied:                                                                                                                                                                                                                                                                                                                                                                                                



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)     the delivery of
    share certificates and other documents evidencing title in
    respect of certain of the pledged shares; (ii) the remedy
    of defects in certain of the pledged shares; and (iii) the
    transfer of certain nominee shares in Cablecom group companies
    to the Cablecom company which beneficially owns such shares and
    the delivery to the facility agent of copies of shareholders
    registers in the group companies updated to show the transfers.



| |                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 9. One hundred and eighty shares in a
    company called Telebarn AG had been assigned by way of security
    by Cablecom to the banks notwithstanding the terms of a trust
    agreement under which Cablecom held those shares. That
    constituted a misrepresentation under the finance documents.

29



---



##### 



In addition, as of December 31, 2001,
Cablecoms and various of its subsidiaries
liabilities exceeded their respective assets. As a consequence,
under Swiss law, those entities were deemed to be
overindebted.

In order to try and resolve the problems caused
by the overindebtedness of its subsidiaries Cablecom GmbH had
guaranteed the liabilities of some of those subsidiaries and had
agreed that intra-group debt owed to it by some of those
subsidiaries should be subordinated to the debt owed by such
subsidiaries to all of their other creditors. This also
constituted an event of default under the Cablecom credit
facility which entitles the lenders to accelerate repayment.
Such an acceleration would result in an event of default under
NTL Incorporateds and NTL Delawares 5.75%
convertible subordinated notes due 2011 and 5.75% convertible
subordinated notes due 2009, entitling the trustee or the
holders of 25% of each series of notes to accelerate repayment.
Under Swiss law, unless the overindebtedness is rectified, those
entities would be required to commence an insolvency proceeding
in Switzerland. A plan has been formulated to rectify this
overindebtedness. Implementation of this plan prior to
April 30, 2002 would mean that those entities would not be
required to commence an insolvency proceeding. Those proceedings
would likely either be a court supervised moratorium in which an
independent administrator, or commissioner, would be appointed
to supervise the running of each company during a restructuring
or, if there is no viable restructuring plan, a bankruptcy. The
commencement of those insolvency proceedings would also
constitute an immediate event of default and acceleration of the
maturity of the convertible subordinated notes referred to above.

NTL is currently in discussions with the lenders
under the Swiss credit facility regarding proposals to resolve
the overindebtedness issue as well as requesting that they waive
various additional covenant breaches under the credit facility.
There can be no assurance that NTL will reach agreement on the
resolution of the overindebtedness issue within the time period
required or obtain the requested waivers.



| |                                      
| | -------------------------------------
| | Interest Payments on Public
    Notes

NTL has substantial interest payment obligations
under its existing indebtedness. The Company did not make
scheduled interest payments due April 1, 2002, in the
aggregate amount of $74.2 million, in respect of its
9 1/2% notes due 2008, 11 1/2% notes due 2008 and
11 7/8% notes due 2010. In addition, the Company did not
make interest payments falling due on April 15, 2002,
totaling $20.2 million, in respect of the 12 3/4%
Senior Deferred Coupon Notes due 2005 and NTL Incorporated and
NTL Delaware did not make interest payments and payment of
related fees falling due on April 15, 2002 in respect of
their 5  3/4% Convertible Subordinated Notes due 2011.
Those payments were not made after consideration by NTL of
requests by the unofficial bondholder committee not to make
those payments. Interest payments of $18.9 million were
made, when due, on April 2, 2002 in respect of Diamond
Cable Communications 13.25% senior discount notes due 2004. On
May 15, 2002, interest totaling $94.0 million is due
on outstanding notes of the Company and NTL Triangle.

If the applicable issuer does not pay interest on
these notes after a 30 day grace period expires (on
April 30, 2002 in the case of the missed interest payments
due April 1, 2002), there is an event of default under the
indenture in respect of the notes on which the interest is due
and unpaid. An event of default entitles the trustee under the
indenture or the holders of 25% of the outstanding notes to
declare the principal amount of those notes to be immediately
due and payable. Even if the maturity of those notes is not
accelerated after April 30, 2002, such an event of default
would also result in an event of default in respect of other
debt (commonly called cross defaults) under all of NTLs
other notes, except for those issued by NTL Triangle, Diamond
Cable Communications or Diamond Holdings. As a result, upon the
expiration of the grace period, on April 30, 2002, events
of default for failure to pay interest would occur under the
relevant indentures at the Company and, contemporaneously, cross
defaults would occur under NTLs other indentures at the
Company, NTL Delaware, NTL Incorporated and under NTLs UK
credit facilities and could occur under NTLs Cablecom
facility. This would give holders of the outstanding series of
debt at these entities the right to accelerate repayment of
those debts by declaring the principal amount of the debts to be
immediately due and payable unless NTL obtains waivers or
forbearance agreements from sufficient percentages of its
creditors. If that right to accelerate was exercised, NTL would
not have sufficient cash resources to repay those debts, which
could ultimately lead to voluntary or involuntary bankruptcy
proceedings relating to the entities so affected. In addition,
the lenders under NTLs UK credit facilities have security
over the assets of NTLs UK operating subsidiaries, except
for the Diamond and NTL Triangle groups of companies. In the
event that there

30



---



##### 



was an event of default under those facilities,
the lenders could seek to take control of those assets under
applicable UK insolvency law.




| |                         
| | ------------------------
| | Credit Rating Downgrades

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



| |                      
| | ---------------------
| | Sale of NTL Australia

On April 2, 2002, NTL announced that it had
completed the previously announced sale of its Australian
broadcast business to Macquarie Bank for A$850 million
(US$448 million) in an all cash transaction. The net
proceeds from the sale were approximately A$574 million
(US$303 million). At that time, the business bank
debt outstanding totaled A$227 million
(US$119 million).

On April 7, 2002, NTL Delaware loaned
£90 million to NTL (UK) Group Limited, which loan
was funded by the proceeds of the sale of NTL Australia. This
loan is subordinated to NTLs UK credit facilities. The
remaining proceeds of the sale of NTL Australia remain at NTL
Delaware and it is currently anticipated that such proceeds will
form a portion of the consideration to be offered to bondholders
of NTL Delaware and NTL Incorporated in satisfaction of their
claims against NTL Delaware as part of the proposed plan of
reorganization.



| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Description of Outstanding Notes, Credit
    Facilities and Redeemable Preferred Stock

The following summarizes the terms of the
significant notes, credit facilities and redeemable preferred
stock issued by the Company and its subsidiaries as of
December 31, 2001.



| |                    
| | -------------------
| | NTL Communications:



| |                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) 12 3/4% Senior Deferred Coupon
    Notes due April 15, 2005, principal amount at maturity of
    $277.8 million, interest payable semiannually from
    October 15, 2000, redeemable at the Companys option
    on or after April 15, 2000;                                     
|
| | (2) 11 1/2% Senior Deferred Coupon
    Notes due February 1, 2006, principal amount at maturity of
    $1,050.0 million, interest payable semiannually from
    August 1, 2001, redeemable at the Companys option on
    or after February 1, 2001;                                 
|
| | (3) 10% Senior Notes due February 15,
    2007, principal amount of $400.0 million, interest payable
    semiannually from August 15, 1997, redeemable at the
    Companys option on or after February 15, 2002;                                                                    
|
| | (4) 9 1/2% Senior Sterling Notes due
    April 1, 2008, principal amount of £125.0 million
    ($181.8 million), interest payable semiannually from
    October 1, 1998, redeemable at the Companys option on
    or after April 1, 2003;                                           
|
| | (5) 10 3/4% Senior Deferred Coupon
    Sterling Notes due April 1, 2008, principal amount at
    maturity of £300.0 million ($436.3 million),
    interest payable semiannually from October 1, 2003,
    redeemable at the Companys option on or after
    April 1, 2003;          
|
| | (6) 9 3/4% Senior Deferred Coupon Notes
    due April 1, 2008, principal amount at maturity of
    $1,300.0 million, interest payable semiannually beginning
    on October 1, 2003, redeemable at the Companys option
    on or after April 1, 2003;                               
|
| | (7) 9 3/4% Senior Deferred Coupon
    Sterling Notes due April 15, 2009, principal amount at
    maturity of £330.0 million ($479.9 million),
    interest payable semiannually beginning on October 15,
    2004, redeemable at the Companys option on or after
    April 15, 2004;
|
| | (8) 11 1/2% Senior Notes due
    October 1, 2008, principal amount of $625.0 million,
    interest payable semiannually from April 1, 1999,
    redeemable at the Companys option on or after
    October 1, 2003;                                                                  

31



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (9) 12 3/8% Senior Deferred Coupon
    Notes due October 1, 2008, principal amount at maturity of
    $450.0 million, interest payable semiannually beginning on
    April 1, 2004, redeemable at the Companys option on or
    after October 1, 2003;                                                                                              
|
| | (10) 7% Convertible Subordinated Notes due
    December 15, 2008, principal amount of $489.8 million,
    interest payable semiannually from June 15, 1999,
    convertible into shares of NTL Incorporated common stock at a
    conversion price of $39.20 per share, redeemable at the
    Companys option on or after December 15, 2001;        
|
| | (11) 9 1/4% Senior Euro Notes due
    November 15, 2006, principal amount of
    250.0 million
    ($222.5 million), interest payable semiannually from
    May 15, 2000;                                                                                                                                                                           
|
| | (12) 9 7/8% Senior Euro Notes due
    November 15, 2009, principal amount of
    350.0 million
    ($311.5 million), interest payable semiannually from
    May 15, 2000, redeemable at the Companys option on or
    after November 15, 2004;                                                                                                     
|
| | (13) 11 1/2% Senior Deferred Coupon
    Euro Notes due November 15, 2009, principal amount at
    maturity of
    210.0 million
    ($186.9 million), interest payable semiannually from
    May 15, 2005, redeemable at the Companys option on or
    after November 15, 2004;                                                                    
|
| | (14) 11 7/8% Senior Notes due
    October 1, 2010, principal amount at maturity of
    $500.0 million, interest payable semiannually beginning on
    April 1, 2001, redeemable at the Companys option on
    or after October 1, 2005;                                                                                                             
|
| | (15) 12 3/8% Senior Euro Notes due
    February 1, 2008, principal amount at maturity of
    300.0 million
    ($267.0 million), interest payable semiannually from
    August 1, 2001;                                                                                                                                                             
|
| | (16) 6 3/4% Convertible Senior Notes
    due May 15, 2008, principal amount at maturity of
    $1,150.0 million, interest payable semiannually from
    November 15, 2001, convertible into shares of the
    Companys common stock at a conversion price of $32.728 per
    share, redeemable at the Companys option on or after
    May 21, 2004;



| |       
| | ------
| | NTLCL:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (17) Working Capital Facility, originally
    for £1,300.0 million ($1,890.6 million); following the
    issuance of new debt beginning in October 2000, the commitment
    has been reduced by £882.5 million
    ($1,283.4 million), of which £100.0 million
    ($145.4 million) was outstanding as of December 31,
    2001. Interest payable at least every six months at LIBOR plus a
    margin rate of 5.50% per annum, which is subject to adjustment;
    effective interest rate of 9.57% at December 31, 2001; the
    unused portion of the commitment is subject to a commitment fee
    of 0.75% payable quarterly; principal is due in full on
    March 31, 2006; in January and February 2002 the remaining
    amounts available under this agreement were borrowed, the entire
    amount outstanding under the credit facility is currently in
    default;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (18) Senior Credit Facility, of which
    £2,784.8 million ($4,050.0 million) was
    outstanding as of December 31, 2001; originally for
    £2,500.0 million ($3,635.8 million), dated 30 May
    2000; interest payable at least every six months at LIBOR plus a
    margin rate of 2.00% per annum, which is subject to adjustment;
    effective interest rate of 6.73% at December 31, 2001; the
    unused portion of the commitment is subject to a commitment fee
    of 0.75% payable quarterly, which is reduced to 0.50% when over
    50% of the commitment is utilized; principal is due in six
    quarterly installments beginning on June 30, 2004; as
    amended and restated pursuant to a Restatement Amendment
    Agreement dated 26 September 2001 which, inter alia, amended
    such Senior Credit Facility to make available a
    £200.0 million ($290.9 million) Term Facility
    (interest payable on such Term Facility at least every six
    months at LIBOR plus a margin rate of 3.50% per annum, effective
    interest rate of 8.06 % at December 31, 2001, principal is
    due in eight quarterly installments beginning on June 30,
    2006) and increase the availability of funds under the Senior
    Credit Facility by £84.8 million ($123.3 million), the
    entire amount outstanding under the credit facility is currently
    in default;

32



---



##### 





| |              
| | -------------
| | NTL Triangle:



| |                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (19) 11.2% Senior Discount Debentures due
    November 15, 2007, principal amount at maturity of
    $517.3 million, interest payable semiannually beginning on
    May 15, 2001, redeemable at NTL Triangles option
    after November 15, 2000;



| |         
| | --------
| | Diamond:



| |                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (20) 13 1/4% Senior Discount Notes due
    September 30, 2004, principal amount at maturity of
    $285.1 million, interest payable semiannually from
    March 31, 2000, redeemable at Diamonds option on or
    after September 30, 1999;                                                                              
|
| | (21) 11 3/4% Senior Discount Notes due
    December 15, 2005, principal amount at maturity of
    $531.0 million, interest payable semiannually from
    June 15, 2001, redeemable at Diamonds option on or
    after December 15, 2000;                                                                                 
|
| | (22) 10 3/4% Senior Discount Notes due
    February 15, 2007, principal amount at maturity of
    $420.5 million, interest payable semiannually beginning on
    August 15, 2002, redeemable at Diamonds option on or
    after December 15, 2002;                                                                       
|
| | (23) 10% Senior Notes due February 1,
    2008, issued by Diamond Holdings plc, a wholly-owned subsidiary
    of Diamond, principal amount at maturity of £135.0 million
    ($196.3 million), interest payable semiannually from
    August 1, 1998, redeemable at Diamonds option on or
    after February 1, 2003; and
|
| | (24) 9 1/8% Senior Notes due
    February 1, 2008, issued by Diamond Holdings plc, principal
    amount of $110.0 million, interest payable semiannually
    from August 1, 1998, redeemable at Diamonds option on
    or after February 1, 2003.                                                                        

Set forth below is a description of defaults, as
well as whether such defaults have led to an event of default or
acceleration of indebtedness, with respect to our bank
facilities and our outstanding notes, each as of April 16,
2002, the date of the original filing of NTL Incorporateds
Report on Form 10-K for the year ended December 31,
2001.

Credit Facilities

|                             |  |                                                                                                  |  |                                                                                        |  |                                 
|---------------------------- |  | ------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------- |  | --------------------------------
|                             |  | Amount Available/                                                                                |  |                                                                                        |  | Event of Default/               
|                             |  | Amount Outstanding                                                                               |  | Defaults                                                                               |  | Acceleration                    
|                             |  | (as of December 31, 2001)                                                                        |  | (as of April 16, 2002)                                                                 |  | (as of April 16, 2002)          
|                             |  |                                                                                                  |  |                                                                                        |  |                                 
|NTLCL                        |  |                                                                                                  |  |                                                                                        |  |                                 
|1.  Working Capital Facility |  | $145.4 million outstanding (additional
    $461.8 million borrowed in January and February 2002) |  | Default (negotiation with bondholders with a view
    to rescheduling) but for waivers |  | Event of default but for waivers
|2.  Senior Credit Facility   |  | $4,050.0 million outstanding                                                                     |  | Default (negotiation with bondholders with a view
    to rescheduling) but for Waivers |  | Event of default but for waivers

33



---



##### 



Outstanding Notes

|                                                              |  |                     |  |                                                                     |  |                       
|------------------------------------------------------------- |  | ------------------- |  | ------------------------------------------------------------------- |  | ----------------------
|                                                              |  | Amount Outstanding  |  |                                                                     |  | Event of Default/     
|                                                              |  | (as of December 31, |  | Default                                                             |  | Acceleration          
|                                                              |  | 2001)               |  | (as of April 16, 2002)                                              |  | (as of April 16, 2002)
|                                                              |  |                     |  |                                                                     |  |                       
|NTL Communications                                            |  |                     |  |                                                                     |  |                       
|1. 12 3/4% Senior Deferred Coupon
    Notes due 2005          |  | $277.8 million      |  | Payment default of $17.7 million of interest due
    April 15, 2002 |  | None                  
|2. 11 1/2% Senior Deferred Coupon
    Notes due 2006          |  | $1,050.0 million    |  | None                                                                |  | None                  
|3. 10% Senior Notes due 2007                                  |  | $400.0 million      |  | None                                                                |  | None                  
|4. 9 1/2% Senior Sterling Notes
    due 2008                  |  | $181.4 million      |  | Payment default of $8.6 million of interest
    due April 1, 2002   |  | None                  
|5. 10 3/4% Senior Deferred Coupon
    Sterling Notes due 2008 |  | $382.3 million      |  | None                                                                |  | None                  
|6. 9 3/4% Senior Deferred Coupon
    Notes due 2008           |  | $1,153.8 million    |  | None                                                                |  | None                  
|7. 9 3/4% Senior Deferred Coupon
    Sterling Notes due 2009  |  | $385.9 million      |  | None                                                                |  | None                  
|8. 11 1/2% Senior Notes
    due 2008                          |  | $625.0 million      |  | Payment default of $35.9 million of interest
    due April 1, 2002  |  | None                  
|9. 12 3/8% Senior Deferred Coupon
    Notes due 2008          |  | $364.9 million      |  | None                                                                |  | None                  
|10. 7% Convertible Subordinated Notes due
    2008            |  | $489.8 million      |  | None                                                                |  | None                  
|11. 9 1/4% Senior Euro Notes due 2006                         |  | $222.5 million      |  | None                                                                |  | None                  
|12. 9 7/8% Senior Euro Notes due 2009                         |  | $311.5 million      |  | None                                                                |  | None                  
|13. 11 1/2% Senior Deferred Coupon Euro
    Notes due 2009    |  | $135.6 million      |  | None                                                                |  | None                  
|14. 11 7/8% Senior Notes due 2010                             |  | $490.7 million      |  | Payment default of $29.7 million of interest
    due April 1, 2002  |  | None                  
|15. 12 3/8% Senior Euro Notes due 2008                        |  | $267.8 million      |  | None                                                                |  | None                  
|16. 6 3/4% Convertible Senior Notes due
    2008              |  | $1,150.0 million    |  | None                                                                |  | None                  

34



---



##### 



|                                                                           |  |                     |  |                        |  |                       
|-------------------------------------------------------------------------- |  | ------------------- |  | ---------------------- |  | ----------------------
|                                                                           |  | Amount Outstanding  |  |                        |  | Event of Default/     
|                                                                           |  | (as of December 31, |  | Default                |  | Acceleration          
|                                                                           |  | 2001)               |  | (as of April 16, 2002) |  | (as of April 16, 2002)
|                                                                           |  |                     |  |                        |  |                       
|NTL Triangle                                                               |  |                     |  |                        |  |                       
|17. 11.2% Senior Discount Debentures due
    November 15, 2007             |  | $517.3 million      |  | None                   |  | None                  
|Diamond                                                                    |  |                     |  |                        |  |                       
|18. 13 1/4% Senior Discount Notes due
    2004.                            |  | $285.1 million      |  | None                   |  | None                  
|19. 11 3/4% Senior Discount Notes due
    2005.                            |  | $531.0 million      |  | None                   |  | None                  
|20.  3/4% Senior Discount Notes due
    2007.                              |  | $415.1 million      |  | None                   |  | None                  
|21. 10% Senior Sterling Notes due 2008,
    issued by Diamond Holdings plc |  | $196.3 million      |  | None                   |  | None                  
|22. 9 1/8% Senior Notes due 2008,
    issued by Diamond Holdings plc       |  | $110.0 million      |  | None                   |  | None                  

Contractual Obligations and Commercial
Commitments

On January 22, 2002, the Securities and
Exchange Commission issued FR-61, Commission Statement
about Managements Discussion and Analysis of Financial
Condition and Results of Operations. The release sets
forth certain views of the Securities and Exchange Commission
regarding disclosure that should be considered by registrants.
The Companys consolidated contractual obligations and
commercial commitments are summarized below, and are fully
disclosed in the Notes to Consolidated Financial Statements.

The following table includes aggregate
information about the Companys contractual obligations as
of December 31, 2001 and the periods in which payments are
due. The entire long-term debt and capital lease obligation has
been classified as current due to the uncertainties about
compliance with the terms and conditions of the Companys
debt that would give the holders of the debt the right to
accelerate repayment.

|                                   |  |                        |          |           |  |       |       |       |  |         |       |  |  |   |         |  |  |   |         | 
|---------------------------------- |  | ---------------------- | -------- | --------- |  | ----- | ----- | ----- |  | ------- | ----- |  |  | - | ------- |  |  | - | ------- | 
|                                   |  |                       
|                                   |  | Payments Due by Period
|                                   |  |                       
|                                   |  |                        |          | Less than |  | 1-3   |       | 4-5   |  | After 5
|Contractual Obligations            |  | Total                  |          | 1 Year    |  | Years |       | Years |  | Years  
|                                   |  |                        |          |           |  |       |       |       |  |        
|                                   |  |                       
|                                   |  | (In millions)         
|Long-Term Debt                     |  | $                      | 14,650.9 |           |  | $     | 2.9   |       |  | $       | 420.7 |  |  | $ | 5,888.3 |  |  | $ | 8,339.0 | 
|Capital Lease Obligations          |  |                        | 192.7    |           |  |       | 9.3   |       |  |         | 15.5  |  |  |   | 12.7    |  |  |   | 155.2   | 
|Operating Leases                   |  |                        | 626.1    |           |  |       | 50.7  |       |  |         | 95.2  |  |  |   | 89.4    |  |  |   | 390.8   | 
|Unconditional Purchase Obligations |  |                        | 1,367.0  |           |  |       | 306.0 |       |  |         | 216.0 |  |  |   | 195.0   |  |  |   | 650.0   | 
|Other Long-Term Obligations        |  |                        | none     |           |  |       |       |       |  |         |       |  |  |   |         |  |  |   |         | 
|Total Contractual Cash Obligations |  | $                      | 16,836.7 |           |  | $     | 368.9 |       |  | $       | 747.4 |  |  | $ | 6,185.4 |  |  | $ | 9,535.0 | 

35



---



##### 



The following table includes aggregate
information about the Companys commercial commitments as
of December 31, 2001. Commercial commitments are items that
the Company could be obligated to pay in the future. They are
not required to be included in the consolidated balance sheet.

|                               |  |                                            |      |           |  |       |     |       |  |        |     |  |  |   |      |  |  |   |      | 
|------------------------------ |  | ------------------------------------------ | ---- | --------- |  | ----- | --- | ----- |  | ------ | --- |  |  | - | ---- |  |  | - | ---- | 
|                               |  |                                           
|                               |  | Amount of Commitment Expiration Per Period
|                               |  |                                           
|Other Commercial               |  | Total Amounts                              |      | Less than |  | 1-3   |     | 4-5   |  | Over 5
|Commitments                    |  | Committed                                  |      | 1 Year    |  | Years |     | Years |  | Years 
|                               |  |                                            |      |           |  |       |     |       |  |       
|                               |  |                                           
|                               |  | (In millions)                             
|Guarantees                     |  | $                                          | 31.0 |           |  | $     | 3.2 |       |  | $      | 1.4 |  |  | $ | 11.9 |  |  | $ | 14.5 | 
|Lines of Credit                |  |                                            | none |           |  |       |     |       |  |        |     |  |  |   |      |  |  |   |      | 
|Standby Letters of Credit      |  |                                            | none |           |  |       |     |       |  |        |     |  |  |   |      |  |  |   |      | 
|Standby Repurchase Obligations |  |                                            | none |           |  |       |     |       |  |        |     |  |  |   |      |  |  |   |      | 
|Other Commercial Commitments   |  |                                            | none |           |  |       |     |       |  |        |     |  |  |   |      |  |  |   |      | 
|Total Commercial Commitments   |  | $                                          | 31.0 |           |  | $     | 3.2 |       |  | $      | 1.4 |  |  | $ | 11.9 |  |  | $ | 14.5 | 

Consolidated Statements of Cash
Flows

Cash used in operating activities was
$558.7 million and $170.3 million in the years ended
December 31, 2001 and 2000, respectively. Cash provided by
operating activities was $73.7 million in the year ended
December 31, 1999. Cash paid for interest, exclusive of
amounts capitalized in the years ended December 31, 2001,
2000 and 1999 was $776.6 million, $363.9 million and
$180.3 million, respectively. In addition, the change in
cash used in operating activities is also due to changes in
working capital as a result of the timing of receipts and
disbursements.

Cash used in investing activities was
$1,858.0 million, $9,505.4 million and
$909.4 million in the years ended December 31, 2001,
2000 and 1999, respectively. In each of these years, cash used
in investing activities was primarily used for purchases of
fixed assets and acquisitions, net of cash acquired.

Cash used for acquisitions, net of cash acquired
of $7,514.9 million and proceeds from borrowings, net of
financing costs of $5,009.8 million in 2000 were primarily
for the acquisition of ConsumerCo including the credit
agreements entered into with a group of banks.

Purchases of fixed assets were
$1,653.0 million, $1,961.8 million and
$1,198.3 million in the years ended December 31, 2001,
2000 and 1999, respectively, as a result of the continuing fixed
asset purchases and construction, including purchases and
construction by acquired companies. The Company expects to
further reduce purchases of fixed assets in 2002 in an effort to
conserve cash.

Cash used in investing activities in 2001 also
includes cash used for a loan to NTL Incorporated of
$150.0 million. On September 28, 2001, the Company
loaned NTL Incorporated $150.0 million in exchange for
15.0% Promissory Notes due September 30, 2004. Interest is
payable monthly in cash at a rate of 15.0% per annum beginning
on October 31, 2001.

Cash provided by financing activities was
$2,252.1 million, $9,050.6 million and
$1,180.5 million in the years ended December 31, 2001,
2000 and 1999, respectively. In each of these years, cash
provided by financing activities includes proceeds from
borrowings, net of financing costs, and net of principal
payments.

Proceeds from borrowings, net of financing costs
of $2,643.4 million in 2001 include $838.5 million
borrowed under the NTLCL senior credit facility,
$431.8 million borrowed under the NTLCL working capital
facility, $1,150.0 million from the issuance of NTL
Communications 6 3/4% Convertible Senior Notes and
$277.9 million from the issuance of NTL Communications
12 3/8% Senior Euro Notes, net of aggregate financing costs
of $54.8 million.

Principal payments of $421.5 million in 2001
include optional repayments of $395.8 million under the
NTLCL credit agreements and repayments of an aggregate of
$25.7 million of other debt.

Proceeds from borrowings, net of financing costs,
of $5,009.8 million in 2000 were primarily for the
acquisition of ConsumerCo including the credit agreements
entered into with a group of banks. Included in

36



---



##### 



proceeds from borrowings, net of financing costs,
is $1,494.9 million of borrowings that was not related to
the ConsumerCo acquisition.


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

Proceeds from borrowings, net of financing costs,
of $1,846.0 in 1999 was from the issuance of various notes,
including $808.6 million in notes issued in connection with
the acquisition of Cablelink.

Principal payments of $758.2 million in 1999
were primarily from the repayment of $716.5 million of
notes issued in connection with the acquisition of Cablelink
from the proceeds of the notes issued in 1999.

Cash provided by financing activities also
includes the following. Contributions from the Companys
parent, NTL (Delaware), Inc., were $40.8 million,
$5,227.2 million and $167.6 million in the years ended
December 31, 2001, 2000 and 1999, respectively. The
contributions of $5,227.2 million in 2000 include cash used
to acquire ConsumerCo.

Critical Accounting Policies

The consolidated financial statements of the
Company and related financial information are based on the
application of accounting principles generally accepted in the
United States (referred to as GAAP). GAAP requires
the use of estimates, assumptions, judgements and subjective
interpretations of accounting principles that have an impact on
the assets, liabilities, revenue and expense amounts reported,
as well as disclosures about contingencies, risk and financial
condition. The following critical accounting policies have the
potential to have a more significant impact on the
Companys financial statements, either because of the
significance of the financial statement item to which they
relate, or because they require more judgement and estimation
due to the uncertainty involved in measuring, at a specific
point in time, transactions which are continuous in nature.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company maintains allowances for doubtful
    accounts and notes receivable for estimated losses resulting
    from the potential inability of its customers or the other
    parties to make payments. These allowances are estimated based
    on the current aging of receivables, prior collection experience
    and future expectations of conditions that might impact the
    collectibility. If the financial condition of our customers or
    the other parties were to deteriorate resulting in an impairment
    in their ability to make payments, additions to the allowances
    may be required.                                                                                                                                                                              
|
| |  | The Companys determination of the treatment
    of contingent liabilities in the financial statements is based
    on a view of the expected outcome of the applicable contingency.
    Legal counsel is consulted on matters related to litigation.
    Experts both within and outside the company are consulted with
    respect to other matters that arise in the ordinary course of
    business. Examples of such matters that are based on
    assumptions, judgements and estimates are the amount to be paid
    to terminate certain agreements included in restructuring
    charges and the amounts to be paid to settle certain other
    liabilities. A liability is accrued if the likelihood of an
    adverse outcome is probable of occurrence and the amount is
    estimable.
|
| |  | The Company reviews long-lived assets and
    goodwill for impairment as described in the Notes to
    Consolidated Financial Statements. The Company obtained a
    valuation to assist with the determination of the fair value of
    long-lived assets and goodwill. In analyzing potential
    impairments, projections of future cash flows from the asset are
    used. The projections are based on assumptions, judgements and
    estimates of growth rates for the related business, anticipated
    future economic, regulatory and political conditions, the
    assignment of discount rates relative to risk and estimates of
    terminal values. Changes to these variables in the future may
    necessitate impairment charges to reduce the carrying value to
    fair value.  
|
| |  | Fixed assets and intangible assets are assigned
    useful lives which impact the annual depreciation and
    amortization expense. The assignment of useful lives involves
    significant judgements and the use of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

37



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | estimates. Changes in technology or changes in
    intended use of these assets may cause the estimated useful life
    to change.                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | In 2001, restructuring charges were recorded as a
    result of additional actions to reorganize, re-size and reduce
    operating costs and create greater efficiency in various areas.
    These charges, for both severance and exit costs, required the
    use of estimates. Actual results could differ from those
    estimated for restructuring.                                                                                                                                                     
|
| |  | The valuation of the Companys pension plans
    requires the use of assumptions and estimates that are used to
    develop actuarial valuations of expenses, projected benefit
    obligations and funding requirements. These assumptions include,
    among others, discount rates, investment returns and projected
    salary increases. Changes in assumptions and future investment
    returns could potentially have a material impact on the
    Companys pension expense and funding requirements.

Results of Operations

NTL provides a broad range of communications
services, including (i) ntl: home, delivering broadband
services to residential markets comprising residential
telephone, analog and digital cable television, narrowband and
broadband Internet access, and interactive services;
(ii) ntl: business, delivering broadband services to
business markets, comprising business telecommunications,
national and international carrier telecommunications,
narrowband and broadband Internet services, and radio
communications services; and (iii) ntl: broadcast,
delivering digital and analog television and radio broadcast
transmission services, wireless network design, buildout and
management, tower site rental, and satellite and media services.

As expected, the Companys growth in 2002
has been curtailed by funding constraints. Although the
Companys current business plan includes a reduction in the
number of new customers and an increase in revenue from existing
customers, the Companys cash constraints present many
challenges to the successful execution of the plan. The Company
is conserving cash through a reduction in capital expenditures
including expenditures to connect new customers to the
Companys network. In order to maintain revenues and cash
from operations while reducing the number of new customers, the
Company must reduce and limit customer churn. The Company
intends to improve its customer service and increase its service
offering to customers in an effort to curtail and reduce churn.
The Company is in the process of integrating its various billing
systems and customer databases in an effort to improve one of
the main tools used to provide customer service.

The plan to reduce churn and to increase average
revenue per unit (referred to as ARPU) includes an increase in
broadband services to our existing customers. The Company
believes that its triple play offering of telephony, broadband
access to the Internet and digital television will prove
attractive to its existing customer base, which will result in
higher ARPU as revenues per existing customer increase.
Beginning in 2001, the Company became focused on adding
customers that subscribe to multiple services and/or to its
digital television. By being observant of this strategy the
Company was able to add to ARPU. In 2001, the Companys
consumer telecommunications and television revenue increased
primarily as a result of price increases on both our analog and
digital cable television products.

The Company faces various challenges in meeting
its goals of expanding its broadband services to residential
customers. Broadband Internet usage by residential customers is
a relatively new and undeveloped market. The Company will need
to continue to upgrade its digital television network despite
its current liquidity situation, while continuing to contend
with its competition. As the Company pushes to increase its
digital television customer base through the successful
migration of its current analog customers, it needs to continue
to improve its customer service, which is expected with the
completion of its integrated billing systems.

The Company estimates that the integration of its
billing system and customer data will be substantially complete
by the end of the second quarter of 2003. The total project cost
is estimated to be approximately £45 million.

There is significant competition in our markets,
through digital satellite and digital terrestrial television and
through alternative Internet access media, such as DSL offered
by BT. If the Company is unable to

38



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charge the prices for these services that are
anticipated in its business plan in response to competition or
if the Companys competition is able to attract the
Companys customers, the Companys results of
operations will be adversely affected. However, despite many new
entrants into the telecommunications industry during the last
five to ten years generating significant over-capacity, the
Company believes that the current global downturn in the
telecommunications industry may result in an increase in the
available customer base, as some of these competitors will be
forced to cease operations.


The Companys broadband customer base has
grown to approximately 276,400 subscribers at June 30, 2002
from approximately 118,200 at December 31, 2001. The
Company anticipates that its broadband customer base will
continue to grow in 2002.

Media speculation regarding the Companys
financial condition and potential outcomes of the
recapitalization process could have an adverse effect on parts
of the Companys business. Similarly, negative press about
the financial condition of alternative telecom carriers in
general may effect the Companys reputation. One of the key
strategies in the Companys business plan is to increase
its penetration of higher value small to medium size enterprises
(or SMEs) and provide increased retail services of bundled
voice, data and Internet services for SMEs. However, due to the
negative publicity surrounding the Companys financial
condition and the effect of that publicity on its brand name,
the Company may find it difficult to convince SMEs to become its
customers. The Company believes its recapitalization process and
the general climate for alternative telecom carriers effected
our revenues in the first half of 2002 as prospective customers
began deferring orders beginning in the fourth quarter of 2001.
Even if the Company successfully completes the recapitalization
process, there is no assurance that the negative publicity will
not adversely impact the Companys results of operations or
have a long-term negative effect on the Companys brand.

In addition, this uncertainty may adversely
affect the Companys relationships with its suppliers. If
suppliers become increasingly concerned about the Companys
financial condition, they may demand faster payments or not
extend normal trade credit, both of which could further
adversely affect the Companys cash conservation measures
and its results of operations.



| |                                           
| | ------------------------------------------
| | Years Ended December 31, 2001 and
    2000

As a result of the completion of the acquisition
of the consumer cable telephone, Internet and television
operations of Cable & Wireless Communications plc
(ConsumerCo) on May 30, 2000, the Company
consolidated the results of operations of this business from the
date of acquisition.

Consolidated revenues increased by 28.4% to
$3,189.6 million in 2001, as compared to
$2,484.2 million in 2000. Revenue growth was achieved
through acquisitions and by improving our product offers,
increasing our broadband and digital TV customer base, raising
prices and by serving new customers and signing new contracts in
our Broadcast and Business telecoms divisions.

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

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

Consumer telecommunications and television
revenues increased to $2,069.2 million from
$1,518.2 million as a result of the ConsumerCo acquisition,
price increases, upselling new services to customers and from
growth in the Companys customer base. The 2001 and 2000
revenue includes $956.6 million and $532.2 million,
respectively, from ConsumerCo. Upselling to existing customers,
new digital and cable modem customers and the price increases
implemented in the first and second quarters of 2001 resulted in
ARPU increases that contributed to the revenue increase.
Increase in ARPU in the future is also expected to be achieved
by continuing to provide new services such as digital
television, cable modem and mobile telephone services to
consumer customers.

