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SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




| | The following items were the subject of a Form 12b-25 and were previously omitted pursuant to Rule 12b-21,
and are included herein: the financial statements and related notes and financial statement schedules
of NTL Europe, Inc. and NTL (Delaware), Inc. as of December 31, 2002 and 2001,
and for the three years ended December 31, 2002 required by Rule 3-10 of
Regulation S-X.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Form 10-K/A

Amendment No. 3


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

or

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

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

Commission file no. 0-22616

NTL Incorporated

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

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

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

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

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

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

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

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





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

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

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

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

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



---

DOCUMENTS INCORPORATED BY REFERENCE

NONE





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Explanatory Note

We are filing this Amendment
No. 3 on Form 10-K/A to our Annual Report on Form 10-K
for the period ending December 31, 2002, which was filed on
March 31, 2002 and subsequently amended by Amendment No. 1
thereto, filed on April 15, 2003, and by Amendment No. 2
thereto, filed on April 29, 2003 (as so amended, the
Form 10-K) to amend and restate the Form 10-K
in its entirety to include: (i) the financial statements and
related notes and financial statement schedules of NTL Europe,
Inc. and NTL (Delaware), Inc. as of December 31, 2002 and
2001, and for the three years ended December 31, 2002 required
by Rule 3-10 of Regulation S-X, which were previously the
subject of a Form 12b-25 and previously omitted pursuant to
Rule 12b-21; and (ii) to correct an inadvertent error in the
table summarizing restructuring charges incurred and utilized in
2000, 2001 and 2002, which appears under Results of
Operations in Item 7 (Managements Discussion and
Analysis) and under Note 13 (Other Charges Including
Restructuring Charges) in the Notes to Consolidated Financial
Statements, by adjusting the amounts set forth in the 2002
provision utilized row to decrease Employee Severance and
Related Costs by $7.7 million and make a corresponding
increase in the Other column.

In addition, our principal executive
officer and principal financial officer are providing the
certifications required by Rule 13a-14, promulgated under the
Securities Act of 1934, as amended, and 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, in connection with this Form 10-K/A.
Except as described above, no other changes have been made to the
Form 10-K.

IMPORTANT EXPLANATORY NOTE
REGARDING THE CONSOLIDATED FINANCIAL STATEMENTS OF NTL (EUROPE),
INC. AND NTL (DELAWARE), INC. INCLUDED IN THIS ANNUAL REPORT

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

Because the Convertible Notes were outstanding as of December 31, 2002, Rule 3-10 of Regulation S-X requires our Annual Report on Form 10-K for the year
ended December 31, 2002 to include consolidated balance sheets for each of NTL Europe, Inc. and NTL (Delaware), Inc. as of December 31, 2002 and 2001 and
consolidated statements of operations and cash flows of each of NTL Europe,
Inc. and NTL (Delaware), Inc. for the years ended December 31, 2002, 2001 and
2000 and the related notes and financial statement schedules (the
Co-obligor Financial Statements). The Co-obligor
Financial Statements are included in this Amendment No. 3 on
Form 10-K/A to our Annual Report on Form 10-K for the
period ending December 31, 2002.

In reviewing this Annual Report,
including the Co-obligor Financial Statements, you should be aware
that since the consummation of the Plan, we are no longer affiliated
with NTL Europe, Inc. or NTL (Delaware), Inc. and the
business and operations of those companies are separate from our
business and operations. In addition, in evaluating our historical
performance, you should be aware that prior to the consummation of
the Plan, NTL Europe, Inc. and NTL (Delaware), Inc. were parent
holding companies of the Company and, consequently, their assets and
liabilities and cash flows (except those relating to our group) were historically never part of our
consolidated group.





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TABLE OF CONTENTS



|                                    |                                                                                                         |  |  |  |  |  |  | 
|----------------------------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                             
|                                    | Item 1. Business                                                                                       
|                                    | Item 2. Properties                                                                                     
|                                    | Item 3. Legal Proceedings                                                                              
|                                    | Item 4. Submission of Matters to a Vote of Security Holders                                            
|PART II                            
|                                    | Item 5. Market for the Registrants Common Equity and Related Stockholder Matters                      
|                                    | Item 6. Selected Financial Data                                                                        
|                                    | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations          
|                                    | Item 7a. Quantitative and Qualitative Disclosures About Market Risk                                    
|                                    | Item 8. Financial Statements and Supplementary Data.                                                   
|                                    | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           
|PART III                           
|                                    | Item 10. Directors and Executive Officers of the Registrant                                            
|                                    | Item 11. Executive Compensation                                                                        
|                                    | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|                                    | Item 13. Certain Relationships and Related Transactions                                                
|                                    | Item 14. Controls and Procedures                                                                       
|PART IV                            
|                                    | Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                              
|EXHIBIT INDEX                      
|SIGNATURE                          
|CERTIFICATIONS                     
|EX-99.1: CERTIFICATION OF CEO & CFO



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Table of Contents

|               |  |                                                                                                |    |  |    | 
|-------------- |  | ---------------------------------------------------------------------------------------------- | -- |  | -- | 
|PART I         |  |                                                                                                |    |  | 2  | 
|Item 1.        |  | Business                                                                                       |    |  | 4  | 
|Item 2.        |  | Properties                                                                                     |    |  | 26 | 
|Item 3.        |  | Legal Proceedings                                                                              |    |  | 27 | 
|Item 4.        |  | Submission of Matters to a Vote of Security Holders                                            |    |  | 27 | 
|PART II        |  |                                                                                                |    |  | 27 | 
|Item 5.        |  | Market for the Registrants Common Equity and Related Stockholder Matters                      |    |  | 27 | 
|Item 6.        |  | Selected Financial Data                                                                        |    |  | 28 | 
|Item 7.        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations          |    |  | 31 | 
|Item 7a.       |  | Quantitative and Qualitative Disclosures About Market Risk                                     |    |  | 46 | 
|Item 8.        |  | Financial Statements and Supplementary Data                                                    |    |  | 54 | 
|Item 9.        |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           |    |  | 55 | 
|PART III       |  |                                                                                                |    |  | 56 | 
|Item 10.       |  | Directors and Executive Officers of the Registrant                                             |    |  | 56 | 
|Item 11.       |  | Executive Compensation                                                                         |    |  | 62 | 
|Item 12.       |  | Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters |    |  | 67 | 
|Item 13.       |  | Certain Relationships and Related Transactions                                                 |    |  | 71 | 
|Item 14.       |  | Controls and Procedures                                                                        |    |  | 75 | 
|PART IV        |  |                                                                                                |    |  | 75 | 
|Item 15.       |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                               |    |  | 75 | 
|SIGNATURE      |  |                                                                                                | 80 | 
|CERTIFICATIONS |  |                                                                                                | 81 | 





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Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:

Certain statements contained herein constitute forward-looking
statements as that term is defined under the Private Securities Litigation
Reform Act of 1995. When used in this Form 10-K/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 beginning on
page 47, as well as: the
impact of our organizational restructuring and integration actions; our ability
to maintain contracts that are critical to our operations; potential adverse
developments with respect to our liquidity or results of operations; our
ability to fund and execute our business plan; our ability to attract, retain
and compensate key executives and associates; our ability to attract and retain
customers; general economic and business conditions; technological
developments; our ability to continue to design networks, install facilities,
obtain and maintain any required governmental licenses or approvals and finance
construction and development, all in a timely manner at reasonable costs and on
satisfactory terms and conditions; assumptions about customer acceptance, churn
rates, overall market penetration and competition from providers of alternative
services; the impact of new business opportunities requiring significant
up-front investment; and interest rate and currency exchange rate fluctuations.
We assume no obligation to update the forward-looking statements contained
herein to reflect actual results, changes in assumptions or changes in factors
affecting such statements.

In this
Report on Form 10-K/A, references to (pound sterling) pounds
sterling, (pound) or pence are to the lawful currency of the UK,
references to (euro) or Euro are to the lawful currency of the European
Monetary Union and references to U.S. dollars, dollars or $ are to the
lawful currency of the United States. Solely for the convenience of the reader,
this Form 10-K/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 translations as representations that the foreign currency
amounts actually represent such U.S. dollar amounts or vice versa or could have
been or could be or will be converted into U.S. dollars or foreign currencies,
as the case may be, at the rate indicated or at any other rate. Unless
otherwise indicated, the translations of foreign currencies into U.S. dollars
and U.S. dollars into foreign currencies have been made at $1.6095 per (pound) 1.00 and $1.0485 per (euro) 1.00, the noon buying rates in the City of
New York for cable transfers as certified for customs purposes by the Federal
Reserve Bank of New York (the Noon Buying Rate) on December 31, 2002. On
March 27, 2003, the Noon Buying Rate was $1.5676 per (pound) 1.00 and $1.0708
per (euro) 1.00.





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PART I

NTL CORPORATE STRUCTURE

NTLs Completed Restructuring

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

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

Historical Structure of the Company

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

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

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

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

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

2



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##### Table of Contents



Summary Corporate Structure

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

(Summary Corporate Structure Chart)

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

3



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Item 1. Business

RECENT DEVELOPMENTS

NTLs Completed Restructuring

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

Vodafone Dispute Settled

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

Appointment of Non-Executive Chairman

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

Appointment of Chief Financial Officer

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

Appointment of Chief Operating Officer

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

ABOUT NTL INCORPORATED

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

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



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

4



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

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

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



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

NTLs Businesses in the UK

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

5



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

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



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

I. ntl: home

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

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

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

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

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

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

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

Internet access

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

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

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

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

Broadband Internet access

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

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

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

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

Franchise customers

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



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

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

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

Cable television

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

Interactive services

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

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

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

Telephony

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

Wholesale Internet

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

Indirect access

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

Customer management systems

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

II. ntl: business

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

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

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

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

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

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

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

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



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

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

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



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

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

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



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

III. ntl: broadcast

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

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

We provide products and services to four distinct market areas:



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

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

Site Leasing and Services

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

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

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

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

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

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

Broadcast Transmission and Services

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

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

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

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

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

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

Satellite and Media Services

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

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



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

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

Public Safety

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

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

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

IV. ntl: networks

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

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

Architecture & Standards

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

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

Capacity Management

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

Network Operations

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

V. ntl: carrier services and mobile

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

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

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

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

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

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

NTLs Businesses and Investments in the Republic of Ireland

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

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

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

Among our recent highlights, NTL Ireland:



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

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

Cable Television

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

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

Telephony

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

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

Internet

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

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

NTLs Customer Statistics as of December 31, 2002

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

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

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



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

Other Operations

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

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

Competition in the UK

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

Consumer Services

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

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

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

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

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

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

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

Business Telecommunications

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

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

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

Broadcast Transmission and Tower Services

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

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

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

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

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

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

Carrier Services and Mobile

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

Competition in the Republic of Ireland

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

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

Government Regulation

Regulation in the UK

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



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

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

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

Price Regulation

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

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

Number Portability

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

Local Loop Unbundling

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

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

Interconnection

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

Open Access to Cable Infrastructure

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

BSkyB

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

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



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



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

Competition Act 1998

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

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

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

The Enterprise Act

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

The main reforms in the Act are:

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

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

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

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

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

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

Mobile Phone Termination Charges

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

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



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

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

Broadcast Services

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

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Telecommunications Act and Broadcasting Act Licenses

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



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

Price Cap Review

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

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

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

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

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

Communications Bill

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

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

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

Regulation in the Republic of Ireland

Legislation and Licensing

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

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

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

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

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

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

MMDS Business

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

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

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

European Union Legislation

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

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

Research and Development

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

Patents, Trademarks, Copyrights and Licenses

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

Customers

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

Employees

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




Item 2. Properties

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

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

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

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




Item 3. Legal Proceedings

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

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

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




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

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




PART II




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

(a) Market Information.

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

(b) Holders.

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

(c) Dividends.

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

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

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

(e) Sales of unregistered securities.

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

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

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




Item 6.Selected Financial Data

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

Beginning on May 8, 2002, the date that we, NTL Europe and certain or our
and NTL Europes subsidiaries filed the Plan under Chapter 11 of the US
Bankruptcy Code, we have prepared our consolidated financial statements in
accordance with the American Institute of Certified Public Accountants
Statement of Position 90-7, Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code (referred to as SOP 90-7 in this annual report).
Pursuant to SOP 90-7, beginning on May 8, 2002 we discontinued accruing
interest expense on certain of our prepetition obligations. Our reported
interest expense in 2002 excludes $662.9 million of contractual interest for
the period from May 8, 2002 to December 31, 2002. Also in 2002,
recapitalization items, net were $151.8 million. Recapitalization items
include all transactions incurred as a result of our Chapter 11 reorganization.
Recapitalization items, net include $36.2 million for employee retention
related to substantially all of our UK employees and $116.7 million for
financial advisory, legal, accounting and consulting costs. These costs are net
of $1.1 million of interest earned on accumulated cash since the Chapter 11
filing on May 8, 2002.

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

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

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

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

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

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

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

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

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

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

NTLs Completed Restructuring

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

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

Background of Restructuring

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

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

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

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

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

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

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

Pro Forma Consolidated Balance Sheet as of December 31, 2002

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

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

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

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

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

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

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Liquidity and Capital Resources

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

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

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

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

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

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

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

Description of Outstanding Notes and Credit Facilities

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

NTL Incorporated:

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

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

NTL Communications Limited:

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

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

(3)    Senior Credit Facility originally dated May 30, 2000 (and
subsequently amended and restated) of £2,784.8 million ($4,482.1
million), all of which was outstanding as of December 31, 2002;
comprising a revolving facility of £2,584.8 million ($4,160.2 million)
and a term facility of £200.0 million ($321.9 million); interest payable
at least every six months at LIBOR plus mandatory costs plus a margin
rate which, in the case of the revolving facility, is fixed at 3.50% per
annum for six months from January 10, 2003 and which then varies,
depending upon satisfaction of a financial covenant over six monthly
periods, between 4.00% and 2.50% per annum and which, in the case of the
term facility, is fixed at 5.50% per annum; effective interest rate on
the revolving facility of 6.26% per annum at December 31, 2002; effective
interest rate on the term facility of 7.76% per annum at December 31,
2002; the unused portion of the commitment to make the revolving facility
available is subject to a commitment fee of 0.75% payable quarterly,
which is reduced to 0.50% when over 50% of the commitment is utilized;
principal then outstanding under the revolving facility is due in full on
September 30, 2005; principal under the term facility is due in six
quarterly installments beginning on June 30, 2006 and increasing from £5
million repayments due on the first two repayment dates to £10 million
repayments due on the next three repayment dates with the balance being
due on September 30, 2007;

NTL Triangle:

(4)  11.2% Senior Discount Debentures due November 15, 2007, principal
amount at maturity of $517.3 million, interest payable semiannually from
May 15, 2001, redeemable at NTL Triangles option after November 15, 2000;

Diamond Holdings:

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

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

Contractual Obligations and Commercial Commitments

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

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Payments Due by Period

|                                   |  |               |         |        |  |           |       |       |  |         |         |       |  |   |         |  |  |   |         | 
|---------------------------------- |  | ------------- | ------- | ------ |  | --------- | ----- | ----- |  | ------- | ------- | ----- |  | - | ------- |  |  | - | ------- | 
|Contractual                        |  |               |         |        |  | Less than |       | 1-3   |  | 4-5     |         | After
|Obligations                        |  | Total         |         | 1 Year |  | Years     |       | Years |  | 5 Years
|                                   |  |               |         |        |  |           |       |       |  |        
|                                   |  | (in millions)
|Long-Term Debt                     |  | $             | 6,545.1 |        |  | $         | 0.4   |       |  | $       | 4,161.0 |       |  | $ | 1,497.1 |  |  | $ | 886.6   | 
|Capital Lease Obligations          |  |               | 206.8   |        |  |           | 9.3   |       |  |         | 17.0    |       |  |   | 13.8    |  |  |   | 166.7   | 
|Operating Leases                   |  |               | 716.3   |        |  |           | 84.0  |       |  |         | 131.3   |       |  |   | 106.5   |  |  |   | 394.5   | 
|Unconditional Purchase Obligations |  |               | 1,422.0 |        |  |           | 437.6 |       |  |         | 219.1   |       |  |   | 218.8   |  |  |   | 546.5   | 
|Other Long-Term Obligations        |  |               | none    |        |  |           |      |       |  |         |        |       |  |   |        |  |  |   |        | 
|                                   |  |               |         |        |  |           |       |       |  |         |         |       |  |   |         |  |  |   |         | 
|Total Contractual Cash Obligations |  | $             | 8,890.2 |        |  | $         | 531.3 |       |  | $       | 4,528.4 |       |  | $ | 1,836.2 |  |  | $ | 1,994.3 | 
|                                   |  |               |         |        |  |           |       |       |  |         |         |       |  |   |         |  |  |   |         | 

The following table includes aggregate information about our commercial
commitments as of December 31, 2002. Commercial commitments are items that we
could be obligated to pay in the future. They are not required to be included
in the consolidated balance sheet.

Amount of Commitment Expiration Per Period

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

Consolidated Statements of Cash Flows

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

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

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

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

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

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

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

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

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

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

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

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

Results of Operations

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

We provide a broad range of communication services, including: (1)
consumer telecommunications and television, (2) business telecommunications and
(3) broadcast transmission and other related services. Our consumer
telecommunications and television services comprise broadband services to
consumer markets including residential telephone, analog and digital cable
television, Internet access, and interactive services. Our business
telecommunications services include business telecommunications, national and
international carrier telecommunications, Internet services, and managed
network services. Our broadcast transmission and other services include
digital and analog television and radio broadcast transmission services,
satellite and media services for programmers, news agencies, sports
broadcasters and production companies, and tower site rental and associated
services to a variety of carriers operating wireless networks.

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

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

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

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

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

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

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

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

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

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

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

Years Ended December 31, 2002 and 2001

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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|                           |  |             |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |   |        |  
|-------------------------- |  | ----------- | ----- | ----- |  | ------------- | ----- | ------ |  | ----- | ----- | ----- |  | - | ----- | - |  | - | ---- | - |  | - | ------ | -
|                           |  | Employee    |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |  
|                           |  | Severance   |       | Lease |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |  
|                           |  | and Related |       | Exit  |  | Agreement     |       | Fixed  |  |       |       |       |  |   |       |  
|                           |  | Costs       |       | Costs |  | Modifications |       | Assets |  | Other |       | Total
|                           |  |             |       |       |  |               |       |        |  |       |       |      
|Charged to expense         |  | $           | 47.9  |       |  | $             | 18.0  |        |  | $     |      |       |  | $ |      |   |  | $ |     |   |  | $ | 65.9   |  
|Utilized                   |  |             |      |       |  |               |      |        |  |       |      |       |  |   |      |   |  |   |     |   |  |   |       |  
|                           |  |             |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |   |        |  
|Balance, December 31, 2000 |  |             | 47.9  |       |  |               | 18.0  |        |  |       |      |       |  |   |      |   |  |   |     |   |  |   | 65.9   |  
|2000 provision utilized    |  |             | (41.3 | )     |  |               | (9.6  | )      |  |       |      |       |  |   |      |   |  |   |     |   |  |   | (50.9  | )
|2000 provision released    |  |             | (6.6  | )     |  |               | (7.3  | )      |  |       |      |       |  |   |      |   |  |   |     |   |  |   | (13.9  | )
|Charged to expense         |  |             | 98.7  |       |  |               | 32.4  |        |  |       | 27.7  |       |  |   | 57.9  |   |  |   |     |   |  |   | 216.7  |  
|2001 provision utilized    |  |             | (26.2 | )     |  |               |      |        |  |       |      |       |  |   | (57.9 | ) |  |   |     |   |  |   | (84.1  | )
|                           |  |             |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |   |        |  
|Balance, December 31, 2001 |  |             | 72.5  |       |  |               | 33.5  |        |  |       | 27.7  |       |  |   |      |   |  |   |     |   |  |   | 133.7  |  
|2000 provision utilized    |  |             |      |       |  |               | (1.1  | )      |  |       |      |       |  |   |      |   |  |   |     |   |  |   | (1.1   | )
|2001 provision utilized    |  |             | (71.9 | )     |  |               | (17.3 | )      |  |       | (16.2 | )     |  |   |      |   |  |   |     |   |  |   | (105.4 | )
|2001 provision released    |  |             | (0.6  | )     |  |               | (15.1 | )      |  |       | (11.5 | )     |  |   |      |   |  |   |     |   |  |   | (27.2  | )
|Charged to expense         |  |             | 35.2  |       |  |               | 78.9  |        |  |       | 1.2   |       |  |   | 7.5   |   |  |   | 9.2  |   |  |   | 132.0  |  
|2002 provision utilized    |  |             | (15.6 | )     |  |               | (0.2  | )      |  |       |      |       |  |   | (7.5  | ) |  |   | (7.7 | ) |  |   | (31.0  | )
|                           |  |             |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |   |        |  
|Balance, December 31, 2002 |  | $           | 19.6  |       |  | $             | 78.7  |        |  | $     | 1.2   |       |  | $ |      |   |  | $ | 1.5  |   |  | $ | 101.0  |  
|                           |  |             |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |   |        |  

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

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

Amortization expense decreased to $63.7 million from $1,178.9 million due
to the adoption of SFAS No. 142 on January 1, 2002 which ended the amortization
of goodwill and other indefinite lived intangible assets. Amortization expense
in the year ended December 31, 2001, after deducting the amortization of
goodwill and other indefinite lived intangible assets of $1,104.9 million,
would have been $74.0 million but for the application of SFAS No. 142.

Interest expense decreased to $780.2 million from $1,240.8 million as a
result of the application of AICPA Statement of Position 90-7, Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code (SOP 90-7).
Pursuant to SOP 90-7, interest expense is included in the results of
operations only to the extent that it will be paid during the proceeding or
that it is probable that it will be an allowed priority, secured or unsecured
claim. In accordance with SOP 90-7, we did not recognize interest expense on
certain of our outstanding publicly traded notes on or after May 8, 2002 (the
date we and certain of our subsidiaries filed our Plan under Chapter 11 of the
Bankruptcy Code). Our contractual interest for the year ended December 31,
2002 was $1,425.4 million. The increase in contractual interest expense in
2002 as compared to 2001 is primarily due to additional borrowings under credit
facilities and the issuance of new notes in 2001. Interest of $456.3 million
and $844.3 million was paid in cash in the years ended December 31, 2002 and
2001, respectively.

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

Foreign currency transaction gains (losses) were losses of $94.1 million
in the year ended December 31, 2002 and gains of $0.6 million in the year ended
December 31, 2001. The change is primarily due to the effect of changes in
exchange rates. We and certain of our subsidiaries have cash, cash equivalents
and debt denominated in non-U.S. dollar currencies that are affected by changes
in exchange rates. In addition, certain of our foreign subsidiaries whose
functional currency is not the U.S. dollar have cash, cash equivalents and debt
denominated in U.S. dollars which are affected by changes in exchange rates.

Recapitalization items, net were $151.8 million in the year ended December
31, 2002. Recapitalization items include all transactions incurred as a result
of our Chapter 11 reorganization. Recapitalization items, net include $36.2
million for employee retention related to substantially all of our UK employees
and $116.7 million for financial advisory, legal, accounting and consulting
costs. These costs are net of $1.1 million of interest earned on accumulated
cash since the Chapter 11 filing on May 8, 2002.

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

Years Ended December 31, 2001 and 2000

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

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

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

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

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

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

Broadcast transmission and other revenues increased to $283.6 million in
2001 from $263.8 million in 2000. The increase reflects increases in the number
of broadcast television and FM radio customers and accounts, which exceeded
price cap reductions in our regulated services, and increases in satellite and
media services used by broadcast and media customers.