39



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Business telecommunications revenues increased to
$836.8 million from $702.2 million as a result of
acquisitions and from the growth in the Companys customer
base. The acquisition of the assets and contracts of Viatel UK
in the third quarter of 2001 accounted for $65.3 million of
the revenue in 2001. The 2001 and 2000 revenue includes
$97.4 million and $62.1 million, respectively, from
ConsumerCo. In addition, the Company continues to focus specific
sales and marketing effort on winning business customers in its
franchise areas and increasing revenue from its existing
customers.

Broadcast transmission and other revenues
increased to $283.6 million from $263.8 million. The
increase reflects increases in the number of broadcast
television and FM radio customers and accounts, which exceeded
price cap reductions in the Companys regulated services,
and increases in satellite and media services used by broadcast
and media customers. The Company expects growth in broadcast
services to be driven primarily by contracts related to the
increased demand for tower infrastructure by wireless services
operators expanding and upgrading their networks for wireless
broadband, the digitalization of analog television and radio
signals and the further development of programming for the
European markets requiring satellite and terrestrial
distribution services.

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

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

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

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

Other charges of $297.9 million in 2001
include restructuring charges of $202.8 million and costs
of $95.1 million incurred primarily to integrate the
acquired companies, mostly related to information technology
integration, as well as costs incurred for business
rationalization consulting. Other charges of $92.7 million
in 2000 include restructuring charges of $65.9 million and
costs of $26.8 million incurred primarily to integrate the
acquired companies, mostly related to information technology
integration, as well as costs incurred for business
rationalization consulting. The increase in the information
technology integration and consulting

40



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costs was the result of an acceleration of a
number of these projects, and the associated fees to the
consultants and advisors, in order to achieve the cost savings
earlier than projected.


Restructuring charges of $202.8 million and
$65.9 million for the years ended December 31, 2001
and 2000, respectively, relate to the Companys
announcements in the fourth quarter of 2001 and in November 2000
that it was taking additional actions to reorganize, re-size and
reduce operating costs and create greater efficiency in various
areas of the Company. An aggregate of $57.9 million of the
2001 reorganization costs are for the write-off of equipment and
other assets that are not used and will not require any future
cash outlays. The employee severance and related costs in 2000
were for approximately 2,300 employees to be terminated,
approximately 550 of whom are still employed by the Company as
of December 31, 2001. These costs in 2001 are for
approximately 5,200 employees to be terminated, of which
approximately 2,900 employees are still employed by the Company
as of December 31, 2001. The following table summarizes the
restructuring charges incurred and utilized in 2000 and 2001:

|                           |  |               |       |       |  |               |      |        |  |       |      |  |  |   |       |   |  |   |       |  
|-------------------------- |  | ------------- | ----- | ----- |  | ------------- | ---- | ------ |  | ----- | ---- |  |  | - | ----- | - |  | - | ----- | -
|                           |  | Employee      |       |       |  |               |      |        |  |      
|                           |  | Severance     |       | Lease |  |               |      |        |  |      
|                           |  | and Related   |       | Exit  |  | Agreement     |      | Fixed  |  |      
|                           |  | Costs         |       | Costs |  | Modifications |      | Assets |  | Total
|                           |  |               |       |       |  |               |      |        |  |      
|                           |  |              
|                           |  | (In millions)
|Charged to expense         |  | $             | 47.9  |       |  | $             | 18.0 |        |  | $     |     |  |  | $ |      |   |  | $ | 65.9  |  
|Utilized                   |  |               |      |       |  |               |     |        |  |       |     |  |  |   |      |   |  |   |      |  
|                           |  |               |       |       |  |               |      |        |  |       |      |  |  |   |       |   |  |   |       |  
|Balance, December 31, 2000 |  |               | 47.9  |       |  |               | 18.0 |        |  |       |     |  |  |   |      |   |  |   | 65.9  |  
|2000 provision utilized    |  |               | (41.3 | )     |  |               | (9.6 | )      |  |       |     |  |  |   |      |   |  |   | (50.9 | )
|2000 provision released    |  |               | (6.6  | )     |  |               | (7.3 | )      |  |       |     |  |  |   |      |   |  |   | (13.9 | )
|Charged to expense         |  |               | 89.7  |       |  |               | 41.4 |        |  |       | 27.7 |  |  |   | 57.9  |   |  |   | 216.7 |  
|2001 provision utilized    |  |               | (26.2 | )     |  |               |     |        |  |       |     |  |  |   | (57.9 | ) |  |   | (84.1 | )
|                           |  |               |       |       |  |               |      |        |  |       |      |  |  |   |       |   |  |   |       |  
|Balance, December 31, 2001 |  | $             | 63.5  |       |  | $             | 42.5 |        |  | $     | 27.7 |  |  | $ |      |   |  | $ | 133.7 |  
|                           |  |               |       |       |  |               |      |        |  |       |      |  |  |   |       |   |  |   |       |  

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

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

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

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

Foreign currency transaction gains
(losses) were gains of $0.6 million in 2001 and losses
of $58.1 million in 2000 primarily due to the effect of
changes in exchange rates. The Company and certain of its
subsidiaries have cash, cash equivalents and debt denominated in
non-U.S. dollar currencies that are affected by changes in
exchange rates. In addition, foreign subsidiaries of the Company
whose functional currency is not the U.S. dollar hold cash, cash
equivalents and debt denominated in U.S. dollars which are
affected by changes in exchange rates.

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

41



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primarily attributable to additional tax
depreciation being claimed during 2001 on original and amended
income tax returns.


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



| |                                           
| | ------------------------------------------
| | Years Ended December 31, 2000 and
    1999

As a result of the completion of the acquisitions
of Diamond Cable Communications Limited (Diamond) in
March 1999, the Australian National Transmission Network
(NTL Australia) in April 1999, Cablelink Limited
(Cablelink) in July 1999, the 1G
Networks of France Telecom in August and December 1999,
NTL Business Limited (formerly Workplace Technologies plc)
(NTL Business) in September 1999, the cable assets
of Cablecom in March 2000 and the consumer cable telephone,
Internet and television operations of ConsumerCo in May 2000,
the Company consolidated the results of operations of these
businesses from the dates of acquisition.

Consolidated revenues increased by 61.6% to
$2,484.2 million in 2000, as compared to
$1,537.1 million in 1999. Revenue growth was achieved
through acquisitions and by increasing our consumer customer
base and by serving new customers and signing new contracts in
our Broadcast and Business telecoms divisions.

In 2000 and 1999, the United Kingdom accounted
for 97.5% and 98.0%, respectively, of total consolidated
revenues. Ireland accounted for the remainder of the
consolidated revenues, or 2.5% and 2.0% in 2000 and 1999,
respectively.

Consumer telecommunications and television
revenues were 61.1% and 53.9% of total consolidated revenues in
2000 and 1999, respectively. Business telecommunications
revenues were 28.3% and 29.4% of total consolidated revenues in
2000 and 1999, respectively. Broadcast transmission and other
revenues were 10.6% and 16.7% of total consolidated revenues in
2000 and 1999, respectively.

Consumer telecommunications and television
revenues increased to $1,518.2 million from
$827.3 million as a result of acquisitions and from
customer growth that increased the Companys current
revenue stream. The 2000 and 1999 revenue includes
$773.6 million and $162.4 million, respectively, from
acquired companies.

Business telecommunications revenues increased to
$702.2 million from $452.5 million as a result of
acquisitions, customer growth and increases in carrier services
revenues. The 2000 and 1999 revenue includes $234.3 million
and $92.8 million, respectively, from acquired companies.
Carrier services revenues increased due to growth in services
provided by the Companys wholesale operation to other
telephone companies.

Broadcast transmission and other revenues
increased to $263.8 million from $257.3 million due to
increases in broadcast television and FM radio customers and
accounts, which exceeded price cap reductions in the
Companys regulated services, and increases in satellite
and media services used by broadcast and media customers.

Operating expenses (including network expense)
increased to $1,223.2 million from $761.5 million as a
result of increases in interconnection costs and programming
costs due to customer growth. Operating expenses as a percentage
of revenues decreased to 49.2% from 49.5%. The 2000 and 1999
expense includes $502.5 million and $141.9 million
respectively, from acquired companies.

Selling, general and administrative expenses
increased to $969.1 million from $562.9 million as a
result of increases in telecommunications and cable television
sales and marketing costs and increases in additional personnel
and overhead to service the increasing customer base. The 2000
and 1999 expense includes $377.9 million and
$52.5 million respectively, from acquired companies.

Pursuant to the terms of various United Kingdom
licenses, the Company incurred license fees paid to the
Independent Television Commission (ITC) to operate
as the exclusive service provider in certain of its franchise
areas. Upon a request by the Company in 1999, the ITC converted
all of the Companys fee bearing

42



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exclusive licenses to non-exclusive licenses at
the end of 1999, and the Companys liability for license
payments ceased upon the conversion. Franchise fees were
$16.5 million in 1999.


Other charges of $92.7 million in 2000
include restructuring costs of $65.9 million and costs of
$26.8 million incurred primarily to integrate the acquired
companies, mostly related to information technology integration,
as well as costs incurred for business rationalization
consulting. The Companys restructuring provision includes
employee severance and related costs of $47.9 million for
approximately 2,300 employees to be terminated and lease exit
costs of $18.0 million. As of December 31, 2000,
approximately 360 of the employes had been terminated. None of
the provision had been utilized through December 31, 2000.
Other charges of $16.2 million in 1999 were incurred for
the cancellation of certain contracts.

Corporate expenses decreased to
$23.7 million from $25.3 million due to a decrease in
various overhead costs.

Depreciation and amortization expense increased
to $1,700.7 million from $765.7 million due to an
increase in depreciation of telecommunications and cable
television equipment. The 2000 and 1999 expense includes
$1,066.3 million and $190.5 million respectively, from
acquired companies, including amortization of acquisition
related intangibles.

Interest income and other, net decreased to
$25.8 million from $48.2 million as a result of a
decline in cash available for investment.

Interest expense increased to $886.3 million
from $678.1 million due to the issuance of additional debt,
and the increase in the accretion of original issue discount on
the deferred coupon notes. The 2000 and 1999 expense includes
$298.7 million and $133.8 million, respectively, from
acquired companies. Interest of $459.0 million and
$222.1 million was paid in the years ended
December 31, 2000 and 1999, respectively.

Other gains of $493.1 million in 1999 are
from the sale of the Companys investment in Cable London.

Foreign currency transaction (losses) gains
decreased to losses of $58.1 million from gains of
$22.8 million primarily due to the effect of unfavorable
changes in exchange rates. The Companys results of
operations are impacted by changes in foreign currency exchange
rates as follows. The Company and certain of its subsidiaries
have cash, cash equivalents and debt denominated in foreign
currencies that are affected by changes in exchange rates. In
addition, foreign subsidiaries of the Company whose functional
currency is not the U.S. dollar hold cash, cash equivalents
and debt denominated in U.S. dollars which are affected by
changes in exchange rates.

The Company recorded an extraordinary loss from
the early extinguishment of debt of $3.0 million in 1999 as
a result of the repayment of the bridge loan incurred in
connection with the Cablelink acquisition.

Consolidated net loss increased to
$2,388.1 million in 2000 from $716.5 million in 1999
as a result of the factors discussed above.

Recent Accounting Pronouncements

In August 2001, the Financial Accounting
Standards Board (referred to as the FASB) issued Statement of
Financial Accounting Standards (referred to as SFAS)
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, effective for the Company on
January 1, 2002. This Statement supercedes SFAS
No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of and
other related accounting guidance. The adoption of this new
standard had no significant effect on the results of operations,
financial condition or cash flows of the Company.

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

In June 2001, the FASB issued SFAS No. 141,
Business Combinations, and No. 142,
Goodwill and Other Intangible Assets. SFAS
No. 141 requires that the purchase method of accounting be
used for all

43



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business combinations initiated after
June 30, 2001. Use of the pooling-of-interests method is no
longer permitted. SFAS No. 141 also includes guidance on
the initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination that is
completed after June 30, 2001. SFAS No. 142 ends the
amortization of goodwill and indefinite-lived intangible assets.
Instead, these assets must be reviewed annually (or more
frequently under certain conditions) for impairment in
accordance with this statement. This impairment test uses a fair
value approach rather than the undiscounted cash flow approach
previously required by SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of. The Company adopted SFAS No. 142 on
January 1, 2002. In light of the significant impairment
charge that the Company recorded in 2001, the Company does not
expect that the adoption of this new standard will have a
significant effect on the results of operations, financial
condition or cash flows of the Company. Amortization expense in
2001 related to goodwill and other indefinite lived intangible
assets was $1,104.1 million. Estimated aggregate
amortization expense for each of the five succeeding fiscal
years from December 31, 2001 is as follows:
$64.9 million in 2002, $63.7 million in 2003,
$45.0 million in 2004, $39.2 million in 2005 and
$31.4 million in 2006.


Item 7a.     Quantitative
and Qualitative Disclosures About Market Risk

Market Risk

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

Foreign Exchange Contracts

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

At December 31, 2001, the Company had cross
currency swaps to hedge exposure to movements in the Euro to
British pound exchange rate.

In September 2001, the Company entered into a
British pound forward foreign exchange agreement, consisting of
twenty-six accumulating forward contracts, to reduce its
exposure to movement in the British pound/U.S. dollar
exchange rate in accordance with its market risk strategies.

Interest Rates

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

The Company has entered into interest rate swaps
to hedge exposure to the floating rate indebtedness incurred
under the NTLCL £200.0 million term facility. The
notional amount of the interest rate swaps was
£100.0 million at December 31, 2001.

44



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##### 



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

NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES

|                                                                             |                               |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  |                |   |  |  |          |  |  |  |          |  
|---------------------------------------------------------------------------- | ----------------------------- | ----------- | - | ----------- |  | ----------- |  | ----------- |  | ----------- |  | -------------- | - | ----- |  | -------------- | - |  |  | -------------- | - |  |  | -------------- | - |  |  | -------- |  |  |  | -------- | -
|                                                                             |                               | Year Ending |   | Year Ending |  | Year Ending |  | Year Ending |  | Year Ending |  |                |   |       |  | Fair Value    
|                                                                             |                               | 12/31/02    |   | 12/31/03    |  | 12/31/04    |  | 12/31/05    |  | 12/31/06    |  | Thereafter     |   | Total |  | 12/31/01      
|                                                                             |                               |             |   |             |  |             |  |             |  |             |  |                |   |       |  |               
|Long-term Debt Including Current
    Portion                                 |                               |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  |                |   |  |  |          |  |  |  |         
|U.S. Dollar                                                                  |                               |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  |                |   |  |  |          |  |  |  |         
|                                                                             | Fixed Rate                    |             |   |            |  |             |  |            |  |             |  | $285.1         |   |       |  | $808.8         |   |  |  | $1,050.0       |   |  |  | $5,962.6       |   |  |  | $8,106.5 |  |  |  | $2,510.7 |  
|                                                                             | Average Interest Rate         |             |   |             |  |             |  |             |  |             |  | 13.25          | % |       |  | 12.09          | % |  |  | 11.50          | % |  |  | 9.71           | % |  |  |          |  |  |  |          |  
|U.K. Pound                                                                   |                               |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  |                |   |  |  |          |  |  |  |         
|                                                                             | Fixed Rate                    |             |   |            |  |             |  |            |  |             |  |               |   |       |  |               |   |  |  |               |   |  |  | £890.0         |   |  |  | £890.0   |  |  |  | £311.2   |  
|                                                                             | Average Interest Rate         |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  | 10.09          | % |  |  |          |  |  |  |          |  
|                                                                             | Average Forward Exchange Rate |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  | 1,4372         |   |  |  |          |  |  |  |          |  
|Euro                                                                         |                               |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  |                |   |  |  |          |  |  |  |         
|                                                                             | Fixed Rate                    |             |   |            |  |             |  |            |  |             |  |               |   |       |  |               |   |  |  | 250.0         |   |  |  | 860.0         |   |  |  | 1,110.0 |  |  |  | 353.5   |  
|                                                                             | Average Interest Rate         |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  | 9.25           | % |  |  | 11.14          | % |  |  |          |  |  |  |          |  
|                                                                             | Average Forward Exchange Rate |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  | .8948          |   |  |  | .9090          |   |  |  |          |  |  |  |          |  
|U.K. Pound                                                                   |                               |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  |                |   |  |  |          |  |  |  |         
|                                                                             | Variable Rate                 |             |   |            |  |             |  |            |  |             |  | £90.0          |   |       |  | £2,494.8       |   |  |  | £100.0         |   |  |  |               |   |  |  | £2,684.8 |  |  |  | £2,684.5 |  
|                                                                             | Average Interest Rate         |             |   |             |  |             |  |             |  |             |  | LIBOR plus 2.0 | % |       |  | LIBOR plus 2.0 | % |  |  | LIBOR plus 5.5 | % |  |  |                |   |  |  |          |  |  |  |          |  
|                                                                             | Average Forward Exchange Rate |             |   |             |  |             |  |             |  |             |  | 1.4131         |   |       |  | 1.4150         |   |  |  | 1.4185         |   |  |  |                |   |  |  |          |  |  |  |          |  
|U.K. Pound                                                                   |                               |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  |                |   |  |  |          |  |  |  |         
|                                                                             | Variable Rate                 |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  | £20.0          |   |  |  | £180.0         |   |  |  | £200.0   |  |  |  | £200.0   |  
|                                                                             | Average Interest Rate         |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  | LIBOR plus 3.5 | % |  |  | LIBOR plus 3.5 | % |  |  |          |  |  |  |          |  
|                                                                             | Average Forward Exchange Rate |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  | 1.4185         |   |  |  | 1.4301         |   |  |  |          |  |  |  |          |  
|Interest Rate Derivative Financial Instruments
    Related to Long-Term Debt |                               |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  |                |   |  |  |          |  |  |  |         
|Receipt of U.K. Pounds                                                       |                               |             |   |             |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  |                |   |  |  |          |  |  |  |         
|                                                                             | Notional Euro Amount          |             |  | 76.3        |  |             |  |            |  |             |  |               |   |       |  |               |   |  |  |               |   |  |  |               |   |  |  | 76.3    |  |  |  | (4.0    | )
|                                                                             | Average Contract Rate         |             |   | .6457       |  |             |  |             |  |             |  |                |   |       |  |                |   |  |  |                |   |  |  |                |   |  |  |          |  |  |  |          |  

Related Forward Contracts to Sell Foreign
Currencies for US$



| |           
| | ----------
| | U.K. Pound

|                      |  |             |             |            |  |   |      |  
|--------------------- |  | ----------- | ----------- | ---------- |  | - | ---- | -
|                      |  | Year Ending |             | Fair Value
|                      |  | 12/31/02*   |             | 12/31/01  
|                      |  |             |             |           
|Notional amount       |  |             | Up to $47.5 |            |  | $ | (0.3 | )
|Average contract rate |  |             | 1.45        |            |  |   |      |  






|  |                                        
|- | ---------------------------------------
|* | The last contract ends on May 30, 2002.

45



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##### 



Risk Factors

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

We have limited liquidity. We do not currently
have access to our historic sources of liquidity in the capital
markets and our credit facilities are either fully drawn or we
are currently unable to access remaining undrawn amounts. If we
make scheduled payments of interest and overdue payments of
interest, then we will not have sufficient cash resources to
meet our liquidity needs through the third quarter of 2002. As a
consequence, we need to restructure our outstanding debt and/or
raise new funds. If we cannot restructure our indebtedness or
obtain additional liquidity in a timely manner, we may face the
possibility of insolvency proceedings in the UK, the United
States or elsewhere.

The successful implementation of the
proposed recapitalization plan will require the support of our
creditors.

The completion of the proposed recapitalization
contemplated by the agreement in principle with the unofficial
bondholder committee will require support from NTLs
creditors and holders of NTLs preferred stock, including
France Telecom. Pursuant to the terms of NTLs credit
facilities waivers, the agreement in principle reached with the
unofficial committee is subject to the approval of the lenders
under NTLs credit facilities. The proposed
recapitalization plan will be implemented pursuant to a
Chapter 11 bankruptcy proceeding. Consummation of such a
plan of reorganization will require a favorable vote by impaired
classes of creditors, satisfaction of bankruptcy law
requirements and confirmation by the bankruptcy court, which, as
a court of equity, may exercise substantial discretion and
choose not to confirm any plan of reorganization NTL agreed with
its creditors. Even if such a plan received the necessary
support from many classes of NTLs creditors, there can be
no assurance that it would be completed. If a protracted
reorganization was to occur, or a liquidation would be
necessary, there is a risk that the value of NTL would be eroded
to the detriment of some or all NTL stakeholders.

We cannot be certain that NTLs bank
lenders will consent to the proposed recapitalization plan or
grant NTL any new waivers NTL may need.

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

The waivers prohibit NTL from making an exchange
offer with respect to its outstanding notes or from entering
into an agreement with bondholders without the consent of the
lenders under each of the credit facilities. The waivers also
prohibit NTL from commencing voluntary dissolution proceedings,
including proceedings under Chapter 11 of the U.S.
Bankruptcy Code, without the consent of these lenders. If NTL is
unable to obtain the consent of the lenders, it will not be able
to make a voluntary Chapter 11 filing as currently
contemplated in connection with the proposed plan.

The UK Credit Facility waivers, if not extended,
will terminate on April 30, 2002, unless the missed
interest payments on April 1, 2002 are remedied or a
sufficient number of noteholders have agreed to waive or forbear
from exercising any rights in respect of such non-payment, in
which case, the waivers will be extended to May 14, 2002.
If the waivers terminate and NTL continues to negotiate with
bondholders or the non-payment of interest is not cured, there
will be events of default under NTLs credit facilities
that will entitle the lenders to accelerate repayment. NTL does
not have sufficient cash resources to repay it outstanding
indebtedness if its is declared immediately due and payable. In
addition, the lenders could also seek to take control over the
assets over which they hold security in an insolvency proceeding.

46



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##### 



NTL did not pay interest due on some of its
outstanding notes on April 1 and April 15, 2002; NTL may
not cure the existing event of default. NTL may not make future
interest payments on most of its outstanding
notes.

NTL Incorporated and NTL (Delaware), Inc. did not
make scheduled interest payments due April 15, 2002 and NTL
Communications did not make scheduled interest payments and
payments of related fees due April 1 and April 15,
2002.

If NTL fails to pay interest on these notes after
a 30 day grace period expires (on April 30, 2002 in
the case of the missed interest payments due April 1,
2002), events of default for failure to pay interest would occur
under the relevant indentures and, contemporaneously, cross
defaults would occur under other of NTLs indentures at the
Company, NTL Delaware, NTL Incorporated and under NTLs UK
credit facilities and could occur under NTLs Cablecom
facility. This would give holders of the outstanding series of
debt at these entities the right to accelerate repayment of
those debts by declaring the principal amount of the debts to be
immediately due and payable unless NTL obtains waivers or
forbearance agreements from sufficient percentages of its
creditors. If that right to accelerate was exercised, NTL would
not have sufficient cash resources to repay those debts, which
could ultimately lead to bankruptcy proceedings relating to the
entities so affected.

NTL has no current availability under its
existing credit facilities.

NTL has no current ability to borrow under its
existing UK credit facilities, as it has borrowed the full
amounts available.

If we make a voluntary bankruptcy filing in
connection with the proposed plan of recapitalization, it is
likely we will lose our net operating loss carryforwards for
U.S. income tax purposes.

We need to restructure our outstanding debt
during 2002. A restructuring of our debt can be expected to give
to rise to cancellation of indebtedness (COD), which
if it occurs in the course of a proceeding pursuant to
Chapter 11 of the U.S. Bankruptcy Code, would be
non-taxable. If the COD is non-taxable, we will be required to
reduce our net operating loss carryforwards and other attributes
such as tax basis in assets by an amount equal to the
non-recognized COD. As a result, it is likely that as a result
of the successful completion of the proposed plan of
recapitalization, we will have no U.S. net operating loss
carryforwards.

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

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

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

47



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##### 



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

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

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

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

Our growth has been curtailed by funding
constraints.

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

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

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

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

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

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

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

A significant component of our strategy to
increase our average revenue per unit is to successfully market
broadband products to our existing residential client base.
Broadband usage by residential customers is in its infancy.
However, we believe that our triple play offering of telephony,
broadband access to the Internet and

48



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##### 



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


We are dependent upon a small number of key
personnel.

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

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

Our principal business activities in the UK and
the Republic of Ireland are regulated and supervised by various
governmental bodies. Changes in laws, regulations or
governmental policy or the interpretations of those laws or
regulations affecting our activities and those of our
competitors, such as licensing requirements, changes in price
regulation and deregulation of interconnection arrangements,
could have a material adverse effect on us.

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

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

The telecommunications industry is subject to
rapid and significant changes in technology and the effect of
technological changes on our businesses cannot be predicted. Our
core offerings may become outdated due to technological
breakthroughs rendering our products out of date. In addition,
our business plan contemplates the introduction of services
using new technologies. Our investments in those new services
may prove premature and we may not realize anticipated returns
on these new products. The cost of implementation for emerging
and future technologies could be significant, and our ability to
fund such implementation may depend on our ability to obtain
additional financing. We cannot be certain that we would be
successful in obtaining any additional financing required.

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

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

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

We encounter currency exchange rate risks because
we generate revenues and incur construction and operating
expenses in other currencies, primarily in pounds sterling while
we pay interest and principal obligations with respect to most
of our existing indebtedness in U.S. dollars and Euro. We
cannot assure you that the hedging transactions we have entered
into or any other hedging transactions we might enter into will

49



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##### 



be successful or that shifts in the currency
exchange rates will not have a material adverse effect on us.
For example, to the extent that the pound sterling declines in
value against the U.S. dollar and, to a lesser extent, the
Euro, and we have not fully hedged against such declines, the
effective cost of servicing our U.S. dollar and Euro debt
will be higher and we will incur currency losses.


The Company, Diamond and NTL Triangle are
holding companies that are dependent upon cash flow from their
subsidiaries to meet their obligations  their ability
to access that cash flow may be limited in some
circumstances.

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



|        |                                                
|------- | -----------------------------------------------
|Item 8. | Financial Statements and Supplementary
    Data

The following is a summary of the quarterly
results of operations for the years ended December 31, 2001
and 2000.

|                 |  |                    |        |               |  |              |        |             |  |   |        |   |  |   |          |  
|---------------- |  | ------------------ | ------ | ------------- |  | ------------ | ------ | ----------- |  | - | ------ | - |  | - | -------- | -
|                 |  |                   
|                 |  | 2001(1)           
|                 |  |                   
|                 |  |                   
|                 |  | Three Months Ended
|                 |  |                   
|                 |  | March 31           |        | June 30       |  | September 30 |        | December 31
|                 |  |                    |        |               |  |              |        |            
|                 |  |                    |        |               |  |             
|                 |  |                    |        | (In millions) |  |             
|Revenues         |  | $                  | 770.5  |               |  | $            | 776.9  |             |  | $ | 816.0  |   |  | $ | 826.2    |  
|Operating (loss) |  |                    | (530.9 | )             |  |              | (541.5 | )           |  |   | (494.3 | ) |  |   | (8,834.9 | )
|Net (loss)       |  |                    | (835.8 | )             |  |              | (798.9 | )           |  |   | (809.2 | ) |  |   | (9,393.1 | )

|                 |  |                    |        |         |  |              |        |             |  |   |        |   |  |   |        |  
|---------------- |  | ------------------ | ------ | ------- |  | ------------ | ------ | ----------- |  | - | ------ | - |  | - | ------ | -
|                 |  |                   
|                 |  | 2000(2)           
|                 |  |                   
|                 |  |                   
|                 |  | Three Months Ended
|                 |  |                   
|                 |  | March 31           |        | June 30 |  | September 30 |        | December 31
|                 |  |                    |        |         |  |              |        |            
|Revenues         |  | $                  | 470.9  |         |  | $            | 553.6  |             |  | $ | 717.7  |   |  | $ | 742.0  |  
|Operating (loss) |  |                    | (173.2 | )       |  |              | (269.0 | )           |  |   | (453.4 | ) |  |   | (629.6 | )
|Net (loss)       |  |                    | (336.7 | )       |  |              | (526.1 | )           |  |   | (658.2 | ) |  |   | (867.1 | )



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In the fourth quarter of 2001, the Company
    recorded asset impairments totaling $8,161.6 million
    including goodwill of $8,077.8 million, license acquisition
    costs of $58.8 million, customer lists of
    $9.1 million, other intangibles of $14.9 million and
    investments in affiliates of $1.0 million. In addition, in
    2001 the Company recorded restructuring costs of
    $202.8 million, integration and consulting costs of
    $95.1 million and a loss on the sale of the ConsumerCo
    off-net indirect access customers of $88.5 million.
|   
|(2) | In May 2000, NTL Incorporated purchased
    ConsumerCo for an aggregate purchase price of
    $13,111.0 million, including intangibles of
    $8,879.0 million. ConsumerCo was subsequently acquired by
    the Company from NTL Incorporated. The net assets and results of
    operations of ConsumerCo are included in the consolidated
    financial statements from May 2000, the date of acquisition.                                                                                                                                                              



|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with
    Accountants on accounting and Financial Disclosure

Not applicable.

50



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##### 



PART III



|         |                                             
|-------- | --------------------------------------------
|Item 10. | Directors and Officers of the
    Registrant

The following table provides information about
the Companys directors and executive officers.

|                       |  |     |    |       |  |                                                                                    
|---------------------- |  | --- | -- | ----- |  | -----------------------------------------------------------------------------------
|Name                   |  | Age |    | Title
|                       |  |     |    |      
|George S. Blumenthal   |  |     | 58 |       |  | Chairman of the Board                                                              
|Barclay Knapp          |  |     | 45 |       |  | President and Chief Executive Officer                                              
|Eric Bouvier           |  |     | 48 |       |  | Director                                                                           
|Robert T. Goad         |  |     | 47 |       |  | Director                                                                           
|Bernard Izerable       |  |     | 45 |       |  | Director                                                                           
|Sidney R. Knafel       |  |     | 71 |       |  | Director                                                                           
|Ted H. McCourtney      |  |     | 63 |       |  | Director                                                                           
|Alan J. Patricof       |  |     | 67 |       |  | Director                                                                           
|Warren Potash          |  |     | 70 |       |  | Director                                                                           
|Jean-Louis Vinciguerra |  |     | 58 |       |  | Director                                                                           
|Michael S. Willner     |  |     | 50 |       |  | Director                                                                           
|Richard J. Lubasch     |  |     | 55 |       |  | Executive Vice President, General Counsel and
    Secretary                        
|John F. Gregg          |  |     | 37 |       |  | Chief Financial Officer and Senior Vice President                                  
|Stephen A. Carter      |  |     | 38 |       |  | Senior Vice President and Chief Operating Officer
    for UK and Ireland Operations
|Gregg N. Gorelick      |  |     | 43 |       |  | Vice President  Controller                                                        
|Bret Richter           |  |     | 32 |       |  | Vice President  Corporate Finance and
    Development                             
|Steven L. Wagner       |  |     | 50 |       |  | Managing Director  Consumer Services
    for NTL Europe                           

George S. Blumenthal has been Chairman, Treasurer
and a director of the Company since its formation.
Mr. Blumenthal was also Chief Executive Officer of the
Company until October 1996. Mr. Blumenthal was President of
Blumenthal Securities, Inc. (and its predecessors), a member
firm of the New York Stock Exchange, from 1967 until 1992.
Mr. Blumenthal was Chairman, Treasurer and a director of
Cellular Communications, Inc. (CCI), which positions
he held since CCIs founding in 1981 until its merger in
August 1996 into a subsidiary of AirTouch Communications, Inc.
(the CCI Merger). Mr. Blumenthal was also
Chairman, Treasurer and a director of Cellular Communications of
Puerto Rico, Inc. until the Companys sale in August 1999.
Mr. Blumenthal is also Chairman Emeritus and a director of
CoreComm Limited (CoreComm) and is a director of
Sothebys Holdings, Inc.

Barclay Knapp is President, Chief Executive
Officer and a director of the Company and has held these
positions since its formation with the exception that
Mr. Knapp was Chief Operating Officer until October 1996
when he was appointed Chief Executive Officer. In addition,
Mr. Knapp was Executive Vice President and Chief Operating
Officer of Cellular Communications International, Inc.
(CCII) until June 1998. Mr. Knapp was also
President, Chief Executive Officer and a director of Cellular
Communications of Puerto Rico, Inc. (CCPR) until its
sale in August 1999, with the exception that Mr. Knapp was
Chief Operating Officer until March 1998 when he was appointed
Chief Executive Officer, and is also Chairman and a director of
CoreComm. Mr. Knapp is also a director of Bredbandsbolaget,
a Swedish company in which NTL holds a 34% interest and is also
a director of Cablecom, a Swiss company in which NTL holds 100%
interest.

Eric Bouvier has been a director of the Company
since January 2002. Mr. Bouvier is the Senior Vice
President, Head of Mergers and Acquisitions of France Telecom.
Mr. Bouvier joined France Telecom in 1999, to head the
Mergers and Acquisitions group, under the authority of the
Executive Senior Vice President and

51



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##### 



Chief Financial Officer. Prior to working at
France Telecom Mr. Bouvier was employed at Banque Indosuez.
Mr. Bouvier occupied successively different positions at
Banque Indosuez, culminating at the position of Partner of
Financiere Indosuez, the investment and M&A advisory
services subsidiary of Banque Indosuez. Mr. Bouvier is also
member of the Supervisory Board of Mobilcom in Germany, and of
TPSA in Poland.


Robert T. Goad has been a director of the Company
since March 1999. Mr. Goad was a director and the Chief
Executive Officer of Diamond Cable Communications Plc from May
1994 to March 8, 1999, and served as Chief Financial
Officer from May 1994 until July 1995. Mr. Goad is a
founder of and principal in ECE Management International, LLC
and has been President of Columbia Management, Inc. since 1984.
Mr. Goad is also a director of B/ G Communications, LLC, B/
G Enterprises, LLC, B/ G Properties, LLC, Diveo Broadband
Networks, Inc. and Grupo Clarin, S.A.

Bernard Izerable has been a director of the
Company since May 2000. Mr. Izerable has been International
Executive Vice President of France Telecom since January 2000.
From March 1996 until December 1999 Mr. Izerable was Senior
Vice President for Europe within France Telecoms
International Development Division. Prior to March 1996,
Mr. Izerable served in various positions at France Telecom
since 1982, other than from 1989 to 1991 when Mr. Izerable
worked in the Strategic Planning and Market Analysis Division of
Nynex (USA) as part of a two year exchange program between
the two companies.

Sidney R. Knafel, a director of the Company since
its formation, has been Managing Partner of SRK Management
Company, a private investment company, since 1981. In addition,
Mr. Knafel is Chairman of Insight Communications, Inc. and
BioReliance Corporation. Mr. Knafel is also a director of
General American Investors Company, Inc., IGENE Biotechnology,
Inc. and some privately owned companies.

Ted H. McCourtney, a director of the Company
since its formation, retired on June 30, 2000 as a General
Partner of Venrock Associates, a venture capital investment
partnership, a position he held since 1970. Mr. McCourtney
also serves as a director of CareMark RX, Inc., and Visual
Networks, Inc.

Alan J. Patricof has been a director of the
Company since its formation. Mr. Patricof is Chairman of
APAX Partners, formerly known as Patricof & Co. Ventures,
Inc., a venture capital firm he founded in 1969.
Mr. Patricof serves as a director of CoreComm and Boston
Properties, Inc., which are publicly held, and Johnny Rockets
Group, Inc., which is a privately held company.

Warren Potash has been a director of the Company
since its formation. Mr. Potash retired in 1991 as
President and Chief Executive Officer of the Radio Advertising
Bureau, a trade association, a position he held since February
1989. Prior to that time and beginning in 1986, he was President
of New Age Communications, Inc., a communications consultancy
firm. Until his retirement in 1986, Mr. Potash was a Vice
President of Capital Cities/ ABC Broadcasting, Inc., a position
he held since 1970. Mr. Potash is also a director of
CoreComm.

Jean-Louis Vinciguerra has been a director of the
Company since August 1999. Mr. Vinciguerra was an executive
officer of BZW from 1995 until 1996 and served as the
representative to Asia for Credit Agricole Indosuez from 1997
until 1998. He has been Senior Executive Vice President and
Chief Financial Officer of France Telecom since 1998.

Michael S. Willner, a director of the Company
since October 1993, is President, CEO, and a Director of Insight
Communications, Inc., the eighth largest cable company in the
U.S. He also is a director of C-SPAN and CableLabs, and is the
Chairman and member of the executive committee of the board of
directors of the National Cable Television Association.

Richard J. Lubasch is the Companys
Executive Vice President  General Counsel and
Secretary, and has been the Companys Senior Vice
President  General Counsel and Secretary since its
formation. Mr. Lubasch was also Senior Vice
President  General Counsel and Secretary of CCPR
prior to its sale in August 1999. Mr. Lubasch also held
these titles, as well as Treasurer, at CCII prior to its sale in
March 1999.

John F. Gregg has been the Companys Chief
Financial Officer and Senior Vice President since June 1999.
Prior to June 1999, Mr. Gregg was Vice President of
Corporate Development since June of 1997. Mr. Gregg joined
the Company in 1994 as Managing Director of Corporate
Development. He is Vice

52



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##### 



Chairman and a director of Virgin Net, a joint
venture between the Company and Virgin Communications Group, a
director of Bredbandsbolaget, a Swedish company in which NTL
holds a 34% interest and a director of eKabel Hessen GmbH, a
German company in which NTL holds a 32.5% interest.
Mr. Gregg is also a director of Two Way TV, an interactive
programming company. Prior to his employment by the Company,
Mr. Gregg was employed by Golder, Thoma & Cressey, a
venture capital firm.


Stephen A. Carter is the Companys Senior
Vice President and Chief Operating Officer of its UK and Ireland
operations. Before joining NTL in November 2000, Mr. Carter
was with J. Walter Thompson, having been appointed Managing
Director of J. Walter Thompsons London Office in
1994, and, three years later took overall control as Chief
Executive Officer of J. Walter Thompsons UK and
Ireland Group. Mr. Carter is also a non-Executive Director
of Trucost Plc and a Trustee of Raleigh International, a
registered UK charity.

Gregg N. Gorelick has been the Companys
Vice President  Controller since its formation. From
1981 to 1986 he was employed by Ernst & Whinney (now known
as Ernst & Young LLP). Mr. Gorelick is a certified
public accountant and was Vice President  Controller
of CCI from 1986 until the CCI Merger. He is also Senior Vice
President  Controller and Treasurer of CoreComm, and
was Vice President  Controller at CCII prior to its
sale in March 1999 and at CCPR prior to its sale in August 1999.

Bret Richter is the Companys Vice President
for Corporate Finance and Development. Mr. Richter is
primarily responsible for the Companys strategic
initiatives, mergers and acquisitions, investor relations and
capital raising activities. Prior to joining NTL in September
1994, Mr. Richter was a member of the media and
telecommunications investment banking group at Salomon Brothers,
where he specialized in mergers and acquisitions.

Steven L. Wagner is the Managing Director of
Consumer Services for NTL Europe. Mr. Wagner is responsible
for managing the Companys consumer businesses across the
European continent. Prior to his current position Mr. Wagner was
the Group Managing Director for Media and Marketing for NTL UK.
Mr. Wagner joined the Company in 1994 with management
responsibility for the Companys consumer business.
Mr. Wagner has spent over 15 years in consumer and
business related activities. Prior to joining the Company,
Mr. Wagner served most recently as Vice President, Eastern
Region for the Walt Disney Companys premium television
network.

Executive officers of the Company are elected
annually by the Board of Directors and serve until their
successors are duly elected and qualified.



|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION


POLICY

Members of the management of the Company occupy
the same positions within the management of NTL Incorporated and
NTL (Delaware) Inc. Such members of management receive an
aggregate amount of compensation directly from the Company in
respect of their management positions in the Company, NTL
Incorporated and NTL (Delaware) Inc.

The Compensation and Option Committee (the
Compensation Committee) of the Board of Directors of
NTL Incorporated has the responsibility for the design and
implementation of NTLs executive compensation program. The
Compensation Committee is composed entirely of non-employee
directors. The current members of the Compensation Committee are
Sidney R. Knafel, Ted H. McCourtney and Jean-Louis Vinciguerra.

NTLs executive compensation program is
designed to be linked to corporate performance. To this end, NTL
has developed an overall compensation strategy and specific
compensation plans that tie a very significant portion of an
executives aggregate compensation to the appreciation in
the stock price of NTL Incorporated. In addition, executive
bonuses are linked to the achievement of operational goals and
therefore

53



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##### 



relate to stockholder return. The overall
objective of this strategy is to attract and retain executive
talent, to motivate these executives to achieve the goals
inherent in NTLs business strategy and to link executive
and stockholder interests through equity-based compensation,
thereby seeking to enhance NTLs profitability and
stockholder value.


Each year the Compensation Committee conducts a
review of NTLs executive compensation program to determine
the appropriate level and forms of compensation. Such review
permits an annual evaluation of the link between the
Companys performance and its executive compensation.

In assessing compensation levels for the named
executives, the Compensation Committee recognizes the fact that
certain executives have participated in the development of the
Company (and its predecessors) from its earliest stages. In
determining the annual compensation for the Chief Executive
Officer, the Compensation Committee uses the same criteria as it
does for the other named executives.

BASE SALARY AND BONUS

In furtherance of the Companys
incentive-oriented compensation goals set forth above, cash
compensation (annual base salary and bonus) is generally set
below levels paid by comparable sized telecommunications
companies and is supplemented by equity-based option grants.
With respect to fiscal year 2001, the aggregate annual base
salary paid by NTL Incorporated for the named executive officers
increased in the aggregate by approximately $117,000 from 2000
levels. The 2001 base salary for the Chief Executive Officer
increased $33,427 to $277,260.

STOCK OPTIONS

Under NTLs stock option plan, stock options
were granted to certain of the named executive officers of the
Company, NTL Incorporated and NTL (Delaware) Inc. during 2001.
Information with respect to such option grants to the named
executive officers is set forth in the table entitled
Option Grants in Last Fiscal Year.

Stock options are designed to align the interests
of executives with those of stockholders. The options generally
are granted at an exercise price equal to the market price of
the common stock on the date of grant and vest over a period of
five years.

Accordingly, the executives are provided
additional incentive to create stockholder value over the long
term since the full benefit of the options cannot be realized
unless stock price appreciation occurs over a number of years.
In determining individual option grants, the Compensation
Committee takes into consideration the number of options
previously granted to that individual, the amount of time and
effort dedicated to NTL during the preceding year and expected
commitment to NTL on a forward-looking basis. The Compensation
Committee also strives to provide each option recipient with an
appropriate incentive to increase stockholder value, taking into
consideration their cash compensation levels.

In 1996, 1997 and 1999, Mr. Knapp did not
receive an option grant. In 1995, Mr. Knapp received an
option to purchase 416,668 shares of common stock with an
exercise price of $14.64. In 1998, Mr. Knapp received an
option to purchase 1,484,375 shares of Common Stock with an
exercise price of $23.36. In 2000, Mr. Knapp received an
option to purchase 7,250,000 shares of common stock with an
exercise price of $63.63. In 2001 Mr. Knapp received an
option to purchase 5,000,000 shares of common stock with an
exercise price of $10.00. Mr. Knapp now owns 459,967 shares of
common stock and holds options to purchase an additional
16,185,250 shares.

COMPENSATION DEDUCTION CAP POLICY

In 1996, NTL Incorporateds stockholders
approved an amendment to NTL Incorporateds 1993 Employee
Stock Option Plan (the 1993 Plan) to, among other
things, comply with the requirements regarding non-deductibility
of compensation in excess of $1 million under sec.162(m) of
the Internal Revenue Code of 1986, as amended (the
Code). Any compensation realized from the exercise
of such stock options granted pursuant to the 1993 Plan at fair
market value as of the date of grant thus generally would be
exempt

54



---



##### 



from the deduction limitations under sec.162(m)
of the Code. Compensation realized from the exercise of stock
options not granted pursuant to a plan or granted pursuant to
NTL Incorporateds 1998 Non-Qualified Stock Option Plan
would not be exempt from the deduction limitation under
sec.162(m) of the Code. Other annual compensation, such as
salary and bonus, is not expected to exceed $1 million per
executive.




| |                       
| | ----------------------
| | THE COMPENSATION AND  
| | OPTION COMMITTEE      
|
| | Sidney R. Knafel      
| | Ted H. McCourtney     
| | Jean-Louis Vinciguerra

GENERAL

The following table discloses compensation
received by the Companys Chief Executive Officer and the
four other most highly paid executive officers for the three
years ended December 31, 2001.

Summary Compensation Table(1)

|                            |                           |                     |      |              |  |            |         |                 |  |                        |         |                 |  |            |   |                    |  |  |   |   |  |  |           |           |  |  |   |   |  |  |       |        | 
|--------------------------- | ------------------------- | ------------------- | ---- | ------------ |  | ---------- | ------- | --------------- |  | ---------------------- | ------- | --------------- |  | ---------- | - | ------------------ |  |  | - | - |  |  | --------- | --------- |  |  | - | - |  |  | ----- | ------ | 
|                            |                           |                     |      |              |  |            |         |                 |  |                       
|                            |                           |                     |      |              |  |            |         |                 |  | Long-Term Compensation
|                            |                           |                     |      |              |  |            |         |                 |  |                       
|                            |                           |                     |      |              |  |            |         |                 |  |                        |         |                
|                            |                           |                     |      | Awards       |  |           
|                            |                           | Annual Compensation |      |              |  | Payouts   
|                            |                           |                     |      | Restricted   |  | Securities |         |                
|                            |                           |                     |      | Other Annual |  | Stock      |         | Underlying      |  | LTIP                   |         | All Other      
|Name and Principal Position |                           | Year                |      | Salary($)    |  | Bonus($)   |         | Compensation($) |  | Awards(s)($)           |         | Options/SARs(#) |  | Payouts($) |   | Compensation($)(2)
|                            |                           |                     |      |              |  |            |         |                 |  |                        |         |                 |  |            |   |                   
|Barclay Knapp               |                           |                     | 2001 |              |  |            | 277,260 |                 |  |                        | 561,138 |                 |  |            |  |                    |  |  |  |   |  |  | 5,000,000 |           |  |  |  |   |  |  | 7,000 |       
|                            | President and Chief       |                     |      | 2000         |  |            |         | 243,833         |  |                        |         | 249,813         |  |            |   |                   |  |  |   |  |  |  |           | 7,250,000 |  |  |   |  |  |  |       | 17,200 | 
|                            | Executive Officer         |                     |      | 1999         |  |            |         | 273,333         |  |                        |         | 262,500         |  |            |   |                   |  |  |   |  |  |  |           |          |  |  |   |  |  |  |       | 16,000 | 
|George S. Blumenthal        |                           |                     | 2001 |              |  |            | 277,260 |                 |  |                        | 561,138 |                 |  |            |  |                    |  |  |  |   |  |  | 5,000,000 |           |  |  |  |   |  |  | 7,000 |       
|                            | Chairman and              |                     |      | 2000         |  |            |         | 243,833         |  |                        |         | 249,813         |  |            |   |                   |  |  |   |  |  |  |           | 7,250,000 |  |  |   |  |  |  |       | 17,200 | 
|                            | Treasurer                 |                     |      | 1999         |  |            |         | 273,333         |  |                        |         | 262,500         |  |            |   |                   |  |  |   |  |  |  |           |          |  |  |   |  |  |  |       | 16,000 | 
|Richard J. Lubasch          |                           |                     | 2001 |              |  |            | 233,692 |                 |  |                        | 384,875 |                 |  |            |  |                    |  |  |  |   |  |  |          |           |  |  |  |   |  |  | 7,000 |       
|                            | Executive Vice            |                     |      | 2000         |  |            |         | 205,517         |  |                        |         | 178,438         |  |            |   |                   |  |  |   |  |  |  |           | 500,000   |  |  |   |  |  |  |       | 17,200 | 
|                            | President  General       |                     |      | 1999         |  |            |         | 235,083         |  |                        |         | 187,500         |  |            |   |                   |  |  |   |  |  |  |           | 117,188   |  |  |   |  |  |  |       | 16,000 | 
|                            | Counsel and Secretary     |                     |      |              |  |            |         |                 |  |                        |         |                 |  |            |   |                    |  |  |   |   |  |  |           |           |  |  |   |   |  |  |       |        | 
|John F. Gregg               |                           |                     | 2001 |              |  |            | 240,220 |                 |  |                        | 591,250 |                 |  |            |  |                    |  |  |  |   |  |  |          |           |  |  |  |   |  |  | 7,000 |       
|                            | Chief Financial           |                     |      | 2000         |  |            |         | 214,960         |  |                        |         | 228,125         |  |            |   |                   |  |  |   |  |  |  |           | 1,000,000 |  |  |   |  |  |  |       | 17,200 | 
|                            | Officer and Senior        |                     |      | 1999         |  |            |         | 201,400         |  |                        |         | 187,500         |  |            |   |                   |  |  |   |  |  |  |           | 156,250   |  |  |   |  |  |  |       | 16,000 | 
|                            | Vice President            |                     |      |              |  |            |         |                 |  |                        |         |                 |  |            |   |                    |  |  |   |   |  |  |           |           |  |  |   |   |  |  |       |        | 
|Stephen A. Carter           |                           |                     | 2001 |              |  |            | 431,790 |                 |  |                        | 278,112 |                 |  |            |  |                    |  |  |  |   |  |  |          |           |  |  |  |   |  |  | 6,738 |       
|                            | Senior Vice President and |                     |      | 2000         |  |            |         | 60,636          |  |                        |         |                |  |            |   |                   |  |  |   |  |  |  |           | 400,000   |  |  |   |  |  |  |       | 38,384 | 
|                            | Chief Operating Officer   |                     |      | 1999         |  |            |         |                |  |                        |         |                |  |            |   |                   |  |  |   |  |  |  |           |          |  |  |   |  |  |  |       |       | 
|                            | UK and Ireland operations |                     |      |              |  |            |         |                 |  |                        |         |                 |  |            |   |                    |  |  |   |   |  |  |           |           |  |  |   |   |  |  |       |        | 



---



|    |                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | All amounts reflect the aggregate amount of
    options granted in respect of such employees position at
    the Company, NTL Incorporated and NTL (Delaware) Inc., as the
    case may be.           
|   
|(2) | All other compensation reflects the
    Companys match of employee contributions to a 401(k) plan
    or in the case of Stephen Carter, contributions to
    Mr. Carters UK executive pension scheme.

55



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##### 



OPTION GRANTS TABLE

The following table provides information on stock
option grants during 2001 to the named executive officers.

Option Grants in Last Fiscal Year(1)

Individual Grants


|                     |  |            |           |              |  |             |       |            |  |                         |       |        |  |  |          |  |  |  |   |  |  |  |            | 
|-------------------- |  | ---------- | --------- | ------------ |  | ----------- | ----- | ---------- |  | ----------------------- | ----- | ------ |  |  | -------- |  |  |  | - |  |  |  | ---------- | 
|                     |  |            |           |              |  |             |       |            |  |                        
|                     |  |            |           |              |  |             |       |            |  | Potential Realizable   
|                     |  |            |           |              |  |             |       |            |  | Value at Assumed Annual
|                     |  | Number of  |           | % of Total   |  |             |       |            |  | Rate of Stock Price    
|                     |  | Securities |           | Options      |  |             |       |            |  | Appreciation for Option
|                     |  | Underlying |           | Granted to   |  | Exercise or |       |            |  | Term(3)                
|                     |  | Options    |           | Employees in |  | Base Price  |       | Expiration |  |                        
|Name                 |  | Granted(#) |           | Fiscal Year  |  | ($/Share)   |       | Date       |  | 5%($)                   |       | 10%($)
|                     |  |            |           |              |  |             |       |            |  |                         |       |       
|Barclay Knapp        |  |            | 5,000,000 | (2)          |  |             | 38.76 | %          |  |                         | 10.00 |        |  |  | 11/06/11 |  |  |  | 0 |  |  |  | 14,071,800 | 
|George G. Blumenthal |  |            | 5,000,000 | (2)          |  |             | 38.76 | %          |  |                         | 10.00 |        |  |  | 11/06/11 |  |  |  | 0 |  |  |  | 14,071,800 | 
|Richard J. Lubasch   |  |            |          |              |  |             |      |            |  |                         |      |        |  |  |         |  |  |  |  |  |  |  |           | 
|John F. Gregg        |  |            |          |              |  |             |      |            |  |                         |      |        |  |  |         |  |  |  |  |  |  |  |           | 
|Stephen A. Carter    |  |            |          |              |  |             |      |            |  |                         |      |        |  |  |         |  |  |  |  |  |  |  |           | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Upon a change of control of NTL Incorporated, all
    unvested options become fully vested and exercisable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(2) | The options were granted on November 7, 2001
    at an exercise price which was more than twice as high as the
    closing price of the common stock of NTL Incorporated on The New
    York Stock Exchange on such date; 20% were exercisable upon
    issuance; an additional 20% became exercisable on
    January 1, 2002 and an additional 20% will become
    exercisable on each of January 1, 2003, 2004 and 2005.                                                                                                                                                                                                                                            
|   
|(3) | The amounts shown in these columns are the
    potential realizable value of options granted at assumed rates
    of stock price appreciation (5% and 10%) specified by the SEC
    based on the closing price of NTL Incorporateds common
    stock on the grant date which was $4.94, and have not been
    discounted to reflect the present value of such amounts. NTL
    Incorporateds common stock closed at $0.20 on
    March 26, 2002, the last day our stock traded on the New
    York Stock Exchange before suspension. The assumed rates of
    stock price appreciation are not intended to forecast the future
    appreciation of the common stock.

56



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##### 



OPTION EXERCISES AND YEAR-END VALUE
TABLE

The following table provides information on stock
option exercises during 2001 by the named executive officers and
the value at December 31, 2001 of unexercised in-the-money
options held by each of the named executive officers.

Aggregated Option Exercises in Last Fiscal
Year-End

and Fiscal Year-End Option Values


|                     |  |                 |         |                   |  |                        |         |                       |  |  |            |     |  |  |   |    
|-------------------- |  | --------------- | ------- | ----------------- |  | ---------------------- | ------- | --------------------- |  |  | ---------- | --- |  |  | - | ---
|                     |  |                 |         |                   |  | Number of Securities   |         | Value of Unexercised 
|                     |  |                 |         |                   |  | Underlying Unexercised |         | In-the-Money         
|                     |  |                 |         |                   |  | Options at FY-End(#)   |         | Options at FY-End($)*
|                     |  | Shares Acquired |         |                   |  | Exercisable(E)/        |         | Exercisable(E)/      
|Name                 |  | on Exercise(#)  |         | Value Realized($) |  | Unexercisable(U)       |         | Unexercisable(U)     
|                     |  |                 |         |                   |  |                        |         |                      
|Barclay Knapp        |  |                 | 91,020  |                   |  |                        | 747,411 |                       |  |  | 4,769,625  | (E) |  |  | 0 | (E)
|                     |  |                 |         |                   |  |                        |         |                       |  |  | 11,415,625 | (U) |  |  |   |    
|George S. Blumenthal |  |                 | 156,248 |                   |  |                        | 184,807 |                       |  |  | 4,345,481  | (E) |  |  | 0 | (E)
|                     |  |                 |         |                   |  |                        |         |                       |  |  | 11,415,625 | (U) |  |  |   |    
|Richard J. Lubasch   |  |                 |        |                   |  |                        |        |                       |  |  | 816,352    | (E) |  |  | 0 | (E)
|                     |  |                 |         |                   |  |                        |         |                       |  |  | 498,438    | (U) |  |  |   |    
|John F. Gregg        |  |                 |        |                   |  |                        |         |                       |  |  | 752,084    | (E) |  |  | 0 | (E)
|                     |  |                 |         |                   |  |                        |         |                       |  |  | 1,143,750  | (U) |  |  |   |    
|Stephen A. Carter    |  |                 |        |                   |  |                        |         |                       |  |  | 240,000    | (E) |  |  | 0 | (E)
|                     |  |                 |         |                   |  |                        |         |                       |  |  | 160,000    | (U) |  |  |   |    



---



|  |                                                                                                                  
|- | -----------------------------------------------------------------------------------------------------------------
|* | Based on the closing price on the NYSE on
    December 31, 2001 of $0.94, there were no in-the-money
    options.

COMPENSATION OF DIRECTORS

The Companys non-employee directors are not
compensated for attending Company general meetings and committee
meetings. However, they are paid $500 by NTL for each NTL
general meeting and committee meeting they attend which are
typically concurrent with Company meetings. NTL also reimburses
its non-employee directors for their out-of-pocket costs
associated with attending.

EMPLOYMENT CONTRACTS

None of our Chief Executive Officer or named
executive officers are party to employment contracts with the
Company or other NTL entity other than Stephen A. Carter.
Mr. Carter and NTL Incorporated entered into an employment
agreement on December 6, 2000 for an initial term of two
years, which will be extended for successive 12 month terms
unless notice is given by either NTL Incorporated or
Mr. Carter at least 12 months prior to the end of the
initial term or the extended term, as the case may be. The
agreement entitles Mr. Carter to a base salary of
£300,000 per year and variable compensation of between
£150,000 and £300,000 per year, subject to increase at
the discretion of NTL Incorporateds compensation
committee. The agreement also provided for an initial award of
400,000 stock options, exercisable at the market price on the
date of the grant, under NTL Incorporateds stock option
plan and provides for additional grants of 50,000 share
options, under NTL Incorporateds then existing stock
option plan, at the commencement of the second year of the
initial term and the commencement of any extended terms.
Pursuant to the employment agreement, Mr. Carter is subject
to standard non-competition, non-solicitation and
confidentiality provisions.

57



---



##### 



PERFORMANCE GRAPH

The following graph compares the cumulative
return on the common stock with the Nasdaq Stock Market (U.S.)
Index (the Nasdaq (U.S.) Index), the Center for
Research in Security Prices Index of Nasdaq Telecommunications
Stocks (the CRSP Index) and the Peer Group Index. In
the Companys view, the Peer Group Index, which includes
British Telecom plc, Cable and Wireless plc, Telewest
Communications plc and United Pan-Europe Communications N.V.
provides a better representation of the performance of
telecommunications companies over the required period than the
broader based CRSP Index.

On October 27, 2000, NTL Incorporated ceased
trading on the Nasdaq and began trading on the New York Stock
Exchange. The common stock of NTL Incorporated closed at $0.20
on March 26, 2002 the last day the stock was traded on the
NYSE before it was suspended from the NYSE pending delisting.

The graph assumes that $100 was invested on
December 31, 1996.

Comparison of NTL Incorporated, the Peer Group
Index,

the CRSP Index and the Nasdaq (U.S.)
Index


(COMPARISON GRAPH)

[COMPARISON GRAPH]

|     |  |                     |        |            |  |                  |        |                      |  |  |        |  |  |  |        | 
|---- |  | ------------------- | ------ | ---------- |  | ---------------- | ------ | -------------------- |  |  | ------ |  |  |  | ------ | 
|     |  | Nasdaq (U.S.) Index |        | CRSP Index |  | NTL Incorporated |        | The Peer Group Index
|     |  |                     |        |            |  |                  |        |                     
|1996 |  |                     | 100    |            |  |                  | 100    |                      |  |  | 100    |  |  |  | 100    | 
|1997 |  |                     | 121.64 |            |  |                  | 142    |                      |  |  | 110.4  |  |  |  | 109.03 | 
|1998 |  |                     | 169.84 |            |  |                  | 232    |                      |  |  | 223.51 |  |  |  | 201.61 | 
|1999 |  |                     | 315.2  |            |  |                  | 470.29 |                      |  |  | 617.57 |  |  |  | 311    | 
|2000 |  |                     | 191.36 |            |  |                  | 214.64 |                      |  |  | 148.13 |  |  |  | 141.52 | 
|2001 |  |                     | 151.07 |            |  |                  | 109.6  |                      |  |  | 5.82   |  |  |  | 65.67  | 





---



|      |                                                                                                                                                               
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note: | Stock price performance shown above for the
    common stock of NTL Incorporated is historical and not
    necessarily indicative of future price performance.



|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management

The Company is an indirect wholly-owned
subsidiary of NTL Incorporated. The following table sets forth
certain information regarding the beneficial ownership of the
common stock of NTL Incorporated, as of April 26, 2002 by
(i) each executive officer and director of the Company,
(ii) all directors and executive

58



---



##### 



officers of the Company as a group and
(iii) shareholders holding 5% or more of the common stock
of NTL Incorporated, the Companys parent.


|                                            |  |                                           |            |              |  |               |            |             |  |  |            |  |  |  |       |  
|------------------------------------------- |  | ----------------------------------------- | ---------- | ------------ |  | ------------- | ---------- | ----------- |  |  | ---------- |  |  |  | ----- | -
|                                            |  |                                          
|                                            |  | Amount and Nature of Beneficial Ownership
|                                            |  |                                          
|                                            |  |                                           |            | Presently    |  |              
|                                            |  |                                           |            | Exercisable  |  |              
|                                            |  |                                           |            | Options      |  |              
|                                            |  |                                           |            | Warrants,    |  |              
|                                            |  |                                           |            | Convertible  |  |              
|                                            |  |                                           |            | Bonds and    |  |              
|                                            |  | Common                                    |            | Exchangeable |  |               |            | Percentage 
|Name of Beneficial Owner                    |  | Stock                                     |            | Preferred(1) |  | Current Total |            | of Class(2)
|                                            |  |                                           |            |              |  |               |            |            
|Barclay Knapp                               |  |                                           | 459,967    |              |  |               | 7,154,000  |             |  |  | 7,613,967  |  |  |  | 2.68  | %
|George S. Blumenthal(3)                     |  |                                           | 269,465    |              |  |               | 6,729,856  |             |  |  | 6,999,321  |  |  |  | 2.47  | %
|Richard J. Lubasch(4)                       |  |                                           | 61,249     |              |  |               | 816,352    |             |  |  | 877,601    |  |  |  | *     |  
|Stephen A. Carter                           |  |                                           | 0          |              |  |               | 240,000    |             |  |  | 240,000    |  |  |  | *     |  
|John F. Gregg(5)                            |  |                                           | 1,250      |              |  |               | 979,635    |             |  |  | 980,885    |  |  |  | *     |  
|Gregg N. Gorelick                           |  |                                           | 85,154     |              |  |               | 188,065    |             |  |  | 273,219    |  |  |  | *     |  
|Bret Richter                                |  |                                           | 291        |              |  |               | 253,387    |             |  |  | 253,678    |  |  |  | *     |  
|Steven L. Wagner                            |  |                                           | 0          |              |  |               | 474,066    |             |  |  | 474,066    |  |  |  | *     |  
|                                            |  |                                           |            |              |  |               |            |             |  |  |            |  |  |  |       |  
|Executive Officers                          |  |                                           | 877,376    |              |  |               | 16,610,361 |             |  |  | 17,487,737 |  |  |  | 6.03  | %
|Robert T. Goad(6)                           |  |                                           | 1,638,685  |              |  |               | 150,000    |             |  |  | 1,788,685  |  |  |  | *     |  
|Sidney R. Knafel(7)                         |  |                                           | 2,086,042  |              |  |               | 320,485    |             |  |  | 2,406,527  |  |  |  | *     |  
|Ted H. McCourtney(8)                        |  |                                           | 23,993     |              |  |               | 320,485    |             |  |  | 344,478    |  |  |  | *     |  
|Alan J. Patricof(9)                         |  |                                           | 11,263     |              |  |               | 320,485    |             |  |  | 331,748    |  |  |  | *     |  
|Warren Potash(10)                           |  |                                           | 42,170     |              |  |               | 251,036    |             |  |  | 293,206    |  |  |  | *     |  
|Michael S. Willner(11)                      |  |                                           | 694,201    |              |  |               | 292,449    |             |  |  | 986,650    |  |  |  | *     |  
|                                            |  |                                           |            |              |  |               |            |             |  |  |            |  |  |  |       |  
|                                            |  |                                           | 4,496,354  |              |  |               | 727,750    |             |  |  | 5,224,104  |  |  |  | 1.87  | %
|NTL Directors                               |  |                                           |            |              |  |               |            |             |  |  |            |  |  |  |       |  
|Directors and Officers as a group           |  |                                           | 5,373,730  |              |  |               | 17,563,111 |             |  |  | 22,936,841 |  |  |  | 7.81  | %
|France Telecom S.A.(12)                     |  |                                           | 50,680,752 |              |  |               | 39,058,641 |             |  |  | 89,739,393 |  |  |  | 28.43 | %
|Capital Research and Management Company(13) |  |                                           | 32,135,130 |              |  |               | 0          |             |  |  | 32,135,130 |  |  |  | 11.62 | %
|Cable & Wireless plc(14)                    |  |                                           | 28,110,413 |              |  |               | 0          |             |  |  | 28,110,413 |  |  |  | 10.16 | %
|Verizon Communications, Inc.(15)            |  |                                           | 24,469,861 |              |  |               | 0          |             |  |  | 24,469,861 |  |  |  | 8.85  | %
|AXA Assurances I.A.R.D. Mutuelle(16)        |  |                                           | 22,405,118 |              |  |               | 641,412    |             |  |  | 23,046,530 |  |  |  | 8.31  | %



---



| |   |                                 
| | - | --------------------------------
| | * | Represents less than one percent



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Includes shares of NTL Incorporated common stock
    purchased upon the exercise of options which are exercisable or
    become so in the next 60 days (Presently Exercisable
    Options), shares of NTL Incorporated common stock issuable
    upon the conversion of the 7% Convertible Subordinated Notes due
    2008 or 5.75% Convertible Subordinated Notes due 2009 (the
    Convertible Bonds) and shares of common stock
    issuable upon the exchange of the Senior Redeemable Exchangeable
    Preferred Stock which are exchangeable or become so in the next
    60 days (the Exchangeable Preferred). Of the
    options, warrants, Convertible Bonds and Exchangeable Preferred
    shown in the table above: (a) 610,309 options were assumed
    by NTL Communications in 1993, having a weighted average
    exercise price of $1.08 per share; and (b) 12,163,088
    options are employee and non-employee director options that have
    been issued under the 1993 Employee Stock Option Plan, the 1993
    Non-Employee Director Stock Option Plan, the 1998 Non-Qualified
    Stock Option Plan or certain other stock option agreements,
    having a weighted average exercise price of $16.82 per share.
|
| | (2) | Includes NTL Incorporated common stock, Presently
    Exercisable Options, warrants, Convertible Bonds and
    Exchangeable Preferred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

59



---



##### 





| |     |                                                                                                                                                                                                                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (3) | Includes 3,299 shares of common stock owned by
    trusts for the benefit of Mr. Blumenthals children
    and also includes 152,092 shares of common stock held by George
    S. Blumenthals 1998 Annuity Trust. Also includes 465,878
    options held in Grantor Retained Annuity Trusts.                       
|
| | (4) | Includes 174 shares of common stock owned by
    Mr. Lubasch as custodian for his child, as to which shares
    Mr. Lubasch disclaims beneficial ownership.                                                                                                                                                         
|
| | (5) | Mr. Gregg owns $100,000 of the 7%
    Convertible Subordinated Notes due 2008, convertible into 2,551
    shares of common stock.                                                                                                                                                                                   
|
| | (6) | Mr. Goad personally owns 30,249 shares of
    common stock. The remainder are owned by Columbia Management,
    Inc., Mr. Goads wholly-owned Investment Company.                                                                                                                                                   
|
| | (7) | Includes 25,958 shares of common stock owned by
    Insight Communications UK, Inc., Mr. Knafels
    wholly-owned Investment Company. Also includes 73,363 shares of
    common stock owned by a foundation of which Mr. Knafel is
    President, as to which shares Mr. Knafel disclaims
    beneficial ownership.
|
| | (8) | An additional 872 shares of common stock are held
    by trusts for the benefit of Mr. McCourtneys
    children, as to which shares Mr. McCourtney disclaims
    beneficial ownership.                                                                                                                             
|
| | (9) | Includes 499 shares of common stock owned by
    Mr. Patricofs wife, as to which shares
    Mr. Patricof disclaims beneficial Ownership.                                                                                                                                                                           



|     |                                                                                                                                                                                                                                                                                   
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Mr. Potash owns $500,000 of the 7%
    Convertible Subordinated Notes due 2008, convertible into 12,755
    shares of common stock.                                                                                                                                               
|    
|(11) | Includes 138,579 shares of common stock held by
    trust accounts for the benefit of Mr. Willners
    children, as to which Shares Mr. Willner disclaims
    beneficial ownership.                                                                                              
|    
|(12) | Based upon Schedule 13D/A (Amendment
    No. 9), dated April 26, 2002, filed by France Telecom
    S.A. and Compagnie Generale des Communications (COGECOM) S.A.
    with the Securities and Exchange Commission (the
    SEC).                                                 
|    
|(13) | Based solely upon Schedule 13G (Amendment
    No. 4), dated February 11, 2002, filed by Capital
    Research and Management Company with the SEC.                                                                                                                                 
|    
|(14) | Based upon Schedule 13-G (Amendment
    No. 1), dated February 14, 2002, filed by Cable and
    Wireless plc, with the SEC.                                                                                                                                                       
|    
|(15) | Based solely upon Schedule 13-G filed on
    April 9, 2001, by Verizon Communications, Inc., Bell
    Atlantic Worldwide Services Group, Inc., Bell Atlantic Network
    Systems Company, and NYNEX Corporation with the SEC.                                                     
|    
|(16) | Based solely upon Schedule 13-G (Amendment
    No. 3), dated February 12, 2002, filed by AXA
    Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA
    Conseil Vie Assurance Mutuelle, AXA Courtage Assurance Mutuelle,
    AXA and AXA Financial, Inc. with the SEC.



|         |                                                   
|-------- | --------------------------------------------------
|Item 13. | Certain Relationships and Related
    Transactions

Barclay Knapp and Gregg Gorelick are executive
officers of the Company and NTL Incorporated, and were executive
officers of CoreComm. In addition, Barclay Knapp, Warren Potash,
George Blumenthal and Alan Patricof are directors of the
Company, NTL Incorporated and CoreComm.

In the fourth quarter of 1999, CoreComm Limited
(CoreComm) (which was formed in 1998) began charging
the Company a percentage of its office rent and supplies expense
in respect of certain facilities which were shared with the
Company.

In 2001, the Company charged CoreComm
$0.3 million for direct costs where identifiable and a
fixed percentage of its corporate overhead, net of
CoreComms charges to the Company. These charges reduced
corporate expenses in 2001. It is not practicable to determine
the amounts of these expenses that would have been incurred had
the Company operated as an unaffiliated entity. In the opinion
of management of the Company, the allocation methods are
reasonable.

60



---



##### 



The Company obtains billing and software
development services from CoreComm. CoreComm billed the Company
$3.4 million in 2001 for these services.

In March 2000, the Company and CoreComm announced
that they had entered into an agreement to link their networks
in order to create an international Internet backbone that
commenced operations in February 2001. The Company incurred
costs of $0.3 million for network usage in the year ended
December 31, 2001.