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

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

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

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

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

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

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

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

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

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

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

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

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

Critical Accounting Policies

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

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



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

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



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

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Recent Accounting
Pronouncements

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

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

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

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

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, effective for us on January 1, 2003. This Statement
addresses financial accounting and reporting for obligations associated with
the retirement of tangible fixed assets and the associated asset retirement
costs. The adoption of this new standard is not expected to have a significant effect on
our results of operations, financial condition or cash flows.

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

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

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

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

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

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

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




Item 7a.Quantitative and Qualitative Disclosures About Market Risk

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

Foreign Exchange Contracts

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

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

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

Interest Rates

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

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

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

NTL INCORPORATED (FORMERLY NTL COMMUNICATIONS CORP.) AND SUBSIDIARIES



|                                         |  |          |   |          |  |          |   |          |  |                |         |  |                |                |        |  |                |   |        |  
|---------------------------------------- |  | -------- | - | -------- |  | -------- | - | -------- |  | -------------- | ------- |  | -------------- | -------------- | ------ |  | -------------- | - | ------ | -
|                                         |  | Year     |   | Year     |  | Year     |   | Year     |  | Year          
|                                         |  | Ending   |   | Ending   |  | Ending   |   | Ending   |  | Ending        
|                                         |  | 12/31/03 |   | 12/31/04 |  | 12/31/05 |   | 12/31/06 |  | 12/31/07      
|                                         |  |          |   |          |  |          |   |          |  |               
|Long-term Debt
Including Current
Portion |  |          |   |          |  |          |   |          |  |                |         |  |                |                |        |  |                |   |        |  
|U.S. Dollars Fixed
Rate                  |  |          |  |          |  |          |  |          |  |                |        |  |                |                |       |  |                | $ | 517.3  |  
|Average Interest Rate                    |  |          |   |          |  |          |   |          |  |                |         |  |                |                |        |  |                |   | 11.20  | %
|UK Pound Fixed Rate                      |  |          |  |          |  |          |  |          |  |                |        |  |                |                |       |  |                |   |       |  
|Average Interest Rate                    |  |          |   |          |  |          |   |          |  |                |         |  |                |                |        |  |                |   |        |  
|Average Forward
Exchange Rate            |  |          |   |          |  |          |   |          |  |                |         |  |                |                |        |  |                |   |        |  
|UK Pound
Variable Rate                   |  |          |  |          |  |          |  |          |  | £              | 2,584.8 |  |                | £              | 408.3  |  |                |   |       |  
|Average Interest Rate                    |  |          |   |          |  |          |   |          |  | LIBOR plus 3.5 | %       |  | LIBOR plus 7.5 | %              |        |  |                |  
|Average Forward
Exchange Rate            |  |          |   |          |  |          |   |          |  |                | 1.5440  |  |                |                | 1.5366 |  |                |   |        |  
|UK Pound
Variable Rate                   |  |          |  |          |  |          |  |          |  |                |        |  |                | £              | 20.0   |  |                | £ | 180.0  |  
|Average Interest Rate                    |  |          |   |          |  |          |   |          |  |                |         |  |                | LIBOR plus 5.5 | %      |  | LIBOR plus 5.5 | %
|Average Forward
Exchange Rate            |  |          |   |          |  |          |   |          |  |                |         |  |                |                | 1.5366 |  |                |   | 1.5311 |  

[Additional columns below]

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

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

Risk Factors

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

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

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



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

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

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

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

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

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

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

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

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

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

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

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



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

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

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

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

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



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

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

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

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

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

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

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

The telecommunications industry is subject to rapid and significant
changes in technology and the effect of technological changes on our businesses
cannot be predicted. Our core offerings may become outdated due to
technological breakthroughs rendering our products out of date. In addition,
our business plan contemplates the introduction of services using new
technologies. Our investments in those new services, such as those related to
the 3G mobile network, may prove premature and we may not realize anticipated
returns on these new products. The cost of implementation for emerging and
future technologies could be significant, and our ability to fund such
implementation may depend on our ability to obtain additional financing. We
cannot be certain that we would be successful in obtaining any additional
financing required.

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

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

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

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

Our growth has been curtailed by funding constraints.

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

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

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

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

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

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

We have experienced rapid growth and development in a relatively short
period, either through acquisitions or connecting customers to our network. One
of our biggest challenges as we have grown has been to limit our customer
churn. The successful implementation of our business plan depends upon a
reduction in the percentage of our customers that stop using our services.

In order to reduce churn in the future, we aim to improve our customer
service. This improvement will be difficult to obtain without an integrated
billing system and a customer database across our entire network. If the
integration of our various billing system is not successful, we could
experience an adverse effect on customer service and, in turn, our churn rate.

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

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

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

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

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

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

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

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

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

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We are dependant upon a samll
number of key personnel.

A small number of key executive officers manage our businesses. The loss
of one or more of these executive officers could have a material adverse effect
on us. We believe that our future success will depend in large part on our
continued ability to attract and retain highly skilled and qualified personnel.
Although we have entered into employment contracts with all of our executive
officers, those contracts cannot prevent such individuals from resigning. If an
individual does resign, he or she is bound by certain non-compete clauses which
may or may not discourage the individual from leaving.

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

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

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

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

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

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

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

We are subject to currency risk because we obtained significant financing and
may in the future obtain additional financing in U.S. dollars but generally
generate revenues and incur expenses in pounds sterling and Euros.

We encounter currency exchange rate risks because we generate revenues and
incur construction and operating expenses in pounds sterling and Euros while we
pay interest and principal obligations with respect to a significant amount of
our existing indebtedness in U.S. dollars. We cannot assure you that any
hedging transactions we might enter into will be successful or that shifts in
the currency exchange rates will not have a material adverse effect on us. For
example, to the extent that the pound sterling declines in value against the
U.S. dollar, and we have not fully hedged against such declines, the effective
cost of servicing our U.S. dollar debt will be higher and we will incur
currency losses.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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




Item 8.Financial Statements and Supplementary Data.

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

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

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



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

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




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

Not applicable.

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PART III




Item 10. Directors and Executive Officers of the Registrant

The following table provides information about our directors and executive
officers:

|                         |  |     |    |          |  |                                                                            
|------------------------ |  | --- | -- | -------- |  | ---------------------------------------------------------------------------
|Name                     |  | Age |    | Position
|                         |  |     |    |         
|James F. Mooney          |  |     | 48 |          |  | Non-Executive Chairman                                                     
|Barclay Knapp            |  |     | 46 |          |  | Director, President and Chief Executive Officer                            
|Jeffrey D. Benjamin      |  |     | 41 |          |  | Director                                                                   
|David Elstein            |  |     | 58 |          |  | Director                                                                   
|William R. Huff          |  |     | 53 |          |  | Director                                                                   
|James F. Mooney          |  |     | 48 |          |  | Non-Executive Chairman                                                     
|George R. Zoffinger      |  |     | 54 |          |  | Director                                                                   
|Lauren Hochman Blair     |  |     | 40 |          |  | Vice President  Deputy General Counsel                                    
|Simon P. Duffy           |  |     | 53 |          |  | Chief Operating Officer                                                    
|Gregg N. Gorelick        |  |     | 44 |          |  | Vice President  Controller                                                
|Howard S. Kalika*        |  |     | 45 |          |  | Vice President  Group Finance Director  Corporate
Finance and Development
|Richard J. Lubasch       |  |     | 56 |          |  | Executive Vice President, General Counsel and Secretary                    
|Richard H. Martin, Jr.** |  |     | 42 |          |  | Vice President  Group Treasurer                                           
|Bret Richter             |  |     | 33 |          |  | Senior Vice President  Finance and Acting Chief
Financial Officer         
|Scott E. Schubert***     |  |     | 49 |          |  | Chief Financial Officer                                                    



---

|*   |  | Mr. Kalika is expected to take office as our Vice President  Group Finance
Director  Corporate Finance and Development in the near future.                                                                         
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|**  |  | Mr. Martin is expected to take office as our Vice President  Group
Treasurer in the near future.                                                                                                                    
|   
|*** |  | Mr. Schubert has been recruited to be our Chief Financial Officer. His
appointment as our Chief Financial Officer has been ratified by our Board of
Directors and is expected to become effective in the near future.

Our charter provides for a classified Board of Directors consisting of
three classes as nearly equal in number as possible with the directors in each
class serving staggered three-year terms.The term of the initial Class I
Directors which are comprised of Mr. Bolin and Mr. Knapp, shall terminate on
the date of our 2003 annual meeting of stockholders; the term of the initial
Class II Directors which are comprised of Mr. Benjamin and Mr. Elstein shall
terminate on the date of our 2004 annual meeting of stockholders; and the term
of the initial Class III Directors which are comprised of Mr. Mooney, Mr. Huff
and Mr. Zoffinger shall terminate on the date of our 2005 annual meeting of
stockholders. At each annual meeting of stockholders, successors to the class
of directors whose term expires at that annual meeting shall be elected for a
three-year term. The following is a brief description of the present and past
business experience of each of the persons who serve as our directors
(including the Chairman of the Board of Directors, who is not an executive
officer of the Company) and executive officers.

Directors

Jeffrey D. Benjamin

Mr. Benjamin became a director of the Company on January 10, 2003. He is
currently a Senior Advisor to Apollo Management, LP, and has held that position
since September 2002. From May 1998 to September 2002, Mr. Benjamin was
employed by Libra Securities LLC and its predecessors in various positions,
including co-CEO. Prior to his affiliation with Libra Securities LLC, he was a
Managing Director at UBS Securities LLC. Mr. Benjamin currently serves on the
boards of directors of Exco

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Resources, Inc (EXCO), an independent oil and gas company, Chiquita Brands
International, Inc. (CQB), McLeod USA (MCLD) and Dade Behring Holdings Inc.
(DBEH).

James E. Bolin

Mr. Bolin became a director of the Company on January 10, 2003. He is
currently a Managing Director of Citadel Investment Group. Prior to joining
Citadel, he was a General Partner of Appaloosa Management, L.P. Prior to his
employment with Appaloosa, Mr. Bolin was a Vice President at Goldman Sachs & Co
and formerly with Smith Barney, Harris Upham. He is currently a director of
Inamed Corporation, a global medical device company and Kindred Healthcare, a
leading nursing home operator.

David Elstein

Mr. Elstein became a director of the Company on January 10, 2003. He owns
Brook Productions Ltd., a television consulting and production company, and is
currently the chairman of the following organizations: the British Screen
Advisory Council, the National Film and Television School Foundation and Really
Useful Theatres Ltd. He is also currently a non-executive director of Sport and
Leisure plc and a non-executive director and Vice-Chairman of Kingsbridge
Capital Ltd. He has been a visiting professor of Broadcasting at Oxford,
Westminster, and Stirling Universities. Mr. Elstein was formerly CEO of Channel
5 Broadcasting in Britain and Head of Programming at BSkyB as well as Director
of Programs of Thames Television.

Barclay Knapp

Barclay Knapp is President, CEO 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. Mr. Knapp co-founded NTL in 1993 with George Blumenthal. Prior to
NTL, Mr. Knapp was a co-founder of Cellular Communications, Inc. (CCI) in
1982, serving first as CFO and then later as President and COO. CCI was a
pioneering US cellular telephone company that grew to become one of the
industrys leading players at the time of its sale to Airtouch in 1996 for $2.5
billion. In addition, CCI was the parent, and Mr. Knapp was COO, of Cellular
Communications of Puerto Rico (CCPR) and Cellular Communications International
(CCII)  the latter a founding partner of Omnitel in Italy. These companies
were spun off from CCI in 1991 and ultimately sold to SBC (1999) and Mannesman
(1998), respectively. Mr. Knapp is currently Chairman of ATX Communications,
the successor to CoreComm, a US-based CLEC which also had its roots in the CCI
companies and NTL.

William R. Huff

Mr. Huff became a director of the Company on January 10, 2003 and served
as Interim Chairman of the Board of Directors until March 12, 2003, when Mr.
Mooney joined our Board of Directors and became Non-Executive Chairman. Mr.
Huff is Principal and President of W.R. Huff Asset Management Co., L.L.C., an
investment adviser and a large independent manager in the high yield market and
private equity boutique. He founded W.R. Huff Asset Management Co., L.L.C. in
1984.

James F. Mooney

Mr. Mooney became Non-Executive Chairman of the Company on March 12, 2003.
Mr. Mooney was most recently the Executive Vice President and Chief Operating
Officer of Nextel Communications Inc. Prior to joining Nextel, Mr. Mooney was
the CEO/COO of Tradeout Inc., an asset management firm owned jointly by General
Electric Capital, Ebay Inc and Benchmark Capital. Before his position with
Tradeout, Mr. Mooney was the Chief Operating Officer at Baan Company, a
business management software provider that had dual headquarters in Amsterdam
and Virginia. From 1980-1999, Mr. Mooney held a number of positions with IBM
Corporation, including his last position as Chief Financial Officer of the
Americas.

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George R. Zoffinger

Mr. Zoffinger became a director of NTL Incorporated on January 10, 2003.
He is the President and CEO of the New Jersey Sports and Exposition Authority.
He previously served as President and CEO of Constellation Capital Corporation
and as President and CEO of Value Property Trust, a publicly owned real estate
investment trust. Mr. Zoffinger also served as Chairman of CoreStates New
Jersey National Bank and as President and CEO of Constellation Bancorp.
Further, Mr. Zoffinger was the Commissioner of Commerce and Economic
Development for the State of New Jersey in 1990. Mr. Zoffinger is currently a
director of New Jersey Resources Inc., Admiralty Bancorp and Commercial Federal
Bancorp.

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\

Executive Officers Other Than Directors

Lauren Hochman Blair

Lauren Hochman Blair is the Companys Vice President  Deputy General
Counsel. Ms. Blair has been with the Company since its formation in 1993,
serving as the Companys Senior Assistant General Counsel. She also served in
this capacity at CCI, CCPR and CCII until such companies were sold in 1996,
1999 and 1999, respectively.

Simon P. Duffy

Simon P. Duffy is the Companys Chief Operating Officer and has held this
position since April 1, 2003. Prior to joining the Company, Mr. Duffy was CFO
of Orange SA. Prior to Orange, Mr. Duffy was Chief Executive Officer of
Denmark-based wireless data company End2End. He joined End2End in 2001 from
Internet service provider World Online International NV. At World Online, Mr.
Duffy served as CEO & Deputy Chairman and led the initial public offering of
the company and subsequent sale to Tiscali SPA. Prior to his tenure at World
Online, Mr. Duffy spent eight years at EMI Group plc, first as Group Finance
Director of THORN EMI and later, following Groups demerger, as Deputy Chairman
and Group Finance Director of EMI Group. Prior to EMI Group, Mr. Duffy worked
at Guinness plc, first as Director of Corporate Finance and subsequently as
Operations Director of United Distillers, Guinnesss spirits division.

Gregg N. Gorelick

Gregg N. Gorelick is the Companys Vice President  Controller, and has
held this position since the Companys 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 sale of CCI. Mr. Gorelick was also Senior Vice President 
Controller and Treasurer of ATX Communications, Inc. from 1996 to 2002. He
was also Vice President  Controller of CCII prior to its sale in March 1999
and at CCPR prior to its sale in August 1999.

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Richard J. Lubasch

Richard J. Lubasch is the Companys Executive Vice President  General
Counsel and Secretary, and has held those positions since 2002. Prior to that
time, he had 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.

Howard S. Kalika

Howard S. Kalika is expected to take office as the Companys Vice
President  Group Finance Director  Corporate Finance and Development in the
near future. Prior to joining the Company, Mr. Kalika was a Senior Vice
President of WilTel Communications Group, where he led corporate finance
activities. Prior to joining Williams in September 1999, Mr. Kalika held
various senior finance positions with Amoco Corporation and BP Amoco.

Richard H. Martin, Jr.

Richard H. Martin, Jr. is expected to take office as the Companys Vice
President  Group Treasurer in the near future. Prior to joining the Company,
Mr. Martin held various positions with WilTel Communications Group, including
Vice President  Treasurer; Vice President  Finance, Emerging Markets; and
Assistant Treasurer. Before joining WilTel, Mr. Martin was Regional CFO -
Africa of BP plc from June 1999 through April 2000. Prior to BP, Mr. Martin
held various positions with Amoco Corporation, including Director, Business
Solutions.

Bret Richter

Bret
Richter is the Companys Senior Vice President  Finance.
Mr. Richter joined NTL in September 1994, and prior to his current responsibilities
he held various positions in the Companys Corporate Development group
including Vice President  Corporate Finance and Development. Prior to joining
NTL, Mr. Richter was a member of the media and telecommunications investment
banking group at Salomon Brothers Inc.

Scott E. Schubert

Mr. Schubert has been recruited to be the Companys Chief Financial
Officer. His appointment as the Companys Chief Financial Officer has been
ratified by the Companys Board of Directors and is expected to become
effective in the near future. From June 1999 to March 2003, Mr. Schubert was
Executive Vice President & Chief Financial Officer of WilTel Communications
Group, which delivers voice, data, video and IP services for worldwide telecom
carriers, internet service providers and global media and entertainment
companies. Prior to joining WilTel, Mr. Schubert held various positions at
Amoco Corporation, including International Controller of Exploration &
Production and Vice President of Worldwide Financial Services. Following the
merger of BP and Amoco in 1998, he was appointed Vice President and Head of BP
Amocos Global Financial Services.

On
May 8, 2002, NTL Europe (formerly NTL Incorporated) (NTL
Europe), NTL (Delaware),
Inc. (NTL Delaware), NTL Incorporated (formerly NTL Communications Corp.), Diamond Cable
Communications Corp., Diamond Holdings Limited and Communications Cable Funding
Corp. filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code.
Ms. Hochman Blair, Mr. Knapp, Mr. Richter and Mr. Lubasch were a director
and/or officer of some or all of these entities at the time of these filings.
Pursuant to the Plan, these companies emerged from bankruptcy on January 10,
2003.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
Exchange Act) requires that our directors, executive officers and persons who
own more than 10% of a registered class of our equity

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securities file with the SEC, and with each exchange on which the Common
Stock trades, initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of ours. Officers, directors and
greater than 10% beneficial owners are required by the SECs regulations to
furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on review of the copies of such reports
furnished to us and written representations that no other reports were required
during the fiscal year ended December 31, 2002, our officers, directors and
greater than 10% beneficial owners complied with all Section 16(a) filing
requirements applicable to them.

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Item 11. Executive Compensation

Compensation Committee Report on Executive Compensation

Policy

The Compensation Committee of the Board of Directors has the
responsibility for the design and implementation of the Companys executive
compensation program. The Compensation Committee is composed entirely of
non-employee directors.

Our executive compensation program is designed to be closely linked to
corporate performance. To this end, we have developed an overall compensation
strategy that links compensation directly to the achievement of operational
goals. The overall objective of this strategy is to attract and retain the best
possible executive talent and to motivate these executives to achieve the goals
inherent in our business strategy, thereby seeking to enhance our profitability
and value.

In furtherance of our incentive-oriented compensation goals, historically
cash compensation such as annual base salary and bonus has generally been set
below levels paid by comparable sized telecommunications companies and was
supplemented by equity-based option grants. However, in part due to the
significant downturn in the financial markets, the elimination of value
associated with stock options generally, as well as the uncertainty and changes
relating to our business in this environment, we have increased the level of
cash compensation paid to several of our senior executives in order to retain
them. In assessing these compensation levels, the Compensation Committee, which
is composed of independent directors, recognizes the fact that some executives
have participated in the development of our business from its earliest stages,
have preserved significant value in an extremely challenging environment, and
are very important to retain for the future success of our business.

Base Salary and Bonus

Compensation for the Companys executive officers, including the Companys
CEO, for 2002, was determined by the compensation committee of NTL Europe.

Stock Options

No stock options were granted by the Company in 2002, during which time we
were a wholly-owned subsidiary of NTL Europe. All stock options previously
granted by NTL Europe were cancelled pursuant to the Plan, effective as of
January 10, 2003.

Management Incentive Plan

The Plan provides that on or after the Effective Date, the compensation
committee of our board of directors is authorized to, and will, adopt a
management incentive plan. The purpose of the management incentive plan is to
provide incentives to certain of our employees and the employees of our
subsidiaries, as well as to incentivize their efforts in fostering and
promoting our long term growth and performance and to better align such
employees interests with those of our stockholders. Under the management
incentive plan, options to purchase up to 10% of the issued and outstanding
shares of our Common Stock as of the Effective Date may be granted from time to
time to certain of our employees and the employees of our subsidiaries.
Accordingly, on the Effective Date pursuant to the Plan, we reserved 5 million
shares of our Common Stock for issuance under the management incentive plan.

The management incentive plan has not yet been adopted, as the
compensation committee of our board of directors has not convened since the
Effective Date.

62



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##### Table of Contents



The Compensation
Committee

James E. Bolin
Jeffrey D. Benjamin

Compensation Committee Interlocks and Insider Participation

During 2002 the Company did not have a Compensation Committee as it was a
wholly-owned subsidiary of NTL Europe and did not independently establish
compensation for the officers of NTL Europe who were also serving as the
Companys officers. The present Compensation Committee members are all
independent directors.

Executive Compensation

The following table discloses compensation received by the Companys Chief
Executive Officer, the Companys four other most highly paid executive officers
who were serving as executive officers at the end of the fiscal year completed
December 31, 2002 and another executive officer who would have been among such
executive officers had he been serving at the end of the fiscal year.

Summary Compensation Table(1)

|                        |                           |      |                         |           |                        |          |         |         |         |        |           |         |        |          |            |              |           |  |         |        | 
|----------------------- | ------------------------- | ---- | ----------------------- | --------- | ---------------------- | -------- | ------- | ------- | ------- | ------ | --------- | ------- | ------ | -------- | ---------- | ------------ | --------- |  | ------- | ------ | 
|                        |                           |      | Annual Compensation (2) |           | Long Term Compensation
|                        |                           |      |                         |           |                       
|                        |                           |      |                         |           |                        |          |         |         |         |        |           |         |        |          | Awards (3) |              | Payouts  
|                        |                           |      |                         |           |                        |          |         |         |         |        |           |         |        |          |            |              |          
|                        |                           |      |                         |           |                        |          |         |         |         |        |           |         |        |          | Securities |              |           |  |        
|                        |                           |      |                         |           |                        |          |         |         |         |        |           |         |        |          | Underlying |              | All Other
|Name and                |                           |      |                         |           |                        |          |         |         |         |        |           |         |        | Options/ |            | Compensation
|Principal Position      |                           | Year |                         | Salary($) |                        | Bonus($) |         | SARs(#) |         | ($)(4)
|                        |                           |      |                         |           |                        |          |         |         |         |       
|Barclay Knapp           |                           |      | 2002                    |           |                        |          | 369,763 |         |         |        | 408,100   |         |        |          |           |              |           |  | 7,334   |       
|                        | President and Chief       |      |                         | 2001      |                        |          |         | 277,260 |         |        |           | 561,138 |        |          |            | 5,000,000    |           |  |         | 7,000  | 
|                        | Executive Officer         |      |                         | 2000      |                        |          |         | 243,833 |         |        |           | 249,813 |        |          |            | 7,250,000    |           |  |         | 17,200 | 
|George S. Blumenthal(5) |                           |      | 2002                    |           |                        |          | 369,763 |         |         |        | 408,100   |         |        |          |           |              |           |  | 7,334   |       
|                        | Chairman and              |      |                         | 2001      |                        |          |         | 277,260 |         |        |           | 561,138 |        |          |            | 5,000,000    |           |  |         | 7,000  | 
|                        | Treasurer                 |      |                         | 2000      |                        |          |         | 243,833 |         |        |           | 249,813 |        |          |            | 7,250,000    |           |  |         | 17,200 | 
|Richard J. Lubasch      |                           |      | 2002                    |           |                        |          | 467,290 |         |         |        | 470,000   |         |        |          |           |              |           |  | 7,334   |       
|                        | Executive Vice            |      |                         | 2001      |                        |          |         | 233,692 |         |        |           | 384,875 |        |          |            |             |           |  |         | 7,000  | 
|                        | President  General       |      |                         | 2000      |                        |          |         | 205,517 |         |        |           | 178,438 |        |          |            | 500,000      |           |  |         | 17,200 | 
|                        | Counsel and Secretary     |      |                         |           |                        |          |         |         |         |        |           |         |        |          |            |              |           |  |         |        | 
|John F. Gregg(5)        |                           |      | 2002                    |           |                        |          | 449,500 |         |         |        | 450,000   |         |        |          |           |              |           |  | 7,334   |       
|                        | Chief Financial           |      |                         | 2001      |                        |          |         | 240,220 |         |        |           | 591,250 |        |          |            |             |           |  |         | 7,000  | 
|                        | Officer and Senior        |      |                         | 2000      |                        |          |         | 214,960 |         |        |           | 228,125 |        |          |            | 1,000,000    |           |  |         | 17,200 | 
|                        | Vice President            |      |                         |           |                        |          |         |         |         |        |           |         |        |          |            |              |           |  |         |        | 
|Stephen A. Carter(5)    |                           |      | 2002                    |           |                        |          | 413,188 |         |         |        | 1,750,405 |         |        |          |           |              |           |  | 952,030 | (6)   
|                        | Senior Vice President and |      |                         | 2001      |                        |          |         | 431,790 |         |        |           | 278,112 |        |          |            |             |           |  |         | 6,738  | 
|                        | Chief Operating Officer   |      |                         | 2000      |                        |          |         | 60,636  |         |        |           |        |        |          |            | 400,000      |           |  |         | 38,384 | 
|                        | UK and Ireland operations |      |                         |           |                        |          |         |         |         |        |           |         |        |          |            |              |           |  |         |        | 
|Bret Richter            |                           |      | 2002                    |           |                        | 299,500  |         | 300,000 |         |       |           | 7,334  
|                        | Senior
Vice President    |      |                         | 2001      |                        |          | 183,428 |         | 319,750 |        |          |         | 7,000 
|                        | Finance                   |      |                         | 2000      |                        |          | 138,884 |         | 138,000 |        | 250,000   |         | 17,200



---

|(1) |  | All amounts reflect the compensation paid to each listed employee in respect of such employees position at
the Company, the Companys former parent, NTL Europe (formerly NTL Incorporated) and the Companys
former intermediate parent, NTL Delaware, as the case may be.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | None of the Named Executive Officers received perquisites in excess of the amount required to be report under
Item 402 of Regulation S-K.                                                                                                                                   
|   
|(3) |  | Options granted were options to purchase shares of our ultimate parent company. All such remaining options                                                                                                                                                                  

63



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|    |  | were cancelled upon our emergence from Chapter 11 on January 10, 2003, in accordance with the Plan.                                                                                        
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(4) |  | 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.
|   
|(5) |  | Messrs. Blumenthal and Gregg terminated their employment with the Company effective January 10, 2003. Mr.
Carter terminated his employment with the Company effective November 30, 2002.   
|   
|(6) |  | Includes severance payments in the amount of $901,500.                                                                                                                                     

64



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Compensation of Directors

Directors are reimbursed for out-of-pocket expenses incurred in attending
meetings of the Board of Directors and the committees. Non-employee board
members are paid quarterly based on an annual fee of £50,000. Directors based
in the U.S. are paid in dollars. Based upon an exchange rate of approximately
$1.57 per British pound as of April 18, 2003, U.S. directors receive $78,500
annually. James Mooney, the Companys non-executive Chairman, is paid an
annual salary of $1.25 million, with the right to receive a bonus of up to
$400,000. In addition, Mr. Mooneys agreement provides for grants of 400,000
stock options under the Companys management incentive plan and 200,000
restricted shares of Common Stock subject to vesting. Barclay Knapp, the
Companys President  Chief Executive Officer, and a director, has an
employment contract with the Company which is described below under Executive
Compensation.

Employment Contracts of Named Executive Officers

The following are summaries of the terms of employment arrangements
between the Company and each of (i) Barclay Knapp, the Companys President 
Chief Executive Officer and a director, (ii) Richard J. Lubasch, the Companys
Executive Vice President  General Counsel and Secretary, and (iii) Bret
Richter, the Companys Senior Vice President  Finance. These descriptions are
subject to, and qualified in their entirety by reference to, the respective
employment agreements between the Company and such executives which are
included as exhibits to the Companys annual report on Form 10-K for the year
ended December 31, 2002.

|                           |  |                                                                                                                                                                                                                                                   
|-------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Barclay Knapp:             |  |                                                                                                                                                                                                                                                   
|                           |  |                                                                                                                                                                                                                                                   
|Term:                      |  | January 10, 2003 through December 31, 2003;
if the contract is not renewed and the
executives employment terminates within
first two weeks of 2004, the executive is
entitled to a lump sum cash severance
payment equal to two times base salary
|                           |  |                                                                                                                                                                                                                                                   
|Title:                     |  | President  Chief Executive Officer                                                                                                                                                                                                               
|                           |  |                                                                                                                                                                                                                                                   
|Base salary:               |  | $700,000                                                                                                                                                                                                                                          
|                           |  |                                                                                                                                                                                                                                                   
|Bonuses:                   |  | Annual discretionary cash bonus of up to
200% of base salary; bonus upon consummation
of the Plan consisting of the number of
shares of Common Stock of the Company with a
value equal to base salary                                             
|                           |  |                                                                                                                                                                                                                                                   
|Options:                   |  | Eligible to receive options to purchase
Common Stock of the Company at such exercise
prices, schedules as to exercisability and
other terms and conditions as determined by
the board of directors                                                
|                           |  |                                                                                                                                                                                                                                                   
|Benefits:                  |  | Entitled to participate in all employee
benefit plans, programs, policies and
arrangements (including fringe benefit and
executive perquisite programs and policies)
made available by the Company to its senior
executive officers               
|                           |  |                                                                                                                                                                                                                                                   
|Termination without cause: |  | Entitled to a lump sum cash severance
payment equal to three times base salary if
terminated without cause                                                                                                                                        
|                           |  |                                                                                                                                                                                                                                                   
|Non-competition:           |  | Non-competition provision survives for
eighteen months following termination of
employment with the Company                                                                                                                                       
|                           |  |                                                                                                                                                                                                                                                   
|Richard J. Lubasch:        |  |                                                                                                                                                                                                                                                   
|                           |  |                                                                                                                                                                                                                                                   
|Term:                      |  | January 10, 2003 through December 31, 2003; if
the contract is not renewed and the executives
employment terminates within first two weeks of
2004, the executive is entitled to a lump sum
cash severance payment equal to two times base
salary

65



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##### Table of Contents



|                           |  |                                                                                                                                                                                                                                                   
|-------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Title:                     |  | Executive Vice President  General Counsel                                                                                                                                                                                                        
|                           |  |                                                                                                                                                                                                                                                   
|Base salary:               |  | $477,000                                                                                                                                                                                                                                          
|                           |  |                                                                                                                                                                                                                                                   
|Bonuses:                   |  | Annual discretionary cash bonus of up to 200%
of base salary; bonus upon consummation of the
Plan consisting of the number of shares of
Common Stock of the Company with a value equal
to base salary                                             
|                           |  |                                                                                                                                                                                                                                                   
|Options:                   |  | Eligible to receive options to purchase Common
Stock of the Company at such exercise prices,
schedules as to exercisability and other terms
and conditions as determined by the board of
directors                                                
|                           |  |                                                                                                                                                                                                                                                   
|Benefits:                  |  | Entitled to participate in all employee benefit
plans, programs, policies and arrangements
(including fringe benefit and executive
perquisite programs and policies) made
available by the Company to its senior
executive officers               
|                           |  |                                                                                                                                                                                                                                                   
|Termination without cause: |  | Entitled to a lump sum cash severance payment
equal to three times base salary if terminated
without cause                                                                                                                                        
|                           |  |                                                                                                                                                                                                                                                   
|Non-competition:           |  | Non-competition provision survives for eighteen
months following termination of employment with
the Company                                                                                                                                       
|                           |  |                                                                                                                                                                                                                                                   
|Bret Richter               |  |                                                                                                                                                                                                                                                   
|                           |  |                                                                                                                                                                                                                                                   
|Term:                      |  | January 10, 2003 through December 31, 2003; if
the contract is not renewed and the executives
employment terminates within first two weeks of
2004, the executive is entitled to a lump sum
cash severance payment equal to two times base
salary
|                           |  |                                                                                                                                                                                                                                                   
|Title:                     |  | Senior Vice President  Finance                                                                                                                                                                                                                   
|                           |  |                                                                                                                                                                                                                                                   
|Base salary:               |  | $345,000                                                                                                                                                                                                                                          
|                           |  |                                                                                                                                                                                                                                                   
|Bonuses:                   |  | Annual discretionary cash
bonus of up to 200% of
base salary; bonus upon
consummation of the Plan
consisting of the number
of shares of common stock
of the Company with a
value equal to base
salary                                             
|                           |  |                                                                                                                                                                                                                                                   
|Options:                   |  | Eligible to receive
options to purchase
common stock of the
Company at such exercise
prices, schedules as to
exercisability and other
terms and conditions as
determined by the board
of directors                                                
|                           |  |                                                                                                                                                                                                                                                   
|Benefits:                  |  | Entitled to participate
in all employee benefit
plans, programs, policies
and arrangements
(including fringe benefit
and executive perquisite
programs and policies)
made available by the
Company to its senior
executive officers               
|                           |  |                                                                                                                                                                                                                                                   
|Termination
without cause: |  | Entitled to a lump sum
cash severance payment
equal to three times base
salary if terminated
without cause                                                                                                                                        
|                           |  |                                                                                                                                                                                                                                                   
|Non-competition:           |  | Non-competition provision
survives for eighteen
months following
termination of employment
with the Company                                                                                                                                       

Option Grants

The Company did not grant any stock options in 2002, as it was a
wholly-owned subsidiary of NTL

66



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##### Table of Contents



Europe. All options granted to officers and
directors of the Company by NTL Europe were cancelled on January 10, 2003 in
accordance with the Plan.

Option Exercises and Year-End Value Table

No options on the Companys stock were held by the Named Executive Officers or
exercised during 2002.

Performance Graph

Until January 10, 2003, the Company was a wholly-owned subsidiary of NTL
Europe. Accordingly, it did not
have a class of common stock registered under Section 12 of the Exchange Act
prior to that time.




Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding the
beneficial ownership of the Common Stock, as of April 17, 2003 (except as
noted), by each person known by us to be the beneficial owner of more than 5%
of any class of our Common Stock.

|                                                                                                       |  |                                           |           |             |  |           |           |          |  |               |           |  |  |  |       |  
|------------------------------------------------------------------------------------------------------ |  | ----------------------------------------- | --------- | ----------- |  | --------- | --------- | -------- |  | ------------- | --------- |  |  |  | ----- | -
|                                                                                                       |  | Amount and Nature of Beneficial Ownership
|                                                                                                       |  |                                          
|                                                                                                       |  |                                           |           |             |  | Presently |           |          |  |               |           |  |  | 
|Name and Address of                                                                                    |  | Common                                    |           | Exercisable |  |           |           |          |  | Percentage of
|Beneficial Owner                                                                                       |  | Stock                                     |           | Warrants    |  | Total     |           | Class(1)
|                                                                                                       |  |                                           |           |             |  |           |           |         
|William R. Huff
c/o W.R. Huff Asset Management
Co., L.L.C., 67 Park Place,
Morristown, NJ 07960(2)     |  |                                           | 6,613,995 |             |  |           | 0         |          |  |               | 6,613,995 |  |  |  | 11.16 | %
|France Telecom
6 Place dAlleray, 75505 Paris
Cedex 15, France (3)                                     |  |                                           | 0         |             |  |           | 6,040,273 |          |  |               | 6,040,273 |  |  |  | 10.19 | %
|Appaloosa Management L.P.
c/o Appaloosa Partners Inc., 26
Main St., First Floor, Chatham,
NJ 07928 (4) |  |                                           | 3,715,201 |             |  |           | 323,342   |          |  |               | 4,038,543 |  |  |  | 6.82  | %
|Angelo, Gordon & Co., L.P.
245 Park Avenue, New York,
New York 10167 (5)                               |  |                                           | 3,342,136 |             |  |           | 0         |          |  |               | 3,342,136 |  |  |  | 5.64  | %



---

|(1) |  | Includes 50,500,969 shares of Common Stock issued and outstanding as of April 17, 2003 and 8,750,496 presently exercisable Series A warrants.                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Based solely upon the Form 4, dated February 12, 2003, filed by William R. Huff with the Commission on February 12, 2003. Includes ownership of our Common
Stock by certain entities of which Mr. Huff is an affiliate or separate accounts for which one or more affiliates act as investment manager, including
among others, W.R. Huff Asset Management Co., L.L.C. William R. Huff possesses sole power to vote and direct the disposition of all shares of our Common
Stock beneficially owned by him, subject to applicable securities law compliance procedures.
|   
|(3) |  | Based solely upon the Form 3/A, dated March 12, 2003, filed by France Telecom with the Commission on March 12, 2003. France Telecom holds Series A
warrants exercisable for 6,040,273                                                                                                                                                                                                                                                                                                                                                                                  

67



---



##### Table of Contents



|    |  | shares of our Common Stock through its indirect wholly owned subsidiary Rapp 26, a societe anonymeorganized under the
laws of France. France Telecom possesses sole power to vote and direct the disposition of all shares of our Common Stock beneficially owned by it.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(4) |  | Based solely upon Schedule 13G, dated January 21, 2003, jointly filed by Appaloosa Investment Limited Partnership I, Palomino Fund Ltd., Appaloosa
Management L.P., Appaloosa Partners Inc. and David A. Tepper with the Commission on January 21, 2003. The beneficial ownership of Appaloosa Management
L.P., Appaloosa Partners Inc. and David A. Tepper includes ownership of our Common Stock and Series A warrants by their affiliates Appaloosa Investment
Limited Partnership I and Palomino Fund Ltd. Appaloosa Investment Limited Partnership I has shared voting and dispositive power with respect to 2,152,543
shares of our Common Stock. Palomino Fund Ltd. has shared voting and dispositive power with respect to 1,886,000 shares of our Common Stock. Appaloosa
Management L.P., Appaloosa Partners Inc. and David A. Tepper each have shared voting and dispositive power with respect to 4,038,543 shares of our Common
Stock.
|   
|(5) |  | Based solely upon Schedule 13G, dated February 13, 2003, jointly filed by Angelo, Gordon & Co., L.P.; John M. Angelo; and Michael L. Gordon, Jr. with the
Commission on February 14, 2003. Each of the reporting persons may be deemed the beneficial owners of 3,342,136 shares held for the account of twenty-one
private investment funds for which Angelo, Gordon & Co., LLP acts as general manager and/or investment advisor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

68



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##### Table of Contents



The following table sets forth certain information regarding the
beneficial ownership of the Common Stock, as of April 17, 2003, by (i) each
executive officer named in the Summary Compensation Table of this Proxy
Statement (the Named Executive Officers) and each director of the Company,
(ii) the executive officers of the Company as a group, (iii) the directors of
the Company as a group and (iv) all directors and executive officers of the
Company as a group.

|                                            |  |                                           |           |             |  |           |       |          |  |               |           |  |  |  |       |  
|------------------------------------------- |  | ----------------------------------------- | --------- | ----------- |  | --------- | ----- | -------- |  | ------------- | --------- |  |  |  | ----- | -
|                                            |  | Amount and Nature of Beneficial Ownership
|                                            |  |                                          
|                                            |  |                                           |           |             |  | Presently |       |          |  |               |           |  |  | 
|                                            |  | Common                                    |           | Exercisable |  |           |       |          |  | Percentage of
|Executive Officers and Directors (1)        |  | Stock                                     |           | Warrants    |  | Total     |       | Class(2)
|                                            |  |                                           |           |             |  |           |       |         
|Barclay Knapp                               |  |                                           | 32,609    | (3)         |  |           | 3,990 |          |  |               | 36,599    |  |  |  | *     |  
|Richard J. Lubasch                          |  |                                           | 22,220    | (3)         |  |           | 531   | (4)      |  |               | 22,751    |  |  |  | *     |  
|Bret Richter                                |  |                                           | 16,071    | (3)         |  |           | 2     |          |  |               | 16,073    |  |  |  | *     |  
|George Blumenthal                           |  |                                           | **        |             |  |           | **    |          |  |               | **        |  |  |  | **    |  
|Stephen Carter                              |  |                                           | **        |             |  |           | **    |          |  |               | **        |  |  |  | **    |  
|John Gregg                                  |  |                                           | **        |             |  |           | **    |          |  |               | **        |  |  |  | **    |  
|                                            |  |                                           |           |             |  |           |       |          |  |               |           |  |  |  |       |  
|Executive Officers as a group               |  |                                           | 187,245   | (5)         |  |           | 4,523 |          |  |               | 191,768   |  |  |  | *     |  
|Jeffrey D. Benjamin                         |  |                                           | 39,174    |             |  |           | 0     |          |  |               | 39,174    |  |  |  | *     |  
|James E. Bolin***                           |  |                                           | 0         |             |  |           | 0     |          |  |               | 0         |  |  |  | *     |  
|David Elstein                               |  |                                           | 0         |             |  |           | 0     |          |  |               | 0         |  |  |  | *     |  
|William R. Huff                             |  |                                           | 6,613,995 | (6)         |  |           | 0     |          |  |               | 6,613,995 |  |  |  | 11.16 | %
|James F. Mooney                             |  |                                           | 600,000   | (7)         |  |           | 0     |          |  |               | 600,000   |  |  |  | *     |  
|George R. Zoffinger                         |  |                                           | 0         |             |  |           | 0     |          |  |               | 0         |  |  |  | *     |  
|                                            |  |                                           |           |             |  |           |       |          |  |               |           |  |  |  |       |  
|Directors as a group                        |  |                                           | 7,253,169 |             |  |           | 0     |          |  |               | 7,253,169 |  |  |  | 12.24 | %
|Directors and Executive Officers as a
group |  |                                           | 7,440,414 |             |  |           | 4,523 |          |  |               | 7,444,937 |  |  |  | 12.56 | %



---

|*   |  | Represents less than one percent.                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|**  |  | Messrs. Blumenthal, Carter and Gregg are no longer executive officers of the Company. As a result, the Company does not have access to information, other than publicly
available information, regarding such former executive officers beneficial ownership of the Common Stock. The Company is not aware of any public filings disclosing
beneficial ownership of the Common Stock by such former executive officers.               
|   
|*** |  | Mr. Bolins term as a director of the Company will expire at the annual meeting. He has indicated that he does not intend to stand for re-election.                                                                                                                                                                                                                                                                                    
|   
|(1) |  | Unless otherwise noted, the business address of each person is 110 East 59th Street, New York, New York 10022.                                                                                                                                                                                                                                                                                                                         
|   
|(2) |  | Includes 50,500,969 shares of Common Stock issued and outstanding as of April 17, 2003 and 8,750,496 presently exercisable Series A warrants.                                                                                                                                                                                                                                                                                          
|   
|(3) |  | The shares of Common Stock beneficially owned by Messrs. Knapp, Lubasch and Richter have been issued in escrow pursuant to such executive officers respective employment
agreements. Under the terms of the escrow, the shares will be delivered to each of the executive officers only if on October 10, 2003, he or she is an employee of NTL or, on
or before such date, was terminated, actually or constructively, without cause.
|   
|(4) |  | Includes two Series A warrants owned by Mr. Lubasch as custodian for his child, as to which warrants Mr. Lubasch disclaims beneficial ownership.                                                                                                                                                                                                                                                                                       
|   
|(5) |  | Includes 83,245 shares of Common Stock beneficially owned by certain of our executive officers that                                                                                                                                                                                                                                                                                                                                    

69



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##### Table of Contents



|    |  | have been issued in escrow pursuant to such executive officers
respective employment agreements. Under the terms of the escrow, the shares will be delivered to each of the executive officers only if on October 10, 2003, he or she is an
employee of NTL or, on or before such date, was terminated, actually or constructively, without cause.                                                                                                                                                                                                                    
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(6) |  | Based solely upon the Form 4, dated February 12, 2003, filed by William R. Huff with the Commission on February 12, 2003. Includes ownership of our Common Stock by certain
entities of which Mr. Huff is an affiliate or separate accounts for which one or more affiliates act as investment manager, including among others, W.R. Huff Asset
Management Co., L.L.C. William R. Huff possesses sole power to vote and direct the disposition of all shares of our Common Stock beneficially owned by him, subject to
applicable securities law compliance procedures.
|   
|(7) |  | Includes 200,000 shares of restricted Common Stock. Also includes (i) stock options for the purchase of 100,000 shares of Common Stock that will vest equally on a quarterly
basis over a three-year period, and (ii) stock options for the purchase of 300,000 shares of Common Stock that will vest 20% per year on a quarterly basis. Full vesting for
the latter portion of the option grant will occur over a five-year period. No shares under option may be sold prior to the first anniversary date of Mr. Mooneys employment
with the Company.               

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Item 13. Certain Relationships and Related Transactions

We have entered into several transactions with related parties as
described below. Each of these transactions is as favorable to us as could be
obtained with an unrelated third party.

Our Relationship with NTL Europe

In connection with the consummation of the Plan, we have entered into
several agreements with NTL Europe including a Tax Sharing Agreement, a
Transitional Services Agreement, a De-Merger Agreement and a Novation
Agreement. We also cooperate with NTL Europe in several other areas.

Transitional Services Agreement

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

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

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

De-Merger Agreement

On the Effective Date, we also entered into a De-Merger Agreement with NTL
Europe. This agreement enables us and NTL Europe to have access to records and
documents which we and they require but which are held by or in the control of
the other. In addition the agreement ensures, to the extent possible, that all
warranties, indemnities or liabilities relating to assets or companies which we
currently own (directly or indirectly), but which were originally acquired by
NTL Europe or one of its subsidiaries before being transferred to us or one of
our subsidiaries, are transferred to us with effect from the date of the
agreement.

Under the De-Merger Agreement, NTL Europe agrees that it holds and that it
shall procure that each of its group companies holds in trust for us the
benefit of warranties and representations and the benefit of covenants to pay
or indemnities under contracts entered into by members of NTL Europes group of
companies prior to the date of the agreement relating to the acquisition of
assets which on the date of the agreement were held by us and/or our
subsidiaries.

There is no specified list of contracts to which the De-Merger Agreement
applies. Instead it is agreed that the De-Merger Agreement will not apply to
the agreements dealt with under the Novation Agreement described below.

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Novation Agreement

In May 2000, our former ultimate parent company (now known as NTL Europe)
completed the acquisition of ConsumerCo, the residential cable business of
Cable & Wireless Communications PLC, referred to in this prospectus as Old CWC.
Old CWC was a publicly listed company in the UK whose largest shareholder was
C&W.

The deal was recorded in a Transaction Agreement originally signed in July
1999. When the deal closed, NTL Europe acquired ConsumerCo. ConsumerCo is a
UK cable business and it was always intended that it would be operationally
integrated with the rest of NTLs UK business.

NTL Europe (then known as NTL Incorporated) transferred ConsumerCo to us
and our subsidiaries in February 2001.