On April 12, 2001, NTL Incorporated
purchased $15.0 million of an unsecured convertible note
from CoreComm and received warrants to purchase 770,000 shares
of CoreComm common stock at an exercise price of $.01 per share
that expire in April 2011. In addition, concurrently with the
note purchase and without additional compensation, NTL
Incorporated entered into a network and software agreement with
CoreComm. Under the agreement, CoreComm will provide U.S.
network access for Internet traffic from NTL Incorporateds
U.K. customers for three years, as well as a royalty free
license to use certain billing and provisioning software and
know-how. Interest on the notes is at 10.75% per annum, payable
semiannually beginning on October 15, 2001. The interest is
payable in kind by the issuance of additional notes in such
principal amount equal to the interest payment that is then due.
The notes are convertible into CoreComm common stock prior to
maturity at a conversion price of $1.00 per share, subject to
adjustment. Additional notes issued for interest will have an
initial conversion price equal to 120% of the weighted average
closing price of CoreComm common stock for a specified period.
NTL Incorporated and CoreComm have agreed to certain
modifications to the conversion feature in connection with
CoreComms recapitalization in December 2001. In the light
of the relationship between the companies described above, the
independent directors of NTL Incorporated examined the
transaction with CoreComm and the Board of Directors of NTL
Incorporated determined that the transaction was inherently fair
to NTL Incorporated and provided NTL Incorporated with benefits
that exceeded those that could be obtained from a third party.

In 2001, the Company and CoreComm entered into a
license agreement whereby the Company was granted an exclusive,
irrevocable, perpetual license to certain billing software
developed by CoreComm for telephony rating, digital television
events rating, fraud management and other tasks. The sales price
was cash of $9.8 million for the development costs expended
by CoreComm plus a fixed amount of $3.0 million
representing the one-time perpetual license fee. The billing
software was being used by the Company at the time of this
agreement, and was being maintained and modified by CoreComm
under an ongoing software maintenance and development
outsourcing arrangement between the companies.

At December 31, 2001 and December 31,
2000, the Company had a receivable from CoreComm of
$1.1 million and a payable to CoreComm of
$17.1 million, respectively. The 2000 payable balance
primarily related to services and other charges billed in
advance in October and November 2000 of $15.8 million.

On November 1, 2001, we announced that we
had entered into an agreement dated September 28, 2001,
with Orange plc for the provision of a new mobile phone service,
for NTLs existing and prospective residential customers
across the UK. France Telecom, one of the principal holders of
NTL Incorporated common stock and a holder of our 5% cumulative
preferred stock, acquired Orange plc in August 2001. Prior to
France Telecoms acquisition, our broadcast division
provided Orange with sight leasing services and continues to do
so.

PART IV



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

|                                                                                                                  |  |  |     |  |  |                                                                                       |  | 
|----------------------------------------------------------------------------------------------------------------- |  |  | --- |  |  | ------------------------------------------------------------------------------------- |  | 
|(a)                                                                                                               |  |  | (1) |  |  | Financial Statements See list of Financial Statements on page F-1.                  
|                                                                                                                  |  |  | (2) |  |  | Financial Statement Schedules see list of Financial Statement Schedules on page F-1.
|                                                                                                                  |  |  | (3) |  |  | Exhibits  See Exhibit Index on page 62.                                             
|(b) No reports on Form 8-K were filed
    by the Company during the fourth quarter of 2001.                      
|(c) Exhibits  The response
    to this portion of Item 14 is submitted as a separate
    section of this report.
|(d) Financial Statement
    Schedules  See list of Financial Statement
    Schedules on page F-1.               

61



---



##### 



EXHIBIT INDEX

|        |        |  |  |                                                                                                                                                                                                                                                                                                                                                                            
|------- | ------ |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        | 
|No.     |        | 
|        |        | 
|        | 2.1    |  |  | Agreement and Plan of Merger, dated as of
    February 9, 2000, by and among NTL Incorporated, NTL
    Communications Corp. and Holdings Merger Sub Inc. (Incorporated
    by reference to Exhibit 2.1 to Amendment No. 1 to the
    Registration Statement on Form S-3/A, filed by NTL
    (Delaware), Inc. and NTL Incorporated on July 14, 2000,
    File No. 333-36434)
|        | 2.2    |  |  | Agreement and Plan of Merger, dated as of
    March 26, 1999, by and among NTL Incorporated, NTL
    Communications and NTL Merger Inc. (Incorporated by reference to
    Exhibit 2.1 to Amendment No. 2 to the Registration
    Statement on Form S-3/A, filed by NTL Incorporated and NTL
    Communications Corp. on June 3, 1999, File
    No. 333-72335)              
|        | 2.3    |  |  | Agreement and Plan of Amalgamation, dated as of
    February 4, 1998, as amended, by and among NTL
    Incorporated, NTL (Bermuda) Limited, and Comcast UK Cable
    Partners Limited (Incorporated by reference to the Registration
    Statement on Form S-4, filed by NTL Incorporated on
    September 30, 1998, File No. 333-64727)                                   
|        | 2.4    |  |  | Amendment No. 1 to Agreement and Plan of
    Amalgamation, dated as of May 28, 1998, by and among NTL
    Incorporated, NTL (Bermuda) Limited and Comcast UK Cable
    Partners Limited (Incorporated by reference to Annex B to
    the Registration Statement on Form S-4, filed by NTL
    Incorporated on September 30, 1998, File No. 333-64727)                      
|        | 2.5    |  |  | Share Exchange Agreement, dated as of
    June 16, 1998, as amended, by and among NTL Incorporated
    and the shareholders of Diamond Cable Communications plc
    (Incorporated by reference to Annex A to the Proxy
    Statement, filed by NTL Incorporated on January 29, 1999,
    File No. 000-22616)                                                               
|        | 2.6    |  |  | Amendment No. 1 to Share Exchange Agreement,
    dated as of December 21, 1998, by and among NTL
    Incorporated and the shareholders of Diamond Cable
    Communications plc (Incorporated by reference to
    Exhibit 99.1 to Form 8-K, filed by NTL Incorporated on
    December 23, 1998, File No. 000-22616)                                                         
|        | 2.7    |  |  | Transaction Agreement, dated as of July 26,
    1999, by and among, Bell Atlantic Corporation, Cable and
    Wireless PLC, Cable, Wireless Communications PLC and NTL
    Incorporated (Incorporated by reference to Annex J to the
    Proxy Statement, filed by NTL Incorporated on February 11,
    2000, File No. 000-25691)                                           
|        | 2.8    |  |  | Investment Agreement, dated as of July 26,
    1999, by and between, NTL Incorporated and France Telecom S.A.
    (Incorporated by reference to Annex A the Proxy Statement,
    filed by NTL Incorporated on February 11, 2000, File
    No. 000-25691)                                                                                                                   
|        | 2.8(a) |  |  | Amendment No. 1 to the Investment Agreement,
    dated as of August 6, 1999 by and among NTL Incorporated
    and France Telecom S.A. (Incorporated by reference Annex B
    to the Proxy Statement, filed by NTL Incorporated on
    February 11, 2000, File No. 000-25691)                                                                                               
|        | 2.8(b) |  |  | Amendment No. 2 to the Investment Agreement,
    dated as of October 8, 1999 by and among NTL Incorporated
    and France Telecom S.A. (Incorporated by reference to
    Annex C to the Proxy Statement, filed by NTL Incorporated
    on February 11, 2000, File No. 000-25691)                                                                                           
|        | 2.9    |  |  | Purchase Agreement, dated as of February 17,
    2000, by and between France Telecom, S.A. and NTL Incorporated
    (Incorporated by reference to Exhibit 99.3 to the
    Form 8-K, filed by NTL Incorporated on February 22,
    2000, File No. 000-25691)                                                                                                                
|        | 2.10   |  |  | Transaction Agreement dated as of
    December 12, 1999 by and among Cablecom Holding AG and NTL
    Incorporated and certain other parties thereto (Incorporated by
    reference to Exhibit 2.9 to the 1999 Annual Report on
    Form 10-K, filed by NTL Incorporated on March 17,
    2000, File No. 000-25691)                                                         

62



---



##### 



|        |     |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | --- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     | 
|No.     |     | 
|        |     | 
|        | 3.1 |  |  | Restated Certificate of Incorporation of NTL
    Communications Corp. (Incorporated by reference to the
    registration statement on Form S-3, filed by Communications
    Corp. on June 3, 1999, File No. 333-72335)                                                                                                                                                                                                         
|        | 3.2 |  |  | By-Laws of NTL Communications Corp. (Incorporated
    by reference to Exhibit 3.4 to Amendment No. 1 to the
    Registration Statement on Form S-3/A, filed by NTL
    Communications Corp. on June 3, 1999, File
    No. 333-72335)                                                                                                                                                                                           
|        | 4.1 |  |  | Form of Indenture, dated as of September 28,
    1994, by and between Diamond Cable Communications plc, and The
    Bank of New York as Trustee, with respect to the 13 1/4%
    Senior Discount Notes due September 30, 2004 (Incorporated
    by reference to Exhibit 4.1 to the Registration Statement
    on Form S-1, filed by Diamond Cable Communications plc on
    September 6, 1994, File No. 33-83740)              
|        | 4.2 |  |  | First Supplemental Indenture, dated as of
    May 31, 1996, by and between Diamond Cable Communications
    plc and The Bank of New York as Trustee (Incorporated by
    reference to Exhibit 4.3 to Post-Effective Amendment
    No. 4 to the Registration Statement on Form S-1, filed
    by Diamond Cable Communications plc on September 12, 1996,
    File No. 33-83740)                                                 
|        | 4.3 |  |  | Indenture, dated as of April 20, 1995, by
    and between NTL Communications Corp. and Chemical Bank as
    Trustee, with respect to the 12 3/4% Senior Notes
    (Incorporated by reference to Exhibit 4.1 to the
    Registration Statement on Form S-4, filed by International
    CableTel Incorporated on May 26, 1995, File
    No. 33-92794)                                                                            
|        | 4.4 |  |  | First Supplemental Indenture, dated as of
    January 22, 1996, by and between NTL Communications Corp.
    and Chemical Bank, as Trustee, with respect to the 12 3/4%
    Senior Notes (Incorporated by reference to Exhibit 4.5 to
    the Registration Statement on Form S-4, filed by
    International CableTel Incorporated on February 5, 1996,
    File No. 333-1010)                                                  
|        | 4.5 |  |  | Indenture, dated as of November 11, 1995, by
    and between Comcast UK Cable Partners Limited and Bank of
    Montreal Trust Company as Trustee with respect to the 11.20%
    Senior Discount Debentures due 2007 (Incorporated by reference
    to Exhibit 4.1 to Amendment No. 2 to the Registration
    Statement on Form S-1/A filed by Comcast UK Cable Partners
    Limited on November 5, 1995, File No. 33-96932)    
|        | 4.6 |  |  | First Supplemental Indenture, dated
    October 29, 1998, by and between NTL (Bermuda) Limited (now
    NTL Triangle) LLC) and Bank of Montreal Trust Company as
    Trustee, with respect to the 11.20% Senior Discount Debentures
    due 2007 (Incorporated by reference to Exhibit 4.1 to
    Form 8-K, filed by NTL (Triangle) LLC on November 4,
    1998, File No. 000-24792)                                           
|        | 4.7 |  |  | Indenture, dated as of December 15, 1995, by
    and between Diamond Cable Communications plc, and The Bank of
    New York as Trustee, with respect to the 11 3/4% Senior
    Discount Notes due December 15, 2005 (Incorporated by
    reference to Exhibit 4.1 to Amendment No. 2 to the
    Registration Statement on Form S-1/A, filed by Diamond
    Cable Communications plc on December 6, 1995, File
    No. 33-98374)
|        | 4.8 |  |  | Indenture, dated as of January 30, 1996, by
    and between NTL Communications and Chemical Bank as Trustee,
    with respect to the 11 1/2% Senior Notes due 2006
    (Incorporated by reference to Exhibit 4.1 to the
    Registration Statement on Form S-4, filed by International
    CabelTel Incorporated on February 5, 1996, File
    No. 333-1010)                                                                   
|        | 4.9 |  |  | Indenture, date as of February 12, 1997, by
    and between NTL Communications Corp. and The Chase Manhattan
    Bank, as Trustee, with respect to the 10% Senior Notes
    (Incorporated by reference to Exhibit 4.9 to the 1996
    Annual Report on Form 10-K, filed by NTL Incorporated on
    March 28, 1997, File No. 000-22616)                                                                                         

63



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##### 



|        |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | ---- |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      | 
|No.     |      | 
|        |      | 
|        | 4.10 |  |  | Indenture, dated as of February 27, 1997, by
    and between Diamond Cable Communications plc and The Bank of New
    York as Trustee, with respect to the 10 3/4% Senior
    Discount Notes due February 15, 2007 (Incorporated by
    reference to Exhibit 4.1 to the Registration Statement on
    Form S-4, filed by Diamond Cable Communications plc on
    April 15, 1997, File No. 333-25193)                                                                                                                 
|        | 4.11 |  |  | Indenture, dated as of February 6, 1998, by
    and among Diamond Holdings plc, Diamond Cable Communications
    plc, and The Bank of New York as Trustee, with respect to the
    10% Senior Notes due February 1, 2008 and 9 1/8%
    Senior Notes due February 1, 2008 (Incorporated by
    reference to Exhibit 4.1 to the Registration Statement on
    Form S-4, filed by Diamond Cable Communications plc on
    March 20, 1998, File No. 333-48413)                                                          
|        | 4.12 |  |  | Indenture, dated as of March 13, 1998, by
    and between NTL Communications Corp. and The Chase Manhattan
    Bank, as Trustee, with respect to the 9 1/2% Senior Notes
    (Incorporated by reference to Exhibit 4.10 to the 1997
    Annual Report on Form 10-K filed by NTL Communications
    (File No. 0-22616) on March 30, 1998)                                                                                                                                                                             
|        | 4.13 |  |  | Indenture, date as of March 13, 1998, by and
    between NTL Communications Corp. and The Chase Manhattan Bank,
    as Trustee, with respect to the 9 3/4% Senior Deferred
    Coupon Notes (Incorporated by reference to Exhibit 4.11 to
    the 1997 Annual Report on Form 10-K, filed by NTL
    Incorporated on March 30, 1998, File No. 000-22616)                                                                                                                                                              
|        | 4.14 |  |  | Indenture, date as of March 13, 1998, by and
    between NTL Communications Corp. and The Chase Manhattan Bank,
    as Trustee, with respect to the 10 3/4% Senior Deferred
    Coupon Notes (Incorporated by reference to Exhibit 4.12 to
    the 1997 Annual Report on Form 10-K, filed by NTL
    Incorporated on March 30, 1998, File No. 000-22616)                                                                                                                                                             
|        | 4.15 |  |  | Indenture, date as of November 2, 1998, by
    and between NTL Communications Corp. and The Chase Manhattan
    Bank, as Trustee, with respect to the 11 1/2% Senior Notes
    due 2008 (Incorporated by reference to Exhibit 4.13 to the
    1998 Annual Report on Form 10-K, filed by NTL Incorporated
    on March 30, 1999, File No. 000-22616)                                                                                                                                                                  
|        | 4.16 |  |  | Indenture, date as of November 6, 1998, by
    and between NTL Communications Corp. and The Chase Manhattan
    Bank, as Trustee, with respect to the 12 3/8% Senior
    Deferred Coupon Notes due 2008 (Incorporated by reference to
    Exhibit 4.15 to the 1998 Annual Report on Form 10-K,
    filed by NTL Incorporated on March 30, 1999, File
    No. 000-22616)                                                                                                                                              
|        | 4.17 |  |  | Indenture, date as of December 16, 1998, by
    and between NTL Communications Corp. and The Chase Manhattan
    Bank, as Trustee, with respect to the 7% Convertible
    Subordinated Notes due 2008 (Incorporated by reference to
    Exhibit 4.17 to the 1998 Annual Report on Form 10-K,
    filed by NTL Incorporated on March 30, 1999, File
    No. 000-22616)                                                                                                                                                
|        | 4.18 |  |  | First Supplemental Indenture, date as of
    March 31, 1999, by and among NTL Incorporated, NTL
    Communications Corp. and The Chase Manhattan Bank, as Trustee,
    with respect to the 7% Convertible Subordinated Notes due 2008
    (Incorporated by reference to Exhibit 4.4 to Amendment
    No. 2 to the Registration Statement on Form S-3/A,
    filed by NTL Incorporated and NTL Communications Corp. on
    June 3, 1999, File No. 333-72335)                                                          
|        | 4.19 |  |  | Second Supplemental Indenture, dated as of
    March 16, 2000, by and among NTL Incorporated, NTL
    Communications Corp. (formerly NTL Incorporated) and The Chase
    Manhattan Bank as Trustee, with respect to the 7% Convertible
    Subordinated Notes due 2008 (Incorporated by reference to
    Exhibit 4.3 to Amendment No. 1 to the Registration
    Statement on Form S-3/A, filed by NTL Incorporated, NTL
    (Delaware), Inc. and NTL Communications Corp. on August 30,
    2000, File No. 333-42792)

64



---



##### 



|        |      |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | ---- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      | 
|No.     |      | 
|        |      | 
|        | 4.20 |  |  | Third Supplemental Indenture, dated as of
    May 17, 2000, by and among NTL Incorporated, NTL
    Communications Corp. (formerly NTL Incorporated) and The Chase
    Manhattan Bank as Trustee, with respect to the 7% Convertible
    Subordinated Notes due 2008 (Incorporated by reference to
    Exhibit 4.4 to Amendment No. 1 to the Registration
    Statement on Form S-3/A, filed by NTL Incorporated, NTL
    (Delaware), Inc. and NTL Communications Corp. on August 30,
    2000, File No. 333-42792)                
|        | 4.21 |  |  | Indenture, dated as of April 14, 1999, by
    and between NTL Communications Corp. and The Chase Manhattan
    Bank as Trustee, with respect to the 9 3/4% Senior Deferred
    Coupon Notes due 2009 (Incorporated by reference to
    Exhibit 4.1 to the Registration Statement on Form S-4,
    filed by NTL Communications Corp. on May 13, 1999, File
    No. 333-78405)                                                                                                                                                      
|        | 4.22 |  |  | Indenture, dated as of November 24, 1999, by
    and between NTL Communications Corp. and The Chase Manhattan
    Bank as Trustee, with respect to the 9 1/4% Senior Notes
    due 2006 (Incorporated by reference to Exhibit 4.1 to the
    Registration Statement on Form S-4, filed by NTL
    Communications Corp. on January 24, 2000, File
    No. 333-95267)                                                                                                                                                               
|        | 4.23 |  |  | Indenture, dated as of November 24, 1999, by
    and between NTL Communication Corp. and The Chase Manhattan Bank
    as Trustee, with respect to the 9 7/8% Senior Notes Due
    2009 (Incorporated by reference to Exhibit 4.2 to the
    Registration Statement on Form S-4, filed by NTL
    Communication Corp. on January 24, 2000, File
    No. 333-95267)                                                                                                                                                                 
|        | 4.24 |  |  | Indenture, dated as of November 24, 1999, by
    and between NTL Communications Corp. and The Chase Manhattan
    Bank as Trustee, with respect to the 11 1/2% Senior
    Deferred Coupon Notes due 2009 (Incorporated by reference to
    Exhibit 4.3 to the Registration Statement on Form S-4,
    filed by NTL Communications Corp. on January 24, 2000, File
    No. 333-95267)                                                                                                                                              
|        | 4.25 |  |  | Indenture, dated as of October 2, 2000, by
    and between NTL Communications Corp. and The Chase Manhattan
    Bank as Trustee, with respect to the 11 7/8% Senior Notes
    due 2010 (Incorporated by reference to Exhibit 4.1 to the
    Registration Statement on Form S-4, filed by NTL
    Communications Corp. on October 26, 2000, File
    No. 333-48648)                                                                                                                                                                
|        | 4.26 |  |  | Indenture, dated as of January 24, 2001, by
    and between NTL Communications Corp. and The Chase Manhattan
    Bank as Trustee, with respect to the 12 3/8% Senior Notes
    due 2008 (Incorporated by reference to Exhibit 4.1 to the
    Registration Statement on Form S-4, filed by NTL
    Communications Corp. on February 9, 2001, File
    No. 333-55288)                                                                                                                                                               
|        | 4.27 |  |  | Indenture, dated as of May 15, 2001, by and
    between NTL Communications Corp., NTL Incorporated and The Chase
    Manhattan Bank, as Trustee, with respect to the 6 3/4%
    Convertible Senior Notes due 2008 (Incorporated by reference to
    Exhibit 4.7 to Amendment No. 1 to the Registration
    Statement on Form S-4/A, filed by NTL Communications Corp.
    on June 8, 2001, File No. 333-55288)                                                                                                                    
|        | 4.28 |  |  | Registration Rights Agreement dated as of
    May 15, 2001 by and among NTL Communications Corp., NTL
    Incorporated, Morgan Stanley & Co. Incorporated, J.P.
    Morgan Securities Inc., Credit Suisse First Boston Corporation
    and Salomon Smith Barney Inc. with respect to the 6 3/4%
    Convertible Senior Notes due 2008 (Incorporated by reference to
    Exhibit 4.8 to Amendment No. 1 to the Registration
    Statement on Form S-4/A, filed by NTL Communications Corp.
    on June 8, 2001, File No. 333-55288)
|        | 10.1 |  |  | Compensation Plan and Agreements, as amended and
    restated effective June 3, 1997 (Incorporated by reference
    to Exhibit 10.1 to the 1997 Annual Report on
    Form 10-K, filed by NTL Communications on March 30,
    1998, File No. 0-22616)                                                                                                                                                                                                                                                                              
|        | 10.2 |  |  | Rules of the NTL Sharesave Plan, adopted by NTL
    Incorporated on October 28, 1997 (Incorporated by reference
    to Exhibit 10.2 to the 1998 Annual Report on
    Form 10-K, filed by NTL Communications, on March 30,
    1999, File No. 0-22616)                                                                                                                                                                                                                                                                             

65



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##### 



|        |         |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- | ------- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         | 
|No.     |         | 
|        |         | 
|        | 10.3    |  |  | Form of Director and Officer Indemnity Agreement
    (together with a schedule of executed Indemnity Agreements)
    (Incorporated by reference to Exhibit 10.3 to the 1999
    Annual Report on Form 10-K, filed by NTL Incorporated on
    March 17, 2000, File No. 000-25691)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10.4    |  |  | 1998 Non-Qualified Stock Option Plan, as Amended
    and Restated October 1998 (Incorporated by reference to
    Exhibit 10.4 to the 1998 Annual Report on Form 10-K,
    filed by NTL Communications on March 30, 1999, File
    No. 0-22616)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.5    |  |  | Credit Agreement relating to the acquisition of
    Cable & Wireless Communications (Holdings) PLC, dated
    as of May 30, 2000, by and among NTL Communications
    Limited, NTL Business Limited, NTL Communications Corp., Chase
    Manhattan PLC and Morgan Stanley Dean Witter Limited, Chase
    Manhattan International Limited (Incorporated by reference to
    Exhibit 10.8 to the 2000 Annual Report on Form 10-K,
    filed by NTL Incorporated on March 30, 2001, File
    No. 001-16183)                                                                                                                                                                                                                                                                                                                              
|        | 10.6    |  |  | Restatement Amendment Agreement dated as of
    September 26, 2001 by and among NTL Communications Limited,
    NTL Investment Holdings Limited, NTL Communications Corp., J.P.
    Morgan plc and Morgan Stanley Dean Witter Bank Limited, Chase
    Manhattan International Limited and others, agreeing to amend
    the Credit Agreement, dated as of May 30, 2000, between NTL
    Communications Corp., NTL (UK) Group, Inc., NTL Communications
    Limited, Morgan Stanley Dean Witter Bank Limited and Chase
    Manhattan PLC (Incorporated by reference to Exhibit 10.16
    to the 2001 Annual Report on Form 10-K, filed by NTL
    Incorporated on April 16, 2001, File No. 0-30673)                                                                                                                                    
|        | 10.6(a) |  |  | Amended and Restated Credit Agreement dated as of
    September 26, 2001, restating the Credit Agreement dated as
    of 30 May 2000, as amended or waived pursuant to a letter
    dated as of 6 June 2000, amendment agreements dated as of
    8 June 2000, 30 June 2000 and 4 September 2000, a
    novation agreement dated as of 21 February 2001 and letters
    of consent dated as of 22 December 2000 and 29 January
    2001 by and among NTL Communications Limited, NTL Investment
    Holdings Limited, NTL Communications Corp., J.P. Morgan plc and
    Morgan Stanley Dean Witter Bank Limited, Chase Manhattan
    International Limited and others (Incorporated by reference to
    Exhibit 10.6(a) to the 2001 Annual Report on
    Form 10-K, filed by NTL Incorporated on April 16,
    2001, File No. 0-30673)
|        | 10.7    |  |  | Investment Agreement, dated July 26, 1999,
    as amended, by and between the Company and France telecom S.A
    (Incorporated by reference to Annex A to the proxy
    statement filed by NTL Incorporated on February 11, 2000,
    File No. 000-25691)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.7(a) |  |  | Amendment, dated as of September 12, 2001,
    to the Investment Agreement, dated July 26, 1999, as
    amended, by and between the Company and France Telecom S.A.
    (Incorporated by reference to Exhibit 10.1 to the Quarterly
    Report on Form 10-Q, filed by NTL Incorporated on
    November 14, 2001, File No. 001-16183)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10.8    |  |  | Framework Agreement For The Provision Of IT
    Outsourcing Services, dated as of May 23, 2001, by and
    between NTL Group Limited and IBM United Kingdom Limited
    (Incorporated by reference to Exhibit 10.9 to the 2001
    Annual Report on Form 10-K, filed by NTL Incorporated on
    April 16, 2001, File No. 0-30673)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10.9    |  |  | Amendment, dated as of April 5, 2001 to the
    Framework Agreement For The Provision of IT Outsourcing
    Services, dated as of May 23, 2001, by and between NTL
    Group Limited and IBM United Kingdom Limited (Incorporated by
    reference to Exhibit 10.10 to the 2001 Annual Report on
    Form 10-K, filed by NTL Incorporated on April 16,
    2001, File No. 0-30673)                                                                                                                                                                                                                                                                                                                                                                                                                                                    

66



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##### 



|        |       |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | ----- |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       | 
|No.     |       | 
|        |       | 
|        | 10.10 |  |  | Consent Letter, dated as of March 8, 2002,
    in respect of the Senior Credit Facility by and among NTL
    Communications Limited, NTL Investment Holdings Limited, NTL
    Communications Corp. and J.P. Morgan Europe Limited, on behalf
    of the banks (Incorporated by reference to Exhibit 10.11 to
    the 2001 Annual Report on Form 10-K, filed by NTL
    Incorporated on April 16, 2001, File No. 0-30673)   
|        | 10.11 |  |  | Consent Letter, dated as of March 8, 2002,
    in respect of the Working Capital Facility by and among NTL
    Communications Corp., NTL Communications Limited, NTL (UK) Group
    Inc. and J.P. Morgan Europe Limited, on behalf of the banks
    (Incorporated by reference to Exhibit 10.12 to the 2001
    Annual Report on Form 10-K, filed by NTL Incorporated on
    April 16, 2001, File No. 0-30673)             
|        | 10.12 |  |  | Consent Letter, dated as of March 28, 2002,
    in respect of the Senior Credit Facility by and among NTL
    Communications Limited, NTL Investment Holdings, NTL
    Communications Corporation and J.P. Morgan Europe Limited, on
    behalf of the banks (Incorporated by reference to
    Exhibit 10.14 to the 2001 Annual Report on Form 10-K,
    filed by NTL Incorporated on April 16, 2001, File
    No. 0-30673)
|        | 10.13 |  |  | Consent Letter, dated March 28, 2002, in
    respect of the Working Capital Facility by and among NTL
    Communications Corp., NTL Communications Limited, NTL (UK) Group
    Inc. (Incorporated by reference to Exhibit 10.15 to the
    2001 Annual Report on Form 10-K, filed by NTL Incorporated
    on April 16, 2001, File No. 0-30673)                                                                             
|        | 10.14 |  |  | Employment Agreement, dated December 6, 2000
    between NTL Incorporated and Stephen Carter (Incorporated by
    reference to Exhibit 10.1 to the 2001 Annual Report on
    Form 10-K/A, filed by NTL Incorporated on April 30,
    2001, File No. 0-30673)                                                                                                                                                               
|        | 21    |  |  | Subsidiaries of the registrant*                                                                                                                                                                                                                                                                                                                                                                                            
|        | 23    |  |  | Consent of Ernst & Young LLP*                                                                                                                                                                                                                                                                                                                                                                                              
|        | 99.1  |  |  | Certification of Chief Executive Officer and
    Chief Financial Officer Pursuant to 18 U.S.C.
    Section 1350*                                                                                                                                                                                                                                                                                                           



---



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

67



---



##### 



Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated: October 15, 2002



| |                         
| | ------------------------
| | NTL COMMUNICATIONS CORP.



| |     |                      
| | --- | ---------------------
| | By: | /s/ GREGG N. GORELICK

| |                                
| | -------------------------------
| |                                
| | Gregg N. Gorelick              
| | Vice President 
    Controller

68



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##### 



CERTIFICATIONS

I, Barclay Knapp, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                                 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K/ A of NTL Communications Corp.;                                                                                                                                                                                                                                                             
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report; and
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report.                           

Date: October 15, 2002



| |                              
| | -----------------------------
| | /s/ BARCLAY KNAPP            
| |                              
| | Barclay Knapp                
| | Chief Executive Officer      
| | (Principal Executive Officer)

I, John Gregg, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                                 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K/ A of NTL Communications Corp.;                                                                                                                                                                                                                                                             
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report; and
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report.                           

Date: October 15, 2002



| |                              
| | -----------------------------
| | /s/ JOHN F. GREGG            
| |                              
| | John F. Gregg                
| | Chief Financial Officer      
| | (Principal Financial Officer)

69



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##### 



FORM 10-K  ITEM 14(a)(1)
AND (2)

NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

AND FINANCIAL STATEMENT SCHEDULES


The following consolidated financial statements
of NTL Communications Corp. and Subsidiaries are included in
Item 8:

|                                                                                                                   |  |  |     | 
|------------------------------------------------------------------------------------------------------------------ |  |  | --- | 
|Report of Independent Auditors                                                                                     |  |  | F-2 | 
|Consolidated Balance Sheets 
    December 31, 2001 and 2000                                                       |  |  | F-3 | 
|Consolidated Statements of
    Operations 
    Years ended December 31, 2001, 2000 and 1999                       |  |  | F-4 | 
|Consolidated Statement of Shareholders
    (Deficiency) Equity 
    Years ended December 31, 2001, 2000 and 1999 |  |  | F-5 | 
|Consolidated Statements of Cash
    Flows 
    Years ended December 31, 2001, 2000 and 1999                       |  |  | F-6 | 
|Notes to Consolidated Financial Statements                                                                         |  |  | F-8 | 

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

|                                                               |  |  |      | 
|-------------------------------------------------------------- |  |  | ---- | 
|Schedule I  Condensed Financial
    Information of Registrant |  |  | F-37 | 
|Schedule II  Valuation and
    Qualifying Accounts            |  |  | F-44 | 

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



---



##### 



REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholder

NTL Communications Corp.


We have audited the consolidated balance sheets
of NTL Communications Corp. and Subsidiaries as of
December 31, 2001 and 2000, and the related consolidated
statements of operations, shareholders
(deficiency) equity and cash flows for each of the three
years in the period ended December 31, 2001. Our audits
also included the financial statement schedules listed in the
Index at Item 14(d). These financial statements and
schedules are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.

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

In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the consolidated financial position of NTL
Communications Corp. and Subsidiaries at December 31, 2001
and 2000, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion,
the related financial statement schedules, when considered in
relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set
forth therein.

The accompanying financial statements have been
prepared assuming that NTL Communications Corp. will continue as
a going concern. As more fully described in Note 1, the
Company has incurred recurring operating losses and negative
operating cash flows, has a working capital deficiency and a
deficiency in shareholders equity. The Company is a
wholly-owned, indirect subsidiary of NTL Incorporated, and has
relied on subsidiaries of NTL Incorporated for funding. NTL
Incorporateds substantial leverage, its current debt and
equity trading levels and its non-compliance with certain debt
covenants in 2002 have eliminated its access to its historic
sources of capital. NTL Incorporated has initiated a
recapitalization process, the success of which is dependent upon
adequate liquidity to complete the process as well as agreement
of NTL Incorporateds creditors and preferred stockholders.
These conditions raise substantial doubt about NTL
Incorporateds and the Companys ability to continue
as going concerns. Managements plans in regard to these
matters are also described in Note 1. The financial statements
do not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result
from the outcome of this uncertainty.



| |                      
| | ---------------------
| | /s/ ERNST & YOUNG LLP

New York, New York

April 16, 2002


F-2



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|                                                                                    |                                                                                                                     |                       |          |           |   |   |          |          |  
|----------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------- | --------------------- | -------- | --------- | - | - | -------- | -------- | -
|                                                                                    |                                                                                                                     |                      
|                                                                                    |                                                                                                                     | December 31,         
|                                                                                    |                                                                                                                     |                      
|                                                                                    |                                                                                                                     | 2001                  |          | 2000     
|                                                                                    |                                                                                                                     |                       |          |          
|                                                                                    |                                                                                                                     |                      
|                                                                                    |                                                                                                                     | (Dollars in millions)
|ASSETS                                                                              |                                                                                                                     |                       |          |           |   |   |          |         
|Current assets:                                                                     |                                                                                                                     |                       |          |           |   |   |          |         
|                                                                                    | Cash and cash equivalents                                                                                           |                       | $        | 251.1     |   |   | $        | 423.5    |  
|                                                                                    | Accounts receivable  trade, less
    allowance for doubtful accounts of $126.1 (2001) and
    $135.2 (2000)        |                       |          | 479.0     |   |   |          | 527.4    |  
|                                                                                    | Due from affiliates                                                                                                 |                       |          | 6.9       |   |   |          | 105.1    |  
|                                                                                    | Other                                                                                                               |                       |          | 271.8     |   |   |          | 275.0    |  
|                                                                                    |                                                                                                                     |                       |          |           |   |   |          |         
|Total current assets                                                                |                                                                                                                     |                       | 1,008.8  |           |   |   | 1,331.0  |         
|Fixed assets, net                                                                   |                                                                                                                     |                       | 10,840.3 |           |   |   | 10,916.8 |         
|Intangible assets, net                                                              |                                                                                                                     |                       | 767.3    |           |   |   | 10,566.1 |         
|Investments in and loans to affiliates, net                                         |                                                                                                                     |                       | 4.6      |           |   |   | 11.6     |         
|Other assets, net of accumulated amortization of
    $125.0 (2001) and $81.9 (2000) |                                                                                                                     |                       | 255.1    |           |   |   | 316.1    |         
|Loan to NTL Incorporated                                                            |                                                                                                                     |                       | 150.0    |           |   |   |         |         
|Deferred income taxes                                                               |                                                                                                                     |                       |         |           |   |   | 4.9      |         
|                                                                                    |                                                                                                                     |                       |          |           |   |   |          |         
|Total assets                                                                        |                                                                                                                     | $                     | 13,026.1 |           |   | $ | 23,146.5 |         
|                                                                                    |                                                                                                                     |                       |          |           |   |   |          |         
|LIABILITIES AND SHAREHOLDERS
    (DEFICIENCY) EQUITY                               |                                                                                                                     |                       |          |           |   |   |          |         
|Current liabilities:                                                                |                                                                                                                     |                       |          |           |   |   |          |         
|                                                                                    | Accounts payable                                                                                                    |                       | $        | 378.3     |   |   | $        | 451.1    |  
|                                                                                    | Accrued expenses and other                                                                                          |                       |          | 836.2     |   |   |          | 1,105.6  |  
|                                                                                    | Accrued construction costs                                                                                          |                       |          | 119.8     |   |   |          | 172.9    |  
|                                                                                    | Due to affiliates                                                                                                   |                       |          |          |   |   |          | 117.9    |  
|                                                                                    | Interest payable                                                                                                    |                       |          | 252.0     |   |   |          | 127.6    |  
|                                                                                    | Deferred revenue                                                                                                    |                       |          | 290.2     |   |   |          | 291.5    |  
|                                                                                    | Current portion of long-term debt                                                                                   |                       |          | 14,205.9  |   |   |          | 10.7     |  
|                                                                                    |                                                                                                                     |                       |          |           |   |   |          |         
|Total current liabilities                                                           |                                                                                                                     |                       | 16,082.4 |           |   |   | 2,277.3  |         
|Long-term debt                                                                      |                                                                                                                     |                       |         |           |   |   | 11,843.4 |         
|Other                                                                               |                                                                                                                     |                       | 8.9      |           |   |   | 13.6     |         
|Deferred income taxes                                                               |                                                                                                                     |                       | 113.8    |           |   |   |         |         
|Commitments and contingent liabilities                                              |                                                                                                                     |                       |          |           |   |   |          |         
|Shareholders (deficiency) equity:                                                  |                                                                                                                     |                       |          |           |   |   |          |         
|                                                                                    | Common stock  $.01 par value;
    authorized 100 shares; issued and outstanding 12 (2001) and
    12 (2000) shares |                       |          |          |   |   |          |         |  
|                                                                                    | Additional paid-in capital                                                                                          |                       |          | 13,917.7  |   |   |          | 13,746.7 |  
|                                                                                    | Accumulated other comprehensive (loss)                                                                              |                       |          | (904.5    | ) |   |          | (379.3   | )
|                                                                                    | (Deficit)                                                                                                           |                       |          | (16,192.2 | ) |   |          | (4,355.2 | )
|                                                                                    |                                                                                                                     |                       |          |           |   |   |          |         
|                                                                                    |                                                                                                                     |                       | (3,179.0 | )         |   |   | 9,012.2  |         
|                                                                                    |                                                                                                                     |                       |          |           |   |   |          |         
|Total liabilities and shareholders
    (deficiency) equity                         |                                                                                                                     | $                     | 13,026.1 |           |   | $ | 23,146.5 |         
|                                                                                    |                                                                                                                     |                       |          |           |   |   |          |         

See accompanying notes.