On January 10, 2003, we, NTL Europe and C&W and certain of their
respective subsidiaries entered into a Novation Agreement which transfers the
remaining rights and obligations under the Transaction Agreement and other
related ancillary transaction documents (other than those relating to C&Ws
rights as a shareholder in NTL Europe or relating to securities of NTL Europe)
from NTL Europe to us. Those rights and obligations include representations
and warranties given by C&W in respect of ConsumerCo, mutual tax indemnities
related to certain tax matters concerning ConsumerCo and the transfer of
certain properties between ConsumerCo and C&W where the relevant properties are
owned by C&W or ConsumerCo but used by the other.

Tax Sharing Agreement

Until consummation of the Plan, we were a part of a federal consolidated
income tax group having NTL Europe as the common parent corporation. Under the
Plan, we separated from the NTL Europe group, becoming a separate federal
consolidated tax group after the Effective Date. On the Effective Date, we
entered into a Tax Sharing Agreement which allocates rights and
responsibilities for tax matters between us, on the one hand, and NTL Europe
and its affiliates, on the other hand.

In general, we will have control over, and be responsible for, the
preparation and filing of our own tax returns and also any joint tax returns
that include us and NTL Europe companies. NTL Europe will reimburse us for
14.5% of the costs associated with our preparation of joint returns, including
the federal income tax returns for 2002 and 2003.

Although it is not anticipated that there will be any federal income tax
liability for 2002 or the portion of 2003 during which we are included in a
joint return with NTL Europe, we have the right to reasonably apportion any tax
liability between us and NTL Europe, and NTL Europe will be liable for any such
apportioned tax liability attributable to NTL Europe and its affiliates. Any
refunds of taxes paid with respect to joint returns will likewise be reasonably
allocated by us to NTL Europe and its affiliates on a similar basis.

NTL Europes UK affiliates are required, as we may direct, to surrender
group relief up to the maximum permitted by law to certain of our UK affiliates
for tax periods before, or that include, the Effective Date as we may direct.
Such group relief allow our UK affiliates to use deductions from NTL Europes
UK affiliates to reduce foreign taxable income. We also have the ability to
amend any claims or returns to give effect to NTL Europes UK affiliates
surrenders of group relief.

We have the exclusive right to control, contest and represent our
interests and NTL Europes interest in any audit relating to a joint tax return
and to resolve, settle or agree to any deficiency, claim or adjustment
proposed, asserted or assessed in connection with any joint return if the
matter involved could effect us. However, NTL Europe has the exclusive
authority to handle audits that relate solely to NTL Europe or its affiliates
to the extent the asserted liability or matter either does not exceed any
amounts escrowed by NTL Europe for taxes or could not otherwise create
liability for us or our affiliates. We have

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an obligation to provide NTL Europe with information, to keep NTL Europe
informed and to give NTL Europe an opportunity to participate in discussions
with tax authorities regarding tax issues that involve NTL Europe or its
affiliates. We have the right to reasonably apportion any costs associated
with responding to an audit, claim or asserted deficiency to NTL Europe.

NTL Europes ability to perform its continuing obligations under the tax
sharing agreement could be affected by a sale of some or all of its assets or
by a change of control. Therefore, NTL Europe is required to provide us with
notice of any change of control of it or any of its affiliates. Finally, we
and NTL Europe have customary rights and obligations to cooperate, exchange
information, provide notice and resolve disputes with respect to tax matters.

NTLs Relationship with ATX Communications, Inc.

Our President  Chief Executive Officer, Barclay Knapp, is also the
Chairman of ATX Communications, Inc. (formerly known as CoreComm Holdco, Inc.
and referred to in this prospectus as ATX). Until January 2003, ATX shared
resources with us related specifically to corporate activity, including
corporate employees and a corporate office. In conjunction with these
arrangements, we provided ATX with management, financial, legal and
administrative support services through the use of employees, as well as access
to office space and equipment and use of supplies and related office services.
The salaries of employees providing services to ATX were charged to ATX by us
based on the allocations of their time spent providing services to ATX.

Amounts charged to ATX by us consist of direct costs allocated to ATX
where identifiable and a percentage of the portion of our corporate overhead
which cannot be specifically allocated to us. Effective January 1, 2001, the
percentage used to allocate corporate overhead was reduced. Our charges to ATX
commenced in October 1998. It is not practicable to determine the amounts of
these expenses that would have been incurred had ATX operated as an
unaffiliated entity. In the opinion of management, this allocation method is
reasonable. For the years ended December 31, 2002, 2001 and 2000, we charged
ATX $385,000, $446,000 and $1,186,000, respectively, which reduced our
corporate expenses.

On April 12, 2001, our former ultimate parent company purchased $15.0
million of an unsecured convertible note from ATX and received warrants to
purchase 770,000 shares of ATX common stock at an exercise price of $.01 per
share that expire in April 2011. In addition, concurrently with the note
purchase and without additional compensation, we entered into a network and
software agreement with ATX. Under the agreement, ATX will provide U.S.
network access for Internet traffic from our UK customers for three years, as
well as a royalty free license to use certain billing and provisioning software
and know-how.

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

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

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NTLs Relationship with Certain Financial Advisors

On May 2, 2002, our former parent company, NTL Europe, its subsidiary NTL
Delaware, and its former subsidiary NTL Communications Limited (also a
subsidiary of ours), on behalf of themselves and their respective subsidiaries
(collectively referred to in this prospectus as the Advised Companies), the
steering committee of the unofficial committee of noteholders of Old NTL that
was convened during our Chapter 11 reorganization, J.P. Morgan plc, J.P.
Morgan Chase, Morgan Stanley Dean Witter Bank Limited and Morgan Stanley Senior
Funding, Inc. entered into a letter agreement to amend the existing engagement
provisions contained in an engagement letter dated May 17, 2000, by and among
the Advised Companies, J.P. Morgan plc, J.P. Morgan Chase, Morgan Stanley
Dean Witter Bank Limited and Morgan Stanley Senior Funding, Inc. (referred to
as the Modified Engagement Letter) as follows:

(1)  J.P. Morgan plc and J.P. Morgan Chase (collectively referred to as
the J.P. Morgan parties), and Morgan Stanley Dean Witter Bank Limited and
Morgan Stanley Senior Funding, Inc. (collectively referred to as the Morgan
Stanley parties) shall each be engaged on a non-exclusive basis by the Advised
Companies and their respective subsidiaries as joint book running managers in
any capital market financing entered into by the Advised Companies or any of
their respective subsidiaries, the proceeds of which are used to refinance all
or any portion of our Working Capital Credit Facility. In connection with
their engagement as joint book running managers, each of the J.P. Morgan
parties and the Morgan Stanley parties shall be entitled to receive 30% of the
underwriting discount of the aggregate principal amount of such issuance of
securities (referred to as the book running fee);

(2)  the J.P. Morgan parties and the Morgan Stanley parties shall each also
be engaged on a non-exclusive basis by the Advised Companies and their
respective subsidiaries as co-managers in any capital markets financing the
proceeds of which are used to refinance the old notes or new notes. In
connection with their engagement as co-managers, each of the J.P. Morgan
parties and the Morgan Stanley parties shall be entitled to receive 10% of the
underwriting discount of the aggregate principal amount of such capital markets
issuance (referred to as the managing fee); and

(3)  each of the Advised Companies agreed that after the refinancing of the
old notes, the new notes and/or the Working Capital Credit Facility, if the
aggregate of the book running fee and the managing fee paid to each of the J.P.
Morgan parties and the Morgan Stanley parties pursuant to paragraphs (1) and
(2) above is less than $3,000,000 per institution, each of the Advised
Companies shall, on a joint and several basis, pay to or procure that there is
paid to each of the J.P. Morgan parties and the Morgan Stanley parties an
amount equal to the amount by which $3,000,000 exceeds the aggregate of the
fees paid to each such institution pursuant to paragraphs (1) and (2) above.

As of the Effective Date (January 10, 2003), the provisions of the
Modified Engagement Letter are a joint and several obligation of NTL Europe and
NTL Delaware (which are no longer affiliated with us) and NTL Communications
Limited, a subsidiary of ours.

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Item 14. Controls and Procedures



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




PART IV




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

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

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EXHIBIT INDEX

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

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

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|      |  |                                                                                                                                                                                                                                                                              
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                              
|10.13 |  | Form of Director and Officer Indemnity Agreement and
a schedule of persons to whom the agreement has been
provided (Incorporated by reference to Exhibit 10.16
to the Registration Statement on Form S-1 filed by
NTL Incorporated on February 12, 2003, File No.
333-103135)
|      |  |                                                                                                                                                                                                                                                                              
|12    |  | Computation of Ratio of Earnings to Fixed Charges (Incorporated by
reference to Exhibit 12 to the Form 10-K filed by NTL Incorporated on
March 31, 2003, File No. 000-22616)                                                                                                 
|      |  |                                                                                                                                                                                                                                                                              
|21    |  | Subsidiaries of the registrant (Incorporated by
reference to Exhibit 21 to the Registration Statement
on Form S-1 filed by NTL Incorporated on February 12,
2003, File No. 333-103135)                                                                                       
|      |  |                                                                                                                                                                                                                                                                              
|99.1  |  | Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350*                                                                                                                                                                     



---

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

79



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##### Table of Contents






SIGNATURE

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: May 30, 2003

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


80



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##### Table of Contents






CERTIFICATIONS



| |    |  | I, Barclay Knapp, certify that:                                                                                                                                                                                                                                                                                         
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 1. |  | I have reviewed this amendment
No. 3 to the
annual report on Form 10-K/A of NTL Incorporated;                                                                                                                                                                                                                           
|
| | 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;
|
| | 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;                   
|
| | 4. |  | The registrants other certifying officers and
I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:                                                                                                  



| | a) |  | Designed such disclosure controls
and procedures to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Evaluated the effectiveness of
the registrants disclosure controls and procedures as
of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | Presented in this annual report
our conclusions about the effectiveness of the
disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



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



| | a) |  | All significant deficiencies in
the design or operation of internal controls which
could adversely affect the registrants ability to
record, process, summarize and report financial data
and have identified for the registrants auditors any
material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Any fraud, whether or not
material, that involves management or other employees
who have a significant role in the registrants
internal controls; and                                                                                                                                        



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

|                   |  |                                                              
|------------------ |  | -------------------------------------------------------------
|Date: May 30, 2003 |  | /s/ Barclay Knapp                                            
|                   |  |                                                              
|                   |  | Barclay Knapp
Chief Executive Officer, President and Director

81



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| |    |  | I, Scott Schubert, certify that:                                                                                                                                                                                                                                                                                        
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 1. |  | I have reviewed this amendment
No. 3 to the
annual report on Form 10-K/A of NTL Incorporated;                                                                                                                                                                                                                           
|
| | 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;
|
| | 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;                   
|
| | 4. |  | The registrants other certifying officers and
I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:                                                                                                  



| | a) |  | Designed such disclosure controls
and procedures to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Evaluated the effectiveness of
the registrants disclosure controls and procedures as
of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | Presented in this annual report
our conclusions about the effectiveness of the
disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



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



| | a) |  | All significant deficiencies in
the design or operation of internal controls which
could adversely affect the registrants ability to
record, process, summarize and report financial data
and have identified for the registrants auditors any
material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Any fraud, whether or not
material, that involves management or other employees
who have a significant role in the registrants
internal controls; and                                                                                                                                        



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

|                   |  |                                       
|------------------ |  | --------------------------------------
|Date: May 30, 2003 |  | /s/  Scott Schubert                   
|                   |  |                                       
|                   |  | Scott Schubert
Chief Financial Officer

82



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

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

Index to Consolidated Financial Statements
and Financial Statement Schedules

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

|                                                                                                                                   |  |  |       | 
|---------------------------------------------------------------------------------------------------------------------------------- |  |  | ----- | 
|Report of Independent Auditors of NTL Incorporated                                                                                 |  |  | F-2   | 
|Consolidated Balance Sheets of
NTL Incorporated  December 31, 2002 and 2001                                                       |  |  | F-3   | 
|Consolidated Statements of
Operations     
Years ended December 31, 2002, 2001 and 2000                                           |  |  | F-5   | 
|Consolidated Statement of
Shareholders Equity (Deficiency) of NTL Incorporated     
Years ended December 31, 2002, 2001 and 2000 |  |  | F-6   | 
|Consolidated Statements of Cash
Flows of NTL Incorporated     
Years ended December 31, 2002, 2001 and 2000                       |  |  | F-8   | 
|Notes to Consolidated Financial
Statements of NTL Incorporated                                                                     |  |  | F-10  | 
|Report of Independent Auditors of NTL Europe, Inc.                                                                                 |  |  | F-61  | 
|Consolidated Balance Sheets of NTL Europe, Inc.  December 31, 2002 and 2001                                                       |  |  | F-62  | 
|Consolidated Statements of Operations of NTL Europe, Inc. 
Years ended December 31, 2002, 2001 and 2000                           |  |  | F-64  | 
|Consolidated Statement of Shareholders (Deficiency) of NTL Europe, Inc. 
Years ended December 31, 2002, 2001 and 2000            |  |  | F-65  | 
|Consolidated Statements of Cash Flows of NTL Europe, Inc. 
Years ended December 31, 2002, 2001 and 2000                           |  |  | F-67  | 
|Notes to Consolidated Financial Statements of NTL Europe, Inc.                                                                     |  |  | F-69  | 
|Report of Independent Auditors of NTL (Delaware), Inc.                                                                             |  |  | F-125 | 
|Consolidated Balance Sheets of NTL (Delaware), Inc.  December 31, 2002 and 2001                                                   |  |  | F-126 | 
|Consolidated Statements of Operations of NTL (Delaware), Inc. 
Years ended December 31, 2002, 2001 and 2000                       |  |  | F-128 | 
|Consolidated Statement of Shareholders (Deficiency) of NTL (Delaware), Inc. 
Years ended December 31, 2002, 2001 and 2000        |  |  | F-129 | 
|Consolidated Statements of Cash Flows of NTL (Delaware), Inc. 
Years ended December 31, 2002, 2001 and 2000                       |  |  | F-131 | 
|Notes to Consolidated Financial Statements of NTL (Delaware), Inc.                                                                 |  |  | F-133 | 

The following consolidated financial statement schedules of NTL Incorporated
(formerly NTL Communications Corp.) and Subsidiaries, NTL Europe, Inc. (formerly NTL Incorporated)
(Debtor-in-Possession) and Subsidiaries and NTL (Delaware), Inc.
(Debtor-in-Possession) and Subsidiaries are included in Item 15(d):

|                                                                                  |  |  |      
|--------------------------------------------------------------------------------- |  |  | -----
|Schedule I  Condensed
Financial Information of Registrant (NTL Incorporated)     |  |  | F-51 
|Schedule II  Valuation
and Qualifying Accounts of
NTL Incorporated               |  |  | F-60 
|Schedule I  Condensed Financial Information of Registrant (NTL Europe, Inc.)     |  |  | F-117
|Schedule II  Valuation and Qualifying Accounts of NTL Europe, Inc.               |  |  | F-123
|Schedule I  Condensed Financial Information of Registrant (NTL (Delaware), Inc.) |  |  | F-174
|Schedule II  Valuation and Qualifying Accounts of NTL (Delaware), Inc.           |  |  | F-176

The following financial statements of are
included in Item 8:

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.

IMPORTANT EXPLANATORY NOTE
REGARDING THE CONSOLIDATED FINANCIAL STATEMENTS OF NTL (EUROPE), INC.
AND NTL (DELAWARE), INC. INCLUDED IN THIS ANNUAL REPORT

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

Because the Convertible Notes were
outstanding as of December 31, 2002, Rule 3-10 of
Regulation S-X requires our Annual Report on Form 10-K for
the year ended December 31, 2002 to include consolidated balance
sheets for each of NTL Europe, Inc. and NTL (Delaware), Inc. as of
December 31, 2002 and 2001 and consolidated statements of
operations and cash flows of each of NTL Europe, Inc. and NTL
(Delaware), Inc. for the years ended December 31, 2002, 2001 and
2000 and the related notes and financial statement schedules (the
Co-obligor Financial Statements). The Co-obligor
Financial Statements are included in this Amendment No. 3 on
Form 10-K/A to our Annual Report on Form 10-K for the
period ending December 31, 2002.

In reviewing this Annual Report,
including the Co-obligor Financial Statements, you should be aware
that since the consummation of the Plan, we are no  longer affiliated
with NTL Europe, Inc. or NTL (Delaware), Inc. and the business and
operations of those companies are separate from our business and
operations. In addition, in evaluating our historical performance,
you should be aware that prior to the consummation of the Plan, NTL
Europe, Inc. and NTL (Delaware), Inc. were parent holding companies
of the Company and, consequently, their assets and liabilities and
cash flows (except those relating to our group) were historically never part of our consolidated group.

F-1



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##### Table of Contents



REPORT OF INDEPENDENT AUDITORS

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

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

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

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

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

/s/ ERNST & YOUNG LLP


New York, New York
March 27, 2003

F-2



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##### Table of Contents



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

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

F-3



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##### Table of Contents



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

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

See accompanying notes.

F-4



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##### Table of Contents



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

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

See accompanying notes.

F-5



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##### Table of Contents



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

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

See accompanying notes.

F-6



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##### Table of Contents



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

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

See accompanying notes.

F-7



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##### Table of Contents



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

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

F-8



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##### Table of Contents



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

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

See accompanying notes.

F-9



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##### Table of Contents



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

Notes to Consolidated Financial Statements

1.     Organization and Business

NTLs Completed Restructuring

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

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

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

Historical Structure of the Company

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

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

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

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

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

Notes to Consolidated Financial
Statements(continued)

1.     Organization and Business (continued)

Business

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

2.     Reorganization and Emergence from Chapter 11

Background of Restructuring

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

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

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

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

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

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

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

Notes to Consolidated Financial
Statements (continued)

2.     Reorganization and Emergence from Chapter 11 (continued)

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

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

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

Recapitalization Expense

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

Recapitalization items, net consist of the following:

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

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

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

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

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

Notes to Consolidated Financial Statements(continued)

2.     Reorganization and Emergence from Chapter 11 (continued)

Pro Forma Consolidated Balance Sheet

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

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

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

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

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

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##### Table of Contents



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

Notes to consolidated Financial Statements (continued)

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

3.  Significant Accounting Policies

Basis of Presentation and Use of Estimates

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

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

Principles of Consolidation

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

Reclassification

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

Foreign Currency Translation

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

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

Cash Equivalents

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

Marketable Securities

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

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

3.  Significant Accounting Policies (continued)

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

Fixed Assets

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

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

Intangible Assets

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

Impairment of Long-Lived Assets

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

Equity Method Investments

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

Deferred Financing Costs

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

Capitalized Interest

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

3.  Significant Accounting Policies (continued)

Revenue Recognition

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

Cable Television System Costs, Expenses and Revenues

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

Advertising Expense

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

Stock-Based Compensation

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

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

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

Derivative Financial Instruments

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

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

4.   Recent Accounting Pronouncements

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

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

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

4.   Recent Accounting Pronouncements (continued)

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

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, which is effective for the Company on January 1, 2003. This
Statement addresses financial accounting and reporting for obligations
associated with the retirement of tangible fixed assets and the associated
asset retirement costs. The adoption of this new standard is not
expected to have a
significant effect on the results of operations, financial condition or cash
flows of the Company.

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also includes guidance on the initial recognition and
measurement of goodwill and other intangible assets acquired in a business
combination that is completed after June 30, 2001. SFAS No. 142 ends the
amortization of goodwill and indefinite-lived intangible assets. Instead, these
assets must be reviewed annually (or more frequently under certain conditions)
for impairment in accordance with this statement. This impairment test uses a
fair value approach rather than the undiscounted cash flow approach previously
required by SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of. The Company
adopted SFAS No. 141 and SFAS No. 142
on January 1, 2002. Primarily due to the significant impairment charge that
the Company recorded in 2001, the adoption of this new standard did
not result in an impairment upon adoption. Amortization of goodwill
and license acquisition costs ceased effective January 1, 2002.
See Note 8.

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

5.   Asset Impairments

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

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

6.   Acquisitions

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

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

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

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

7.   Fixed Assets

Fixed assets consist of:

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

8.   Intangible Assets

Intangible assets consist of:

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

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

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

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

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

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

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

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

9.   Liabilities Subject to Compromise

Liabilities subject to compromise consist of the following:

|                        |                                                         |   |                   |         | 
|----------------------- | ------------------------------------------------------- | - | ----------------- | ------- | 
|                        |                                                         |   | December 31, 2002
|                        |                                                         |   |                  
|                        |                                                         |   | (in millions)    
|Accounts payable        |                                                         | $ | 0.6               |        
|Interest payable        |                                                         |   | 316.8             |        
|Due to NTL Europe, Inc. |                                                         |   | 25.2              |        
|Accrued expenses        |                                                         |   | 1.0               |        
|Long-term debt:         |                                                         |   |                   |        
|NTL Communications:     |                                                         |   |                   |        
|                        | 12 3/4% Senior Deferred Coupon Notes                    |   |                   | 277.8   | 
|                        | 11 1/2% Senior Deferred Coupon Notes                    |   |                   | 1,050.0 | 
|                        | 10% Senior Notes                                        |   |                   | 400.0   | 
|                        | 9 1/2% Senior Sterling Notes, less unamortized discount |   |                   | 200.8   | 
|                        | 10 3/4% Senior Deferred Coupon Sterling Notes           |   |                   | 439.2   | 
|                        | 9 3/4% Senior Deferred Coupon Notes                     |   |                   | 1,193.3 | 
|                        | 9 3/4% Senior Deferred Coupon Sterling Notes            |   |                   | 441.6   | 
|                        | 11 1/2% Senior Notes                                    |   |                   | 625.0   | 
|                        | 12 3/8% Senior Deferred Coupon Notes                    |   |                   | 380.6   | 
|                        | 7% Convertible Subordinated Notes                       |   |                   | 489.8   | 
|                        | 9 1/4% Senior Euro Notes                                |   |                   | 262.1   | 
|                        | 9 7/8% Senior Euro Notes                                |   |                   | 367.0   | 
|                        | 11 1/2% Senior Deferred Coupon Euro Notes               |   |                   | 166.1   | 
|                        | 11 7/8% Senior Notes, less unamortized discount         |   |                   | 491.7   | 
|                        | 12 3/8% Senior Euro Notes, plus unamortizd premium      |   |                   | 315.3   | 
|                        | 6 3/4% Convertible Senior Notes                         |   |                   | 1,150.0 | 
|Diamond Cable:          |                                                         |   |                   |        
|                        | 13 1/4% Senior Discount Notes                           |   |                   | 285.1   | 
|                        | 11 3/4% Senior Discount Notes                           |   |                   | 531.0   | 
|                        | 10 3/4% Senior Discount Notes                           |   |                   | 420.5   | 
|Diamond Holdings:       |                                                         |   |                   |        
|                        | 10% Senior Sterling Notes                               |   |                   | 217.3   | 
|                        | 9 1/8% Senior Notes                                     |   |                   | 110.0   | 
|                        |                                                         |   |                   |        
|Total                   |                                                         | $ | 10,157.8          |        
|                        |                                                         |   |                   |        

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

10.   Long-Term Debt

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

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

F-24



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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

10.   Long-Term Debt (continued)

DIP Facility

In connection with the Plan, some members of the official unsecured creditors
committee of bondholders committed to provide up to $500.0 million of new debt
financing to enable the business operations of our former parent company and
some of its subsidiaries to have access to sufficient liquidity to continue
ordinary operations during the Chapter 11 process. The Bankruptcy Court
approved a DIP facility in the principal amount of $630.0 million (including a
$130.0 million commitment from NTL (Delaware), Inc. and the $500.0 million from
certain members of the creditors committee) in an order entered on July 3,
2002. On July 15, 2002, the various lenders under the DIP facility and NTL
(Delaware), Inc. entered into the DIP facility agreement with Communications
Cable Funding Corp., a wholly-owned subsidiary of the Company to provide $630.0
million in financing to Communications Cable Funding Corp.

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

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

Each term loan under the DIP facility incurred interest on the unpaid principal
amount for three months from July 15, 2002 at the rate of 11% per annum. With
respect to each successive three month period following that date, the rate per
annum increased incrementally by 1% over the immediately preceding three month
period but will not exceed 18% per annum for any three month period. Interest
was payable in cash at least monthly. The DIP facility also included an
unutilized commitment fee of 1/2% per annum on the aggregate principal amount
of unutilized commitments which is payable in cash each month.

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

Outstanding Public Notes

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



|(a) |  | 12 3/4% Notes due April 15, 2005, principal amount at maturity of $277.8
million, interest payable semiannually from October 15, 2000, redeemable
at the Companys option on or after April 15, 2000;                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | 11 1/2% Notes due February 1, 2006, principal amount at maturity of
$1,050.0 million, interest payable semiannually from August 1, 2001,
redeemable at the Companys option on or after February 1, 2001;                           
|   
|(c) |  | 10% Notes due February 15, 2007, principal amount at maturity of $400.0
million, interest payable semiannually from August 15, 1997, redeemable at
the Companys option on or after February 15, 2002;                              
|   
|(d) |  | 9 1/2% Sterling Notes due April 1, 2008, principal amount at maturity of
£125.0 million ($201.2 million), interest payable semiannually from
October 1, 1998, redeemable at the Companys option on or after April 1,
2003;         
|   
|(e) |  | 10 3/4% Sterling Notes due April 1, 2008, principal amount at maturity of
£300.0 million ($482.9 million), interest payable semiannually beginning
on October 1, 2003, redeemable at the Companys option on or after April
1, 2003;
|   
|(f) |  | 9 3/4% Notes due April 1, 2008, principal amount at maturity of $1,300.0
million, interest payable semiannually beginning on October 1, 2003,
redeemable at the Companys option on or after April 1, 2003;                         

F-25



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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

10.   Long-Term Debt (continued)



|(g) |  | 9 3/4% Sterling Notes due April 15, 2009, principal amount at maturity of
£330.0 million ($531.1 million), interest payable semiannually beginning
on October 15, 2004, redeemable at the Companys option on or after April
15, 2004;                                                                                                                                                                                                                        
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(h) |  | 11 1/2% Notes due October 1, 2008, principal amount at maturity of $625.0
million, interest payable semiannually from April 1, 1999, redeemable at
the Companys option on or after October 1, 2003;                                                                                                                                                                                                                                                          
|   
|(i) |  | 12 3/8% Notes due October 1, 2008, principal amount at maturity of $450.0
million, interest payable semiannually beginning on April 1, 2004,
redeemable at the Companys option on or after October 1, 2003;                                                                                                                                                                                                                                                  
|   
|(j) |  | 7% Convertible Notes due December 15, 2008, principal amount at maturity
of $489.8 million, interest payable semiannually from June 15, 1999,
redeemable at the Companys option on or after December 15, 2001,
convertible into shares of NTL Incorporated common stock at a conversion
price of $39.20 per share (there are approximately 12.5 million shares of
NTL Incorporated common stock reserved for issuance upon conversion);                      
|   
|(k) |  | 9 1/4% Euro Notes due November 15, 2006, principal amount at maturity of
250.0 million, ($262.1 million), interest payable semiannually from May
15, 2000;                                                                                                                                                                                                                                                                                                   
|   
|(l) |  | 9 7/8% Euro Notes due November 15, 2009, principal amount at maturity of
350.0 million, ($367.0 million), interest payable semiannually from May
15, 2000, redeemable at the Companys option on or after November 15,
2004;                                                                                                                                                                                                                                 
|   
|(m) |  | 11 1/2% Deferred Euro Notes due November 15, 2009, principal amount at
maturity of 210.0 million ($220.1 million), interest payable semiannually
beginning on May 15, 2005, redeemable at the Companys option on or after
November 15, 2004;                                                                                                                                                                                                                
|   
|(n) |  | 11 7/8% Notes due October 1, 2010, principal amount at maturity of $500.0
million, interest payable semiannually from April 1, 2001, redeemable at
the Companys option on or after October 1, 2005;                                                                                                                                                                                                                                                          
|   
|(o) |  | 12 3/8% Senior Euro Notes due February 1, 2008, issued in January and
February 2001, principal amount at maturity of 300.0 million ($314.6
million), interest payable semiannually from August 1, 2001;                                                                                                                                                                                                                                                      
|   
|(p) |  | 6 3/4% Convertible Notes due May 15, 2008, issued in May 2001, principal
amount at maturity of $1,150.0 million, interest payable semiannually from
November 15, 2001, redeemable at the Companys option on or after May 20,
2004, convertible into shares of NTL Incorporated common stock at a
conversion price of $32.728 per share (there were approximately 35.1
million shares of NTL Incorporated common stock reserved for issuance upon
conversion);
|   
|(q) |  | 11.2% Debentures due November 15, 2007, principal amount at maturity of
$517.3 million, interest payable semiannually from May 15, 2001,
redeemable at NTL Triangles option after November 15, 2000;                                                                                                                                                                                                                                                         
|   
|(r) |  | 13 1/4% Notes due September 30, 2004, principal amount at maturity of
$285.1 million, interest payable semiannually from March 31, 2000,
redeemable at Diamonds option on or after September 30, 1999;                                                                                                                                                                                                                                                       
|   
|(s) |  | 11 3/4% Notes due December 15, 2005, principal amount at maturity of
$531.0 million, interest payable semiannually from June 15, 2001,
redeemable at Diamonds option on or after December 15, 2000;                                                                                                                                                                                                                                                          
|   
|(t) |  | 10 3/4% Notes due February 15, 2007, principal amount at maturity of
$420.5 million, interest payable semiannually beginning on August 15,
2002, redeemable at Diamonds option on or after December 15, 2002;                                                                                                                                                                                                                                                

F-26



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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

10.   Long-Term Debt (continued)



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

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

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



|(w) |  | Senior Credit Facility originally dated May 30, 2000 (and subsequently
amended and restated) of £2,784.8 million ($4,482.1 million), all of which
was outstanding as of December 31, 2002; comprising a revolving facility
of £2,584.8 million ($4,160.2 million) and a term facility of £200.0
million ($321.9 million); interest payable at least every six months at
LIBOR plus mandatory costs plus a margin rate which, in the case of the
revolving facility, is fixed at 3.50% per annum for six months from
January 10, 2003 and which then varies, depending upon satisfaction of a
financial covenant over six monthly periods, between 4.00% and 2.50% per
annum and which, in the case of the term facility, is fixed at 5.50% per
annum; effective interest rate on the revolving facility of 6.26% and
6.73% per annum at December 31, 2002 and 2001, respectively; effective
interest rate on the term facility of 7.76% and 8.06% per annum at
December 31, 2002 and 2001, respectively; the unused portion of the
commitment to make the revolving facility available is subject to a
commitment fee of 0.75% payable quarterly, which is reduced to 0.50% when
over 50% of the commitment is utilized; principal then outstanding under
the revolving facility is due in full on September 30, 2005; principal
under the term facility is due in six quarterly installments beginning on
June 30, 2006 and increasing from £5.0 million repayments due on the first
two repayment dates to £10.0 million repayments due on the next three
repayment dates with the balance being due on September 30, 2007; and
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Working Capital Credit Facility originally dated May 30, 2000 (and
subsequently amended and restated) of approximately £408.3 million ($657.1
million), all of which was outstanding as of December 31, 2002; originally
for £1,300.0 million ($2,092.4 million); following the issuance of new
debt beginning in October 2000, the commitment has been reduced to the
aforementioned amount; interest payable at least every six months at LIBOR
plus mandatory costs plus a margin rate which commenced at 4.50% per annum
and increases by 0.50% per annum at the end of each quarter after the date
upon which the facility was first utilized (subject to a cap on total
interest of 16% per annum and a cap on total interest payable in cash of
14% per annum (any excess being added to principal)); effective interest
rate of 11.76% and 9.57% per annum at December 31, 2002 and 2001,
respectively; principal is due in full on March 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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

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

F-27



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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

10.   Long-Term Debt (continued)

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

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

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

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

11.   Derivative Financial Instruments

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

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

In 2001, the Company entered into cross currency swaps to hedge exposure to
movements in the Euro/British pound exchange rate. In the year ended December
31, 2001, the Company recorded other comprehensive loss of $1.4 million as a
result of changes in the fair values. The aggregate fair value at December 31,
2001 was a net liability of $3.6 million. In May 2002, the Company closed out
its cross currency swaps for a cash payment of $2.0 million, and recognized a
loss of $2.0 million.

In September 2001, the Company entered into a British pound forward foreign
exchange agreement, consisting of twenty-six accumulating forward contracts, to
reduce its exposure to movement in the British pound/U.S. dollar exchange rate
in accordance with its market risk strategies. As of December 31, 2001, the
fair value of this instrument was a liability of $0.3 million.
In March 2002,
this agreement was closed out and the Company received cash of £0.5 million.

12.   Non-Cash Compensation

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

F-28



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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

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

13.   Other Charges Including Restructuring Charges

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

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

F-29



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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

13.   Other Charges Including Restructuring Charges (continued)

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

|                           |  |                   |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |   |        |  
|-------------------------- |  | ----------------- | ----- | ----- |  | ------------- | ----- | ------ |  | ----- | ----- | ----- |  | - | ----- | - |  | - | ---- | - |  | - | ------ | -
|                           |  | Employee          |       | Lease |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |  
|                           |  | Severance         |       | Exit  |  | Agreement     |       | Fixed  |  |       |       |       |  |   |       |  
|                           |  | and Related Costs |       | Costs |  | Modifications |       | Assets |  | Other |       | Total
|                           |  |                   |       |       |  |               |       |        |  |       |       |      
|Charged to expense         |  | $                 | 47.9  |       |  | $             | 18.0  |        |  | $     |      |       |  | $ |      |   |  | $ |     |   |  | $ | 65.9   |  
|Utilized                   |  |                   |      |       |  |               |      |        |  |       |      |       |  |   |      |   |  |   |     |   |  |   |       |  
|                           |  |                   |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |   |        |  
|Balance, December 31, 2000 |  |                   | 47.9  |       |  |               | 18.0  |        |  |       |      |       |  |   |      |   |  |   |     |   |  |   | 65.9   |  
|2000 provision utilized    |  |                   | (41.3 | )     |  |               | (9.6  | )      |  |       |      |       |  |   |      |   |  |   |     |   |  |   | (50.9  | )
|2000 provision released    |  |                   | (6.6  | )     |  |               | (7.3  | )      |  |       |      |       |  |   |      |   |  |   |     |   |  |   | (13.9  | )
|Charged to expense         |  |                   | 98.7  |       |  |               | 32.4  |        |  |       | 27.7  |       |  |   | 57.9  |   |  |   |     |   |  |   | 216.7  |  
|2001 provision utilized    |  |                   | (26.2 | )     |  |               |      |        |  |       |      |       |  |   | (57.9 | ) |  |   |     |   |  |   | (84.1  | )
|                           |  |                   |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |   |        |  
|Balance, December 31, 2001 |  |                   | 72.5  |       |  |               | 33.5  |        |  |       | 27.7  |       |  |   |      |   |  |   |     |   |  |   | 133.7  |  
|2000 provision utilized    |  |                   |      |       |  |               | (1.1  | )      |  |       |      |       |  |   |      |   |  |   |     |   |  |   | (1.1   | )
|2001 provision utilized    |  |                   | (71.9 | )     |  |               | (17.3 | )      |  |       | (16.2 | )     |  |   |      |   |  |   |     |   |  |   | (105.4 | )
|2001 provision released    |  |                   | (0.6  | )     |  |               | (15.1 | )      |  |       | (11.5 | )     |  |   |      |   |  |   |     |   |  |   | (27.2  | )
|Charged to expense         |  |                   | 35.2  |       |  |               | 78.9  |        |  |       | 1.2   |       |  |   | 7.5   |   |  |   | 9.2  |   |  |   | 132.0  |  
|2002 provision utilized    |  |                   | (15.6 | )     |  |               | (0.2  | )      |  |       |      |       |  |   | (7.5  | ) |  |   | (7.7 | ) |  |   | (31.0  | )
|                           |  |                   |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |   |        |  
|Balance, December 31, 2002 |  | $                 | 19.6  |       |  | $             | 78.7  |        |  | $     | 1.2   |       |  | $ |      |   |  | $ | 1.5  |   |  | $ | 101.0  |  
|                           |  |                   |       |       |  |               |       |        |  |       |       |       |  |   |       |   |  |   |      |   |  |   |        |  

14.   Income Taxes

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

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

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

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

Notes to Consolidated Financial Statements (continued)

14.   Income Taxes (continued)

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

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

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

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

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

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

14.   Income Taxes (continued)

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

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

15.   Fair Values of Financial Instruments

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

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

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

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

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

Notes to Consolidated Financial Statements (continued)

15.   Fair Values of Financial Instruments (continued)

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

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

16.   Related Party Transactions

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

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

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

Notes to Consolidated Financial Statements (continued)

16.   Related Party Transactions (continued)

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

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

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

On April 5, 2002, following receipt of the proceeds from the sale of NTL
Australia, NTL Delaware loaned £90.0 million to NTL (UK) Group, Inc. Such loan
was actually made (with the approval of the lenders under the UK credit
facilities) to NTL (UK) Group, Inc. and then on-lent to certain subsidiaries of
NTL (UK) Group, Inc. Interest on the note was at 23% per annum, compounded
semiannually, and was payable, in cash, on the earlier of April 1, 2006 or the
redemption date of the notes. In connection with the DIP facility, the current
interest rate on this loan had been reduced from 23% per annum to 11% per
annum. Interest expense  NTL Europe, Inc. includes $14.8 million from such
loan. Upon emergence from Chapter 11 reorganization and in accordance with the
Plan, such debt was repaid.

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

Pursuant to the DIP facility, all funding needs of the debtors were funded
through the proceeds of the DIP facility, in accordance with a budget and the
terms of the DIP facility agreement. Communications Cable Funding Corp. had
entered into intercompany note agreements with NTL Europe and NTL (Delaware),
Inc. to evidence such transactions. The notes earned interest on the unpaid
principal amount for three months from July 15, 2002 at the rate of 11% per
annum. With respect to each successive three month period following that date,
the rate per annum increased incrementally by 1% over the immediately preceding
three month period but will not exceed 18% per annum for any three month
period. Interest income  NTL Europe, Inc. includes $0.8 million of interest
due from NTL Europe, Inc. for such notes. Upon emergence from Chapter 11
reorganization and in accordance with the Plan, such debt in the amount of
$69.3 million was repaid.

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

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

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

Notes to Consolidated Financial Statements (continued)

16.   Related Party Transactions (continued)

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

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

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

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

17.   Shareholders Equity

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

Authorized Capital Stock

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

Common Stock

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

Stockholder Rights Plan

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

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

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

Notes to Consolidated Financial Statements (continued)

Stock Options

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

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

Notes to Consolidated Financial Statements (continued)

Stock Options (continued)

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

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

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

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

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

Notes to Consolidated Financial Statements (continued)

Stock Options (continued)

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

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

18.   Employee Benefit Plans

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

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

F-38



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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

18.   Employee Benefit Plans (continued)

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

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

F-39



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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

18.   Employee Benefit Plans (continued)

The components of net pension costs are as follows:

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

19.   Leases

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

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

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

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

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

F-40



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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

20.   Commitments and Contingent Liabilities

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

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

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

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

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

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

F-41



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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

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



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

[Additional columns below]

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

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

F-42



---



##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

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



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

[Additional columns below]

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

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

F-43



---



##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

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



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

[Additional columns below]

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

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

F-44



---



##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

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



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

[Additional columns below]

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

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



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

[Additional columns below]

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

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

F-45



---



##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

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



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

[Additional columns below]

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

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



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

[Additional columns below]

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

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

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



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

[Additional columns below]

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

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

22.   Industry Segments

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

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

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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

22.   Industry Segments (continued)

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



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

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##### Table of Contents



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

Notes to Consolidated Financial Statements (continued)

22.   Industry Segments (continued)

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

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

Geographic Information

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

F-50



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##### Table of Contents



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

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

See accompanying notes.

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##### Table of Contents



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

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

See accompanying notes.

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##### Table of Contents



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

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

See accompanying notes.

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##### Table of Contents



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

1.  Corporate Restructuring

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

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

2.  Basis of Presentation

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

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##### Table of Contents



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

3.   Liabilities Subject to Compromise

Liabilities subject to compromise consist of the following:

|                                |                                                         |   |               |         | 
|------------------------------- | ------------------------------------------------------- | - | ------------- | ------- | 
|                                |                                                         |   | December 31, 
|                                |                                                         |   | 2002         
|                                |                                                         |   |              
|                                |                                                         |   | (in millions)
|Accounts payable                |                                                         | $ | 0.6           |        
|Interest payable                |                                                         |   | 243.2         |        
|Payable to NTL (Delaware), Inc. |                                                         |   | 25.2          |        
|Accrued expenses                |                                                         |   | 1.0           |        
|Long-term debt                  |                                                         |   |               |        
|NTL Communications:             |                                                         |   |               |        
|                                | 12 3/4% Senior Deferred Coupon Notes                    |   |               | 277.8   | 
|                                | 11 1/2% Senior Deferred Coupon Notes                    |   |               | 1,050.0 | 
|                                | 10% Senior Notes                                        |   |               | 400.0   | 
|                                | 9 1/2% Senior Sterling Notes, less unamortized discount |   |               | 200.8   | 
|                                | 10 3/4% Senior Deferred Coupon Sterling Notes           |   |               | 439.2   | 
|                                | 9 3/4% Senior Deferred Coupon Notes                     |   |               | 1,193.3 | 
|                                | 9 3/4% Senior Deferred Coupon Sterling Notes            |   |               | 441.6   | 
|                                | 11 1/2% Senior Notes                                    |   |               | 625.0   | 
|                                | 12 3/8% Senior Deferred Coupon Notes                    |   |               | 380.6   | 
|                                | 7% Convertible Subordinated Notes                       |   |               | 489.8   | 
|                                | 9 1/4% Senior Euro Notes                                |   |               | 262.1   | 
|                                | 9 7/8% Senior Euro Notes                                |   |               | 367.0   | 
|                                | 11 1/2% Senior Deferred Coupon Euro Notes               |   |               | 166.1   | 
|                                | 11 7/8% Senior Notes, less unamortized discount         |   |               | 491.7   | 
|                                | 12 3/8% Senior Euro Notes, plus unamortized premium     |   |               | 315.3   | 
|                                | 6 3/4% Convertible Senior Notes                         |   |               | 1,150.0 | 
|                                |                                                         |   |               |        
|Total                           |                                                         | $ | 8,520.3       |        
|                                |                                                         |   |               |        

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

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##### Table of Contents



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

4.   Long-Term Debt

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

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

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##### Table of Contents



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

Outstanding Public Notes

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



|(a) |  | 12-3/4% Notes due April 15, 2005, principal amount at maturity of $277.8
million, interest payable semiannually from on October 15, 2000,
redeemable at the Companys option on or after April 15, 2000;                                                                                                                                                                                                                                
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | 11-1/2% Notes due February 1, 2006, principal amount at maturity of
$1,050.0 million, interest payable semiannually from August 1, 2001,
redeemable at the Companys option on or after February 1, 2001;                                                                                                                                                                                                                               
|   
|(c) |  | 10% Notes due February 15, 2007, principal amount at maturity of $400.0
million, interest payable semiannually from August 15, 1997, redeemable at
the Companys option on or after February 15, 2002;                                                                                                                                                                                                                                  
|   
|(d) |  | 9-1/2% Sterling Notes due April 1, 2008, principal amount at maturity of
£125.0 million ($201.2 million), interest payable semiannually from
October 1, 1998, redeemable at the Companys option on or after April 1,
2003;                                                                                                                                                                                                             
|   
|(e) |  | 10-3/4% Sterling Notes due April 1, 2008, principal amount at maturity of
£300.0 million ($482.9 million), interest payable semiannually beginning
on October 1, 2003, redeemable at the Companys option on or after April
1, 2003;                                                                                                                                                                                                    
|   
|(f) |  | 9-3/4% Notes due April 1, 2008, principal amount at maturity of $1,300.0
million, interest payable semiannually beginning on October 1, 2003,
redeemable at the Companys option on or after April 1, 2003;                                                                                                                                                                                                                             
|   
|(g) |  | 9-3/4% Sterling Notes due April 15, 2009, principal amount at maturity of
£330.0 million ($531.1 million), interest payable semiannually beginning
on October 15, 2004, redeemable at the Companys option on or after April
15, 2004;                                                                                                                                                                                                  
|   
|(h) |  | 11-1/2% Notes due October 1, 2008, principal amount at maturity of $625.0
million, interest payable semiannually from April 1, 1999, redeemable at
the Companys option on or after October 1, 2003;                                                                                                                                                                                                                                    
|   
|(i) |  | 12-3/8% Notes due October 1, 2008, principal amount at maturity of $450.0
million, interest payable semiannually beginning on April 1, 2004,
redeemable at the Companys option on or after October 1, 2003;                                                                                                                                                                                                                            
|   
|(j) |  | 7% Convertible Notes due December 15, 2008, principal amount at maturity
of $489.8 million, interest payable semiannually from June 15, 1999,
convertible into shares of NTL Incorporated common stock at a conversion
price of $39.20 per share, redeemable at the Companys option on or after
December 15, 2001 (there are approximately 12.5 million shares of NTL
Incorporated common stock reserved for issuance upon conversion);
|   
|(k) |  | 9- 1/4% Euro Notes due November 15, 2006, principal amount at maturity of
250.0 million ($262.1 million), interest payable semiannually from May
15, 2000;                                                                                                                                                                                                                                                                             
|   
|(l) |  | 9-7/8% Euro Notes due November 15, 2009, principal amount at maturity of
350.0 million ($367.0 million), interest payable semiannually from May
15, 2000, redeemable at the Companys option on or after November 15,
2004;                                                                                                                                                                                                            

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



|(m) |  | 11-1/2% Deferred Euro Notes due November 15, 2009, principal amount at
maturity of 210.0 million ($220.1 million), interest payable semiannually
beginning on May 15, 2005, redeemable at the Companys option on or after
November 15, 2004 and;                                                                                                                                                                                                                  
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(n) |  | 11-7/8% Notes due October 1, 2010, principal amount at maturity of $500.0
million, interest payable semiannually from April 1, 2001, redeemable at
the Companys option on or after October 1, 2005;                                                                                                                                                                                                                                                                
|   
|(o) |  | 12-3/8% Senior Euro Notes due February 1, 2008, issued in January and
February 2001, principal amount at maturity of 300.0 million ($314.6
million), interest payable semiannually from August 1, 2001;                                                                                                                                                                                                                                                            
|   
|(p) |  | 6-3/4% Convertible Senior Notes due May 15, 2008, issued in May 2001,
principal amount at maturity of $1,150.0 million, interest payable
semiannually from November 15, 2001, convertible into shares of NTL
Incorporated common stock at a conversion price of $32.728 per share,
redeemable at the Companys option on or after May 20, 2004 (there are
approximately 35.1 million shares of NTL Incorporated common stock
reserved for issuance upon conversion);

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

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

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

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

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

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

5.   Leases

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

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

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6.     Other

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

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

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

On September 28, 2001, the Company loaned NTL Europe, Inc. $150.0 million in
cash and received 15.0% Promissory Notes due September 30, 2004. Interest is
payable monthly in cash at a rate of 15.0% per year beginning on October 31,
2001. Upon emergence from Chapter 11 reorganization and in accordance with the
Plan, these notes were canceled.