F-3



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                          |  |                         |           |      |  |      |          |   |  |   |         |  
|------------------------------------------------------------------------- |  | ----------------------- | --------- | ---- |  | ---- | -------- | - |  | - | ------- | -
|                                                                          |  |                        
|                                                                          |  | Year Ended December 31,
|                                                                          |  |                        
|                                                                          |  | 2001                    |           | 2000 |  | 1999
|                                                                          |  |                         |           |      |  |     
|                                                                          |  |                        
|                                                                          |  | (In millions)          
|Revenues                                                                  |  |                         |           |      |  |      |          |   |  |   |         |  
|Consumer telecommunications and television                                |  | $                       | 2,069.2   |      |  | $    | 1,518.2  |   |  | $ | 827.3   |  
|Business telecommunications                                               |  |                         | 836.8     |      |  |      | 702.2    |   |  |   | 452.5   |  
|Broadcast transmission and other                                          |  |                         | 283.6     |      |  |      | 263.8    |   |  |   | 257.3   |  
|                                                                          |  |                         |           |      |  |      |          |   |  |   |         |  
|                                                                          |  |                         | 3,189.6   |      |  |      | 2,484.2  |   |  |   | 1,537.1 |  
|Costs and expenses                                                        |  |                         |           |      |  |      |          |   |  |   |         |  
|Operating expenses (exclusive of depreciation
    shown separately below) |  |                         | 1,564.3   |      |  |      | 1,223.2  |   |  |   | 761.5   |  
|Selling, general and administrative expenses                              |  |                         | 973.2     |      |  |      | 969.1    |   |  |   | 562.9   |  
|Asset impairments                                                         |  |                         | 8,160.6   |      |  |      |         |   |  |   |        |  
|Franchise fees                                                            |  |                         |          |      |  |      |         |   |  |   | 16.5    |  
|Non-cash compensation                                                     |  |                         | 30.6      |      |  |      |         |   |  |   |        |  
|Other charges                                                             |  |                         | 297.9     |      |  |      | 92.7     |   |  |   | 16.2    |  
|Corporate expenses                                                        |  |                         | 24.3      |      |  |      | 23.7     |   |  |   | 25.3    |  
|Depreciation                                                              |  |                         | 1,361.4   |      |  |      | 874.4    |   |  |   | 475.5   |  
|Amortization                                                              |  |                         | 1,178.9   |      |  |      | 826.3    |   |  |   | 290.2   |  
|                                                                          |  |                         |           |      |  |      |          |   |  |   |         |  
|                                                                          |  |                         | 13,591.2  |      |  |      | 4,009.4  |   |  |   | 2,148.1 |  
|                                                                          |  |                         |           |      |  |      |          |   |  |   |         |  
|Operating (loss)                                                          |  |                         | (10,401.6 | )    |  |      | (1,525.2 | ) |  |   | (611.0  | )
|Other income (expense)                                                    |  |                         |           |      |  |      |          |   |  |   |         |  
|Interest income and other, net                                            |  |                         | 34.7      |      |  |      | 25.8     |   |  |   | 48.2    |  
|Interest expense                                                          |  |                         | (1,240.8  | )    |  |      | (886.3   | ) |  |   | (678.1  | )
|Share of (losses) from equity investments                                 |  |                         | (23.3     | )    |  |      | (24.2    | ) |  |   | (18.4   | )
|Other (losses) gains                                                      |  |                         | (88.5     | )    |  |      |         |   |  |   | 493.1   |  
|Foreign currency transaction gains (losses)                               |  |                         | 0.6       |      |  |      | (58.1    | ) |  |   | 22.8    |  
|                                                                          |  |                         |           |      |  |      |          |   |  |   |         |  
|(Loss) before income taxes and extraordinary item                         |  |                         | (11,718.9 | )    |  |      | (2,468.0 | ) |  |   | (743.4  | )
|Income tax (expense) benefit                                              |  |                         | (118.1    | )    |  |      | 79.9     |   |  |   | 29.9    |  
|                                                                          |  |                         |           |      |  |      |          |   |  |   |         |  
|(Loss) before extraordinary item                                          |  |                         | (11,837.0 | )    |  |      | (2,388.1 | ) |  |   | (713.5  | )
|Loss from early extinguishment of debt                                    |  |                         |          |      |  |      |         |   |  |   | (3.0    | )
|                                                                          |  |                         |           |      |  |      |          |   |  |   |         |  
|Net (loss)                                                                |  | $                       | (11,837.0 | )    |  | $    | (2,388.1 | ) |  | $ | (716.5  | )
|                                                                          |  |                         |           |      |  |      |          |   |  |   |         |  

See accompanying notes.

F-4



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS
(DEFICIENCY) EQUITY

|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |   | 
|---------------------------------------------------------- | ----- | --------------------- | -------- | -------------- |  | ---------- | - | ------------- |  | -------- | ----------- | ------------- |  | ----------------- | ---- | ----------- |  | --------- | -------- | - |  | - | --------- | --------- | - | - | ------ | - |  | - | ---- | - |  | - | --------- | - | 
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |            
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  | Accumulated Other |      |            
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  | Comprehensive     |      |            
|                                                           |       |                       |          |                |  |            |   |               |  |          |             | Income (Loss) |  |                  
|                                                           |       | Series Preferred      |          |                |  |            |   |               |  |          |             |              
|                                                           |       | Stock                 |          | Common Stock   |  |            |   |               |  |          |             | Unrealized    |  |                  
|                                                           |       | $.01 Par Value        |          | $.01 Par Value |  | Additional |   |               |  | Foreign  |             | Net           |  |                  
|                                                           |       |                       |          |                |  | Paid-In    |   | Comprehensive |  | Currency |             | Losses on     |  |                  
|                                                           |       | Shares                |          | Par            |  | Shares     |   | Par           |  | Capital  |             | Loss          |  | Translation       |      | Derivatives |  | (Deficit)
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |          
|                                                           |       |                       |          |               
|                                                           |       | (Dollars in millions) |          |               
|Balance, December 31, 1998                                 |       |                       | 177,000  |                |  |            |  |               |  |          | 60,249,000  |               |  | $                 | 0.6  |             |  | $         | 1,501.6  |   |  |   |           |           |   | $ | 104.7  |   |  |   |      |   |  | $ | (1,251.7  | )
|Exercise of stock options                                  |       |                       |          |                |  |            |   |               |  |          | 432,000     |               |  |                   |     |             |  |           | 12.1     |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Exercise of warrants                                       |       |                       |          |                |  |            |   |               |  |          | 15,000      |               |  |                   |     |             |  |           |         |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Preferred stock issued for cash                            |       |                       | 500,000  |                |  |            |  |               |  |          |             |               |  |                   |      |             |  |           | 483.8    |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Warrants issued for cash                                   |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           | 16.2     |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Accreted dividends on preferred stock                      |       |                       | 4,000    |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           | (8.6     | ) |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Accretion of discount on preferred stock                   |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |         |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Conversion of 7% Convertible Subordinated Notes            |       |                       |          |                |  |            |   |               |  |          | 1,000       |               |  |                   |     |             |  |           |         |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Common stock issued for an acquisition                     |       |                       |          |                |  |            |   |               |  |          | 12,705,000  |               |  |                   | 0.1  |             |  |           | 971.3    |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Stock options issued in connection with an
    acquisition |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           | 6.6      |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Corporate restructuring                                    |       |                       | (681,000 | )              |  |            |  |               |  |          | (73,401,900 | )             |  |                   | (0.7 | )           |  |           | 405.6    |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Distribution to NTL Incorporated                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           | (500.0   | ) |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Contributions from NTL Incorporated                        |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           | 173.2    |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Distribution of subsidiary to NTL Incorporated             |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           | (30.5    | ) |  |   |           |           |   |   |        |   |  |   |      |   |  |   | 1.1       |  
|Corporate restructuring                                    |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Comprehensive loss:                                        |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Net loss for the year ended December 31, 1999              |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  | $ | (716.5    | )         |   |   |        |   |  |   |      |   |  |   | (716.5    | )
|Currency translation adjustment                            |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   | (102.9    | )         |   |   | (102.9 | ) |  |   |      |   |  |   |           |  
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|                                                           | Total |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   | $         | (819.4    | ) |   |        |   |  |   |      |   |  |   |           |   | 
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Balance, December 31, 1999                                 |       |                       |          |                |  |            |  |               |  |          | 100         |               |  |                   |     |             |  |           | 3,031.3  |   |  |   |           |           |   |   | 1.8    |   |  |   |      |   |  |   | (1,967.1  | )
|Contributions from NTL (Delaware), Inc.                    |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           | 10,715.4 |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Corporate restructuring                                    |       |                       |          |                |  |            |   |               |  |          | (88         | )             |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Comprehensive loss:                                        |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Net loss for the year ended December 31, 2000              |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  | $ | (2,388.1  | )         |   |   |        |   |  |   |      |   |  |   | (2,388.1  | )
|Currency translation adjustment                            |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   | (381.1    | )         |   |   | (381.1 | ) |  |   |      |   |  |   |           |  
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|                                                           | Total |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   | $         | (2,769.2  | ) |   |        |   |  |   |      |   |  |   |           |   | 
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Balance, December 31, 2000                                 |       |                       |          |                |  |            |  |               |  |          | 12          |               |  |                   |     |             |  |           | 13,746.7 |   |  |   |           |           |   |   | (379.3 | ) |  |   |      |   |  |   | (4,355.2  | )
|Contribution from NTL (Delaware), Inc., net                |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           | 140.4    |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Non-cash compensation                                      |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           | 30.6     |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Comprehensive loss:                                        |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Net loss for the year ended December 31, 2001              |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  | $ | (11,837.0 | )         |   |   |        |   |  |   |      |   |  |   | (11,837.0 | )
|Currency translation adjustment                            |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   | (521.6    | )         |   |   | (521.6 | ) |  |   |      |   |  |   |           |  
|Unrealized net losses on derivatives                       |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   | (3.6      | )         |   |   |        |   |  | $ | (3.6 | ) |  |   |           |  
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|                                                           | Total |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   | $         | (12,362.2 | ) |   |        |   |  |   |      |   |  |   |           |   | 
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  
|Balance, December 31, 2001                                 |       |                       |          |                |  |            |  |               |  |          | 12          |               |  | $                 |     |             |  | $         | 13,917.7 |   |  |   |           |           |   | $ | (900.9 | ) |  | $ | (3.6 | ) |  | $ | (16,192.2 | )
|                                                           |       |                       |          |                |  |            |   |               |  |          |             |               |  |                   |      |             |  |           |          |   |  |   |           |           |   |   |        |   |  |   |      |   |  |   |           |  

See accompanying notes.

F-5



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                                            |                                                 |                            |           |         |       |      |          |         |        |   |          |        |        |  
|----------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | -------------------------- | --------- | ------- | ----- | ---- | -------- | ------- | ------ | - | -------- | ------ | ------ | -
|                                                                                                            |                                                 |                           
|                                                                                                            |                                                 | Year Ended December 31,   
|                                                                                                            |                                                 |                           
|                                                                                                            |                                                 | 2001                       |           | 2000    |       | 1999
|                                                                                                            |                                                 |                            |           |         |       |     
|                                                                                                            |                                                 |                           
|                                                                                                            |                                                 | (In millions)             
|Operating activities                                                                                        |                                                 |                            |           |         |       |      |          |         |        |   |          |       
|Net loss                                                                                                    |                                                 | $                          | (11,837.0 | )       |       | $    | (2,388.1 | )       |        | $ | (716.5   | )     
|Adjustment to reconcile net loss to net cash
    (used in) provided by operating activities:                |                                                 |                            |           |         |       |      |          |         |        |   |          |       
|                                                                                                            | Depreciation and amortization                   |                            |           | 2,540.3 |       |      |          | 1,700.7 |        |   |          | 765.7  |       
|                                                                                                            | Non-cash compensation                           |                            |           | 30.6    |       |      |          |        |        |   |          |       |       
|                                                                                                            | Non-cash restructuring charge                   |                            |           | 57.9    |       |      |          |        |        |   |          |       |       
|                                                                                                            | Asset impairment                                |                            |           | 8,160.6 |       |      |          |        |        |   |          |       |       
|                                                                                                            | Equity in losses of unconsolidated subsidiaries |                            |           | 23.3    |       |      |          |        |        |   |          |       |       
|                                                                                                            | Loss from early extinguishment of debt          |                            |           |        |       |      |          |        |        |   |          | 3.0    |       
|                                                                                                            | (Gain) loss on sale of assets                   |                            |           | 88.5    |       |      |          |        |        |   |          | (493.1 | )     
|                                                                                                            | Provision for losses on accounts receivable     |                            |           | 58.3    |       |      |          | 98.5    |        |   |          | 45.7   |       
|                                                                                                            | Deferred income taxes                           |                            |           | 116.4   |       |      |          | (80.8   | )      |   |          | (30.9  | )     
|                                                                                                            | Amortization of original issue discount         |                            |           | 284.7   |       |      |          | 473.1   |        |   |          | 451.4  |       
|                                                                                                            | Other                                           |                            |           | (16.8   | )     |      |          | (75.1   | )      |   |          | (8.0   | )     
|Changes in operating assets and liabilities, net
    of effect from business acquisitions and dispositions: |                                                 |                            |           |         |       |      |          |         |        |   |          |       
|                                                                                                            |                                                 | Accounts receivable        |           |         | (31.3 | )    |          |         | (247.9 | ) |          |        | (134.6 | )
|                                                                                                            |                                                 | Other current assets       |           |         | 23.4  |      |          |         | (41.8  | ) |          |        | (34.6  | )
|                                                                                                            |                                                 | Other assets               |           |         | 56.1  |      |          |         | 42.4   |   |          |        | (25.2  | )
|                                                                                                            |                                                 | Accounts payable           |           |         | (38.8 | )    |          |         | (102.2 | ) |          |        | 32.0   |  
|                                                                                                            |                                                 | Accrued expenses and other |           |         | (81.9 | )    |          |         | 330.3  |   |          |        | 150.4  |  
|                                                                                                            |                                                 | Deferred revenue           |           |         | 7.0   |      |          |         | 120.6  |   |          |        | 68.4   |  
|                                                                                                            |                                                 |                            |           |         |       |      |          |         |        |   |          |       
|Net cash (used in) provided by operating
    activities                                                     |                                                 |                            | (558.7    | )       |       |      | (170.3   | )       |        |   | 73.7     |       
|Investing activities                                                                                        |                                                 |                            |           |         |       |      |          |         |        |   |          |       
|Acquisitions, net of cash acquired                                                                          |                                                 |                            | (26.2     | )       |       |      | (7,514.9 | )       |        |   | (637.6   | )     
|Purchase of fixed assets                                                                                    |                                                 |                            | (1,653.0  | )       |       |      | (1,961.8 | )       |        |   | (1,198.3 | )     
|Investments in and loans to affiliates                                                                      |                                                 |                            | (11.9     | )       |       |      |         |         |        |   |         |       
|Increase in other assets                                                                                    |                                                 |                            | (31.6     | )       |       |      | (33.7    | )       |        |   | (30.1    | )     
|Loan to NTL Incorporated                                                                                    |                                                 |                            | (150.0    | )       |       |      |         |         |        |   |         |       
|Proceeds from sales of assets                                                                               |                                                 |                            | 14.6      |         |       |      |         |         |        |   | 692.5    |       
|Purchase of marketable securities                                                                           |                                                 |                            | (9.9      | )       |       |      | (3.3     | )       |        |   | (354.5   | )     
|Proceeds from sales of marketable securities                                                                |                                                 |                            | 10.0      |         |       |      | 8.3      |         |        |   | 618.6    |       
|                                                                                                            |                                                 |                            |           |         |       |      |          |         |        |   |          |       
|Net cash (used in) investing activities                                                                     |                                                 |                            | (1,858.0  | )       |       |      | (9,505.4 | )       |        |   | (909.4   | )     

F-6



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)

|                                                                                 |  |                         |         |      |  |      |          |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | -------- | - |  | - | ------- | -
|                                                                                 |  |                        
|                                                                                 |  | Year Ended December 31,
|                                                                                 |  |                        
|                                                                                 |  | 2001                    |         | 2000 |  | 1999
|                                                                                 |  |                         |         |      |  |     
|                                                                                 |  |                        
|                                                                                 |  | (In millions)          
|Financing activities                                                             |  |                         |         |      |  |      |          |   |  |   |         |  
|Distribution to NTL (Delaware), Inc.                                             |  |                         | (10.6   | )    |  |      |         |   |  |   | (500.0  | )
|Contribution from NTL (Delaware), Inc.                                           |  |                         | 40.8    |      |  |      | 5,227.2  |   |  |   | 167.6   |  
|Proceeds from borrowings, net of financing costs                                 |  |                         | 2,643.4 |      |  |      | 5,009.8  |   |  |   | 1,846.0 |  
|Proceeds from issuance of preferred stock and
    warrants                       |  |                         |        |      |  |      |         |   |  |   | 500.0   |  
|Principal payments                                                               |  |                         | (421.5  | )    |  |      | (1,263.9 | ) |  |   | (758.2  | )
|Cash released from (placed in) escrow for debt
    repayment                     |  |                         |        |      |  |      | 77.5     |   |  |   | (87.0   | )
|Proceeds from exercise of stock options and
    warrants                         |  |                         |        |      |  |      |         |   |  |   | 12.1    |  
|                                                                                 |  |                         |         |      |  |      |          |   |  |   |         |  
|Net cash provided by financing activities                                        |  |                         | 2,252.1 |      |  |      | 9,050.6  |   |  |   | 1,180.5 |  
|Effect of exchange rate changes on cash                                          |  |                         | (7.8    | )    |  |      | (25.6    | ) |  |   | (6.9    | )
|                                                                                 |  |                         |         |      |  |      |          |   |  |   |         |  
|(Decrease) increase in cash and cash equivalents                                 |  |                         | (172.4  | )    |  |      | (650.7   | ) |  |   | 337.9   |  
|Cash and cash equivalents at beginning of year                                   |  |                         | 423.5   |      |  |      | 1,074.2  |   |  |   | 736.3   |  
|                                                                                 |  |                         |         |      |  |      |          |   |  |   |         |  
|Cash and cash equivalents at end of year                                         |  | $                       | 251.1   |      |  | $    | 423.5    |   |  | $ | 1,074.2 |  
|                                                                                 |  |                         |         |      |  |      |          |   |  |   |         |  
|Supplemental disclosure of cash flow
    information                             |  |                         |         |      |  |      |          |   |  |   |         |  
|Cash paid during the year for interest exclusive
    of amounts capitalized      |  | $                       | 776.6   |      |  | $    | 363.9    |   |  | $ | 180.3   |  
|Income taxes paid                                                                |  |                         | 0.1     |      |  |      | 1.5      |   |  |   | 2.4     |  
|Supplemental schedule of non-cash financing
    activities                       |  |                         |         |      |  |      |          |   |  |   |         |  
|Contribution from NTL (Delaware), Inc.                                           |  | $                       | 110.2   |      |  | $    | 5,488.2  |   |  | $ | 5.6     |  
|Accretion of dividends and discount on preferred
    stock                       |  |                         |        |      |  |      |         |   |  |   | 8.6     |  
|Conversion of Convertible Notes, net of
    unamortized deferred financing costs |  |                         | 109.5   |      |  |      |         |   |  |   | 269.3   |  
|Common stock and stock options issued for
    acquisitions                       |  |                         |        |      |  |      |         |   |  |   | 978.0   |  

See accompanying notes.

F-7



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

1.     Corporate
Restructuring and Business

Corporate Restructuring

On May 18, 2000, NTL Incorporated completed
a second corporate restructuring to create a holding company
structure in connection with the acquisition of certain assets
of Cable & Wireless Communications plc
(CWC) (the operations acquired from CWC are called
ConsumerCo). The holding company restructuring was
accomplished through a merger so that all the stockholders of
NTL Incorporated at the effective time of the merger became
stockholders of the new holding company, and NTL Incorporated
became a subsidiary of the new holding company. The new holding
company has taken the name NTL Incorporated and the holding
companys subsidiary simultaneously changed its name to NTL
(Delaware), Inc. (NTL Delaware). The Company is a
wholly-owned subsidiary of NTL Delaware.

On February 21, 2001, the Company completed
a transaction whereby it acquired the entire issued share
capital of NTL (CWC Holdings) Limited (the entity that owns
ConsumerCo) from NTL Incorporated and the entire issued share
capital of NTL Business Limited (formerly Workplace Technologies
plc) from NTL (Delaware), Inc. in exchange for shares of its
common stock. As a result of this transaction, ConsumerCo and
NTL Business Limited became wholly-owned subsidiaries of the
Company. The Company accounted for the transaction in a manner
consistent with a transfer of entities under common control,
which is similar to a pooling of interests.
Accordingly, the net assets and results of operations of
ConsumerCo and NTL Business Limited have been included in the
consolidated financial statements from their respective dates of
acquisition.

Business

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

Liquidity and Recapitalization
Process



| |                                                                
| | ---------------------------------------------------------------
| | Recapitalization Process and Ability to
    Continue Operations

The Company historically incurred operating
losses and negative operating cash flow. In addition, the
Company required significant amounts of capital to finance
construction of its networks, connection of customers to the
networks, other capital expenditures and for working capital
needs including debt service requirements. The Company
historically met these liquidity requirements through issuances
of high-yield debt securities and convertible debt securities in
the capital markets and equity contributions from NTL
Incorporated. Both the equity and debt capital markets have
recently experienced periods of significant volatility,
particularly for securities issued by telecommunications and
technology companies. The ability of telecommunications
companies to access those markets as well as their ability to
obtain financing provided by bank lenders and equipment
suppliers has become more restricted and financing costs have
increased. During some recent periods, the capital markets have
been largely unavailable to new issues of securities by
telecommunications companies. NTL Incorporateds public
equity is no longer trading on the New York Stock Exchange, and
NTLs public debt securities are trading at or near all
time lows. These factors, together

F-8



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

with the Companys substantial leverage,
mean the Company does not currently have access to its historic
sources of capital.

In addition, NTLs UK credit facilities are
fully drawn and NTLs Swiss subsidiaries are currently
unable to draw the remaining undrawn amounts under the Cablecom
credit facility. The Company did not pay cash interest on
certain series of its notes that was due on April 1, 2002
and April 15, 2002. NTL Incorporated and NTL Delaware, a
wholly-owned subsidiary of NTL Incorporated, also did not pay
cash interest and related fees on a series of their notes that
was due on April 15, 2002. As of December 31, 2001,
NTL had approximately $505 million in cash and cash
equivalents on hand and, on April 4, 2002, received
approximately $303 million net cash proceeds from the sale
of its Australian business. NTL and the Company will require
cash for working capital and capital expenditures in 2002. If
NTL makes scheduled and overdue interest payments on its notes,
then NTL will not have sufficient cash resources to meet its
liquidity needs through the third quarter of 2002.

The Company does not generate sufficient cash
flow from operations to fund its operational expenses and
interest payments. The Company has historically met its cash
requirements through equity from NTL Incorporated and issuances
of high yield debt securities. Given NTL Incorporateds
liquidity situation, it is likely that it will not be able to
provide the Company with cash at least for the short-term.

As of December 31, 2001,
$14,203.0 million of the Companys $14,205.9 million
of long-term debt had been classified as current due to the
uncertainties about compliance with the terms and conditions of
the Companys debt that would give the holders of the debt
the right to accelerate payment.

These liquidity concerns raise substantial doubt
about the Companys ability to continue as a going concern.
As a consequence, the Company, NTL Incorporated and certain of
its subsidiaries need to restructure their outstanding debt
and/or raise new funds through the issuance of equity or
additional debt.

On January 31, 2002, NTL Incorporated
announced that it had appointed Credit Suisse First Boston, JP
Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen NTLs balance
sheet and reduce debt and put an appropriate capital structure
in place for its business. Since then, NTL has been evaluating
various recapitalization alternatives to effect a comprehensive
consensual reorganization in a timely manner to minimize
negative effects on its business operations.

On April 16, 2002, NTL announced that it and
an unofficial committee of its public bondholders had reached an
agreement in principle on a comprehensive recapitalization of
NTL. The members of the committee hold in the aggregate over 50%
of the face value of NTL Incorporateds and its
subsidiaries public bonds. The recapitalization would
result in a conversion of approximately $10.6 billion in debt
into equity.

To implement the proposed recapitalization, NTL
Incorporated, NTL Delaware, the Company, Diamond Cable
Communications Limited and Diamond Holdings Limited would file a
pre-negotiated recapitalization plan in a Chapter 11 case under
the U.S. Bankruptcy Code. NTLs operating subsidiaries
would not be included in the Chapter 11 filing. The
agreement in principle is subject to various conditions,
including mutually acceptable terms with NTLs bank
lenders. The recapitalization transaction contemplates that the
bank debt will remain in place as part of the recapitalization.

To facilitate the recapitalization, certain
members of the unofficial committee of bondholders would commit
to provide up to $500 million of new debt financing to
NTLs UK and Ireland operations during the Chapter 11
process and for the post-recapitalized NTL. The new financing
will ensure that NTLs business operations have access to
sufficient liquidity to continue ordinary operations.

Under the agreement in principle, NTL would be
split into two companies, one tentatively called NTL UK and
Ireland and holding all of its UK and Ireland assets, and one
tentatively called NTL Euroco and holding certain of its
continental European and other assets.

F-9



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Holders of notes of NTL Incorporated, NTL
(Delaware), Inc., the Company and Diamond Cable Communications
Limited would in the aggregate receive 100% of the initial
common stock of NTL UK and Ireland and approximately 86.5% of
the initial common stock of NTL Euroco. NTL (Delaware), Inc.
bondholders would have the option to reinvest all or a portion
of NTL (Delaware), Inc. cash in additional shares of NTL common
stock, or to receive such cash in the recapitalization. Notes of
Diamond Holdings Limited and NTL Triangle would remain
outstanding and will be kept current in interest payments.
Current preferred and common stockholders, including France
Telecom, would participate in a package of rights (to be priced
at a $10.5 billion enterprise value) and warrants entitling
them to purchase primary common stock of NTL UK and Ireland at
the consummation of the proposed plan, in the case of the
rights, and for the duration of the eight-year warrants at
prescribed prices. If fully exercised, those rights and warrants
would entitle the current preferred stockholders to acquire
approximately 23.6% and the current common stockholders to
acquire approximately 8.9% of the entitys primary common
stock.

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

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

The Companys ability to meet its funding
requirements upon consummation of the reorganization plan is
dependent upon a number of factors, including the revenue
generated by its operating subsidiaries, its existing cash
balances, and its ability to draw upon an exit facility or any
alternative financing. There can be no assurance that these
sources of financing will be or will remain available. The
Company will require substantial funds for general corporate and
other expenses and may require additional funds for working
capital fluctuations. Failure to achieve profitability or
maintain or achieve various other financial performance levels
could in the future diminish the Companys ability to
sustain operations, obtain additional funds required for capital
expenditures or other purposes, and make required payments on
any indebtedness it has incurred, may incur or that may then, as
a result, become due. The Company can provide no assurance that
it will be successful in raising additional financing if
required, or if successful, that the terms of such financing
will be favorable to the Company.

The Company currently expects that it will
require approximately $620 million to fund its working
capital and capital expenditures, net of cash from operations,
in the twelve month period ending December 31, 2002 to fund
the expenditures mentioned above.

The Company believes that cash, cash equivalents
and marketable securities on hand at March 31, 2002 and the
cash expected to be available from the DIP Facility and the exit
facility, if the recapitalization is completed, will be
sufficient for its and its subsidiaries cash requirements for
the twelve months ending December 31, 2002.

Over the long term, the Company will continue to
require cash to fund operations, service its remaining debt and
implement its strategy. In order to fund these requirements, the
Company anticipates that it will use cash flow from operations
and may also need to issue additional debt or equity securities
or may need to secure additional bank financing. Given the
Companys current financial condition, there can be no
assurance that these sources of funds will be available to us.

F-10



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |             
| | ------------
| | Bank Waivers

Before NTL could commence negotiations with the
unofficial committee of bondholders, it was necessary to obtain
waivers from the lenders under its credit facilities. Effective
March 8, 2002, these lenders granted waivers which, until
March 29, 2002, provided that the commencement of
negotiations with bondholders with a view to rescheduling its
debt would not constitute an event of default under the credit
facilities.

But for the initial waivers, the commencement of
negotiations with bondholders would have been an event of
default under the credit facilities. If an event of default were
to occur, it would entitle the lenders under the credit
facilities to declare the principal amount of the outstanding
debt immediately due and payable. If this right was exercised,
it would result in an event of default under all of NTLs
outstanding notes, except for those issued by Diamond Cable
Communications, Diamond Holdings and NTL Triangle, entitling the
trustee or 25% of the holders of a series to accelerate the
repayment of that series of notes. NTL does not have sufficient
cash resources to repay its outstanding indebtedness if it is
declared immediately due and payable.

In connection with the granting of the initial
waivers, NTL agreed:



| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to provide the lenders with a 13 week
    rolling cash flow projection (updated every two weeks);                                                                                    
|
| |  | to keep the lenders informed of, and to provide
    documents in connection with, negotiations with bondholders or
    strategic investors or concerning proposed asset dispositions;
|
| |  | not to repurchase NTL notes; and                                                                                                                                                     
|
| |  | not to make an exchange offer for NTL notes or
    enter into an agreement with NTL bondholders, subject to some
    exceptions, without the consent of the lenders.                 

Effective March 28, 2002, the lenders under
the credit facilities agreed to amend the initial waivers. The
amendments to the initial waivers extend the duration of the
initial waivers to April 30, 2002 in the case of the UK
credit facilities or May 14, 2002 in the case of the
Cablecom facility, unless the missed interest payments on
April 1, 2002 are remedied or a sufficient number of
bondholders agree to forbear in respect of such non-payment, in
which case, the UK credit facilities waivers will be extended to
May 14, 2002. As a condition to the waivers
continuing effectiveness, the UK lenders required NTL Delaware
to loan £90 million to NTL (UK) Group, Inc.
following receipt of the proceeds from the sale of NTL
Australia. This loan is structurally senior to the outstanding
public notes issued by the Company but contractually
subordinated to the UK credit facilities. In connection with the
amendments to the waivers, NTL affirmed the provisions of the
initial waivers and in addition, NTL agreed, among other things,
to:



| |   |                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | provide the bank lenders a timeline setting forth
    the steps proposed to be taken in connection with the
    recapitalization and the dates by which such steps are to be
    taken;                                                                                
|
| |  | use reasonable endeavors to consider with the
    lenders under the Cablecom credit facility possible means of
    credit enhancement;                                                                                                                                 
|
| |  | provide the lenders under the Cablecom credit
    facility, by April 12, 2002, with an updated structure
    chart of NTL as well as a contingency business plan for Cablecom
    in the event that sufficient additional funding for Cablecom is
    not obtained; and
|
| |  | pay legal, accounting and other advisory fees of
    the agent or coordinators of the Cablecom credit facility.                                                                                                                                                        

The amended waivers prevent NTL from making an
exchange offer with respect to its outstanding notes or from
entering into an agreement with bondholders without the consent
of the lenders under each of the credit facilities. The amended
waivers also prohibit NTL from commencing voluntary dissolution
proceedings, including proceedings under Chapter 11 of the
U.S. bankruptcy code, without the consent of these lenders.

F-11



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

As a consequence, NTL cannot enter into a binding
agreement with the unofficial bondholder committee or implement
the proposed plan without the consent of its bank lenders.

Cablecom GmbH is the principal trading company of
NTLs Swiss group. There are a number of technical defaults
under the Swiss credit facility made available to Cablecom and
various of its subsidiaries. These technical defaults consisted
of the following, as of December 31, 2001:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     The requirement
    that members of the Cablecom group generating at least 95% of
    the groups EBITDA should guarantee the repayment of the
    loan outstanding under the credit agreement had not been
    satisfied.                                                                                                                                                                                                                                                                                                                              
|
| | 2.     Three companies
    within the Cablecom group had merged in contravention of
    restrictions in the credit agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | 3.     Loans had been
    made by members of the Cablecom group to other group members and
    to a 10% affiliate in contravention of restrictions in the
    credit agreement. A related obligation to deliver quarterly
    certificates specifying the maximum levels of intra-group loans
    had not been complied with.                                                                                                                                                                                                                                  
|
| | 4.     The requirement
    to ensure that the total interest cost in respect of at least
    40% of the loan was capped at interest rates agreed with the
    facility agent had not been complied with.                                                                                                                                                                                                                                                                                                                                                       
|
| | 5.     A mortgage
    securing a loan of CHF 600,000 from United Bank of Switzerland
    was refinanced and the benefit of the existing mortgage was
    assigned to the refinancing lender. That assignment meant the
    mortgage was no longer permitted under the credit agreement.                                                                                                                                                                                                                                                                        
|
| | 6.     Four per cent of
    the shares in FGS Hägendorf SA were acquired by Cablecom,
    making the company a wholly owned member of the Cablecom group.
    That acquisition was not permitted under the credit agreement.                                                                                                                                                                                                                                                                                                                                   
|
| | 7.     One of the
    security documents in favor of the banks required specified
    details of receivables to be provided to the facility agent and
    all such receivables to be paid into bank accounts assigned by
    way of security to the banks. It also required a bank account to
    be set up for the purpose of receiving certain cash payments
    which may have to be applied in prepayment of the facility. That
    bank account also had to be assigned by way of security to the
    banks. These obligations had not been complied with.
|
| | 8.     The following
    obligations imposed by the share pledges executed by various
    Cablecom group members in favour of the banks had not been
    satisfied:                                                                                                                                                                                                                                                                                                                                                                                            



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) the delivery of share certificates and
    other documents evidencing title in respect of certain of the
    pledged shares; (ii) the remedy of defects in certain of
    the pledged shares; and (iii) the transfer of certain
    nominee shares in Cablecom group companies to the Cablecom
    company which beneficially owns such shares and the delivery to
    the facility agent of copies of shareholders registers in the
    group companies updated to show the transfers.