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

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

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

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

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##### Table of Contents



REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
NTL Europe, Inc. (formerly NTL Incorporated)

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

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

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

As discussed in Note 5, the Company changed its method of accounting for
goodwill and other intangibles effective January 1, 2002.

/s/ ERNST & YOUNG LLP

New York, New York
May 28, 2003

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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Consolidated Balance Sheets
(dollars in millions)

|                                                                                  |                                                                                                  |   |              |          |      |   |          |          | 
|--------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | - | ------------ | -------- | ---- | - | -------- | -------- | 
|                                                                                  |                                                                                                  |   | December 31,
|                                                                                  |                                                                                                  |   |             
|                                                                                  |                                                                                                  |   | 2002         |          | 2001
|                                                                                  |                                                                                                  |   |              |          |     
|Assets                                                                            |                                                                                                  |   |              |          |      |   |          |         
|Current assets:                                                                   |                                                                                                  |   |              |          |      |   |          |         
|                                                                                  | Cash and cash equivalents                                                                        |   | $            | 277.5    |      |   | $        | 228.3    | 
|                                                                                  | Marketable securities                                                                            |   |              | 17.3     |      |   |          |         | 
|                                                                                  | Accounts receivable  trade, less allowance for doubtful
accounts of $9.4 (2002) and $6.6 (2001) |   |              | 243.4    |      |   |          | 194.2    | 
|                                                                                  | Other                                                                                            |   |              | 50.3     |      |   |          | 67.9     | 
|                                                                                  | Discontinued operations                                                                          |   |              | 12,968.1 |      |   |          | 13,331.0 | 
|                                                                                  |                                                                                                  |   |              |          |      |   |          |         
|Total current assets                                                              |                                                                                                  |   | 13,556.6     |          |      |   | 13,821.4 |         
|Fixed assets, net                                                                 |                                                                                                  |   | 1,682.1      |          |      |   | 1,494.9  |         
|Goodwill                                                                          |                                                                                                  |   | 218.7        |          |      |   | 960.0    |         
|Customer lists, net of accumulated amortization of $171.4 (2002)
and $91.1 (2001) |                                                                                                  |   | 62.8         |          |      |   | 104.1    |         
|Investments in and loans to affiliates, net                                       |                                                                                                  |   | 13.0         |          |      |   | 267.8    |         
|Deferred tax asset                                                                |                                                                                                  |   | 195.3        |          |      |   | 20.4     |         
|Other assets, net of accumulated amortization of
$62.4 (2002) and $24.9 (2001)    |                                                                                                  |   | 120.9        |          |      |   | 190.3    |         
|                                                                                  |                                                                                                  |   |              |          |      |   |          |          | 
|Total assets                                                                      |                                                                                                  | $ | 15,849.4     |          |      | $ | 16,858.9 |         
|                                                                                  |                                                                                                  |   |              |          |      |   |          |         

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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Consolidated Balance Sheets  continued
(dollars in millions)

|                                                                                                                                                                                                                     |                                                                                                                                                     |   |              |           |      |   |          |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | --------- | ---- | - | -------- | --------- | -
|                                                                                                                                                                                                                     |                                                                                                                                                     |   | December 31,
|                                                                                                                                                                                                                     |                                                                                                                                                     |   |             
|                                                                                                                                                                                                                     |                                                                                                                                                     |   | 2002         |           | 2001
|                                                                                                                                                                                                                     |                                                                                                                                                     |   |              |           |     
|Liabilities and shareholders (deficiency)                                                                                                                                                                           |                                                                                                                                                     |   |              |           |      |   |          |          
|Liabilities not subject to compromise                                                                                                                                                                                |                                                                                                                                                     |   |              |           |      |   |          |          
|Current liabilities:                                                                                                                                                                                                 |                                                                                                                                                     |   |              |           |      |   |          |          
|                                                                                                                                                                                                                     | Accounts payable                                                                                                                                    |   | $            | 49.3      |      |   | $        | 37.7      |  
|                                                                                                                                                                                                                     | Accrued expenses and other                                                                                                                          |   |              | 92.5      |      |   |          | 158.5     |  
|                                                                                                                                                                                                                     | Interest payable                                                                                                                                    |   |              | 43.5      |      |   |          | 50.5      |  
|                                                                                                                                                                                                                     | Deferred revenue                                                                                                                                    |   |              | 235.6     |      |   |          | 173.3     |  
|                                                                                                                                                                                                                     | Current portion of long-term debt                                                                                                                   |   |              | 2,719.3   |      |   |          | 3,460.2   |  
|                                                                                                                                                                                                                     | Discontinued operations (including liabilities subject to
compromise of $10,157.8)                                                                  |   |              | 17,956.2  |      |   |          | 16,426.2  |  
|                                                                                                                                                                                                                     |                                                                                                                                                     |   |              |           |      |   |          |          
|Total current liabilities                                                                                                                                                                                            |                                                                                                                                                     |   | 21,096.4     |           |      |   | 20,306.4 |          
|Long-term debt                                                                                                                                                                                                       |                                                                                                                                                     |   |             |           |      |   |         |          
|Other                                                                                                                                                                                                                |                                                                                                                                                     |   | 132.7        |           |      |   | 156.6    |          
|Deferred income taxes                                                                                                                                                                                                |                                                                                                                                                     |   | 226.0        |           |      |   | 164.6    |          
|Liabilities subject to compromise, including redeemable preferred stock                                                                                                                                              |                                                                                                                                                     |   | 4,294.1      |           |      |   |         |          
|Commitments and contingent liabilities                                                                                                                                                                               |                                                                                                                                                     |   |              |           |      |   |          |          
|Redeemable preferred stock  $.01 par value, plus accreted dividends;
liquidation preference $3,024.7; less unamortized discount of $33.4
(2002) and $53.4 (2001); issued and outstanding 2.1 shares (2002 and
2001) |                                                                                                                                                     |   |             |           |      |   | 2,773.7  |          
|Shareholders (deficiency):                                                                                                                                                                                          |                                                                                                                                                     |   |              |           |      |   |          |          
|                                                                                                                                                                                                                     | Series preferred stock  $.01 par value; authorized 10.0 shares;
liquidation preference $3,160.0; issued and outstanding 3.0 shares
(2002 and 2001) |   |              |          |      |   |          |          |  
|                                                                                                                                                                                                                     | Common stock  $.01 par value; authorized 800.0 shares; issued and
outstanding 276.6 shares (2002 and 2001)                                         |   |              | 2.8       |      |   |          | 2.8       |  
|                                                                                                                                                                                                                     | Additional paid-in capital                                                                                                                          |   |              | 13,574.9  |      |   |          | 13,720.0  |  
|                                                                                                                                                                                                                     | Accumulated other comprehensive (loss)                                                                                                              |   |              | (830.2    | )    |   |          | (1,072.8  | )
|                                                                                                                                                                                                                     | (Deficit)                                                                                                                                           |   |              | (22,647.3 | )    |   |          | (19,192.4 | )
|                                                                                                                                                                                                                     |                                                                                                                                                     |   |              |           |      |   |          |           |  
|                                                                                                                                                                                                                     |                                                                                                                                                     |   | (9,899.8     | )         |      |   | (6,542.4 | )        
|                                                                                                                                                                                                                     |                                                                                                                                                     |   |              |           |      |   |          |           |  
|Total liabilities and shareholders (deficiency)                                                                                                                                                                     |                                                                                                                                                     | $ | 15,849.4     |           |      | $ | 16,858.9 |          
|                                                                                                                                                                                                                     |                                                                                                                                                     |   |              |           |      |   |          |          

See accompanying notes.

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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Consolidated Statements of Operations
(dollars in millions, except per share amounts)

|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |          |        |  
|---------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ----------------------------------- | -------- | ----------------------- | ------ | ---- | --------- | --------- | ------ | - | -------- | -------- | ------ | -
|                                                                                         |                                                                                                                |                                     |          | Year Ended December 31,
|                                                                                         |                                                                                                                |                                     |          |                        
|                                                                                         |                                                                                                                |                                     |          | 2002                    |        | 2001 |           | 2000     
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |          
|Revenues                                                                                 |                                                                                                                | $                                   | 435.9    |                         |        | $    | 391.6     |           |        | $ | 226.8    |         
|Costs and expenses
Operating expenses (exclusive of depreciation
shown separately below) |                                                                                                                |                                     | 175.4    |                         |        |      | 170.4     |           |        |   | 88.9     |         
|Selling, general and administrative expenses                                             |                                                                                                                |                                     | 138.8    |                         |        |      | 178.0     |           |        |   | 103.1    |         
|Asset impairments                                                                        |                                                                                                                |                                     | 854.3    |                         |        |      | 912.1     |           |        |   |         |         
|Other charges                                                                            |                                                                                                                |                                     | 3.5      |                         |        |      | 12.2      |           |        |   |         |         
|Corporate expenses                                                                       |                                                                                                                |                                     | 11.5     |                         |        |      | 42.5      |           |        |   | 23.8     |         
|Depreciation                                                                             |                                                                                                                |                                     | 222.7    |                         |        |      | 154.4     |           |        |   | 87.4     |         
|Amortization                                                                             |                                                                                                                |                                     | 95.5     |                         |        |      | 433.4     |           |        |   | 299.3    |         
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|                                                                                         |                                                                                                                |                                     | 1,501.7  |                         |        |      | 1,903.0   |           |        |   | 602.5    |         
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|Operating (loss)                                                                         |                                                                                                                |                                     | (1,065.8 | )                       |        |      | (1,511.4  | )         |        |   | (375.7   | )       
|Other income (expense)
Interest income and other, net                                    |                                                                                                                |                                     | (11.0    | )                       |        |      | 20.4      |           |        |   | 45.5     |         
|Interest expense (contractual interest of $223.5 (2002))                                 |                                                                                                                |                                     | (156.1   | )                       |        |      | (195.1    | )         |        |   | (139.7   | )       
|Share of (losses) from equity investments                                                |                                                                                                                |                                     | (251.3   | )                       |        |      | (660.0    | )         |        |   | (46.7    | )       
|Other gains (losses)                                                                     |                                                                                                                |                                     | 3.0      |                         |        |      | (58.9     | )         |        |   |         |         
|Foreign currency transaction gains (losses)                                              |                                                                                                                |                                     | 9.3      |                         |        |      | (14.3     | )         |        |   | (62.5    | )       
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|(Loss) before recapitalization items, income taxes and
discontinued operations           |                                                                                                                |                                     | (1,471.9 | )                       |        |      | (2,419.3  | )         |        |   | (579.1   | )       
|Recapitalization items, net                                                              |                                                                                                                |                                     | (4.8     | )                       |        |      |          |           |        |   |         |         
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|(Loss) before income taxes and discontinued operations                                   |                                                                                                                |                                     | (1,476.7 | )                       |        |      | (2,419.3  | )         |        |   | (579.1   | )       
|Income tax benefit (expense)                                                             |                                                                                                                |                                     | 128.1    |                         |        |      | 50.9      |           |        |   | 22.9     |         
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|(Loss) from continuing operations                                                        |                                                                                                                |                                     | (1,348.6 | )                       |        |      | (2,368.4  | )         |        |   | (556.2   | )       
|Discontinued operations:                                                                 |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|                                                                                         | (Loss) from discontinued operations, net of income tax
benefit of $26.3 (2002), $114.1 (2001) and $88.1
(2000) |                                     |          | (2,100.6                | )      |      |           | (11,872.9 | )      |   |          | (2,407.5 | )     
|                                                                                         | Net (loss) on sales of discontinued operations, net of
income tax expense of $4.6 (2002)                       |                                     |          | (5.7                    | )      |      |           |          |        |   |          |         |       
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|(Loss) from discontinued operations                                                      |                                                                                                                |                                     | (2,106.3 | )                       |        |      | (11,872.9 | )         |        |   | (2,407.5 | )       
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|Net (loss)                                                                               |                                                                                                                |                                     | (3,454.9 | )                       |        |      | (14,241.3 | )         |        |   | (2,963.7 | )       
|Preferred stock dividends (contractual dividends of
$370.6 (2002))                       |                                                                                                                |                                     | (145.1   | )                       |        |      | (325.7    | )         |        |   | (194.0   | )       
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|Net (loss) available to common shareholders                                              |                                                                                                                | $                                   | (3,600.0 | )                       |        | $    | (14,567.0 | )         |        | $ | (3,157.7 | )       
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|Basic and diluted net (loss) per share:                                                  |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|                                                                                         |                                                                                                                | (Loss) from continuing operations   |          | $                       | (5.40  | )    |           | $         | (9.76  | ) |          | $        | (3.46  | )
|                                                                                         |                                                                                                                | (Loss) from discontinued operations |          |                         | (7.62  | )    |           |           | (43.02 | ) |          |          | (11.08 | )
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|                                                                                         |                                                                                                                | Net (loss) per common share         |          | $                       | (13.02 | )    |           | $         | (52.78 | ) |          | $        | (14.54 | )
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         
|                                                                                         |                                                                                                                | Weighted average shares             |          |                         | 276.6  |      |           |           | 276.0  |   |          |          | 217.1  |  
|                                                                                         |                                                                                                                |                                     |          |                         |        |      |           |           |        |   |          |         

See accompanying notes.

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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Consolidated Statement of Shareholders (Deficiency)
(dollars in millions)

|                                                                                                                                                                                          |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ---- | -------------- |  | ---------- | - | --- |  | ------- | ----- | - |  | - | --- |  |  | - | -------- | -
|                                                                                                                                                                                          |  | Series Preferred Stock |      | Common Stock   |  | Additional
|                                                                                                                                                                                          |  | $.01 Par Value         |      | $.01 Par Value |  | Paid-In   
|                                                                                                                                                                                          |  |                        |      |                |  |           
|                                                                                                                                                                                          |  | Shares                 |      | Par            |  | Shares     |   | Par |  | Capital
|                                                                                                                                                                                          |  |                        |      |                |  |            |   |     |  |        
|Balance, December 31, 1999                                                                                                                                                                |  |                        | 1.3  |                |  | $          |  |     |  |         | 132.4 |   |  | $ | 1.3 |  |  | $ | 4,125.1  |  
|Exercise of stock options                                                                                                                                                                 |  |                        |      |                |  |            |   |     |  |         | 2.3   |   |  |   |    |  |  |   | 36.3     |  
|Rescission of stock option exercises                                                                                                                                                      |  |                        |      |                |  |            |   |     |  |         | (0.2  | ) |  |   |     |  |  |   | (1.1     | )
|Exercise of warrants                                                                                                                                                                      |  |                        |      |                |  |            |   |     |  |         | 1.3   |   |  |   |    |  |  |   | 9.0      |  
|Common stock issued for cash                                                                                                                                                              |  |                        |      |                |  |            |   |     |  |         | 42.2  |   |  |   | 0.4 |  |  |   | 2,327.2  |  
|Preferred stock issued for cash                                                                                                                                                           |  |                        | 2.0  |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   | 1,862.0  |  
|Common stock issued for an acquisition                                                                                                                                                    |  |                        |      |                |  |            |   |     |  |         | 84.9  |   |  |   | 0.9 |  |  |   | 5,487.4  |  
|Conversion of series preferred stock                                                                                                                                                      |  |                        | (0.5 | )              |  |            |  |     |  |         | 9.2   |   |  |   | 0.1 |  |  |   | 7.5      |  
|Preferred stock issued for dividends                                                                                                                                                      |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   | 9.4      |  
|Accreted dividends on preferred stock                                                                                                                                                     |  |                        | 0.1  |                |  |            |  |     |  |         |       |   |  |   |     |  |  |   | (97.8    | )
|Accretion of discount on preferred stock                                                                                                                                                  |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   | (0.3     | )
|Comprehensive loss:                                                                                                                                                                       |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  
|Net loss for the year ended
December 31, 2000
Currency translation adjustment
Unrealized net losses on investments
Total                                                                  |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  
|                                                                                                                                                                                          |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  
|Balance, December 31, 2000                                                                                                                                                                |  |                        | 2.9  |                |  |            |  |     |  |         | 272.1 |   |  |   | 2.7 |  |  |   | 13,764.7 |  
|Exercise of stock options                                                                                                                                                                 |  |                        |      |                |  |            |   |     |  |         | 1.1   |   |  |   |     |  |  |   | 13.0     |  
|Non-cash compensation                                                                                                                                                                     |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   | 30.6     |  
|Accreted dividends on preferred stock                                                                                                                                                     |  |                        | 0.1  |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   | (195.5   | )
|Accretion of discount on preferred stock                                                                                                                                                  |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   | (25.3    | )
|Conversion of 7% Convertible Notes                                                                                                                                                        |  |                        |      |                |  |            |   |     |  |         | 3.3   |   |  |   | 0.1 |  |  |   | 128.2    |  
|Common stock issued for an acquisition                                                                                                                                                    |  |                        |      |                |  |            |   |     |  |         | 0.1   |   |  |   |     |  |  |   | 4.3      |  
|Comprehensive loss:                                                                                                                                                                       |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  
|Net loss for the year ended
December 31, 2001
Currency translation adjustment
Unrealized net losses on investments
Unrealized net losses on derivatives
Total                             |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  
|                                                                                                                                                                                          |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  
|Balance, December 31, 2001                                                                                                                                                                |  |                        | 3.0  |                |  |            |  |     |  |         | 276.6 |   |  |   | 2.8 |  |  |   | 13,720.0 |  
|Accreted dividends on preferred stock                                                                                                                                                     |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   | (125.1   | )
|Accretion of discount on preferred stock                                                                                                                                                  |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   | (20.0    | )
|Comprehensive loss:                                                                                                                                                                       |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  
|Net loss for the year ended
December 31, 2002
Currency translation adjustment
Reclassification adjustment
Additional minimum pension liability
Unrealized net losses on derivatives
Total |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  
|                                                                                                                                                                                          |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  
|Balance, December 31, 2002                                                                                                                                                                |  |                        | 3.0  |                |  | $          |  |     |  |         | 276.6 |   |  | $ | 2.8 |  |  | $ | 13,574.9 |  
|                                                                                                                                                                                          |  |                        |      |                |  |            |   |     |  |         |       |   |  |   |     |  |  |   |          |  

F-65



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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Consolidated Statement of Shareholders (Deficiency)  continued
(dollars in millions)

|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |   | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- | - | ------------- | --------- | ----------- | - | ----------- | - | ----------- | - | ----------------- | - | ---------- | - | ----- | - |  | - | ----- | - |  | - | --------- | - | 
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   | Accumulated Other |   |            |   |       |   |  |   |      
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   | Comprehensive     |   |            |   |       |   |  |   |      
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   | (Loss)            |   |            |   |       |   |  |   |      
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   | Unrealized        |   | Unrealized |   |       |   |  |   |       |   | 
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   | Foreign     |   | Net         |   | Net               |   |            |   |       |   |  |   |      
|                                                                                                                                                                                                                                                                                                                                                                     |       |   | Comprehensive |           | Currency    |   | Losses on   |   | Losses on   |   | Minimum Pension   |   |            |   |      
|                                                                                                                                                                                                                                                                                                                                                                     |       |   | (Loss)        |           | Translation |   | Investments |   | Derivatives |   | Liability         |   | (Deficit) 
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   |                   |   |           
|Balance, December 31, 1999                                                                                                                                                                                                                                                                                                                                           |       |   |               |           |             | $ | (2.1        | ) |             |   |                   |   |            |   |       |   |  |   |       |   |  | $ | (1,987.4  | )
|Exercise of stock options
Rescission of stock option exercises
Exercise of warrants
Common stock issued for cash
Preferred stock issued for cash
Common stock issued for an
acquisition
Conversion of series preferred stock
Preferred stock issued for dividends
Accreted dividends on preferred
stock
Accretion of discount on preferred
stock
Comprehensive loss: |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Net loss for the year ended
December 31, 2000                                                                                                                                                                                                                                                                                                                        |       | $ | (2,963.7      | )         |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   | (2,963.7  | )
|Currency translation adjustment                                                                                                                                                                                                                                                                                                                                      |       |   | (432.6        | )         |             |   | (432.6      | ) |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Unrealized net losses on investments                                                                                                                                                                                                                                                                                                                                 |       |   | (14.2         | )         |             |   |             |   |             | $ | (14.2             | ) |            |   |       |   |  |   |       |   |  |   |           |  
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|                                                                                                                                                                                                                                                                                                                                                                     | Total |   |               | (3,410.5  | )           |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |   | 
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Balance, December 31, 2000                                                                                                                                                                                                                                                                                                                                           |       |   |               |           |             |   | (434.7      | ) |             |   | (14.2             | ) |            |   |       |   |  |   |       |   |  |   | (4,951.1  | )
|Exercise of stock options
Non-cash compensation
Accreted dividends on preferred
stock
Accretion of discount on preferred
stock                                                                                                                                                                                                                                       |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Conversion of 7% Convertible Notes
Common stock issued for an
acquisition                                                                                                                                                                                                                                                                                            |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Comprehensive loss:                                                                                                                                                                                                                                                                                                                                                  |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Net loss for the year ended
December 31, 2001                                                                                                                                                                                                                                                                                                                        |       |   | (14,241.3     | )         |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   | (14,241.3 | )
|Currency translation adjustment                                                                                                                                                                                                                                                                                                                                      |       |   | (607.8        | )         |             |   | (607.8      | ) |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Unrealized net losses on investments                                                                                                                                                                                                                                                                                                                                 |       |   | (1.1          | )         |             |   |             |   |             |   | (1.1              | ) |            |   |       |   |  |   |       |   |  |   |           |  
|Unrealized net losses on derivatives                                                                                                                                                                                                                                                                                                                                 |       |   | (15.0         | )         |             |   |             |   |             |   |                   |   |            | $ | (15.0 | ) |  |   |       |   |  |   |           |  
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|                                                                                                                                                                                                                                                                                                                                                                     | Total |   |               | (14,865.2 | )           |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |   | 
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Balance, December 31, 2001                                                                                                                                                                                                                                                                                                                                           |       |   |               |           |             |   | (1,042.5    | ) |             |   | (15.3             | ) |            |   | (15.0 | ) |  |   |       |   |  |   | (19,192.4 | )
|Accreted dividends on preferred
stock
Accretion of discount on preferred
stock
Comprehensive loss:                                                                                                                                                                                                                                                                   |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Net loss for the year ended
December 31, 2002                                                                                                                                                                                                                                                                                                                        |       |   | (3,454.9      | )         |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   | (3,454.9  | )
|Currency translation adjustment                                                                                                                                                                                                                                                                                                                                      |       |   | 272.4         |           |             |   | 272.4       |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Reclassification adjustment                                                                                                                                                                                                                                                                                                                                          |       |   | 15.3          |           |             |   |             |   |             |   | 15.3              |   |            |   |       |   |  |   |       |   |  |   |           |  
|Additional minimum pension liability                                                                                                                                                                                                                                                                                                                                 |       |   | (30.0         | )         |             |   |             |   |             |   |                   |   |            |   |       |   |  | $ | (30.0 | ) |  |   |           |  
|Unrealized net losses on derivatives                                                                                                                                                                                                                                                                                                                                 |       |   | (15.1         | )         |             |   |             |   |             |   |                   |   |            |   | (15.1 | ) |  |   |       |   |  |   |           |  
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|                                                                                                                                                                                                                                                                                                                                                                     | Total |   | $             | (3,212.3  | )           |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |   | 
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  
|Balance, December 31, 2002                                                                                                                                                                                                                                                                                                                                           |       |   |               |           |             | $ | (770.1      | ) |             | $ |                  |   |            | $ | (30.1 | ) |  | $ | (30.0 | ) |  | $ | (22,647.3 | )
|                                                                                                                                                                                                                                                                                                                                                                     |       |   |               |           |             |   |             |   |             |   |                   |   |            |   |       |   |  |   |       |   |  |   |           |  

See accompanying notes.