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 9.     One hundred and
    eighty shares in a company called Telebarn AG had been assigned
    by way of security by Cablecom to the banks notwithstanding the
    terms of a trust agreement under which Cablecom held those
    shares. That constituted a misrepresentation under the finance
    documents.

In addition, as of December 31, 2001,
Cablecoms and various of its subsidiaries
liabilities exceeded their respective assets. As a consequence,
under Swiss law, those entities were deemed to be
overindebted.

In order to try and resolve the problems caused
by the overindebtedness of its subsidiaries Cablecom GmbH had
guaranteed the liabilities of some of those subsidiaries and had
agreed that intra-group debt owed to it by some of those
subsidiaries should be subordinated to the debt owed by such
subsidiaries to all of their other creditors. This also
constituted an event of default under the Cablecom credit
facility which entitles the lenders to accelerate repayment.
Such an acceleration would result in an event of default under
NTL

F-12



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Incorporateds and NTL Delawares 5.75%
convertible subordinated notes due 2011 and 5.75% convertible
subordinated notes due 2009, entitling the trustee or the
holders of 25% of each series of notes to accelerate repayment.
Under Swiss law, unless the overindebtedness is rectified, those
entities would be required to commence an insolvency proceeding
in Switzerland. A plan has been formulated to rectify this
overindebtedness. Implementation of this plan prior to April 30,
2002 would mean that those entities would not be required to
commence an insolvency proceeding. Those proceedings would
likely either be a court supervised moratorium in which an
independent administrator, or commissioner, would be appointed
to supervise the running of each company during a restructuring
or, if there is no viable restructuring plan, a bankruptcy. The
commencement of those insolvency proceedings would also
constitute an immediate event of default and acceleration of the
maturity of the convertible subordinated notes referred to above.

NTL is currently in discussions with the lenders
under the Swiss credit facility regarding proposals to resolve
the overindebtedness issue as well as requesting that they waive
various additional covenant breaches under the credit facility.
There can be no assurance that NTL will reach agreement on the
resolution of the overindebtedness issue within the time period
required or obtain the requested waivers.



| |                                      
| | -------------------------------------
| | Interest Payments on Public
    Notes

NTL has substantial interest payment obligations
under its existing indebtedness. The Company did not make
scheduled interest payments due April 1, 2002, in the
aggregate amount of $74.2 million, in respect of its
9 1/2% notes due 2008, 11 1/2% notes due 2008 and
11 7/8% notes due 2010. In addition, the Company did not
make interest payments falling due on April 15, 2002,
totaling $20.2 million, in respect of the 12 3/4%
Senior Deferred Coupon Notes due 2005 and NTL Incorporated and
NTL Delaware did not make interest payments and payment of
related fees falling due on April 15, 2002 in respect of
their 5 3/4% Convertible Subordinated Notes due 2011. Those
payments were not made after consideration by NTL of requests by
the unofficial bondholder committee not to make those payments.
Interest payments of $18.9 million were made, when due, on
April 2, 2002 in respect of Diamond Cable Communications
13.25% senior discount notes due 2004. On May 15, 2002,
interest totaling $94.0 million is due on outstanding notes
of the Company and NTL Triangle.

If the applicable issuer does not pay interest on
these notes after a 30 day grace period expires (on
April 30, 2002 in the case of the missed interest payments
due April 1, 2002), there is an event of default under the
indenture in respect of the notes on which the interest is due
and unpaid. An event of default entitles the trustee under the
indenture or the holders of 25% of the outstanding notes to
declare the principal amount of those notes to be immediately
due and payable. Even if the maturity of those notes is not
accelerated after April 30, 2002, such an event of default
would also result in an event of default in respect of other
debt (commonly called cross defaults) under all of NTLs
other notes, except for those issued by NTL Triangle, Diamond
Cable Communications or Diamond Holdings. As a result, upon the
expiration of the grace period, on April 30, 2002, events
of default for failure to pay interest would occur under the
relevant indentures at the Company and, contemporaneously, cross
defaults would occur under NTLs other indentures at the
Company, NTL Delaware, NTL Incorporated and under NTLs UK
credit facilities and could occur under NTLs Cablecom
facility. This would give holders of the outstanding series of
debt at these entities the right to accelerate repayment of
those debts by declaring the principal amount of the debts to be
immediately due and payable unless NTL obtains waivers or
forbearance agreements from sufficient percentages of its
creditors. If that right to accelerate was exercised, NTL would
not have sufficient cash resources to repay those debts, which
could ultimately lead to voluntary or involuntary bankruptcy
proceedings relating to the entities so affected. In addition,
the lenders under NTLs UK credit facilities have security
over the assets of NTLs UK operating subsidiaries, except
for the Diamond and NTL Triangle groups of companies. In the
event that there was an event of default under those facilities,
the lenders could seek to take control of those assets under
applicable UK insolvency law.

F-13



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                         
| | ------------------------
| | Credit Rating Downgrades

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



| |                      
| | ---------------------
| | Sale of NTL Australia

On April 2, 2002, NTL announced that it had
completed the previously announced sale of its Australian
broadcast business to Macquarie Bank for A$850 million
(US$448 million) in an all cash transaction. The net
proceeds from the sale were approximately A$574 million
(US$303 million). At that time, the business bank
debt outstanding totaled A$227 million
(US$119 million).

On April 7, 2002, NTL Delaware loaned
£90 million to NTL (UK) Group Limited, which loan
was funded by the proceeds of the sale of NTL Australia. This
loan is subordinated to NTLs UK credit facilities. The
remaining proceeds of the sale of NTL Australia remain at NTL
Delaware and it is currently anticipated that such proceeds will
form a portion of the consideration to be offered to bondholders
of NTL Delaware and NTL Incorporated in satisfaction of their
claims against NTL Delaware as part of the proposed plan of
reorganization.

Basis of Presentation

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

Due to uncertainties about compliance with the
terms and conditions of the Companys debt that would give
the holders of the debt the right to accelerate repayment, all
of the Companys long-term debt has been classified as
current.



|   |                                
|-- | -------------------------------
|2. | Significant Accounting Policies

Use of Estimates

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

Principles of Consolidation

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

F-14



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Reclassification

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

Foreign Currency Translation

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

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

Cash Equivalents

Cash equivalents are short-term highly liquid
investments purchased with a maturity of three months or less.
Cash equivalents were $218.7 million and
$211.3 million at December 31, 2001 and 2000,
respectively, which consisted primarily of U.S. Treasury
bills (2000 only) bank time deposits and corporate commercial
paper. At December 31, 2001 and 2000, $188.7 million
and $57.2 million, respectively, of the cash equivalents
were denominated in foreign currencies.

Marketable Securities

Marketable securities were 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 component of accumulated other comprehensive (loss). The
amortized cost of debt securities is adjusted for amortization
of premiums and accretion of discounts to maturity. Such
amortization is included in interest income. 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.

During the years ended December 31, 2001,
2000 and 1999, there were no realized gains or losses on sales
of securities.

Fixed Assets

Fixed assets are stated at cost, which includes
amounts capitalized for labor and overhead expended in
connection with the design and installation of operating
equipment. 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 40 years.

Intangible Assets

Intangible assets include goodwill, license
acquisition costs, customer lists and other intangibles.
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 of 3, 10, 15 or 30 years. License
acquisition costs represent the portion of purchase price
allocated to the cable

F-15



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

television and telecommunications licenses
acquired in business combinations. License acquisition costs are
amortized on a straight-line basis over the remaining lives of
the licenses at acquisition, which vary from approximately two
years to 23 years. Customer lists represent the portion of
the purchase price allocated to the value of the customer base.
Customer lists are amortized on a straight-line basis over 3 or
5 years. Other intangibles include the portion of the
purchase price allocated to the value of workforce in place.
Workforce in place is amortized over the period benefited of
four 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.

Valuation of Long-Lived Assets

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.

Equity Method Investments

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

Deferred Financing Costs

Deferred financing costs are 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 2001, 2000 and 1999, total
interest incurred was $1,308.5 million, $981.4 million
and $719.9 million, respectively, of which interest of
$67.7 million, $95.1 million and $41.8 million,
respectively, was capitalized.

Revenue Recognition

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

Cable Television System Costs, Expenses and
Revenues

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

F-16



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Advertising Expense

The Company charges the cost of advertising to
expense as incurred. Advertising costs were $77.9 million,
$94.0 million and $35.8 million in 2001, 2000 and
1999, respectively.

Stock-Based Compensation

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

Derivative Financial Instruments

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

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



|   |                                 
|-- | --------------------------------
|3. | Recent Accounting Pronouncements

In August 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, effective for the Company on
January 1, 2002. This Statement supercedes SFAS
No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of and
other related accounting guidance. The adoption of this new
standard had no significant effect on the results of operations,
financial condition or cash flows of the Company.

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

In June 2001, the FASB issued SFAS No. 141,
Business Combinations, and No. 142,
Goodwill and Other Intangible Assets. SFAS
No. 141 requires that the purchase method of accounting be
used for all business combinations initiated after June 30,
2001. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also includes guidance on the
initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination that is
completed after June 30, 2001. SFAS No. 142 ends the
amortization of goodwill and indefinite-lived intangible assets.
Instead, these assets must be reviewed annually (or more
frequently under certain conditions) for impairment in
accordance with this statement. This impairment test uses a fair
value approach rather than the undiscounted cash flow approach
previously required by SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of. The Company adopted SFAS No. 142 on
January 1, 2002. In light of the significant impairment
charge that the Company recorded in 2001, the Company does not
expect that the adoption of this new standard will have a
significant effect on the result of operations, financial
condition or cash flows of the Company. Amortization expense in
2001 related to goodwill and other indefinite lived intangible
assets was $1,104.1 million. Estimated aggregate
amortization expense for each of the five

F-17



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

succeeding fiscal years from December 31,
2001 is as follows: $64.9 million in 2002,
$63.7 million in 2003, $45.0 million in 2004,
$39.2 million in 2005 and $31.4 million in 2006.



|   |                  
|-- | -----------------
|4. | Asset Impairments

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



|   |             
|-- | ------------
|5. | Acquisitions

On May 30, 2000, the Company acquired the
consumer cable telephone, Internet and television operations of
CWC in the United Kingdom (ConsumerCo). The
acquisition was accounted for as a purchase, and accordingly,
the net assets and results of operations of the acquired
business has been included in the consolidated financial
statements from the date of acquisition.

In March 1999, the Company purchased Diamond
Cable Communications plc (Diamond) for an aggregate
purchase price of $984.6 million, including intangibles
aggregating $1,323.0 million. In July 1999, the Company
acquired Cablelink Limited (Cablelink) for an
aggregate purchase price of $700.5 million, including
intangibles of $669.6 million. In September 1999, NTL
Delaware acquired the shares of Workplace Technologies plc, for
an aggregate purchase price of $175.0 million, including
intangibles of $176.9 million. Workplace Technologies was
subsequently acquired by the Company from NTL Delaware. The net
assets and results of operations of Diamond, Cablelink and
Workplace Technologies plc are included in the consolidated
financial statements from March 1999, July 1999 and September
1999, their respective dates of acquisition.

A significant component of the pro forma results
is associated with the acquisition of ConsumerCo. The historical
results of ConsumerCo reflect certain intercompany costs and
expenses as they were prior to the separation of ConsumerCo,
which was completed in the second quarter of 2000. These costs
and expenses do not necessarily reflect the costs and expenses
that would have been incurred had ConsumerCo reported as a
separate entity for these periods. Therefore the historical
results of ConsumerCo which are included in the pro forma
results below are not reflective of results on a going forward
basis.

The pro forma unaudited consolidated results of
operations for the years ended December 31, 2000 and 1999
assuming consummation of these transactions as of
January 1, 1999 is as follows (in millions).

|                                     |  |                         |          |      |  |   |          |  
|------------------------------------ |  | ----------------------- | -------- | ---- |  | - | -------- | -
|                                     |  |                        
|                                     |  | Year Ended December 31,
|                                     |  |                        
|                                     |  | 2000                    |          | 1999
|                                     |  |                         |          |     
|Total revenue                        |  | $                       | 2,953.4  |      |  | $ | 2,844.5  |  
|Net (loss) before extraordinary item |  |                         | (2,973.5 | )    |  |   | (2,326.0 | )
|Net (loss)                           |  |                         | (2,973.5 | )    |  |   | (2,329.0 | )

F-18



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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



|   |             
|-- | ------------
|6. | Fixed Assets

Fixed assets consist of:

|                         |  |               |          |      |  |   |          |  
|------------------------ |  | ------------- | -------- | ---- |  | - | -------- | -
|                         |  |              
|                         |  | December 31, 
|                         |  |              
|                         |  | 2001          |          | 2000
|                         |  |               |          |     
|                         |  |              
|                         |  | (In millions)
|Operating equipment      |  | $             | 11,703.1 |      |  | $ | 10,004.9 |  
|Other equipment          |  |               | 833.2    |      |  |   | 1,079.8  |  
|Construction-in-progress |  |               | 1,274.4  |      |  |   | 1,509.7  |  
|                         |  |               |          |      |  |   |          |  
|                         |  |               | 13,810.7 |      |  |   | 12,594.4 |  
|Accumulated depreciation |  |               | (2,970.4 | )    |  |   | (1,677.6 | )
|                         |  |               |          |      |  |   |          |  
|                         |  | $             | 10,840.3 |      |  | $ | 10,916.8 |  
|                         |  |               |          |      |  |   |          |  

7.     Intangible
Assets

Intangible assets consist of:

|                                                                                                  |  |               |       |      |  |   |          | 
|------------------------------------------------------------------------------------------------- |  | ------------- | ----- | ---- |  | - | -------- | 
|                                                                                                  |  |              
|                                                                                                  |  | December 31, 
|                                                                                                  |  |              
|                                                                                                  |  | 2001          |       | 2000
|                                                                                                  |  |               |       |     
|                                                                                                  |  |              
|                                                                                                  |  | (In millions)
|Goodwill, net of accumulated amortization of
    $58.4 (2001) and $837.7 (2000)                   |  | $             | 640.9 |      |  | $ | 10,236.4 | 
|License acquisition costs, net of accumulated
    amortization of $125.2 (2001) and $215.8 (2000) |  |               | 54.7  |      |  |   | 139.2    | 
|Customer lists, net of accumulated amortization
    of $78.1 (2001) and $70.4 (2000)              |  |               | 64.8  |      |  |   | 158.6    | 
|Other intangibles, net of accumulated
    amortization of $4.5 (2001) and $5.5 (2000)             |  |               | 6.9   |      |  |   | 31.9     | 
|                                                                                                  |  |               |       |      |  |   |          | 
|                                                                                                  |  | $             | 767.3 |      |  | $ | 10,566.1 | 
|                                                                                                  |  |               |       |      |  |   |          | 

8.     Investments in
Cable London plc

NTL (Triangle) LLC (NTL Triangle), an
indirect wholly-owned subsidiary of the Company, owned a 50%
interest in Cable London plc (Cable London).
Pursuant to an agreement with Telewest Communications plc
(Telewest) relating to NTL Triangles and
Telewests respective 50% ownership interests in Cable
London, in November 1999 Telewest purchased all of NTL
Triangles shares of Cable London for
£428.0 million ($692.5 million) in cash. The
Company recorded a gain of $493.1 million on the sale. The
sale of the Cable London interest was an Asset Sale
for purposes of the Companys Indentures for certain of its
notes. The Company used an amount equal to the proceeds from the
sale to invest in Replacement Assets by November
2000.

F-19



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

9.     Long-Term
Debt

Long-term debt consists of:

|                            |                                                             |  |     |               |   |         |  |  |   |         | 
|--------------------------- | ----------------------------------------------------------- |  | --- | ------------- | - | ------- |  |  | - | ------- | 
|                            |                                                             |  |     |              
|                            |                                                             |  |     | December 31, 
|                            |                                                             |  |     |              
|                            |                                                             |  |     | 2001          |   | 2000   
|                            |                                                             |  |     |               |   |        
|                            |                                                             |  |     |              
|                            |                                                             |  |     | (In millions)
|NTL Communications:         |                                                             |  |     |               |   |         |  |  |   |        
|                            | 12 3/4% Senior Deferred Coupon Notes                        |  | (a) |               | $ | 277.8   |  |  | $ | 277.8   | 
|                            | 11 1/2% Senior Deferred Coupon Notes                        |  | (b) |               |   | 1,050.0 |  |  |   | 1,040.5 | 
|                            | 10% Senior Notes                                            |  | (c) |               |   | 400.0   |  |  |   | 400.0   | 
|                            | 9 1/2% Senior Sterling Notes, less
    unamortized discount |  | (d) |               |   | 181.4   |  |  |   | 186.5   | 
|                            | 10 3/4% Senior Deferred Coupon Sterling Notes               |  | (e) |               |   | 382.3   |  |  |   | 353.6   | 
|                            | 9 3/4% Senior Deferred Coupon Notes                         |  | (f) |               |   | 1,153.8 |  |  |   | 1,048.5 | 
|                            | 9 3/4% Senior Deferred Coupon Sterling Notes                |  | (g) |               |   | 385.9   |  |  |   | 360.8   | 
|                            | 11 1/2% Senior Notes                                        |  | (h) |               |   | 625.0   |  |  |   | 625.0   | 
|                            | 12 3/8% Senior Deferred Coupon Notes                        |  | (i) |               |   | 364.9   |  |  |   | 323.6   | 
|                            | 7% Convertible Subordinated Notes                           |  | (j) |               |   | 489.8   |  |  |   | 599.3   | 
|                            | 9 1/4% Senior Euro Notes                                    |  | (k) |               |   | 222.5   |  |  |   | 234.7   | 
|                            | 9 7/8% Senior Euro Notes                                    |  | (l) |               |   | 311.5   |  |  |   | 328.6   | 
|                            | 11 1/2% Senior Deferred Coupon Euro Notes                   |  | (m) |               |   | 135.6   |  |  |   | 127.9   | 
|                            | 11 7/8% Senior Notes, less unamortized
    discount         |  | (n) |               |   | 490.7   |  |  |   | 489.6   | 
|                            | 12 3/8% Senior Euro Notes, less unamortized
    premium     |  | (o) |               |   | 267.8   |  |  |   |        | 
|                            | 6 3/4% Convertible Senior Notes                             |  | (p) |               |   | 1,150.0 |  |  |   |        | 
|NTL Communications Limited: |                                                             |  |     |               |   |         |  |  |   |        
|                            | Credit Agreement                                            |  | (w) |               |   | 3,759.1 |  |  |   | 375.3   | 
|                            | Working Capital Agreement                                   |  | (w) |               |   | 145.4   |  |  |   |        | 
|                            | Senior Secured Financing                                    |  | (w) |               |   | 290.9   |  |  |   |        | 
|                            | Other                                                       |  |     |               |   | 58.6    |  |  |   |        | 
|NTL Business:               |                                                             |  |     |               |   |         |  |  |   |        
|                            | Credit Agreement                                            |  | (w) |               |   |        |  |  |   | 3,030.3 | 
|ConsumerCo:                 |                                                             |  |     |               |   |         |  |  |   |        
|                            | Term Loan Facility and other                                |  |     |               |   |        |  |  |   | 21.7    | 
|NTL Triangle:               |                                                             |  |     |               |   |         |  |  |   |        
|                            | 11.2% Senior Discount Debentures                            |  | (q) |               |   | 517.3   |  |  |   | 517.3   | 
|                            | Other                                                       |  |     |               |   | 4.5     |  |  |   | 5.2     | 
|Diamond:                    |                                                             |  |     |               |   |         |  |  |   |        
|                            | 13 1/4% Senior Discount Notes                               |  | (r) |               |   | 285.1   |  |  |   | 285.1   | 
|                            | 11 3/4% Senior Discount Notes                               |  | (s) |               |   | 531.0   |  |  |   | 531.0   | 
|                            | 10 3/4% Senior Discount Notes                               |  | (t) |               |   | 415.1   |  |  |   | 373.9   | 
|                            | 10% Senior Sterling Notes                                   |  | (u) |               |   | 196.3   |  |  |   | 201.9   | 

F-20



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                     |                     |  |     |               |          |       |  |   |          |       | 
|-------------------- | ------------------- |  | --- | ------------- | -------- | ----- |  | - | -------- | ----- | 
|                     |                     |  |     |              
|                     |                     |  |     | December 31, 
|                     |                     |  |     |              
|                     |                     |  |     | 2001          |          | 2000 
|                     |                     |  |     |               |          |      
|                     |                     |  |     |              
|                     |                     |  |     | (In millions)
|                     | 9 1/8% Senior Notes |  | (v) |               |          | 110.0 |  |   |          | 110.0 | 
|                     | Other               |  |     |               |          | 3.6   |  |   |          | 6.0   | 
|                     |                     |  |     |               |          |       |  |   |          |      
|                     |                     |  |     |               | 14,205.9 |       |  |   | 11,854.1 |      
|Less current portion |                     |  |     |               | 14,205.9 |       |  |   | 10.7     |      
|                     |                     |  |     |               |          |       |  |   |          |      
|                     |                     |  |     | $             |         |       |  | $ | 11,843.4 |      
|                     |                     |  |     |               |          |       |  |   |          |      



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | 12 3/4% Notes due April 15, 2005,
    principal amount at maturity of $277.8 million, interest
    payable semiannually from October 15, 2000, redeemable at
    the Companys option on or after April 15, 2000;                                                                                                                                                                                                                                                   
|   
|(b) | 11 1/2% Notes due February 1, 2006,
    principal amount at maturity of $1,050.0 million, interest
    payable semiannually from August 1, 2001, redeemable at the
    Companys option on or after February 1, 2001;                                                                                                                                                                                                                                               
|   
|(c) | 10% Notes due February 15, 2007, principal
    amount at maturity of $400.0 million, interest payable
    semiannually from August 15, 1997, redeemable at the
    Companys option on or after February 15, 2002;                                                                                                                                                                                                                                                  
|   
|(d) | 9 1/2% Sterling Notes due April 1,
    2008, principal amount at maturity of £125.0 million
    ($181.8 million), interest payable semiannually from
    October 1, 1998, redeemable at the Companys option on
    or after April 1, 2003;                                                                                                                                                                                                                         
|   
|(e) | 10 3/4% Sterling Notes due April 1,
    2008, principal amount at maturity of £300.0 million
    ($436.3 million), interest payable semiannually beginning
    on October 1, 2003, redeemable at the Companys option
    on or after April 1, 2003;                                                                                                                                                                                                                
|   
|(f) | 9 3/4% Notes due April 1, 2008,
    principal amount at maturity of $1,300.0 million, interest
    payable semiannually beginning on October 1, 2003,
    redeemable at the Companys option on or after
    April 1, 2003;                                                                                                                                                                                                                                         
|   
|(g) | 9 3/4% Sterling Notes due April 15,
    2009, principal amount at maturity of £330.0 million
    ($479.9 million), interest payable semiannually beginning
    on October 15, 2004, redeemable at the Companys
    option on or after April 15, 2004;                                                                                                                                                                                                              
|   
|(h) | 11 1/2% Notes due October 1, 2008,
    principal amount at maturity of $625.0 million, interest
    payable semiannually from April 1, 1999, redeemable at the
    Companys option on or after October 1, 2003;                                                                                                                                                                                                                                                    
|   
|(i) | 12 3/8% Notes due October 1, 2008,
    principal amount at maturity of $450.0 million, interest
    payable semiannually beginning on April 1, 2004, redeemable
    at the Companys option on or after October 1, 2003;                                                                                                                                                                                                                                            
|   
|(j) | 7% Convertible Notes due December 15, 2008,
    principal amount at maturity of $489.8 million, interest
    payable semiannually from June 15, 1999, redeemable at the
    Companys option on or after December 15, 2001,
    convertible into shares of NTL Incorporated common stock at a
    conversion price of $39.20 per share (there are approximately
    12.5 million shares of NTL Incorporated common stock
    reserved for issuance upon conversion);
|   
|(k) | 9 1/4% Euro Notes due November 15,
    2006, principal amount at maturity of
    250.0 million,
    ($222.5 million), interest payable semiannually from
    May 15, 2000;                                                                                                                                                                                                                                                                                         
|   
|(l) | 9 7/8% Euro Notes due November 15,
    2009, principal amount at maturity of
    350.0 million,
    ($311.5 million), interest payable semiannually from
    May 15, 2000, redeemable at the Companys option on or
    after November 15, 2004;                                                                                                                                                                                                                   
|   
|(m) | 11 1/2% Deferred Euro Notes due
    November 15, 2009, principal amount at maturity of
    210.0 million
    ($186.9 million), interest payable semiannually beginning
    on May 15, 2005, redeemable at the Companys option on
    or after November 15, 2004;                                                                                                                                                                                                  
|   
|(n) | 11 7/8% Notes due October 1, 2010,
    principal amount at maturity of $500.0 million, interest
    payable semiannually from April 1, 2001, redeemable at the
    Companys option on or after October 1, 2005;                                                                                                                                                                                                                                                    

F-21



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(o) | 12 3/8% Senior Euro Notes due
    February 1, 2008, issued in January and February 2001,
    principal amount at maturity of
    300.0 million
    ($267.0 million), interest payable semiannually from
    August 1, 2001;                                                                                                                                                                                                                                                                         
|   
|(p) | 6 3/4% Convertible Senior Notes due
    May 15, 2008, issued in May 2001, principal amount at
    maturity of $1,150.0 million, interest payable semiannually
    from November 15, 2001, redeemable at the Companys
    option on or after May 20, 2004, convertible into shares of
    NTL Incorporated common stock at a conversion price of $32.728
    per share (there were approximately 35.1 million shares of
    NTL Incorporated common stock reserved for issuance upon
    conversion);
|   
|(q) | 11.2% Debentures due November 15, 2007,
    principal amount at maturity of $517.3 million, interest
    payable semiannually from May 15, 2001, redeemable at NTL
    Triangles option after November 15, 2000;                                                                                                                                                                                                                                                                                    
|   
|(r) | 13 1/4% Notes due September 30, 2004,
    principal amount at maturity of $285.1 million, interest
    payable semiannually from March 31, 2000, redeemable at
    Diamonds option on or after September 30, 1999;                                                                                                                                                                                                                                                                                  
|   
|(s) | 11 3/4% Notes due December 15, 2005,
    principal amount at maturity of $531.0 million, interest
    payable semiannually from June 15, 2001, redeemable at
    Diamonds option on or after December 15, 2000;                                                                                                                                                                                                                                                                                     
|   
|(t) | 10 3/4% Notes due February 15, 2007,
    principal amount at maturity of $420.5 million, interest
    payable semiannually beginning on August 15, 2002,
    redeemable at Diamonds option on or after
    December 15, 2002;                                                                                                                                                                                                                                                                       
|   
|(u) | 10% Sterling Notes due February 1, 2008,
    issued by Diamond Holdings plc, principal amount at maturity of
    £135.0 million ($196.3 million), interest payable
    semiannually from August 1, 1998, redeemable at
    Diamonds option on or after February 1, 2003; and                                                                                                                                                                                                                        
|   
|(v) | 9 1/8% Notes due February 1, 2008,
    issued by Diamond Holdings plc, principal amount of
    $110.0 million, interest payable semiannually from
    August 1, 1998, redeemable at Diamonds option on or
    after February 1, 2003.                                                                                                                                                                                                                                                               

See Note 1 for discussion of the
uncertainties about compliance with the terms and conditions of
the Companys debt that would give the holders of the debt
the right to accelerate repayment, which has caused primarily
all of the Companys long-term debt to be classified as
current.

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

The Company, NTL Incorporated and NTL Delaware
did not make interest payments and payments of related fees when
due on April 1 and April 15, 2002. If the applicable issuer
does not pay interest on these notes after a 30 day grace
period expires (on April 30, 2002 in the case of the missed
interest payments due April 1, 2002), there is an event of
default under the indenture in respect of the notes on which the
interest is due and unpaid. An event of default entitles the
trustee under the indenture or the holders of 25% of the
outstanding notes to declare the principal amount of those notes
to be immediately due and payable. Even if the maturity of those
notes is not accelerated after April 30, 2002, such an
event of default would also result in an event of default for
payment defaults in respect of other debt (commonly called cross
defaults) under all of our other notes, except for those issued
by NTL Triangle, Diamond Cable Communications or Diamond
Holdings. As a result, upon the expiration of the grace period,
on April 30, 2002, events of default for failure to pay
interest would occur under the relevant indentures at NTL
Communications and, contemporaneously, cross defaults would
occur under the Companys other indentures at NTL
Communications, NTL Delaware, NTL Incorporated and under our
bank credit facility in the United Kingdom. This would give
holders of the outstanding series of debt at these entities the
right to accelerate repayment of those debts by declaring the
principal amount of the debts to be immediately due and payable
unless we obtain waivers or forbearance agreements from
sufficient percentages of our creditors.

F-22



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

During 2001, 2000 and 1999, the Company
recognized $284.7 million, $473.1 million and
$451.4 million, respectively, of original issue discount as
interest expense.

In addition to the notes described above, a
subsidiary of the Company has the following bank credit
agreements outstanding:



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(w) | In May 2000, NTL Business Limited (NTL
    Business), a wholly-owned subsidiary of the Company and
    NTL Communications Limited (NTLCL), a wholly-owned
    indirect subsidiary of the Company, entered into a
    £2,500.0 million ($3,635.8 million) credit
    agreement in connection with the ConsumerCo acquisition. On
    February 21, 2001, as required by the NTL Business and
    NTLCL credit agreement, the Company completed a transaction
    whereby it acquired the entire issued share capital of NTL (CWC
    Holdings) Limited (the entity that owns ConsumerCo) from NTL
    Incorporated and the entire issued share capital of NTL Business
    from NTL Delaware in exchange for shares of NTL Incorporated
    common stock. As a result of this transaction, ConsumerCo and
    NTL Business became subsidiaries of the Company, and NTL
    Business rights and obligations under the
    £2,500.0 million credit agreement were assigned to a
    subsidiary of NTLCL. In October 2001, NTLCL completed
    £169.6 million ($246.6 million) of vendor
    financing as an addition to NTLCLs
    £2,500.0 million credit agreement with the same terms
    and conditions. The Company borrowed £84.8 million
    ($123.3 million) of the vendor financing in October 2001.
    The commitment for the remaining £84.8 million has
    expired. Interest is payable at least every six months at LIBOR
    plus a margin rate of 2.00% per annum, which is subject to
    adjustment based on the ratio of EBITDA to finance charges of
    the UK Group.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For purposes of this credit agreement, Diamond
    Cable Communications Limited and subsidiaries, NTL (Triangle)
    LLC and subsidiaries and certain other entities are excluded
    from the U.K. Group. The unused portion of the commitment is
    subject to a commitment fee of 0.75% payable quarterly, which is
    reduced to 0.50% when over 50% of the commitment is utilized.
    Principal is due in six quarterly installments beginning on
    June 30, 2004. The credit agreement contains various
    financial and other covenants with respect to the U.K. Group,
    and restrictions on dividends and distributions by the U.K.
    Group. As of December 31, 2001, there was
    £2,584.8 million ($3,759.1 million) outstanding
    under this credit agreement. The effective interest rate was
    6.73% and 8.283% as of December 31, 2001 and 2000,
    respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | In October 2001, NTLCL completed
    £200.0 million ($290.9 million) of GE Capital
    senior secured financing. Interest on the GE Capital senior
    secured financing is payable at least every six months at LIBOR
    plus a margin rate of 3.50% per annum. The senior secured
    financing is repayable in eight quarterly installments beginning
    on June 30, 2006. The effective interest rate at
    December 31, 2001 was 8.06%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | NTLCL has a £1,300.0 million
    ($1,890.6 million) credit agreement with a group of banks,
    which is available to finance working capital requirements of
    the U.K. Group (as defined above). Pursuant to the credit
    agreement, in connection with the issuance of new debt beginning
    in October 2000, the commitment has been reduced by
    £882.5 million ($1,283.4 million). Interest is
    payable at least every six months at LIBOR plus a margin rate of
    5.50% per annum. The margin rate shall increase by 0.50% on the
    three month anniversary of the initial advance and by an
    additional 0.50% on each subsequent three month anniversary, up
    to a maximum total interest rate of 16.00% per annum. The unused
    portion of the commitment is subject to a commitment fee of
    0.75% payable quarterly. Principal is due in full on
    March 31, 2001. The credit agreement contains various
    financial and other covenants with respect to the U.K. Group,
    and restrictions on dividends and distributions by the U.K.
    Group. As of December 31, 2001, £100.0 million
    ($145.4 million) was outstanding under this credit
    agreement with an effective interest rate of 9.57%. In January
    and February 2002, the Company borrowed the remaining amounts
    available under this agreement.

F-23



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

In connection with the Cablelink acquisition, the
Company issued $704.6 million principal amount Senior Increasing
Rate Notes due 2000. In November 1999, the Company received net
proceeds of $720.7 from the issuance of the 9 1/4% Euro
Notes, the 9 7/8% Euro Notes and the 11 1/2% Deferred
Euro Notes, of which $716.5 million was used to repay the
Senior Increasing Rate Notes plus accrued interest. The Company
recorded an extraordinary loss from the early extinguishment of
the notes of $3.0 million in 1999.

The NTLCL bank credit facilities, as well as the
NTL Triangle and Diamond notes, restrict the payment of cash
dividends and loans to the Company. At December 31, 2001,
restricted net assets were $3,640.1 million.

Long-term debt repayments are due as follows (in
millions). The table reflects the Companys contractual
obligations, but the entire obligation has been classified as
current.

|                         |  |   |           |  
|------------------------ |  | - | --------- | -
|Year ending December 31: |  |  
|2002                     |  | $ | 2.9       |  
|2003                     |  |   | 2.4       |  
|2004                     |  |   | 418.3     |  
|2005                     |  |   | 4,439.2   |  
|2006                     |  |   | 1,449.1   |  
|Thereafter               |  |   | 8,339.0   |  
|                         |  |   |           |  
|Total debt repayments    |  | $ | 14,650.9  |  
|Less: current portion    |  |   | (14,650.9 | )
|                         |  |   |           |  
|                         |  | $ |          |  
|                         |  |   |           |  



|    |                                 
|--- | --------------------------------
|10. | Derivative Financial Instruments

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

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

F-24



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

ended December 31, 2001, the Company
recorded other comprehensive loss of $1.4 million as a
result of changes in the fair values. The aggregate fair value
at December 31, 2001 was a net liability of
$3.6 million.

In September 2001, the Company entered into a
British pound forward foreign exchange agreement, consisting of
twenty-six accumulating forward contracts, to reduce its
exposure to movement in the British pound/ U.S. dollar exchange
rate in accordance with its market risk strategies. As of
December 31, 2001, the fair value of this instrument was a
liability of $0.3 million.



|    |                      
|--- | ---------------------
|11. | Non-Cash Compensation

In July 2001, the Compensation and Option
Committee of the Board of Directors (the Compensation
Committee) approved modifications to certain stock
options. The latest possible expiration date of options to
purchase an aggregate of approximately 4.7 million shares
of NTL Incorporateds common stock with exercise prices
from $.17 to $14.76 per share was extended from July 30, 2001 to
October 2004, as applicable, to January 30, 2006. The
Company recognized non-cash compensation expense of
$30.6 million based on the excess of the quoted market
price of NTL Incorporateds common stock on the date of the
modification of $12.05 per share over the exercise price per
share.

In September 2000, the Board of Directors
approved modifications to certain stock options granted to
employees in November 1999 through May 2000. Options to purchase
an aggregate of approximately 16.5 million shares of NTL
Incorporateds common stock with a weighted average
exercise price of $64.39 per share were modified such that the
exercise price was reduced to $44.50 per share and the vesting
schedule was delayed and/or lengthened. The Company is
accounting for these options as a variable plan beginning in
September 2000. The Company will recognize non-cash compensation
expense for the excess of the quoted market price of NTL
Incorporateds common stock over the exercise price of the
vested options while the options remain outstanding. In
September 2000, the Company recognized non-cash compensation
expense of $2.2 million related to this plan.

The Compensation Committee has taken the actions
described above to continue to provide the appropriate
performance incentives to those affected.



|    |                                                  
|--- | -------------------------------------------------
|12. | Other Charges Including Restructuring
    Charges

Other charges of $297.9 million in 2001
include restructuring charges of $202.8 million and costs
of $95.1 million incurred primarily to integrate the
acquired companies, mostly related to information technology
integration, as well as costs incurred for business
rationalization consulting. Other charges of $92.7 million
in 2000 include restructuring charges of $65.9 million and
costs of $26.8 million incurred primarily to integrate the
acquired companies, mostly related to information technology
integration, as well as costs incurred for business
rationalization consulting. Other charges of $16.2 million
in 1999 were incurred for the cancellation of certain contracts.

Restructuring charges of $202.8 million and
$65.9 million for the years ended December 31, 2001
and 2000, respectively, relate to the Companys
announcements in the fourth quarter of 2001 and in November 2000
that it was taking additional actions to reorganize, re-size and
reduce operating costs and create greater efficiency in various
areas of the Company. An aggregate of $57.9 million of the
2001 reorganization costs are for the write-off of equipment and
other assets that are not in use and will not require any future
cash outlays. The employee severance and related costs in 2000
were for approximately 2,300 employees to be terminated,
approximately 550 of whom are still employed by the Company as
of December 31, 2001. These costs in 2001 are for
approximately 5,200 employees to be terminated, of which
approximately 2,900 employees are still employed by the Company
as of December 31, 2001.

F-25



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

|                           |  |               |       |       |  |               |      |        |  |       |      |  |  |   |       |   |  |   |       |  
|-------------------------- |  | ------------- | ----- | ----- |  | ------------- | ---- | ------ |  | ----- | ---- |  |  | - | ----- | - |  | - | ----- | -
|                           |  | Employee      |       |       |  |               |      |        |  |      
|                           |  | Severance     |       | Lease |  |               |      |        |  |      
|                           |  | And Related   |       | Exit  |  | Agreement     |      | Fixed  |  |      
|                           |  | Costs         |       | Costs |  | Modifications |      | Assets |  | Total
|                           |  |               |       |       |  |               |      |        |  |      
|                           |  |              
|                           |  | (In millions)
|Charged to expense         |  | $             | 47.9  |       |  | $             | 18.0 |        |  | $     |     |  |  | $ |      |   |  | $ | 65.9  |  
|Utilized                   |  |               |      |       |  |               |     |        |  |       |     |  |  |   |      |   |  |   |      |  
|                           |  |               |       |       |  |               |      |        |  |       |      |  |  |   |       |   |  |   |       |  
|Balance, December 31, 2000 |  |               | 47.9  |       |  |               | 18.0 |        |  |       |     |  |  |   |      |   |  |   | 65.9  |  
|2000 provision utilized    |  |               | (41.3 | )     |  |               | (9.6 | )      |  |       |     |  |  |   |      |   |  |   | (50.9 | )
|2000 provision released    |  |               | (6.6  | )     |  |               | (7.3 | )      |  |       |     |  |  |   |      |   |  |   | (13.9 | )
|Charged to expense         |  |               | 89.7  |       |  |               | 41.4 |        |  |       | 27.7 |  |  |   | 57.9  |   |  |   | 216.7 |  
|2001 provision utilized    |  |               | (26.2 | )     |  |               |     |        |  |       |     |  |  |   | (57.9 | ) |  |   | (84.1 | )
|                           |  |               |       |       |  |               |      |        |  |       |      |  |  |   |       |   |  |   |       |  
|Balance, December 31, 2001 |  | $             | 63.5  |       |  | $             | 42.5 |        |  | $     | 27.7 |  |  | $ |      |   |  | $ | 133.7 |  
|                           |  |               |       |       |  |               |      |        |  |       |      |  |  |   |       |   |  |   |       |  



|    |             
|--- | ------------
|13. | Income Taxes

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

|               |         |                         |       |       |  |      |       |       |   |   |       |       |  
|-------------- | ------- | ----------------------- | ----- | ----- |  | ---- | ----- | ----- | - | - | ----- | ----- | -
|               |         |                        
|               |         | Year Ended December 31,
|               |         |                        
|               |         | 2001                    |       | 2000  |  | 1999
|               |         |                         |       |       |  |     
|               |         |                        
|               |         | (In millions)          
|Current:       |         |                         |       |       |  |      |       |       |   |   |       |      
|               | Federal |                         | $     | 1.2   |  |      | $     |      |   |   | $     | 1.0   |  
|               | Foreign |                         |       | 0.5   |  |      |       | 0.9   |   |   |       |      |  
|               |         |                         |       |       |  |      |       |       |   |   |       |      
|Total current  |         |                         | 1.7   |       |  |      | 0.9   |       |   |   | 1.0   |      
|               |         |                         |       |       |  |      |       |       |   |   |       |      
|Deferred:      |         |                         |       |       |  |      |       |       |   |   |       |      
|               | Foreign |                         | $     | 116.4 |  |      | $     | (80.8 | ) |   | $     | (30.9 | )
|               |         |                         |       |       |  |      |       |       |   |   |       |      
|Total deferred |         |                         | 116.4 |       |  |      | (80.8 | )     |   |   | (30.9 | )    
|               |         |                         |       |       |  |      |       |       |   |   |       |      
|               |         | $                       | 118.1 |       |  | $    | (79.9 | )     |   | $ | (29.9 | )    
|               |         |                         |       |       |  |      |       |       |   |   |       |      

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

F-26



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

|                                            |                                 |               |          |         |  |   |          |         | 
|------------------------------------------- | ------------------------------- | ------------- | -------- | ------- |  | - | -------- | ------- | 
|                                            |                                 |              
|                                            |                                 | December 31, 
|                                            |                                 |              
|                                            |                                 | 2001          |          | 2000   
|                                            |                                 |               |          |        
|                                            |                                 |              
|                                            |                                 | (In millions)
|Deferred tax liabilities:                   |                                 |               |          |         |  |   |          |        
|                                            | Intangibles                     |               | $        | 34.5    |  |   | $        | 58.0    | 
|                                            | Depreciation and amortization   |               |          | 354.2   |  |   |          | 591.9   | 
|                                            |                                 |               |          |         |  |   |          |        
|Total deferred tax liabilities              |                                 |               | 388.7    |         |  |   | 649.9    |        
|Deferred tax assets:                        |                                 |               |          |         |  |   |          |        
|                                            | Net operating losses            |               |          | 1,932.9 |  |   |          | 1,491.9 | 
|                                            | Net deferred interest expense   |               |          | 239.9   |  |   |          | 198.6   | 
|                                            | Depreciation and amortization   |               |          | 401.5   |  |   |          | 378.0   | 
|                                            | Inventory                       |               |          | 15.9    |  |   |          | 18.5    | 
|                                            | Purchase accounting liabilities |               |          | 16.5    |  |   |          | 158.5   | 
|                                            | Other                           |               |          | 51.9    |  |   |          | 32.4    | 
|                                            |                                 |               |          |         |  |   |          |        
|Total deferred tax assets                   |                                 |               | 2,658.6  |         |  |   | 2,277.9  |        
|Valuation allowance for deferred tax assets |                                 |               | (2,383.7 | )       |  |   | (1,623.1 | )      
|                                            |                                 |               |          |         |  |   |          |        
|Net deferred tax assets                     |                                 |               | 274.9    |         |  |   | 654.8    |        
|                                            |                                 |               |          |         |  |   |          |        
|Net deferred tax (assets) liabilities       |                                 | $             | 113.8    |         |  | $ | (4.9     | )      
|                                            |                                 |               |          |         |  |   |          |        

At December 31, 2001, the Company had a
valuation allowance against its deferred tax assets to the
extent it was not more likely than not that such assets would be
realized in the future. At December 31, 2001, the valuation
allowance includes approximately $475.0 million, which, if
realized, would be accounted for as a reduction to goodwill or
an increase in additional paid-in capital.

At December 31, 2001, the Company had net
operating loss carryforwards of approximately
$1,000.0 million for U.S. federal income tax purposes that
expire in varying amounts commencing in 2009. This excludes net
operating loss carryforwards of companies that are resident in
both the U.S. and the United Kingdom. The Company also has
United Kingdom net operating loss carryforwards of approximately
$5,215.0 million that have no expiration date. Pursuant to
United Kingdom law, these losses are only available to offset
income of the separate entity that generated the loss. A portion
of the United Kingdom net operating loss carryforward relates to
dual resident companies, of which the U.S. net operating loss
carryforward amount is approximately $1,100.0 million.

As discussed in Note 1, the Company needs to
restructure its outstanding debt during 2002. A restructuring of
the Companys debt can be expected to give rise to
cancellation of indebtedness (COD), which if it
occurs in the course of a proceeding pursuant to Chapter 11
of the U.S. Bankruptcy Code, would be non-taxable. If the COD is
non-taxable, the Company will be required to reduce its U.S. net
operating loss carryforwards and other attributes such as tax
basis in assets by an amount equal to the non-recognized COD.
Therefore, it is likely that as a result of the successful
completion of the proposed plan of recapitalization, the Company
will have no U.S. net operating loss carryforwards.

In 2000, the Internal Revenue Service completed
its federal income tax audit of the Company for the years 1993,
1994 and 1995. The audit resulted in a reduction in U.S. net
operating loss carryforwards that had no material impact on the
Company. The Company is currently undergoing a U.S. federal
income tax audit

F-27



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

for the years 1996, 1997 and 1998. The Company
does not expect that the audit adjustments will have a material
adverse effect on its financial position, results of operations
or cash flows.

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

|                                          |                                                    |                         |          |         |  |      |        |       |  |   |        |       | 
|----------------------------------------- | -------------------------------------------------- | ----------------------- | -------- | ------- |  | ---- | ------ | ----- |  | - | ------ | ----- | 
|                                          |                                                    |                        
|                                          |                                                    | Year Ended December 31,
|                                          |                                                    |                        
|                                          |                                                    | 2001                    |          | 2000    |  | 1999
|                                          |                                                    |                         |          |         |  |     
|                                          |                                                    |                        
|                                          |                                                    | (In millions)          
|(Benefit) at federal statutory rate (35%) |                                                    | $                       | (4,101.6 | )       |  | $    | (863.8 | )     |  | $ | (261.0 | )    
|Add:                                      |                                                    |                         |          |         |  |      |        |       |  |   |        |      
|                                          | Non-deductible asset impairments                   |                         |          | 2,856.6 |  |      |        |      |  |   |        |      | 
|                                          | Foreign losses with no benefit                     |                         |          | 809.7   |  |      |        | 568.6 |  |   |        | 106.9 | 
|                                          | U.S. losses with no benefit                        |                         |          | 436.6   |  |      |        | 215.3 |  |   |        | 124.2 | 
|                                          | Prior year accelerated depreciation                |                         |          | 116.3   |  |      |        |      |  |   |        |      | 
|                                          | State and local income tax, net of federal benefit |                         |          | 0.5     |  |      |        |      |  |   |        |      | 
|                                          |                                                    |                         |          |         |  |      |        |       |  |   |        |      
|                                          |                                                    | $                       | 118.1    |         |  | $    | (79.9  | )     |  | $ | (29.9  | )    
|                                          |                                                    |                         |          |         |  |      |        |       |  |   |        |      

14.     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
carrying amounts of the bank credit facilities and the senior
secured financing approximate their fair values. The fair values
of the Companys other debt in the following table are
based on the quoted market prices.

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

|                          |                              |                   |       |                   |  |          |       |            |  |   |       |         |  |   |       |       | 
|------------------------- | ---------------------------- | ----------------- | ----- | ----------------- |  | -------- | ----- | ---------- |  | - | ----- | ------- |  | - | ----- | ----- | 
|                          |                              |                   |       |                  
|                          |                              | December 31, 2001 |       | December 31, 2000
|                          |                              |                   |       |                  
|                          |                              | Carrying          |       |                   |  | Carrying |       |           
|                          |                              | Amount            |       | Fair Value        |  | Amount   |       | Fair Value
|                          |                              |                   |       |                   |  |          |       |           
|                          |                              |                  
|                          |                              | (In millions)    
|Cash and cash equivalents |                              | $                 | 251.1 |                   |  | $        | 251.1 |            |  | $ | 423.5 |         |  | $ | 423.5 |      
|Long-term debt:           |                              |                   |       |                   |  |          |       |            |  |   |       |         |  |   |       |      
|                          | 12 3/4% Notes                |                   |       | 277.8             |  |          |       | 91.7       |  |   |       | 277.8   |  |   |       | 255.6 | 
|                          | 11 1/2% Notes                |                   |       | 1,050.0           |  |          |       | 336.0      |  |   |       | 1,040.5 |  |   |       | 913.5 | 
|                          | 10% Notes                    |                   |       | 400.0             |  |          |       | 120.0      |  |   |       | 400.0   |  |   |       | 348.0 | 
|                          | 9 1/2% Sterling Senior Notes |                   |       | 181.4             |  |          |       | 60.1       |  |   |       | 186.5   |  |   |       | 154.2 | 
|                          | 10 3/4% Sterling Notes       |                   |       | 382.3             |  |          |       | 124.3      |  |   |       | 353.6   |  |   |       | 242.3 | 
|                          | 9 3/4% Notes                 |                   |       | 1,153.8           |  |          |       | 338.0      |  |   |       | 1,048.5 |  |   |       | 715.0 | 
|                          | 9 3/4% Sterling Notes        |                   |       | 385.9             |  |          |       | 124.8      |  |   |       | 360.8   |  |   |       | 214.7 | 
|                          | 11 1/2% Notes                |                   |       | 625.0             |  |          |       | 200.0      |  |   |       | 625.0   |  |   |       | 556.3 | 
|                          | 12 3/8% Notes                |                   |       | 364.9             |  |          |       | 108.0      |  |   |       | 323.6   |  |   |       | 252.0 | 
|                          | 7% Convertible Notes         |                   |       | 489.8             |  |          |       | 53.9       |  |   |       | 599.3   |  |   |       | 470.5 | 
|                          | 9 1/4% Euro Notes            |                   |       | 222.5             |  |          |       | 74.6       |  |   |       | 234.7   |  |   |       | 207.7 | 
|                          | 9 7/8% Euro Notes            |                   |       | 311.5             |  |          |       | 104.4      |  |   |       | 328.6   |  |   |       | 269.4 | 

F-28



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                |  |                   |         |                   |  |          |         |            |  |  |         |  |  |  |         | 
|------------------------------- |  | ----------------- | ------- | ----------------- |  | -------- | ------- | ---------- |  |  | ------- |  |  |  | ------- | 
|                                |  |                   |         |                  
|                                |  | December 31, 2001 |         | December 31, 2000
|                                |  |                   |         |                  
|                                |  | Carrying          |         |                   |  | Carrying |         |           
|                                |  | Amount            |         | Fair Value        |  | Amount   |         | Fair Value
|                                |  |                   |         |                   |  |          |         |           
|                                |  |                  
|                                |  | (In millions)    
|11 1/2% Euro Deferred Notes     |  |                   | 135.6   |                   |  |          | 44.9    |            |  |  | 127.9   |  |  |  | 99.6    | 
|11 7/8% Senior Notes            |  |                   | 490.7   |                   |  |          | 160.0   |            |  |  | 489.6   |  |  |  | 445.0   | 
|12 3/8% Senior Euro Notes       |  |                   | 267.8   |                   |  |          | 90.8    |            |  |  |        |  |  |  |        | 
|6 3/4% Convertible Senior Notes |  |                   | 1,150.0 |                   |  |          | 353.6   |            |  |  |        |  |  |  |        | 
|Credit Agreement                |  |                   | 3,759.1 |                   |  |          | 3,759.1 |            |  |  | 3,405.6 |  |  |  | 3,405.6 | 
|Working Capital Agreement       |  |                   | 145.4   |                   |  |          | 145.4   |            |  |  |        |  |  |  |        | 
|Senior Secured Financing        |  |                   | 290.9   |                   |  |          | 290.9   |            |  |  |        |  |  |  |        | 
|11.2% Debentures                |  |                   | 517.3   |                   |  |          | 367.3   |            |  |  | 517.3   |  |  |  | 439.7   | 
|13 1/4% Notes                   |  |                   | 285.1   |                   |  |          | 77.0    |            |  |  | 285.1   |  |  |  | 270.8   | 
|11 3/4% Notes                   |  |                   | 531.0   |                   |  |          | 132.8   |            |  |  | 531.0   |  |  |  | 467.3   | 
|10 3/4% Notes                   |  |                   | 415.1   |                   |  |          | 100.9   |            |  |  | 373.9   |  |  |  | 281.7   | 
|10% Sterling Notes              |  |                   | 196.3   |                   |  |          | 143.4   |            |  |  | 201.9   |  |  |  | 161.5   | 
|9 1/8% Notes                    |  |                   | 110.0   |                   |  |          | 71.5    |            |  |  | 110.0   |  |  |  | 89.7    | 

15.     Related Party
Transactions

In 1999, the Company provided management,
financial, legal and technical services to Cellular
Communications International, Inc. (CCII) and
Cellular Communications of Puerto Rico, Inc. (CCPR).
Certain officers and directors of the Company were officers and
directors of CCII and CCPR.

In the fourth quarter of 1999, CoreComm Limited
(CoreComm) (which was formed in 1998 and has certain
common officers and directors with the Company) began charging
the Company a percentage of its office rent and supplies expense
in respect of certain facilities which were shared with the
Company. In 1999, the Company charged CCPR, CCII and CoreComm
$0.1 million, $0.4 million and $1.3 million,
respectively, for direct costs where identifiable and a fixed
percentage of its corporate overhead, net of CoreComms
charges to the Company. Charges to CCPR and to CCII ceased in
1999 due to each of them being acquired and the resulting
termination of services. In 2001 and 2000, the Company charged
CoreComm $0.3 million and $0.9 million, respectively,
for direct costs where identifiable and a fixed percentage of
its corporate overhead, net of CoreComms charges to the
Company. These charges reduced corporate expenses in 2001, 2000
and 1999. It is not practicable to determine the amounts of
these expenses that would have been incurred had the Company
operated as an unaffiliated entity. In the opinion of management
of the Company, the allocation methods are reasonable.

The Company obtains billing and software
development services from CoreComm. CoreComm billed the Company
$3.4 million, $5.9 million and $4.6 million in
2001, 2000 and 1999, respectively, for these services.

In March 2000, the Company and CoreComm announced
that they had entered into an agreement to link their networks
in order to create an international Internet backbone that
commenced operations in February 2001. The Company incurred
costs of $0.3 million for network usage in the year ended
December 31, 2001.

On April 12, 2001, NTL Incorporated
purchased $15.0 million of an unsecured convertible note
from CoreComm Limited and received warrants to purchase 770,000
shares of CoreComm common stock at an exercise price of $.01 per
share that expire in April 2011. In addition, concurrently with
the note purchase and without additional compensation, NTL
Incorporated entered into a network and software agreement with
CoreComm. Under the agreement, CoreComm will provide U.S.
network access for Internet traffic from NTL Incorporateds
U.K. customers for three years, as well as a royalty free
license to use certain billing and

F-29



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

provisioning software and know-how. Interest on
the notes is at 10.75% per annum, payable semiannually beginning
on October 15, 2001. The interest is payable in kind by the
issuance of additional notes in such principal amount equal to
the interest payment that is then due. The notes are convertible
into CoreComm common stock prior to maturity at a conversion
price of $1.00 per share, subject to adjustment. Additional
notes issued for interest will have an initial conversion price
equal to 120% of the weighted average closing price of CoreComm
common stock for a specified period. The Company and CoreComm
have agreed to certain modifications to the conversion feature
in connection with CoreComms recapitalization in December
2001.

In 2001, the Company and CoreComm entered into a
license agreement whereby the Company was granted an exclusive,
irrevocable, perpetual license to certain billing software
developed by CoreComm for telephony rating, digital television
events rating, fraud management and other tasks. The sales price
was cash of $9.8 million for the development costs expended
by CoreComm plus a fixed amount of $3.0 million
representing the one-time perpetual license fee. The billing
software was being used by the Company at the time of this
agreement, and was being maintained and modified by CoreComm
under an ongoing software maintenance and development
outsourcing arrangement between the companies.

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

At December 31, 2001 and 2000, the Company
had a receivable from CoreComm of $1.1 million and a
payable to CoreComm of $17.1 million, respectively. The
2000 payable balance primarily related to services and other
charges billed in advance in October and November 2000 of
$15.8 million.

16.     Shareholders
Equity

Sales of Preferred Stock and
Warrants

In January 1999, the Company received
$500.0 million in cash from Microsoft Corp.
(Microsoft) in exchange for 500,000 shares of the
Companys 5.25% Convertible Preferred Stock and warrants to
purchase 1.9 million shares of the Companys common
stock at an exercise price of $53.76 per share (as adjusted for
stock splits in 1999 and 2000).

Series Preferred Stock

In February 1997, the Company issued 100,000
shares of its 13% Senior Redeemable Exchangeable Preferred Stock.

In September 1998, the Company issued 125,000
shares of 9.9% Non-voting Mandatorily Redeemable Preferred
Stock, Series A (the Series A Preferred
Stock) in connection with an acquisition. Each share of
Series A Preferred Stock had a stated value of $1,000.
Cumulative dividends accrued at 9.9% of the stated value per
share. Dividends were payable when and if declared by the Board
of Directors.

In December 1998, the Company issued 52,000
shares of 9.9% Non-voting Mandatorily Redeemable Preferred
Stock, Series B (the Series B Preferred
Stock) in connection with an acquisition. Each share of
Series B Preferred Stock had a stated value of $1,000.
Cumulative dividends accrued at 9.9% of the stated value per
share. Dividends were payable when and if declared by the Board
of Directors.

F-30



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The changes in the number of shares of Series
Preferred Stock were as follows:

|                                          |  |     |          |          |  |          |          |       |  |  |         |   |  |  |          |  
|----------------------------------------- |  | --- | -------- | -------- |  | -------- | -------- | ----- |  |  | ------- | - |  |  | -------- | -
|                                          |  |     |          | 9.9%     |  | 9.9%     |          |      
|                                          |  | 13% |          | Series A |  | Series B |          | 5.25%
|                                          |  |     |          |          |  |          |          |      
|Balance, December 31, 1997                |  |     | 110,000  |          |  |          |         |       |  |  |        |   |  |  |         |  
|Issued for acquisitions                   |  |     |         |          |  |          | 125,000  |       |  |  | 52,000  |   |  |  |         |  
|Issued for dividends                      |  |     | 15,000   |          |  |          |         |       |  |  |        |   |  |  |         |  
|                                          |  |     |          |          |  |          |          |       |  |  |         |   |  |  |          |  
|Balance, December 31, 1998                |  |     | 125,000  |          |  |          | 125,000  |       |  |  | 52,000  |   |  |  |         |  
|Issued for cash                           |  |     |         |          |  |          |         |       |  |  |        |   |  |  | 500,000  |  
|Issued for dividends                      |  |     | 3,000    |          |  |          |         |       |  |  |        |   |  |  | 4,000    |  
|Corporate restructuring                   |  |     | (128,000 | )        |  |          | (125,000 | )     |  |  | (52,000 | ) |  |  | (504,000 | )
|                                          |  |     |          |          |  |          |          |       |  |  |         |   |  |  |          |  
|Balance, December 31, 2001, 2000 and 1999 |  |     |         |          |  |          |         |       |  |  |        |   |  |  |         |  
|                                          |  |     |          |          |  |          |          |       |  |  |         |   |  |  |          |  



|    |              
|--- | -------------
|16. | Stock Options

The Companys employees participate in the
following NTL Incorporated stock option plans.

There are 3,848,000 shares and 10,396,000 shares
of common stock reserved for issuance under the 1991 Stock
Option Plan and the 1993 Stock Option Plan, respectively. These
plans provide that incentive stock options (ISOs) be
granted at the fair market value of NTL Incorporated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 NTL Incorporated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. No additional options will be
granted under these plans.

There are 156,000 shares and 500,000 shares of
common stock reserved for issuance under 1991 and 1993
Non-Employee Director Stock Option Plans, respectively. Under
the terms of these plans, options will be granted to members of
the Board of Directors who are not employees of the Company or
any of its affiliates. These plans provide that all options be
granted at the fair market value of NTL Incorporated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. No
additional options will be granted under these plans.

There are 83,438,000 shares of common stock
reserved for issuance under the 1998 Non-Qualified Stock Option
Plan, and there are 19,684,000 shares available for issuance at
December 31, 2000. The exercise price of a NQSO shall be
determined by the Compensation and Option Committee. Options are
generally exercisable ratably over five to ten years while the
optionee remains an employee of the Company. Options will expire
ten years after the date of the grant.

There were 13.7 million, 34.8 million
and 6.4 million options granted under these plans for the
years ended December 31, 2001, 2000 and 1999, respectively.

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 NTL Inc.s
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 2001, 2000 and
1999: risk-free interest rates of 4.47%, 5.30% and 6.81%,
respectively, dividend yield of 0%, volatility factor of

F-31



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

the expected market price of NTL Incorporated
common stock of .702, .385 and .336, 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 NTL Incorporated 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. The effects of applying SFAS
No. 123 on pro forma disclosures of net loss for the years
ended December 31, 2001, 2000 and 1999 are not likely to be
representative of the pro forma effects on net loss in future
years. Following is the Companys pro forma information as
if the Company and not NTL Incorporated had issued the
stock options:

|                     |  |                         |           |      |  |      |          |   |  |   |        |  
|-------------------- |  | ----------------------- | --------- | ---- |  | ---- | -------- | - |  | - | ------ | -
|                     |  |                        
|                     |  | Year Ended December 31,
|                     |  |                        
|                     |  | 2001                    |           | 2000 |  | 1999
|                     |  |                         |           |      |  |     
|                     |  |                        
|                     |  | (In millions)          
|Pro forma net (loss) |  | $                       | (12,096.9 | )    |  | $    | (2,636.7 | ) |  | $ | (799.8 | )

17.     Employee
Benefit Plans

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

At December 31, 2001, the projected benefit
obligation of NTL Business defined benefit pension plan
exceeded the fair value of its plan assets by $3.0 million.

|                                        |  |               |       |      |  |   |       |  
|--------------------------------------- |  | ------------- | ----- | ---- |  | - | ----- | -
|                                        |  |              
|                                        |  | Year Ended   
|                                        |  | December 31, 
|                                        |  |              
|                                        |  | 2001          |       | 2000
|                                        |  |               |       |     
|                                        |  |              
|                                        |  | (In millions)
|Change in benefit obligation            |  |               |       |      |  |   |       |  
|Benefit obligation at beginning of year |  | $             | 201.8 |      |  | $ | 197.1 |  
|Service cost                            |  |               | 9.9   |      |  |   | 10.7  |  
|Interest cost                           |  |               | 11.3  |      |  |   | 11.3  |  
|Actuarial (gains) losses                |  |               | (7.0  | )    |  |   | 0.2   |  
|Benefits paid                           |  |               | (6.3  | )    |  |   | (5.7  | )
|Foreign currency exchange rate changes  |  |               | (9.4  | )    |  |   | (11.8 | )
|                                        |  |               |       |      |  |   |       |  
|Benefit obligation at end of year       |  | $             | 200.3 |      |  | $ | 201.8 |  
|                                        |  |               |       |      |  |   |       |  

F-32



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                               |  |               |       |      |  |   |       |  
|---------------------------------------------- |  | ------------- | ----- | ---- |  | - | ----- | -
|                                               |  |              
|                                               |  | Year Ended   
|                                               |  | December 31, 
|                                               |  |              
|                                               |  | 2001          |       | 2000
|                                               |  |               |       |     
|                                               |  |              
|                                               |  | (In millions)
|Change in plan assets                          |  |               |       |      |  |   |       |  
|Fair value of plan assets at beginning of year |  | $             | 269.1 |      |  | $ | 278.4 |  
|Actual return on plan assets                   |  |               | (31.0 | )    |  |   | 2.0   |  
|Company contributions                          |  |               | 8.0   |      |  |   | 8.6   |  
|Plan participants contributions               |  |               | 3.0   |      |  |   | 3.4   |  
|Benefits paid                                  |  |               | (6.3  | )    |  |   | (5.7  | )
|Foreign currency exchange rate changes         |  |               | (13.6 | )    |  |   | (17.6 | )
|                                               |  |               |       |      |  |   |       |  
|Fair value of plan assets at end of year       |  | $             | 229.2 |      |  | $ | 269.1 |  
|                                               |  |               |       |      |  |   |       |  
|Funded status of the plan                      |  | $             | 28.9  |      |  | $ | 67.3  |  
|Unrecognized net actuarial gains               |  |               | (12.4 | )    |  |   | (62.0 | )
|Unrecognized transition obligation             |  |               | 5.0   |      |  |   | 6.8   |  
|                                               |  |               |       |      |  |   |       |  
|Prepaid benefit cost                           |  | $             | 21.5  |      |  | $ | 12.1  |  
|                                               |  |               |       |      |  |   |       |  

|                       |                                                  |                         |  |               |  |  |  |               | 
|---------------------- | ------------------------------------------------ | ----------------------- |  | ------------- |  |  |  | ------------- | 
|                       |                                                  |                        
|                       |                                                  | Year Ended December 31,
|                       |                                                  |                        
|                       |                                                  | 2001                    |  | 2000         
|                       |                                                  |                         |  |              
|Actuarial assumptions: |                                                  |                         |  |               |  |  |  |              
|                       | Weighted average discount rate                   |                         |  | 6.00%         |  |  |  | 6.00%         | 
|                       | Weighted average rate of compensation increase   |                         |  | 3.50% - 4.00% |  |  |  | 3.50% - 4.25% | 
|                       | Expected long-term rate of return on plan assets |                         |  | 7.00% - 7.50% |  |  |  | 7.50% - 7.75% | 

The components of net pension costs are as
follows:

|                              |  |                         |       |      |  |      |       |   |  |   |       |  
|----------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                              |  |                        
|                              |  | Year Ended December 31,
|                              |  |                        
|                              |  | 2001                    |       | 2000 |  | 1999
|                              |  |                         |       |      |  |     
|                              |  |                        
|                              |  | (In millions)          
|Service cost                  |  | $                       | 9.9   |      |  | $    | 10.7  |   |  | $ | 12.0  |  
|Interest cost                 |  |                         | 11.3  |      |  |      | 11.3  |   |  |   | 12.0  |  
|Actual return on plan assets  |  |                         | 31.0  |      |  |      | (2.0  | ) |  |   | (43.1 | )
|Net amortization and deferral |  |                         | (51.9 | )    |  |      | (20.6 | ) |  |   | 26.8  |  
|                              |  |                         |       |      |  |      |       |   |  |   |       |  
|                              |  | $                       | 0.3   |      |  | $    | (0.6  | ) |  | $ | 7.7   |  
|                              |  |                         |       |      |  |      |       |   |  |   |       |  

18.     Leases

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

|                               |  |              |       |      |  |   |       |  
|------------------------------ |  | ------------ | ----- | ---- |  | - | ----- | -
|                               |  |             
|                               |  | December 31,
|                               |  |             
|                               |  | 2001         |       | 2000
|                               |  |              |       |     
|Land, buildings and equipment  |  | $            | 100.2 |      |  | $ | 95.8  |  
|Less: accumulated depreciation |  |              | (28.5 | )    |  |   | (22.2 | )
|                               |  |              |       |      |  |   |       |  
|                               |  | $            | 71.7  |      |  | $ | 73.6  |  
|                               |  |              |       |      |  |   |       |  

F-33



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Future minimum annual payments at
December 31, 2001 are as follows (in millions). The table
reflects the Companys contractual obligations, but the
entire obligation has been classified as current.

|                                         |  |         |        |           |  |   |       | 
|---------------------------------------- |  | ------- | ------ | --------- |  | - | ----- | 
|                                         |  | Capital |        | Operating
|                                         |  | Leases  |        | Leases   
|                                         |  |         |        |          
|Year ending December 31:                 |  |         |        |           |  |   |       | 
|2002                                     |  | $       | 9.3    |           |  | $ | 50.7  | 
|2003                                     |  |         | 8.2    |           |  |   | 48.1  | 
|2004                                     |  |         | 7.3    |           |  |   | 47.1  | 
|2005                                     |  |         | 6.5    |           |  |   | 45.1  | 
|2006                                     |  |         | 6.2    |           |  |   | 44.3  | 
|Thereafter                               |  |         | 155.2  |           |  |   | 390.8 | 
|                                         |  |         |        |           |  |   |       | 
|Total minimum lease payments             |  |         | 192.7  |           |  | $ | 626.1 | 
|                                         |  |         |        |           |  |   |       | 
|Less: amount representing interest       |  |         | (129.8 | )         |  |   |       | 
|                                         |  |         |        |           |  |   |       | 
|Present value of net minimum obligations |  |         | 62.9   |           |  |   |       | 
|Less: current portion                    |  |         | (62.9  | )         |  |   |       | 
|                                         |  |         |        |           |  |   |       | 
|                                         |  | $       |       |           |  |   |       | 
|                                         |  |         |        |           |  |   |       | 

Leases for buildings, office space and equipment
extend through 2031. Total rental expense for the years ended
December 31, 2001, 2000 and 1999 under operating leases was
$74.5 million, $46.2 million and $27.5 million,
respectively.

19.     Commitments
and Contingent Liabilities

At December 31, 2001, the Company was
committed to pay approximately $1,367.0 million for
equipment and services, which includes approximately
$1,061.0 million for certain operations and maintenance
contracts through 2006.

The Company had certain exclusive local delivery
operator licenses for Northern Ireland and other franchise areas
in the United Kingdom. Pursuant to these licenses, various
subsidiaries of the Company were required to make monthly cash
payments to the Independent Television Commission
(ITC) during the 15-year license terms. Upon a
request by the Company in 1999, the ITC converted all of the
Companys fee bearing exclusive licenses to non-exclusive
licenses by the end of 1999. In 1999, the Company paid
$30.1 million in connection with these licenses. Since the
Companys liability for the license payments ceased upon
the conversion, in 1999 the Company reversed an accrual for
franchise fees of $13.6 million.

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

20.     Industry
Segments

The Company has four reportable segments:
Broadcast Services, Consumer Services, Business Services and
Shared Services. The Broadcast Services segment operates in the
United Kingdom and includes digital and analog television and
radio broadcasting, rental of antenna space on the
Companys owned and leased towers and sites and associated
services, and satellite and media services. Consumer Services
include telephony, cable television, Internet access and
interactive services in regional franchise areas in the United
Kingdom and Ireland. The Business Services segment operates
primarily in the United Kingdom and includes telephony, national
and international wholesale carrier telecommunications, and
radio communications

F-34



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

services to the emergency services community.
Shared Services principally include network and information
technology management, finance, human resources and facilities
management. Shared Services also includes assets and related
depreciation and amortization that are not allocated to another
segment.