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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Consolidated Statements of Cash Flows
(dollars in millions)

|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |        |  
|------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | - | ----------------------- | ------ | ---- | - | --------- | ----- | - | - | --------- | ------ | -
|                                                                                                        |                                                 |   | Year Ended December 31,
|                                                                                                        |                                                 |   |                        
|                                                                                                        |                                                 |   | 2002                    |        | 2001 |   | 2000     
|                                                                                                        |                                                 |   |                         |        |      |   |          
|Operating activities                                                                                    |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Net (loss)                                                                                              |                                                 | $ | (3,454.9                | )      |      | $ | (14,241.3 | )     |   | $ | (2,963.7  | )     
|(Loss) from discontinued operations                                                                     |                                                 |   | (2,100.6                | )      |      |   | (11,872.9 | )     |   |   | (2,407.5  | )     
|Net (loss) on sales of discontinued operations                                                          |                                                 |   | (5.7                    | )      |      |   |          |       |   |   |          |       
|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Loss from continuing operations                                                                         |                                                 |   | (1,348.6                | )      |      |   | (2,368.4  | )     |   |   | (556.2    | )     
|Adjustments to reconcile to net cash provided by
(used in) continuing operations:                       |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|                                                                                                        | Depreciation and amortization                   |   |                         | 318.2  |      |   |           | 587.8 |   |   |           | 386.7  |  
|                                                                                                        | Asset impairments                               |   |                         | 854.3  |      |   |           | 912.1 |   |   |           |       |  
|                                                                                                        | Write-down of other assets                      |   |                         | 28.2   |      |   |           |      |   |   |           |       |  
|                                                                                                        | Equity in losses of unconsolidated subsidiaries |   |                         | 251.3  |      |   |           | 660.0 |   |   |           | 46.7   |  
|                                                                                                        | (Gain) loss on sale of assets                   |   |                         | (6.2   | )    |   |           | 58.2  |   |   |           |       |  
|                                                                                                        | Provision for losses on accounts receivable     |   |                         | 7.2    |      |   |           | 39.7  |   |   |           | 0.4    |  
|                                                                                                        | Deferred income taxes                           |   |                         | (127.5 | )    |   |           | (50.3 | ) |   |           | (23.1  | )
|                                                                                                        | Amortization of original issue discount         |   |                         |       |      |   |           | 0.2   |   |   |           | 0.3    |  
|                                                                                                        | Other                                           |   |                         | 1.9    |      |   |           | 51.2  |   |   |           | 1.1    |  
|Changes in operating assets and liabilities, net of
effect from business acquisitions and dispositions: |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|                                                                                                        | Accounts receivable                             |   |                         | (10.1  | )    |   |           | (13.0 | ) |   |           | (116.6 | )
|                                                                                                        | Other current assets                            |   |                         | (70.1  | )    |   |           | 31.2  |   |   |           | (18.8  | )
|                                                                                                        | Other assets                                    |   |                         | 4.5    |      |   |           | (5.2  | ) |   |           | 1.0    |  
|                                                                                                        | Accounts payable                                |   |                         | 8.0    |      |   |           | 2.8   |   |   |           | 11.4   |  
|                                                                                                        | Accrued expenses and other                      |   |                         | (33.1  | )    |   |           | 5.6   |   |   |           | 47.9   |  
|                                                                                                        | Deferred revenue                                |   |                         | 25.2   |      |   |           | 9.1   |   |   |           | 58.0   |  
|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Net cash (used in) continuing operations                                                                |                                                 |   | (96.8                   | )      |      |   | (79.0     | )     |   |   | (161.2    | )     
|Net cash provided by (used in) discontinued operations                                                  |                                                 |   | 251.9                   |        |      |   | (518.8    | )     |   |   | (129.0    | )     
|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Net cash provided by (used in) operating activities                                                     |                                                 |   | 155.1                   |        |      |   | (597.8    | )     |   |   | (290.2    | )     
|Investing activities                                                                                    |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Acquisitions, net of cash acquired                                                                      |                                                 |   |                        |        |      |   |          |       |   |   | (3,425.1  | )     
|Purchase of fixed assets                                                                                |                                                 |   | (120.8                  | )      |      |   | (245.2    | )     |   |   | (277.7    | )     
|Investments in and loans to affiliates                                                                  |                                                 |   | (15.9                   | )      |      |   | (125.8    | )     |   |   | (365.6    | )     
|Increase in other assets                                                                                |                                                 |   | (7.0                    | )      |      |   | (49.0     | )     |   |   | (121.5    | )     
|Loan to NTL (UK) Group, Inc.                                                                            |                                                 |   | (129.2                  | )      |      |   | 150.0     |       |   |   |          |       
|Proceeds from sales of assets                                                                           |                                                 |   | 432.2                   |        |      |   | 30.9      |       |   |   |          |       
|Loan to ATX Communications, Inc.                                                                        |                                                 |   |                        |        |      |   | (15.0     | )     |   |   |          |       
|Purchase of marketable securities                                                                       |                                                 |   | (63.5                   | )      |      |   |          |       |   |   | (155.1    | )     
|Proceeds from sales of marketable securities                                                            |                                                 |   | 46.3                    |        |      |   | 60.3      |       |   |   | 444.3     |       
|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Net cash provided by (used in) continuing operations                                                    |                                                 |   | 142.1                   |        |      |   | (193.8    | )     |   |   | (3,900.7  | )     
|Net cash (used in) discontinued operations                                                              |                                                 |   | (734.4                  | )      |      |   | (1,906.0  | )     |   |   | (9,527.5  | )     
|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Net cash (used in) investing activities                                                                 |                                                 |   | (592.3                  | )      |      |   | (2,099.8  | )     |   |   | (13,428.2 | )     

F-67



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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Consolidated Statements of Cash Flows  continued
(dollars in millions)

|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|------------------------------------------------------------------------ |  | ----------------------- | ------ | ---- |  | ---- | ------- | - |  | - | -------- | -
|                                                                         |  | Year Ended December 31,
|                                                                         |  |                        
|                                                                         |  | 2002                    |        | 2001 |  | 2000
|                                                                         |  |                         |        |      |  |     
|Financing activities                                                     |  |                         |        |      |  |      |         |   |  |   |          |  
|Proceeds from borrowings, net of financing costs                         |  |                         | 104.1  |      |  |      | 461.3   |   |  |   | 1,860.3  |  
|Proceeds from issuance of preferred stock and warrants                   |  |                         |       |      |  |      |        |   |  |   | 1,862.0  |  
|Proceeds from issuance of common stock                                   |  |                         |       |      |  |      |        |   |  |   | 2,327.6  |  
|Proceeds from issuance of redeemable preferred stock                     |  |                         |       |      |  |      |        |   |  |   | 1,850.0  |  
|Proceeds from exercise of stock options and warrants                     |  |                         |       |      |  |      | 13.0    |   |  |   | 44.2     |  
|Principal payments                                                       |  |                         | (2.9   | )    |  |      | (68.3   | ) |  |   | (39.1    | )
|Repayment of the NTL Australia bank loan                                 |  |                         | (121.7 | )    |  |      |        |   |  |   |         |  
|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Net cash provided by (used in) continuing activities                     |  |                         | (20.5  | )    |  |      | 406.0   |   |  |   | 7,905.0  |  
|Net cash provided by discontinued activities                             |  |                         | 681.4  |      |  |      | 2,227.9 |   |  |   | 3,823.4  |  
|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Net cash provided by financing activities                                |  |                         | 660.9  |      |  |      | 2,633.9 |   |  |   | 11,728.4 |  
|Effect of exchange rate changes on cash                                  |  |                         | 51.2   |      |  |      | (11.1   | ) |  |   | (27.8    | )
|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Increase (decrease) increase in cash and cash equivalents                |  |                         | 274.9  |      |  |      | (74.8   | ) |  |   | (2,017.8 | )
|Cash and cash equivalents at beginning of year  continuing
operations   |  |                         | 228.3  |      |  |      | 126.4   |   |  |   | 1,510.2  |  
|Cash and cash equivalents at beginning of year  discontinued
operations |  |                         | 276.3  |      |  |      | 453.0   |   |  |   | 1,087.0  |  
|Cash and cash equivalents at end of year  discontinued operations       |  |                         | (502.0 | )    |  |      | (276.3  | ) |  |   | (453.0   | )
|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Cash and cash equivalents at end of year  continuing operations         |  | $                       | 277.5  |      |  | $    | 228.3   |   |  | $ | 126.4    |  
|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Supplemental disclosure of cash flow information                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Cash paid during the year for interest
exclusive of amounts capitalized  |  | $                       | 130.4  |      |  | $    | 171.3   |   |  | $ | 131.1    |  
|Income taxes paid                                                        |  |                         |       |      |  |      | 13.4    |   |  |   | 5.2      |  
|Supplemental schedule of non-cash financing activities                   |  |                         |        |      |  |      |         |   |  |   |          |  
|Accretion of dividend and discount on preferred stock                    |  | $                       | 145.1  |      |  | $    | 220.8   |   |  | $ | 98.1     |  
|Conversion of notes, net of unamortized deferred financing costs         |  |                         |       |      |  |      | 18.8    |   |  |   |         |  
|Common stock issued for acquisitions                                     |  |                         |       |      |  |      | 4.3     |   |  |   | 5,488.3  |  
|Redeemable preferred stock issued for investment in affiliates           |  |                         |       |      |  |      | 518.0   |   |  |   |         |  
|Conversion of series preferred stock                                     |  |                         |       |      |  |      |        |   |  |   | 7.6      |  

See accompanying notes.

F-68



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##### Table of Contents





|1. |  | Organization and Business
|-- |  | -------------------------

Summary

The accompanying financial statements do not reflect any adjustments in
connection with the emergence of NTL Europe, Inc. (NTL Europe or the
Company) from Chapter 11 reorganization nor the likely deconsolidation of
Cablecom GmbH, an indirect wholly-owned subsidiary of the Company (Cablecom)
and, therefore, are not indicative of the Companys future results of
operations, financial position or cash flows.

NTLs Completed Restructuring

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

Pursuant to the Plan, Old NTL and its subsidiaries were split into two separate
companies. The entity formerly known as NTL Incorporated was renamed NTL
Europe, Inc. and became the holding company for Old NTLs European and certain
other assets. The entity formerly known as NTL Communications Corp. was
renamed NTL Incorporated and became the holding company for Old NTLs
principal UK and Ireland assets (New NTL). Pursuant to the Plan, all of the
outstanding securities of Old NTL and certain of its subsidiaries were
canceled, and the Company issued shares of its common stock, par value $0.01
per share (the Common Stock), and 10% Fixed Coupon Redeemable Preferred
Stock, Series A, par value $0.01 per share (with a $50.00 liquidation
preference per share) (the Preferred Stock), and New NTL issued shares of its
common stock and Series A warrants to various former creditors and stockholders
of Old NTL and its subsidiaries. The precise mix of new securities received by
holders of each particular type of security of Old NTL and its subsidiaries was
set forth in the Plan. New NTL is an independent entity which is no longer
owned by or affiliated with the Company.

New NTL has been accounted for as a discontinued operation beginning with the
quarter ended September 30, 2002 and, accordingly, it is excluded from assets
and liabilities of continuing operations as of December 31, 2002 and 2001, and
from results of continuing operations for the years ended December 31, 2002,
2001 and 2000.

With the separation of Old NTL into two entities, the majority of the
significant assets and holdings formerly owned and consolidated by Old NTL were
retained by New NTL. Generally, other than Cablecom (which is itself being
restructured as described below), the Companys assets are not material
compared to those of New NTL. In addition, as described in more detail in Note
22, as a result of the existing defaults under Cablecoms debt agreements and
its overindebtedness, in the near future, the Company expects its interest in
Cablecom to be reduced to, at most, a small minority position. Further, the
Companys board of directors and management will explore the strategic and
financial alternatives available to it, including the Companys possible
liquidation, a going-private transaction and the sale of its remaining assets.
Accordingly, the Companys historic financial statements presented herein are
not particularly meaningful to the Companys current and anticipated future
business and should not be relied upon as indicative of the Companys future
performance.

Historical Structure of the Company

On May 18, 2000, the entity then known as NTL Incorporated (currently named NTL
(Delaware), Inc. (NTL Delaware)) completed a corporate restructuring to
create a holding company structure. The formation of the holding company was
part of NTL Delawares acquisition of certain assets of Cable & Wireless
Communications plc (CWC). The holding company restructuring was accomplished
through a merger so that all the stockholders of NTL Delaware at the effective
time of the merger became stockholders of the new holding company, and NTL
Delaware became a subsidiary of the new holding company. The new holding
company was called NTL Incorporated (which is now known as NTL Europe, Inc.)
and the holding companys subsidiary simultaneously changed its name to NTL
(Delaware), Inc.

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

F-69



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##### Table of Contents



NTL Europe, Inc. (formerly NTL
Incorporated) (Debtor-in-Possession) and SubsidiariesNotes to
Consolidated Financial Statements



|1. |  | Organization and Business (continued)
|-- |  | -------------------------------------

Business

The Company, through its direct and indirect wholly-owned subsidiaries, owns
and operates Premium TV Limited, Cablecom, NTL Lanbase, SL, NTL Broadcast
(Thailand) Ltd. and NTL Broadcast Sdn, Ltd. Premium TV Limited (Premium TV)
develops sports-related Internet and media rights in the United Kingdom.
Cablecom is the largest television operator in Switzerland, but, as discussed
below, it is overindebted under Swiss law and it is unlikely that the Company
will retain any significant interest in Cablecom. NTL Lanbase, SL is based in
Spain and is a value-added reseller of equipment for corporate data networks in
the United Kingdom. NTL Broadcast (Thailand) Ltd. and NTL Broadcast Sdn, Ltd.,
together with New NTLs branch office in Singapore, offer design and build,
consultancy and system integration services to broadcasters in Malaysia and
Thailand.

Cablecom has approximately CHF 3,792 million in bank debt (which includes
recently accrued interest payments) maturing on the business day following May
31, 2003 (with an additional automatic extension to June 30, 2003 under certain
circumstances), and insufficient resources to satisfy such obligation. In
addition, Cablecom and two of its subsidiaries are overindebted under Swiss
law and, accordingly, may be required to file for insolvency proceedings in
Switzerland. Cablecom and its lenders have been involved in ongoing
discussions regarding a complete financial restructuring of Cablecom which
will, among other things, reduce the amount of bank debt outstanding, extend
the maturity date thereof and resolve the Swiss overindebtedness issue. In the
event that such negotiations are unsuccessful, the Company expects to be
deprived of all of its ownership interest in Cablecom in the near future.
Further, even if such negotiations are successful, the Company expects to be
left with no more than a small minority interest in Cablecom. Accordingly, the
Company anticipates that, in the near future, the results of Cablecom will no
longer be reported as part of the Companys consolidated results of operations.
In that regard, it should also be noted that, in accordance with the terms of
the existing Cablecom credit agreement, no dividends, distributions or other
payments have ever been or will be made by Cablecom to the Company. Further,
the lenders under Cablecoms credit facility have no legal recourse to any
assets of the NTL Europe group, other than to the shares of Cablecom, certain
assets of the Cablecom group and certain assets of the Companys subsidiaries
which hold, directly or indirectly, the shares of the Cablecom group.

The Company also has various equity and cost method investments detailed in
Note 9.

The Companys most significant holdings are currently being restructured, and
the Company is reviewing all of its holdings to determine the most appropriate
course of action, which may result in one or more of these holdings being sold,
transferred, foreclosed on, liquidated, wound-up or otherwise disposed of in
the near future or at a later date. The Company may not receive any proceeds
from any of these transactions after the payment of outstanding debt that some
of these companies may owe and any fees and expenses incurred in connection
with these transactions. See, in particular, Note 22 Commitments and
Contingent Liabilities  Cablecom. To the extent the Company receives cash
proceeds from any asset sale it or its subsidiaries complete, the Preferred
Stock will be entitled to mandatory redemption in a like amount, subject to
some limited exceptions set forth in the Companys charter, until all shares of
the Preferred Stock (having an aggregate of $343 million in liquidation
preference) have been redeemed.



|2. |  | Reorganization and Emergence from Chapter 11
|-- |  | --------------------------------------------

Background of Restructuring

On January 31, 2002, Old NTL announced that it had appointed professional
advisors to advise on strategic and recapitalization alternatives to strengthen
its balance sheet, reduce debt and put an appropriate capital structure in
place for its business.

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

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

F-70



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##### Table of Contents



NTL Europe, Inc. (formerly NTL
Incorporated) (Debtor-in-Possession) and SubsidiariesNotes to
Consolidated Financial Statements (continued)



|2. |  | Reorganization and Emergence from Chapter 11 (continued)
|-- |  | --------------------------------------------------------

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

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

The Plan was confirmed by the Bankruptcy Court on September 5, 2002. During
the fall of 2002, Old NTL negotiated with a group of lenders to enter into a
new financing arrangement to repay the DIP facility, to repay certain
obligations and to provide liquidity to Old NTL and its subsidiaries. The Plan
became effective on January 10, 2003, at which time Old NTL emerged from
Chapter 11 reorganization. In connection with Old NTLs emergence from Chapter
11 reorganization, NTL Communications Corp. issued $558.2 million aggregate
principal face amount of 19% Senior Secured Notes due 2010 and 500,000 shares
of its common stock on January 10, 2003. The proceeds were used in part to
repay amounts outstanding under the DIP facility and to purchase from NTL
Delaware a £90.0 million note of NTL (UK) Group Inc. and to repay certain other
obligations.

Liquidity and Capital Resources

The Company emerged from bankruptcy on January 10, 2003, at which time, as part
of the reorganization plan, all of its secured debt, common stock and preferred
stock were canceled and new Common Stock and Preferred Stock were issued.
Further, upon the consummation of the reorganization plan (after taking into
account the redemption for cash of $25 million of the Preferred Stock) the
Company had approximately $63 million in cash and its subsidiaries had an
additional amount of approximately $11 million in cash.

The Company is primarily a holding company for the stock of its subsidiaries,
with no material independent source of cash proceeds. During 2003, the Company
does not anticipate receiving any material cash proceeds from its subsidiaries.
Accordingly, the Company expects to fund its operations primarily out of its
$63 million in cash and its subsidiaries cash remaining after the consummation
of the reorganization plan. During 2003, the Company does not anticipate
borrowing any material amount of funds and the Company does not expect to issue
any of its securities for cash. Further, during 2003, the Company does not
anticipate any material capital expenses.

As described in Notes 1, 2 and 22, the Company expects to either complete a
restructuring of the debt and equity of Cablecom, in the near future, which
would result in a dilution of the Companys ownership interest to less than
five percent or, if such restructuring is not successful, to file for the
insolvency of Cablecom in Switzerland, which would result in the Companys
having no remaining ownership in Cablecom. In either of these events, the
lenders under Cablecoms credit facility would have no legal recourse to any
assets of the NTL Europe group, other than to the shares of Cablecom, certain
assets of the Cablecom group and certain assets of the Companys subsidiaries
which hold, directly or indirectly, the shares of the Cablecom group.

The Companys management and Board will explore strategic and financial
alternatives available to it, including the Companys possible liquidation, a
going-private transaction and the sale of its remaining assets. During 2003,
the Companys primary expenses are expected to consist of operating expenses,
including salaries, professional fees, insurance and severance costs, as well
as certain funding obligations to certain of its subsidiaries of approximately
$13 million. Further, after reserving for certain contingent liabilities, to
the extent the Company has remaining funds legally available, the Company
intends to pay dividends on or redeem shares of its Preferred Stock. The
liquidation preference of Preferred Stock aggregates $343 million.
Accordingly, it is highly unlikely that common shareholders will ever receive
any distribution related to their shares.

F-71



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##### Table of Contents



NTL Europe, Inc. (formerly NTL
Incorporated) (Debtor-in-Possession) and SubsidiariesNotes to
Consolidated Financial Statements (continued)



|2. |  | Reorganization and Emergence from Chapter 11 (continued)
|-- |  | --------------------------------------------------------

The Company believes that its existing cash and cash equivalents will be
sufficient to support its expected operations and fund its capital commitments
through at least January 1, 2004, which, as previously noted, will exclude
Cablecom.

Recapitalization Expense

The joint reorganization plan provided that recapitalization costs be allocated
among the Company, NTL Delaware and New NTL.

Recapitalization items, net consist of the following:

|                                                                   |  |      |              |      |  |               |   |  |  |   |   | 
|------------------------------------------------------------------ |  | ---- | ------------ | ---- |  | ------------- | - |  |  | - | - | 
|                                                                   |  |      | Year Ended   |      |  |               |   |  |  |  
|                                                                   |  |      | December 31, |      |  |               |   |  |  |  
|                                                                   |  |      |              |      |  |              
|                                                                   |  | 2002 |              | 2001 |  | 2000         
|                                                                   |  |      |              |      |  |              
|                                                                   |  |      |              |      |  | (in millions)
|Payroll and related costs paid                                     |  | $    | (0.1         | )    |  | $             |  |  |  | $ |  | 
|Professional fees                                                  |  |      | (6.9         | )    |  |               |  |  |  |   |  | 
|Interest earned on accumulated cash from Chapter 11 proceeding (1) |  |      | 2.2          |      |  |               |  |  |  |   |  | 
|                                                                   |  |      |              |      |  |               |   |  |  |   |   | 
|                                                                   |  | $    | (4.8         | )    |  | $             |  |  |  | $ |  | 
|                                                                   |  |      |              |      |  |               |   |  |  |   |   | 

Details of operating cash receipts and payments resulting from the
recapitalization are as follows. The Company and NTL Delaware made payments on
behalf of New NTL which were charged to New NTL. The recapitalization items
charged to New NTL are included in loss from discontinued operations.

|                                                     |  |                   |       |  
|---------------------------------------------------- |  | ----------------- | ----- | -
|                                                     |  | Year Ended       
|                                                     |  | December 31, 2002
|                                                     |  |                  
|                                                     |  | (in millions)    
|Interest income (1)                                  |  | $                 | 2.2   |  
|Payroll and related costs paid                       |  |                   |      |  
|Professional fees                                    |  |                   | (45.9 | )
|                                                     |  |                   |       |  
|Net operating cash flows from recapitalization items |  | $                 | (43.7 | )
|                                                     |  |                   |       |  



---

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

Pro Forma Consolidated Balance Sheet

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

The adjustments entitled Emergence from Chapter 11 reflect the consummation
of the Plan, including the cancellation of all of Old NTLs outstanding
securities, including common stock, and the authorization of the issuance of
19,668,777 shares of Common Stock, together with associated preferred stock
purchase rights, and 7,364,000 shares of Preferred Stock. In accordance with
the reorganization plan, the Company has reserved 2,000,000 shares of Common
Stock for issuance upon exercise of the management incentive options authorized
for grant under the management incentive plan. The Company has not issued, and
it currently has no plans to issue, any options under the management incentive
plan.

The order confirming the Plan authorized and approved, as of the effective
date, the redemption for cash of $25 million of the Preferred Stock. This
redemption occurred on the Effective Date. Following such redemption,
approximately 6,864,000 shares of Preferred Stock remain outstanding, having a
liquidation preference of approximately $343 million.