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

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

|                                   |  |               |       |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|---------------------------------- |  | ------------- | ----- | -------- |  | -------- | -------- | ------ |  | ----- | ------- |  |  | - | ------- | - |  | - | -------- | 
|                                   |  | Broadcast     |       | Consumer |  | Business |          | Shared |  | Total
|                                   |  |               |       |          |  |          |          |        |  |      
|                                   |  |              
|                                   |  | (In millions)
|Year ended December 31, 2001       |  |               |       |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|Revenues                           |  | $             | 283.6 |          |  | $        | 2,069.2  |        |  | $     | 836.8   |  |  | $ |        |   |  | $ | 3,189.6  | 
|Depreciation and amortization      |  |               | 76.0  |          |  |          | 1,840.5  |        |  |       | 587.9   |  |  |   | 35.9    |   |  |   | 2,540.3  | 
|EBITDA(1)                          |  |               | 143.9 |          |  |          | 738.7    |        |  |       | 335.2   |  |  |   | (565.7  | ) |  |   | 652.1    | 
|Expenditures for long-lived assets |  |               | 75.3  |          |  |          | 823.9    |        |  |       | 171.9   |  |  |   | 577.3   |   |  |   | 1,648.4  | 
|Total assets(2)                    |  |               | 792.5 |          |  |          | 8,008.0  |        |  |       | 3,287.0 |  |  |   | 938.6   |   |  |   | 13,026.1 | 
|Year ended December 31, 2000       |  |               |       |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|Revenues                           |  | $             | 263.8 |          |  | $        | 1,518.2  |        |  | $     | 702.2   |  |  | $ |        |   |  | $ | 2,484.2  | 
|Depreciation and amortization      |  |               | 53.2  |          |  |          | 1,443.6  |        |  |       | 184.2   |  |  |   | 19.7    |   |  |   | 1,700.7  | 
|EBITDA(1)                          |  |               | 130.3 |          |  |          | 410.8    |        |  |       | 232.4   |  |  |   | (481.6  | ) |  |   | 291.9    | 
|Expenditures for long-lived assets |  |               | 70.0  |          |  |          | 1,088.5  |        |  |       | 724.6   |  |  |   | 276.1   |   |  |   | 2,159.2  | 
|Total assets(3)                    |  |               | 804.8 |          |  |          | 17,910.7 |        |  |       | 3,746.0 |  |  |   | 685.0   |   |  |   | 23,146.5 | 
|Year ended December 31, 1999       |  |               |       |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|Revenues                           |  | $             | 257.3 |          |  | $        | 827.3    |        |  | $     | 452.5   |  |  | $ |        |   |  | $ | 1,537.1  | 
|Depreciation and amortization      |  |               | 52.7  |          |  |          | 580.0    |        |  |       | 104.1   |  |  |   | 28.9    |   |  |   | 765.7    | 
|EBITDA(1)                          |  |               | 140.4 |          |  |          | 245.0    |        |  |       | 106.6   |  |  |   | (279.3  | ) |  |   | 212.7    | 
|Expenditures for long-lived assets |  |               | 69.6  |          |  |          | 590.5    |        |  |       | 356.7   |  |  |   | 124.5   |   |  |   | 1,141.3  | 
|Total assets(4)                    |  |               | 698.4 |          |  |          | 6,646.5  |        |  |       | 1,319.1 |  |  |   | 1,069.0 |   |  |   | 9,733.0  | 

F-35



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



---



|    |                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents earnings before interest, taxes,
    depreciation and amortization, franchise fees, non-cash
    compensation, other charges, corporate expenses, asset
    impairments, share of (losses) from equity investments,
    other (losses) gains, foreign currency transaction gains
    (losses) and extraordinary items.
|   
|(2) | At December 31, 2001, shared assets included
    $189.8 million of cash and cash equivalents and
    $748.8 million in other assets.                                                                                                                                                                                             
|   
|(3) | At December 31, 2000, shared assets included
    $355.0 million of cash and cash equivalents and
    $330.0 million of other assets.                                                                                                                                                                                             
|   
|(4) | At December 31, 1999, shared assets included
    $828.6 million of cash, cash equivalents and marketable
    securities and $240.4 million in other assets.                                                                                                                                                                      

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

|                                                |                                             |                         |           |         |   |      |          |         |   |   |        |        |  
|----------------------------------------------- | ------------------------------------------- | ----------------------- | --------- | ------- | - | ---- | -------- | ------- | - | - | ------ | ------ | -
|                                                |                                             |                        
|                                                |                                             | Year Ended December 31,
|                                                |                                             |                        
|                                                |                                             | 2001                    |           | 2000    |   | 1999
|                                                |                                             |                         |           |         |   |     
|                                                |                                             |                        
|                                                |                                             | (In millions)          
|Segment Combined EBITDA                         |                                             | $                       | 652.1     |         |   | $    | 291.9    |         |   | $ | 212.7  |       
|(Add) Deduct:                                   |                                             |                         |           |         |   |      |          |         |   |   |        |       
|                                                | Franchise fees                              |                         |           |        |   |      |          |        |   |   |        | 16.5   |  
|                                                | Non-cash compensation                       |                         |           | 30.6    |   |      |          |        |   |   |        |       |  
|                                                | Other charges                               |                         |           | 297.9   |   |      |          | 92.7    |   |   |        | 16.2   |  
|                                                | Corporate expenses                          |                         |           | 24.3    |   |      |          | 23.7    |   |   |        | 25.3   |  
|                                                | Asset impairments                           |                         |           | 8,160.6 |   |      |          |        |   |   |        |       |  
|                                                | Depreciation and amortization               |                         |           | 2,540.3 |   |      |          | 1,700.7 |   |   |        | 765.7  |  
|                                                | Interest income and other, net              |                         |           | (34.7   | ) |      |          | (25.8   | ) |   |        | (48.2  | )
|                                                | Interest expense                            |                         |           | 1,240.8 |   |      |          | 886.3   |   |   |        | 678.1  |  
|                                                | Shares of losses from equity investments    |                         |           | 23.3    |   |      |          | 24.2    |   |   |        | 18.4   |  
|                                                | Other losses (gains)                        |                         |           | 88.5    |   |      |          |        |   |   |        | (493.1 | )
|                                                | Foreign currency transaction (gains) losses |                         |           | (0.6    | ) |      |          | 58.1    |   |   |        | (22.8  | )
|                                                |                                             |                         |           |         |   |      |          |         |   |   |        |       
|                                                |                                             |                         | 12,371.0  |         |   |      | 2,759.9  |         |   |   | 956.1  |       
|                                                |                                             |                         |           |         |   |      |          |         |   |   |        |       
|Loss before income taxes and extraordinary item |                                             | $                       | (11,718.9 | )       |   | $    | (2,468.0 | )       |   | $ | (743.4 | )     
|                                                |                                             |                         |           |         |   |      |          |         |   |   |        |       

21.     Geographic
Information

|                  |  |               |       |                |  |         |          |       |  |   |       |  |  |   |          | 
|----------------- |  | ------------- | ----- | -------------- |  | ------- | -------- | ----- |  | - | ----- |  |  | - | -------- | 
|                  |  | United States |       | United Kingdom |  | Ireland |          | Total
|                  |  |               |       |                |  |         |          |      
|                  |  |               |       |                |  |        
|                  |  |               |       | (In millions)  |  |        
|2001              |  |               |       |                |  |         |          |       |  |   |       |  |  |   |          | 
|Revenues          |  | $             |      |                |  | $       | 3,127.3  |       |  | $ | 62.3  |  |  | $ | 3,189.6  | 
|Long-lived assets |  |               | 151.3 |                |  |         | 11,703.3 |       |  |   | 162.6 |  |  |   | 12,017.2 | 
|2000              |  |               |       |                |  |         |          |       |  |   |       |  |  |   |          | 
|Revenues          |  | $             |      |                |  | $       | 2,423.0  |       |  | $ | 61.2  |  |  | $ | 2,484.2  | 
|Long-lived assets |  |               | 1.6   |                |  |         | 21,660.1 |       |  |   | 155.4 |  |  |   | 21,815.5 | 
|1999              |  |               |       |                |  |         |          |       |  |   |       |  |  |   |          | 
|Revenues          |  | $             |      |                |  | $       | 1,505.9  |       |  | $ | 31.2  |  |  | $ | 1,537.1  | 
|Long-lived assets |  |               | 1.6   |                |  |         | 8,143.6  |       |  |   | 148.0 |  |  |   | 8,293.2  | 

F-36



---



##### 



NTL COMMUNICATIONS CORP.

SCHEDULE I  CONDENSED FINANCIAL
INFORMATION OF REGISTRANT

CONSOLIDATED BALANCE SHEETS

|                                                                                                      |                                        |               |          |           |   |   |          |          |  
|----------------------------------------------------------------------------------------------------- | -------------------------------------- | ------------- | -------- | --------- | - | - | -------- | -------- | -
|                                                                                                      |                                        |              
|                                                                                                      |                                        | December 31, 
|                                                                                                      |                                        |              
|                                                                                                      |                                        | 2001          |          | 2000     
|                                                                                                      |                                        |               |          |          
|                                                                                                      |                                        |              
|                                                                                                      |                                        | (In millions)
|ASSETS                                                                                                |                                        |               |          |           |   |   |          |         
|Current assets:                                                                                       |                                        |               |          |           |   |   |          |         
|                                                                                                      | Cash and cash equivalents              |               | $        | 78.5      |   |   | $        | 168.2    |  
|                                                                                                      | Other                                  |               |          | 12.9      |   |   |          | 10.5     |  
|                                                                                                      |                                        |               |          |           |   |   |          |         
|Total current assets                                                                                  |                                        |               | 91.4     |           |   |   | 178.7    |         
|Office improvements and equipment, net of
    accumulated depreciation of $1.7 (2001) and $1.2 (2000) |                                        |               | 1.2      |           |   |   | 1.6      |         
|Investments in and loans to affiliates, net                                                           |                                        |               | 4,461.3  |           |   |   | 15,188.5 |         
|Deferred financing costs, net of accumulated
    amortization of $75.9 (2001) and $51.4 (2000)        |                                        |               | 154.1    |           |   |   | 136.6    |         
|Note receivable from NTL Incorporated                                                                 |                                        |               | 150.0    |           |   |   |         |         
|                                                                                                      |                                        |               |          |           |   |   |          |         
|Total assets                                                                                          |                                        | $             | 4,858.0  |           |   | $ | 15,505.4 |         
|                                                                                                      |                                        |               |          |           |   |   |          |         
|                                                                                                     
|LIABILITIES AND SHAREHOLDERS
    (DEFICIENCY) EQUITY                                                 |                                        |               |          |           |   |   |          |         
|Current liabilities                                                                                   |                                        | $             | 8,037    |           |   | $ | 96.8     |         
|Long-term debt                                                                                        |                                        |               |         |           |   |   | 6,396.4  |         
|Shareholders (deficiency) equity:                                                                    |                                        |               |          |           |   |   |          |         
|                                                                                                      | Common stock                           |               |          |          |   |   |          |         |  
|                                                                                                      | Additional paid-in capital             |               |          | 13,917.7  |   |   |          | 13,746.7 |  
|                                                                                                      | Accumulated other comprehensive (loss) |               |          | (904.5    | ) |   |          | (379.3   | )
|                                                                                                      | (Deficit)                              |               |          | (16,192.2 | ) |   |          | (4,355.2 | )
|                                                                                                      |                                        |               |          |           |   |   |          |         
|                                                                                                      |                                        |               | (3,179.0 | )         |   |   | 9,012.2  |         
|                                                                                                      |                                        |               |          |           |   |   |          |         
|Total liabilities and shareholders
    (deficiency) equity                                           |                                        | $             | 4,858.0  |           |   | $ | 15,505.4 |         
|                                                                                                      |                                        |               |          |           |   |   |          |         

See accompanying notes.

F-37



---



##### 



NTL COMMUNICATIONS CORP.


SCHEDULE I  CONDENSED FINANCIAL
INFORMATION OF REGISTRANT  (Continued)

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                                            |  |                         |           |      |  |      |          |   |  |   |        |  
|------------------------------------------------------------------------------------------- |  | ----------------------- | --------- | ---- |  | ---- | -------- | - |  | - | ------ | -
|                                                                                            |  |                        
|                                                                                            |  | Year Ended December 31,
|                                                                                            |  |                        
|                                                                                            |  | 2001                    |           | 2000 |  | 1999
|                                                                                            |  |                         |           |      |  |     
|                                                                                            |  |                        
|                                                                                            |  | (In millions)          
|Costs and expenses                                                                          |  |                         |           |      |  |      |          |   |  |   |        |  
|Corporate expenses                                                                          |  | $                       | 24.5      |      |  | $    | 23.6     |   |  | $ | 22.7   |  
|General and administrative expenses                                                         |  |                         | 3.2       |      |  |      | 5.9      |   |  |   |       |  
|Asset impairments                                                                           |  |                         | 1.0       |      |  |      |         |   |  |   |       |  
|Non-cash compensation                                                                       |  |                         | 30.6      |      |  |      |         |   |  |   |       |  
|Depreciation and amortization                                                               |  |                         | 25.0      |      |  |      | 19.7     |   |  |   | 18.3   |  
|                                                                                            |  |                         |           |      |  |      |          |   |  |   |        |  
|Operating (loss)                                                                            |  |                         | (84.3     | )    |  |      | (49.2    | ) |  |   | (41.0  | )
|Other income (expense)                                                                      |  |                         |           |      |  |      |          |   |  |   |        |  
|Interest income and other, net                                                              |  |                         | 26.9      |      |  |      | 14.4     |   |  |   | 121.6  |  
|Interest expense                                                                            |  |                         | (762.8    | )    |  |      | (599.4   | ) |  |   | (529.5 | )
|Foreign currency transaction gains                                                          |  |                         | 58.2      |      |  |      | 67.8     |   |  |   | 21.9   |  
|                                                                                            |  |                         |           |      |  |      |          |   |  |   |        |  
|(Loss) before income taxes, extraordinary item
    and equity in net (loss) of subsidiaries |  |                         | (762.0    | )    |  |      | (566.4   | ) |  |   | (427.0 | )
|Income tax expense                                                                          |  |                         |          |      |  |      |         |   |  |   | (1.0   | )
|                                                                                            |  |                         |           |      |  |      |          |   |  |   |        |  
|(Loss) before extraordinary item and equity in
    net (loss) of subsidiaries               |  |                         | (762.0    | )    |  |      | (566.4   | ) |  |   | (428.0 | )
|Loss from early extinguishment of debt                                                      |  |                         |          |      |  |      |         |   |  |   | (3.0   | )
|                                                                                            |  |                         |           |      |  |      |          |   |  |   |        |  
|(Loss) before equity in net (loss) of
    subsidiaries                                      |  |                         | (762.0    | )    |  |      | (566.4   | ) |  |   | (431.0 | )
|Equity in net (loss) of subsidiaries                                                        |  |                         | (11,075.0 | )    |  |      | (1,821.7 | ) |  |   | (285.5 | )
|                                                                                            |  |                         |           |      |  |      |          |   |  |   |        |  
|Net (loss)                                                                                  |  | $                       | (11,837.0 | )    |  | $    | (2,388.1 | ) |  | $ | (716.5 | )
|                                                                                            |  |                         |           |      |  |      |          |   |  |   |        |  

See accompanying notes.

F-38



---



##### 



NTL COMMUNICATIONS CORP.


SCHEDULE I  CONDENSED FINANCIAL
INFORMATION OF REGISTRANT  (Continued)

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                 |  |                         |          |      |  |      |          |   |  |   |          |  
|-------------------------------------------------------------------------------- |  | ----------------------- | -------- | ---- |  | ---- | -------- | - |  | - | -------- | -
|                                                                                 |  |                        
|                                                                                 |  | Year Ended December 31,
|                                                                                 |  |                        
|                                                                                 |  | 2001                    |          | 2000 |  | 1999
|                                                                                 |  |                         |          |      |  |     
|                                                                                 |  |                        
|                                                                                 |  | (In millions)          
|Net cash (used in) operating activities                                          |  | $                       | (399.0   | )    |  | $    | (293.8   | ) |  | $ | (118.3   | )
|Investing activities                                                             |  |                         |          |      |  |      |          |   |  |   |          |  
|Purchase of office improvements and equipment                                    |  |                         | (0.1     | )    |  |      | (0.5     | ) |  |   | (0.9     | )
|Purchase of marketable securities                                                |  |                         | (9.9     | )    |  |      |         |   |  |   | (354.5   | )
|Proceeds from sales of marketable securities                                     |  |                         | 10.0     |      |  |      | 5.0      |   |  |   | 618.6    |  
|Loan to NTL Incorporated                                                         |  |                         | (150.0   | )    |  |      |         |   |  |   |         |  
|Increase in investments in and loans to affiliates                               |  |                         | (956.8   | )    |  |      | (5,953.2 | ) |  |   | (1,164.8 | )
|                                                                                 |  |                         |          |      |  |      |          |   |  |   |          |  
|Net cash (used in) investing activities                                          |  |                         | (1,106.8 | )    |  |      | (5,948.7 | ) |  |   | (901.6   | )
|                                                                                
|Financing activities                                                             |  |                         |          |      |  |      |          |   |  |   |          |  
|Distribution to NTL (Delaware), Inc.                                             |  |                         | (10.6    | )    |  |      |         |   |  |   | (500.0   | )
|Contributions from NTL (Delaware),
    Inc.                                      |  |                         | 40.8     |      |  |      | 5,227.2  |   |  |   | 167.6    |  
|Proceeds from borrowings, net of financing costs                                 |  |                         | 1,385.9  |      |  |      | 476.3    |   |  |   | 1,846.0  |  
|Proceeds from issuance of preferred stock and
    warrants                       |  |                         |         |      |  |      |         |   |  |   | 500.0    |  
|Principal payments                                                               |  |                         |         |      |  |      | (73.7    | ) |  |   | (730.3   | )
|Proceeds from exercise of stock options and
    warrants                         |  |                         |         |      |  |      |         |   |  |   | 12.1     |  
|Cash released from (placed in) escrow for debt
    repayment                     |  |                         |         |      |  |      | 77.5     |   |  |   | (87.0    | )
|                                                                                 |  |                         |          |      |  |      |          |   |  |   |          |  
|Net cash provided by financing activities                                        |  |                         | 1,416.1  |      |  |      | 5,707.3  |   |  |   | 1,208.4  |  
|                                                                                 |  |                         |          |      |  |      |          |   |  |   |          |  
|(Decrease) increase in cash and cash equivalents                                 |  |                         | (89.7    | )    |  |      | (535.2   | ) |  |   | 188.5    |  
|Cash and cash equivalents at beginning of year                                   |  |                         | 168.2    |      |  |      | 703.4    |   |  |   | 514.9    |  
|                                                                                 |  |                         |          |      |  |      |          |   |  |   |          |  
|Cash and cash equivalents at end of year                                         |  | $                       | 78.5     |      |  | $    | 168.2    |   |  | $ | 703.4    |  
|                                                                                 |  |                         |          |      |  |      |          |   |  |   |          |  
|                                                                                
|Supplemental disclosure of cash flow
    information                             |  |                         |          |      |  |      |          |   |  |   |          |  
|Cash paid for interest                                                           |  | $                       | 424.3    |      |  | $    | 240.2    |   |  | $ | 209.1    |  
|Income taxes paid                                                                |  |                         |         |      |  |      | 0.4      |   |  |   |         |  
|Supplemental schedule of non-cash financing
    activities                       |  |                         |          |      |  |      |          |   |  |   |          |  
|Accretion of dividends and discount on preferred
    stock                       |  | $                       |         |      |  | $    |         |   |  | $ | 8.6      |  
|Conversion of Convertible Notes, net of
    unamortized deferred financing costs |  |                         | 109.5    |      |  |      |         |   |  |   | 269.3    |  
|Contribution from NTL (Delaware), Inc.                                           |  |                         | 110.2    |      |  |      |         |   |  |   |         |  
|Common stock and stock options issued for an
    acquisition                     |  | $                       |         |      |  |      |         |   |  |   | 978.0    |  

See accompanying notes.

F-39



---



##### 



NTL COMMUNICATIONS CORP.

SCHEDULE I  CONDENSED
FINANCIAL INFORMATION OF
REGISTRANT  (Continued)

NOTES TO CONDENSED FINANCIAL
STATEMENTS



|   |                        
|-- | -----------------------
|1. | Corporate Restructuring

On May 18, 2000, NTL Incorporated completed
a corporate restructuring to create a holding company structure
in connection with the acquisition of ConsumerCo. The holding
company restructuring was accomplished through a merger so that
all the stockholders of NTL Incorporated at the effective time
of the merger became stockholders of the new holding company,
and NTL Incorporated became a subsidiary of the new holding
company. The new holding company has taken the name NTL
Incorporated and the holding companys subsidiary
simultaneously changed its name to NTL (Delaware), Inc. NTL
Communications Corp. (the Company) is a wholly-owned
subsidiary of NTL (Delaware), Inc.

On February 21, 2001, the Company completed
a transaction whereby it acquired the entire issued share
capital of NTL (CWC Holdings) Limited (the entity that owns
ConsumerCo) from NTL Incorporated and the entire issued share
capital of NTL Business Limited (formerly Workplace Technologies
plc) from NTL (Delaware), Inc. in exchange for shares of its
common stock. As a result of this transaction, ConsumerCo and
NTL Business Limited became wholly-owned subsidiaries of the
Company. The Company accounted for the transaction in a manner
consistent with a transfer of entities under common control,
which is similar to a pooling of interests.
Accordingly, the net assets and results of operations of
ConsumerCo and NTL Business Limited have been included in the
financial statements from their respective dates of acquisition.



|   |                      
|-- | ---------------------
|2. | Basis of Presentation

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



|   |               
|-- | --------------
|3. | Long-Term Debt

Long-term debt consists of:

|                                                             |  |  |    |               |  |      |         |  |  |   |         | 
|------------------------------------------------------------ |  |  | -- | ------------- |  | ---- | ------- |  |  | - | ------- | 
|                                                             |  |  |    |              
|                                                             |  |  |    | December 31, 
|                                                             |  |  |    |              
|                                                             |  |  |    | 2001          |  | 2000
|                                                             |  |  |    |               |  |     
|                                                             |  |  |    |              
|                                                             |  |  |    | (In millions)
|12- 3/4% Senior Deferred Coupon Notes                        |  |  | (a | )             |  | $    | 277.8   |  |  | $ | 277.8   | 
|11- 1/2% Senior Deferred Coupon Notes                        |  |  | (b | )             |  |      | 1,050.0 |  |  |   | 1,040.5 | 
|10% Senior Notes                                             |  |  | (c | )             |  |      | 400.0   |  |  |   | 400.0   | 
|9- 1/2% Senior Sterling Notes, less
    unamortized discount |  |  | (d | )             |  |      | 181.4   |  |  |   | 186.5   | 
|10- 3/4% Senior Deferred Coupon Sterling
    Notes           |  |  | (e | )             |  |      | 382.3   |  |  |   | 353.6   | 
|9- 3/4% Senior Deferred Coupon Notes                         |  |  | (f | )             |  |      | 1,153.8 |  |  |   | 1,048.5 | 
|9- 3/4% Senior Deferred Coupon Sterling Notes                |  |  | (g | )             |  |      | 385.9   |  |  |   | 360.8   | 
|11- 1/2% Senior Notes                                        |  |  | (h | )             |  |      | 625.0   |  |  |   | 625.0   | 
|12- 3/8% Senior Deferred Coupon Notes                        |  |  | (i | )             |  |      | 364.9   |  |  |   | 323.6   | 
|7% Convertible Subordinated Notes                            |  |  | (j | )             |  |      | 489.8   |  |  |   | 599.3   | 
|9- 1/4% Senior Euro Notes                                    |  |  | (k | )             |  |      | 222.5   |  |  |   | 234.7   | 
|9- 7/8% Senior Euro Notes                                    |  |  | (l | )             |  |      | 311.5   |  |  |   | 328.6   | 
|11- 1/2% Senior Deferred Coupon Euro Notes                   |  |  | (m | )             |  |      | 135.6   |  |  |   | 127.9   | 
|11- 7/8% Senior Notes, less unamortized
    discount         |  |  | (n | )             |  |      | 490.7   |  |  |   | 489.6   | 

F-40



---



##### 



NTL COMMUNICATIONS CORP.


SCHEDULE I  CONDENSED
FINANCIAL INFORMATION OF
REGISTRANT  (Continued)

NOTES TO CONDENSED FINANCIAL
STATEMENTS



3.     Long-Term
Debt (continued)


|                                                         |  |  |    |               |  |      |         |  |  |   |         | 
|-------------------------------------------------------- |  |  | -- | ------------- |  | ---- | ------- |  |  | - | ------- | 
|                                                         |  |  |    |              
|                                                         |  |  |    | December 31, 
|                                                         |  |  |    |              
|                                                         |  |  |    | 2001          |  | 2000
|                                                         |  |  |    |               |  |     
|                                                         |  |  |    |              
|                                                         |  |  |    | (In millions)
|12- 3/8% Senior Euro Notes, plus unamortized
    premium |  |  | (o | )             |  |      | 267.8   |  |  |   |        | 
|6- 3/4% Convertible Senior Notes                         |  |  | (p | )             |  |      | 1,150.0 |  |  |   |        | 
|                                                         |  |  |    |               |  |      |         |  |  |   |         | 
|                                                         |  |  |    |               |  |      | 7,889.0 |  |  |   | 6,396.4 | 
|Less current portion                                     |  |  |    |               |  |      | 7,889.0 |  |  |   |         | 
|                                                         |  |  |    |               |  |      |         |  |  |   |         | 
|                                                         |  |  |    |               |  | $    |        |  |  | $ | 6,396.4 | 
|                                                         |  |  |    |               |  |      |         |  |  |   |         | 



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | 12- 3/4% Notes due April 15, 2005,
    principal amount at maturity of $277.8 million, interest
    payable semiannually from on October 15, 2000, redeemable
    at the Companys option on or after April 15, 2000;                                                                                                                                                                                                                                               
|   
|(b) |  | 11- 1/2% Notes due February 1, 2006,
    principal amount at maturity of $1,050.0 million, interest
    payable semiannually from August 1, 2001, redeemable at the
    Companys option on or after February 1, 2001;                                                                                                                                                                                                                                              
|   
|(c) |  | 10% Notes due February 15, 2007, principal
    amount at maturity of $400.0 million, interest payable
    semiannually from August 15, 1997, redeemable at the
    Companys option on or after February 15, 2002;                                                                                                                                                                                                                                                  
|   
|(d) |  | 9- 1/2% Sterling Notes due April 1,
    2008, principal amount at maturity of £125.0 million
    ($181.8 million), interest payable semiannually from
    October 1, 1998, redeemable at the Companys option on
    or after April 1, 2003;                                                                                                                                                                                                                        
|   
|(e) |  | 10- 3/4% Sterling Notes due April 1,
    2008, principal amount at maturity of £300.0 million
    ($436.3 million), interest payable semiannually beginning
    on October 1, 2003, redeemable at the Companys option
    on or after April 1, 2003;                                                                                                                                                                                                               
|   
|(f) |  | 9- 3/4% Notes due April 1, 2008,
    principal amount at maturity of $1,300.0 million, interest
    payable semiannually beginning on October 1, 2003,
    redeemable at the Companys option on or after
    April 1, 2003;                                                                                                                                                                                                                                        
|   
|(g) |  | 9- 3/4% Sterling Notes due April 15,
    2009, principal amount at maturity of £330.0 million
    ($479.9 million), interest payable semiannually beginning
    on October 15, 2004, redeemable at the Companys
    option on or after April 15, 2004;                                                                                                                                                                                                             
|   
|(h) |  | 11- 1/2% Notes due October 1, 2008,
    principal amount at maturity of $625.0 million, interest
    payable semiannually from April 1, 1999, redeemable at the
    Companys option on or after October 1, 2003;                                                                                                                                                                                                                                                   
|   
|(i) |  | 12- 3/8% Notes due October 1, 2008,
    principal amount at maturity of $450.0 million, interest
    payable semiannually beginning on April 1, 2004, redeemable
    at the Companys option on or after October 1, 2003;                                                                                                                                                                                                                                           
|   
|(j) |  | 7% Convertible Notes due December 15, 2008,
    principal amount at maturity of $489.8 million, interest
    payable semiannually from June 15, 1999, convertible into
    shares of NTL Incorporated common stock at a conversion price of
    $39.20 per share, redeemable at the Companys option on or
    after December 15, 2001 (there are approximately
    12.5 million shares of NTL Incorporated common stock
    reserved for issuance upon conversion);
|   
|(k) |  | 9- 1/4% Euro Notes due November 15,
    2006, principal amount at maturity of
    250.0 million
    ($222.5 million), interest payable semiannually from
    May 15, 2000;                                                                                                                                                                                                                                                                                         
|   
|(l) |  | 9- 7/8% Euro Notes due November 15,
    2009, principal amount at maturity of
    350.0 million
    ($311.5 million), interest payable semiannually from
    May 15, 2000, redeemable at the Companys option on or
    after November 15, 2004;                                                                                                                                                                                                                   

F-41



---



##### 



NTL COMMUNICATIONS CORP.


SCHEDULE I  CONDENSED
FINANCIAL INFORMATION OF
REGISTRANT  (Continued)

NOTES TO CONDENSED FINANCIAL
STATEMENTS



3.     Long-Term
Debt (continued)




|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(m) |  | 11- 1/2% Deferred Euro Notes due
    November 15, 2009, principal amount at maturity of
    210.0 million
    ($186.9 million), interest payable semiannually beginning
    on May 15, 2005, redeemable at the Companys option on
    or after November 15, 2004 and;                                                                                                                                                                                                                              
|   
|(n) |  | 11- 7/8% Notes due October 1, 2010,
    principal amount at maturity of $500.0 million, interest
    payable semiannually from April 1, 2001, redeemable at the
    Companys option on or after October 1, 2005;                                                                                                                                                                                                                                                                                    
|   
|(o) |  | 12- 3/8% Senior Euro Notes due
    February 1, 2008, issued in January and February 2001,
    principal amount at maturity of
    300.0 million
    ($267.0 million), interest payable semiannually from
    August 1, 2001;                                                                                                                                                                                                                                                                        
|   
|(p) |  | 6- 3/4% Convertible Senior Notes due
    May 15, 2008, issued in May 2001, principal amount at
    maturity of $1,150.0 million, interest payable semiannually
    from November 15, 2001, convertible into shares of NTL
    Incorporated common stock at a conversion price of $32.728 per
    share, redeemable at the Companys option on or after
    May 20, 2004 (there are approximately 35.1 million
    shares of NTL Incorporated common stock reserved for issuance
    upon conversion);

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

During 2001, 2000 and 1999, the Company
recognized $243.5 million, $334.3 million and
$308.1 million, respectively, of original issue discount as
interest expense.

In connection with the Cablelink acquisition, the
Company issued $704.6 million principal amount Senior
Increasing Rate Notes due 2000. In November 1999, the Company
received net proceeds of $720.7 million from the issuance
of the 9- 1/4% Euro Notes, the 9- 7/8% Euro Notes and
the 11- 1/2% Deferred Euro Notes, of which
$716.5 million was used to repay the Senior Increasing Rate
Notes plus accrued interest. The Company recorded an
extraordinary loss from the early extinguishment of the notes of
$3.0 million in 1999.

Long-term debt repayments are due as follows (in
millions). The table reflects the Companys contractual
obligations, but the entire obligation has been classified as
current.

|                         |                       |  |   |          |  
|------------------------ | --------------------- |  | - | -------- | -
|Year ending December 31: |                       |  |   |         
|                         | 2002                  |  | $ |         |  
|                         | 2003                  |  |   |         |  
|                         | 2004                  |  |   |         |  
|                         | 2005                  |  |   | 277.8    |  
|                         | 2006                  |  |   | 1,272.5  |  
|                         | Thereafter            |  |   | 6,778.2  |  
|                         |                       |  |   |         
|                         | Total debt repayments |  |   | 8,328.5  |  
|                         | Less: current portion |  |   | (8,328.5 | )
|                         |                       |  |   |         
|                         |                       |  | $ |         |  
|                         |                       |  |   |         



|   |       
|-- | ------
|4. | Leases

Leases for office space end in 2004. Total rental
expense for the years ended December 31, 2001, 2000 and
1999 under operating leases was $1.8 million,
$2.0 million and $1.2 million, respectively.

F-42



---



##### 



NTL COMMUNICATIONS CORP.


SCHEDULE I  CONDENSED
FINANCIAL INFORMATION OF
REGISTRANT  (Continued)

NOTES TO CONDENSED FINANCIAL
STATEMENTS



4.     Leases
(continued)


Future minimum lease payments under
noncancellable operating leases as of December 31, 2001 are
(in millions): $77.7 (2002), $56.3 (2003), $39.7 (2004) and
$29.7 (2005).



|   |      
|-- | -----
|5. | Other

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

No cash dividends were paid to the registrant by
subsidiaries for the years ended December 31, 2001, 2000
and 1999.

F-43



---



##### 



NTL COMMUNICATIONS CORP. AND
SUBSIDIARIES

SCHEDULE II  VALUATION
AND QUALIFYING ACCOUNTS

|                             |                                 |              |   |            |  |            |   |                        |  |           |   |   |  |  |   |       |      |  |   |       | 
|---------------------------- | ------------------------------- | ------------ | - | ---------- |  | ---------- | - | ---------------------- |  | --------- | - | - |  |  | - | ----- | ---- |  | - | ----- | 
|                             |                                 |              |   |            |  |            |   |                       
|Col. A                       |                                 | Col. B       |   | Col. C     |  | Col. D     |   | Col. E                
|                             |                                 |              |   |            |  |            |   |                       
|                             |                                 |              |   |            |  |            |   |                       
|                             |                                 |              |   | Additions  |  |            |   |                       
|                             |                                 |              |   |            |  |            |   |                       
|                             |                                 |              |   |            |  | (2)        |   |                        |  |          
|                             |                                 |              |   | (1)        |  | Charged to |   |                        |  |          
|                             |                                 | Balance at   |   | Charged to |  | Other      |   |                        |  | Balance  
|                             |                                 | Beginning of |   | Costs and  |  | Accounts  |   | (Deductions)/Additions |  | at End   
|Description                  |                                 | Period       |   | Expenses   |  | Describe   |   | Describe               |  | of Period
|                             |                                 |              |   |            |  |            |   |                        |  |          
|Year ended December 31, 2001 |                                 |              |   |            |  |            |   |                        |  |           |   |   |  |  |   |       |      |  |   |      
|                             | Allowance for doubtful accounts |              | $ | 135.2      |  |            | $ | 58.3                   |  |           | $ |  |  |  | $ | (67.4 | )(b) |  | $ | 126.1 | 
|                             |                                 |              |   |            |  |            |   |                        |  |           |   |   |  |  |   |       |      |  |   |      
|Year ended December 31, 2000 |                                 |              |   |            |  |            |   |                        |  |           |   |   |  |  |   |       |      |  |   |      
|                             | Allowance for doubtful accounts |              | $ | 84.9       |  |            | $ | 98.5                   |  |           | $ |  |  |  | $ | (48.2 | )(c) |  | $ | 135.2 | 
|                             |                                 |              |   |            |  |            |   |                        |  |           |   |   |  |  |   |       |      |  |   |      
|Year ended December 31, 1999 |                                 |              |   |            |  |            |   |                        |  |           |   |   |  |  |   |       |      |  |   |      
|                             | Allowance for doubtful accounts |              | $ | 38.5       |  |            | $ | 45.7                   |  |           | $ |  |  |  | $ | 0.7   | (a)  |  | $ | 84.9  | 
|                             |                                 |              |   |            |  |            |   |                        |  |           |   |   |  |  |   |       |      |  |   |      



---



|    |                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Uncollectible accounts written-off, net of
    recoveries of $63.5 million and $3.9 million foreign
    currency translation adjustments.                                                                                                                            
|   
|(b) | Uncollectible accounts written-off, net of
    recoveries of $91.6 million and $5.7 million foreign
    exchange currency translation adjustments, offset by
    $49.1 million allowance for doubtful accounts as of
    acquisition dates of purchased subsidiaries.
|   
|(c) | Uncollectible accounts written-off, net of
    recoveries of $15.1 million and $1.1 million foreign
    currency exchange translation adjustments, offset by
    $16.9 million allowance for doubtful accounts as of
    acquisition dates of purchased subsidiaries.

F-44