F-72



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##### Table of Contents



NTL Europe, Inc. (formerly NTL
Incorporated) (Debtor-in-Possession) and SubsidiariesNotes to
Consolidated Financial Statements (continued)



|2. |  | Reorganization and Emergence from Chapter 11 (continued)
|-- |  | --------------------------------------------------------

The adjustments entitled Fresh-Start reflect the adoption of fresh-start
reporting. The Company engaged an independent financial advisor to assist in
the determination of the reorganization value (or fair value) of its assets and
the present value of its liabilities. This determination resulted in the
fresh-start reporting adjustments to write-down fixed assets and write-up of
intangible assets to their fair values. The determination of the
reorganization value is preliminary since the valuation of certain of the
Companys assets is still in process. In addition, the Companys total
reorganization value exceeded the amounts allocable to identifiable assets that
resulted in a new indefinite-lived intangible asset.

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

|                                              |  |               |         |  
|--------------------------------------------- |  | ------------- | ------- | -
|                                              |  | (in millions)
|                                              |  |              
|Gain on debt discharge                        |  | $             | 4,059.2 |  
|Gain related to deconsolidation of New NTL    |  |               | 4,988.1 |  
|Fresh-start adoption  intangible assets      |  |               | 142.1   |  
|Fresh-start adoption  long-term debt         |  |               | 1,284.9 |  
|Fresh-start adoption  deferred tax liability |  |               | (13.5   | )
|Fresh-start adoption  accrued pension        |  |               | (61.2   | )
|Fresh-start adoption  fixed assets           |  |               | (507.0  | )
|Fresh-start adoption  other assets           |  |               | (33.5   | )
|                                              |  |               |         |  
|TOTAL                                         |  | $             | 9,859.1 |  
|                                              |  |               |         |  

The adjustments entitled Deconsolidation of Cablecom reflect the likelihood
that the Company will not retain a significant interest in Cablecom and that
Cablecom will no longer be reported as part of the Companys consolidated
results of operations. As described in more detail in Note 22 (Commitments and
Contingent Liabilities  Cablecom), Cablecom has approximately CHF 3,792
million in bank debt (which includes recently accrued interest payments)
maturing on the business day following May 31, 2003 (with an additional
automatic extension to June 30, 2003 under certain circumstances), and
insufficient resources to satisfy such obligation. In addition, Cablecom and
two of its subsidiaries are overindebted under Swiss law and, accordingly,
may be required to file for insolvency proceedings in Switzerland. Cablecom
and its lenders have been involved in ongoing discussions regarding a complete
financial restructuring of Cablecom which will, among other things, reduce the
amount of bank debt outstanding, extend the maturity date thereof and resolve
the Swiss overindebtedness issue. In the event that such negotiations are
unsuccessful, the Company expects to be deprived of all of its ownership
interest in Cablecom in the near future. Further, even if such negotiations
are successful, the Company expects to be left with no more than a small
minority interest in Cablecom. Accordingly, the Company anticipates that, in
the near future, the results of Cablecom will no longer be reported as part of
the Companys consolidated results of operations. In that regard, it should
also be noted that, in accordance with the terms of the existing Cablecom
credit agreement, no dividends, distributions or other payments have ever been
or will be made by Cablecom to the Company. Further, the lenders under
Cablecoms credit facility have no legal recourse to any assets of the NTL
Europe group, other than to the shares of Cablecom, certain assets of the
Cablecom group and certain assets of the Companys subsidiaries which hold,
directly or indirectly, the shares of the Cablecom group.

F-73



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##### Table of Contents



NTL Europe, Inc. (formerly NTL
Incorporated) (Debtor-in-Possession) and SubsidiariesNotes to
Consolidated Financial Statements (continued)



|2. |  | Reorganization and Emergence from Chapter 11 (continued)
|-- |  | --------------------------------------------------------

|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |           |   | 
|----------------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ---------------------- | -------- | ------------- | - | ---------- | --------- | --------- | - | --------------- | -------- | --------------- | - | -------- | ------- | ------------- | - | ----- | -------- | -------- | - | - | ------- | --------- | - | 
|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         | Pro Forma
|                                                                                                      |                                                                 |                        |          | Historical as |   | Emergence  |           |           |   |                 |          | Before          |   |          |         |               |   | as of
|                                                                                                      |                                                                 |                        |          | of December   |   | from       |           | Fresh-    |   | Deconsolidation |          | Deconsolidation |   | December
|                                                                                                      |                                                                 |                        |          | 31, 2002      |   | Chapter 11 |           | Start     |   | of Cablecom     |          | of Cablecom     |   | 31, 2002
|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |         
|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         | (in millions) |   |       |          |          |   |   |         |          
|Assets
Current assets:                                                                                |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |          
|                                                                                                      | Cash and cash equivalents                                       |                        | $        | 277.5         |   |            | $         | (117.7    | ) |                 | $        |                |   |          | $       | 159.8         |   |       | $        | (85.9    | ) |   | $       | 73.9      |  
|                                                                                                      | Marketable securities                                           |                        |          | 17.3          |   |            |           | (17.3     | ) |                 |          |                |   |          |         |              |   |       |          |         |   |   |         |          |  
|                                                                                                      | Accounts receivable-trade, less allowance
for doubtful accounts |                        |          | 243.4         |   |            |           |          |   |                 |          |                |   |          |         | 243.4         |   |       |          | (230.8   | ) |   |         | 12.6      |  
|                                                                                                      | Other                                                           |                        |          | 50.3          |   |            |           |          |   |                 |          |                |   |          |         | 50.3          |   |       |          | (38.5    | ) |   |         | 11.8      |  
|                                                                                                      | Discontinued operations                                         |                        |          | 12,968.1      |   |            |           | (12,968.1 | ) |                 |          |                |   |          |         |              |   |       |          | 2,189.1  |   |   |         | 2,189.1   |  
|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |           |  
|Total current assets                                                                                  |                                                                 |                        | 13,556.6 |               |   |            | (13,103.1 | )         |   |                 |         |                 |   |          | 453.5   |               |   |       | 1,833.9  |          |   |   | 2,287.4 |          
|Fixed assets, net                                                                                     |                                                                 |                        | 1,682.1  |               |   |            |          |           |   |                 | (506.9   | )               |   |          | 1,175.2 |               |   |       | (1,166.8 | )        |   |   | 8.4     |          
|Goodwill                                                                                              |                                                                 |                        | 218.7    |               |   |            |          |           |   |                 | (218.7   | )               |   |          |        |               |   |       |         |          |   |   |        |          
|Reorganization value in excess of amounts
allocable to identifiable assets                            |                                                                 |                        |         |               |   |            |          |           |   |                 | 213.9    |                 |   |          | 213.9   |               |   |       | (213.9   | )        |   |   |        |          
|Customer lists, net                                                                                   |                                                                 |                        | 62.8     |               |   |            |          |           |   |                 | 146.8    |                 |   |          | 209.6   |               |   |       | (209.6   | )        |   |   |        |          
|Investments in and loans to affiliates, net                                                           |                                                                 |                        | 13.0     |               |   |            |          |           |   |                 |         |                 |   |          | 13.0    |               |   |       | (7.7     | )        |   |   | 5.3     |          
|Deferred tax asset                                                                                    |                                                                 |                        | 195.3    |               |   |            |          |           |   |                 | 80.4     |                 |   |          | 275.7   |               |   |       | (235.5   | )        |   |   | 40.2    |          
|Other assets, net                                                                                     |                                                                 |                        | 120.9    |               |   |            | (22.5     | )         |   |                 | (50.8    | )               |   |          | 47.6    |               |   |       | (0.4     | )        |   |   | 47.2    |          
|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |           |  
|Total assets                                                                                          |                                                                 | $                      | 15,849.4 |               |   | $          | (13,125.6 | )         |   | $               | (335.3   | )               |   | $        | 2,388.5 |               |   | $     |         |          |   | $ | 2,388.5 |          
|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |           |  
|Liabilities and shareholders (deficiency)
Liabilities not subject to compromise
Current liabilities: |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |          
|                                                                                                      | Accounts payable                                                |                        | $        | 49.3          |   |            | $         |          |   |                 | $        |                |   |          | $       | 49.3          |   |       | $        | (40.6    | ) |   | $       | 8.7       |  
|                                                                                                      | Accrued expenses and other                                      |                        |          | 92.5          |   |            |           | (1.2      | ) |                 |          |                |   |          |         | 91.3          |   |       |          | (64.2    | ) |   |         | 27.1      |  
|                                                                                                      | Interest payable                                                |                        |          | 43.5          |   |            |           |          |   |                 |          |                |   |          |         | 43.5          |   |       |          | (43.5    | ) |   |         |          |  
|                                                                                                      | Deferred revenue                                                |                        |          | 235.6         |   |            |           |          |   |                 |          |                |   |          |         | 235.6         |   |       |          | (229.8   | ) |   |         | 5.8       |  
|                                                                                                      | Current portion of long-term debt                               |                        |          | 2,719.3       |   |            |           |          |   |                 |          | (1,284.9        | ) |          |         | 1,434.4       |   |       |          | (1,434.4 | ) |   |         |          |  
|                                                                                                      | Discontinued operations                                         |                        |          | 17,956.2      |   |            |           | (17,956.2 | ) |                 |          |                |   |          |         |              |   |       |          | 2,189.1  |   |   |         | 2,189.1   |  
|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |           |  
|Total
current liabilities                                                                             |                                                                 |                        | 21,096.4 |               |   |            | (17,957.4 | )         |   |                 | (1,284.9 | )               |   |          | 1,854.1 |               |   |       | 376.6    |          |   |   | 2,230.7 |          
|Long-term debt                                                                                        |                                                                 |                        |         |               |   |            |          |           |   |                 |         |                 |   |          |        |               |   |       |         |          |   |   |         |          
|Other                                                                                                 |                                                                 |                        | 132.7    |               |   |            |          |           |   |                 | (16.4    | )               |   |          | 116.3   |               |   |       | (96.9    | )        |   |   | 19.4    |          
|Deferred income taxes                                                                                 |                                                                 |                        | 226.0    |               |   |            |          |           |   |                 | 93.9     |                 |   |          | 319.9   |               |   |       | (279.7   | )        |   |   | 40.2    |          
|Commitments and contingent liabilities                                                                |                                                                 |                        |         |               |   |            |          |           |   |                 |         |                 |   |          |        |               |   |       |         |          |   |   |        |          
|Senior Redeemable Preferred                                                                           |                                                                 |                        |         |               |   |            | 98.0      |           |   |                 |         |                 |   |          | 98.0    |               |   |       |         |          |   |   | 98.0    |          
|Liabilities subject to compromise                                                                     |                                                                 |                        | 4,294.1  |               |   |            | (4,294.1  | )         |   |                 |         |                 |   |          |        |               |   |       |         |          |   |   |        |          
|Shareholders (deficiency):                                                                           |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |          
|                                                                                                      |                                                                 | Series preferred stock |          |               |  |            |           |           |  |                 |          |                 |  |          |         |               |  |       |          |          |  |   |         |           |  | 
|                                                                                                      | Common stock-old                                                |                        |          | 2.8           |   |            |           | (2.8      | ) |                 |          |                |   |          |         |              |   |       |          |         |   |   |         |          |  
|                                                                                                      | Common stock-new                                                |                        |          |              |   |            |           | 0.2       |   |                 |          |                |   |          |         | 0.2           |   |       |          |         |   |   |         | 0.2       |  
|                                                                                                      | Additional paid-in capital                                      |                        |          | 13,574.9      |   |            |           |          |   |                 |          | (13,574.9       | ) |          |         |              |   |       |          |         |   |   |         |          |  
|                                                                                                      | Accumulated other comprehensive (loss)                          |                        |          | (830.2        | ) |            |           |           |   |                 |          | 830.2           |   |          |         |              |   |       |          |         |   |   |         |          |  
|                                                                                                      | (Deficit)                                                       |                        |          | (22,647.3     | ) |            |           | 9,030.5   |   |                 |          | 13,616.8        |   |          |         |              |   |       |          |         |   |   |         |          |  
|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |           |  
|Shareholders (deficiency)                                                                            |                                                                 |                        | (9,899.8 | )             |   |            | 9,027.9   |           |   |                 | 872.1    |                 |   |          | 0.2     |               |   |       |         |          |   |   | 0.2     |          
|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |           |  
|Total liabilities and shareholders
(deficiency)                                                      |                                                                 | $                      | 15,849.4 |               |   | $          | (13,125.6 | )         |   | $               | (335.3   | )               |   | $        | 2,388.5 |               |   | $     |         |          |   | $ | 2,388.5 |          
|                                                                                                      |                                                                 |                        |          |               |   |            |           |           |   |                 |          |                 |   |          |         |               |   |       |          |          |   |   |         |           |  

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##### Table of Contents



NTL Europe, Inc. (formerly NTL
Incorporated) (Debtor-in-Possession) and SubsidiariesNotes to
Consolidated Financial Statements (continued)



|3. |  | Significant Accounting Policies
|-- |  | -------------------------------

Basis of Presentation and Use of Estimates



| |  | The accompanying financial statements have been prepared on a going concern
basis. As described in Notes 1, 2 and 22, the Company expects to either
complete a restructuring of the debt and equity of Cablecom in the near future,
which would result in a dilution of the Companys ownership interest to less
than five percent or, if such restructuring is not successful, to file for the
insolvency of Cablecom in Switzerland, which would result in the Company having
no remaining ownership in Cablecom. In either of these events, the lenders
under Cablecoms credit facility would have no legal recourse to any assets of
the NTL Europe group, other than to the shares of Cablecom, certain assets of
the Cablecom group and certain assets of the Companys subsidiaries which hold,
directly or indirectly, the shares of the Cablecom group.                                                  
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Companys management and Board will explore strategic and financial
alternatives available to it, including the Companys possible liquidation, a
going-private transaction and the sale of its remaining assets. During 2003,
the Companys primary expenses are expected to consist of salaries,
professional fees, insurance and severance payments, as well as, certain
funding obligations to selected subsidiaries of approximately $13 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | After the consummation of the Companys restructuring on January 10, 2003, the
Company had approximately $63 million in cash and its subsidiaries had
approximately $11 million in cash, which management believes will be adequate
to finance the Companys operating expenses and funding requirements through at
least January 1, 2004. Further, after reserving for certain contingent
liabilities, to the extent the Company has remaining funds legally available,
the Company intends to pay dividends on or redeem shares of its Preferred
Stock. The liquidation preference of the Preferred Stock aggregates $343
million. Accordingly, it is highly unlikely that common shareholders will ever
receive any distribution related to their shares. However, as noted above, the
Company should be able to pay its liabilities and funding requirements as they
come due through at least January 1, 2004.
|
| |  | The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States,
including AICPA Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code (SOP 90-7). Old NTL had determined
that there was insufficient collateral to cover the interest portion of
scheduled payments on certain of its prepetition debt obligations. Old NTL had
therefore discontinued accruing interest on these obligations. For the year
ended December 31, 2002, contractual interest was $223.5 million, which was
$67.4 million in excess of reported interest expense.                                                                                                                                                                                                                        
|
| |  | The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Such estimates and assumptions impact, among
others, the following: the amount of uncollectible accounts and notes
receivable, the amount to be paid 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.

Reclassification

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

Foreign Currency Translation

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

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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated)
(Debtor-in-Possession) and Subsidiares
Notes to Consolidated Financial Statements (continued)



|3. |  | Significant Accounting Policies (continued)
|-- |  | -------------------------------------------

Cash Equivalents

Cash equivalents are short-term highly liquid investments purchased with a
maturity of three months or less. Cash equivalents were $174.5 million and
$125.0 million at December 31, 2002 and 2001, respectively, which consisted
primarily of bank time deposits and corporate commercial paper. At December
31, 2002 and 2001, none and $1.5 million, respectively, of the cash equivalents
were denominated in foreign currencies.

Marketable Securities

Marketable securities at December 31, 2002 consist of commercial paper.
Marketable securities are classified as available-for-sale, which are carried
at fair value. Unrealized holding gains and losses on securities, net of tax,
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 are 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, 2002, 2001 and 2000, there were no realized
gains or losses on sales of securities.

Fixed Assets

Fixed assets are stated at cost, which includes amounts capitalized for labor
and overhead expended in connection with the design and installation of
operating equipment. Internal costs directly related to the construction of
such facilities, including payroll and overhead costs of certain employees, are
capitalized. Depreciation is computed by the straight-line method over the
estimated useful lives of the assets. Estimated useful lives of fixed assets
range from 5 years to 30 years.

Intangible Assets

Intangible assets include goodwill and customer lists. Goodwill is the excess
of the purchase price over the fair value of net assets acquired in business
combinations accounted for as purchases. Prior to the adoption of SFAS No.
142, Goodwill and Other Intangible Assets, goodwill was amortized on a
straight-line basis over 10 years. Upon the adoption of SFAS No. 142, goodwill
is no longer amortized. Instead goodwill is reviewed annually (or more
frequently under certain conditions) for impairment in accordance with this
statement.

Customer lists represent the portion of the purchase price allocated to the
value of the customer base. Customer lists are amortized on a straight-line
basis over 3 or 5 years.

Impairment of Long-Lived Assets

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

F-76



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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated)
(Debtor-in-Possession) and Subsidiares
Notes to Consolidated Financial Statements (continued)



|3. |  | Significant Accounting Policies (continued)
|-- |  | -------------------------------------------

Investments

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

Investments in which the Company does not have the ability to exercise
significant influence (less than 20% ownership) are accounted for on the cost
method.

Deferred Financing Costs

Deferred financing costs, net of $37.4 million and $74.8 million as of December
31, 2002 and 2001, respectively, are included in other assets. Deferred
financing costs are incurred in connection with the issuance of debt and are
amortized over the term of the related debt.

Revenue Recognition

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

Cable Television System Costs, Expenses and Revenues

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

Advertising Expense

The Company charges the cost of advertising to expense as incurred.
Advertising costs were $9.4 million, $13.1 million and $19.0 million in 2002,
2001 and 2000, respectively.

Stock-Based Compensation

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

F-77



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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated)
(Debtor-in-Possession) and Subsidiares
Notes to Consolidated Financial Statements (continued)



|3. |  | Significant Accounting Policies (continued)
|-- |  | -------------------------------------------

Stock-Based Compensation (continued)

Had compensation for stock options granted by Old NTL been determined
consistent with the provisions of SFAS No. 123, the effect on Old NTLs net
loss would have been changed to the following pro forma amounts (See Note 19):

|                                                 |  |                                         |          |      |  |      |           |   |  |   |          |  
|------------------------------------------------ |  | --------------------------------------- | -------- | ---- |  | ---- | --------- | - |  | - | -------- | -
|                                                 |  | For the Year Ended December 31,        
|                                                 |  |                                        
|                                                 |  | 2002                                    |          | 2001 |  | 2000
|                                                 |  |                                         |          |      |  |     
|                                                 |  | (in millions, except per share amounts)
|Non-cash compensation expense, as reported       |  | $                                       |         |      |  | $    | 30.6      |   |  | $ |         |  
|Non-cash compensation expense, pro forma         |  | $                                       | 264.3    |      |  | $    | 268.3     |   |  | $ | 255.8    |  
|Net loss, as reported                            |  | $                                       | (3,454.9 | )    |  | $    | (14,241.3 | ) |  | $ | (2,963.7 | )
|Net loss, pro forma                              |  | $                                       | (3,719.2 | )    |  | $    | (14,509.6 | ) |  | $ | (3,219.5 | )
|Basic and diluted net (loss) per share           |  | $                                       | (13.02   | )    |  | $    | (52.78    | ) |  | $ | (14.54   | )
|Basic and diluted pro forma net (loss) per share |  | $                                       | (13.97   | )    |  | $    | (53.75    | ) |  | $ | (15.72   | )

Derivative Financial Instruments

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

4. Discontinued Operations

Pursuant to the Plan, Old NTL was split into two separate companies on the
Effective Date. The entity formerly known as NTL Communications Corp. was
renamed NTL Incorporated and became the holding company for Old NTLs
principal UK and Ireland assets. Prior to consummation of the Plan, NTL
Communications Corp. was a wholly-owned subsidiary of Old NTL, which, pursuant
to the Plan, was renamed NTL Europe, Inc. and which became the holding
company for Old NTLs European and certain other assets. Pursuant to the Plan,
all of the outstanding securities of the Old NTL and certain of its
subsidiaries were canceled, and the Company issued shares of its Common Stock
and Preferred Stock and New NTL issued shares of its common stock and Series A
warrants to various former creditors and stockholders of the Old NTL and its
subsidiaries. The precise mix of new securities received by holders of each
particular type of security of Old NTL and its subsidiaries was set forth in
the Plan.

New NTL is accounted for as a discontinued operation, and accordingly, it is
excluded from assets and liabilities of continuing operations as of December
31, 2002 and 2001, and from results of continuing operations for the years
ended December 31, 2002, 2001 and 2000.

On April 2, 2002, Old NTL had completed the previously announced sale of its
Australian broadcast business to Macquarie Communications Infrastructure
Holding Pty Limited for A$850 million (US$451.3 million). The net proceeds
from the sale after the repayment of the outstanding bank credit facility and
transaction related costs were approximately A$575.3 million (US$304.5
million). Old NTL recognized a gain on the sale of approximately US$7.5
million, net of income tax expense of US$4.6 million, in April 2002. NTL
Australia is accounted for as a discontinued operation and, accordingly, NTL
Australia is excluded from assets and liabilities of continuing operations as
of December 31, 2002 and 2001 and from results of continuing operations for the
years ended December 31, 2002, 2001 and 2000.

In October 2002, Cablecom sold its consumer electronics retail stores
(Rediffusion) for approximately CHF 5.0 million. The Company recognized a
loss on the sale of approximately US$13.2 million in October 2002. Rediffusion
is accounted for as a discontinued operation and, accordingly, Rediffusion is
excluded from assets and liabilities of continuing operations as of December
31, 2002 and 2001 and from results of continuing operations for the years ended
December 31, 2002, 2001 and 2000.

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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated)
(Debtor-in-Possession) and Subsidiares
Notes to Consolidated Financial Statements (continued)



|4. |  | Discontinued Operations (continued)
|-- |  | -----------------------------------

The following are the assets, liabilities and results of operations of New NTL, NTL Australia and Rediffusion:

|                                  |  |     |          |           |  |                   |   |       |  |   |   |  |  |   |          | 
|--------------------------------- |  | --- | -------- | --------- |  | ----------------- | - | ----- |  | - | - |  |  | - | -------- | 
|                                  |  |     |          |           |  | December 31, 2002 |   |       |  |  
|                                  |  |     |          |           |  | (in millions)     |   |       |  |  
|                                  |  |     |          |           |  |                   |   |       |  |  
|                                  |  | New |          | NTL       |  |                   |   |       |  |   |   | 
|                                  |  | NTL |          | Australia |  | Rediffusion       |   | Total
|                                  |  |     |          |           |  |                   |   |      
|Current assets                    |  | $   | 1,097.4  |           |  | $                 |  |       |  | $ |  |  |  | $ | 1,097.4  | 
|Fixed assets, net                 |  |     | 11,088.9 |           |  |                   |  |       |  |   |  |  |  |   | 11,088.9 | 
|Other assets                      |  |     | 781.8    |           |  |                   |  |       |  |   |  |  |  |   | 781.8    | 
|                                  |  |     |          |           |  |                   |   |       |  |   |   |  |  |   |          | 
|Total assets                      |  | $   | 12,968.1 |           |  | $                 |  |       |  | $ |  |  |  | $ | 12,968.1 | 
|                                  |  |     |          |           |  |                   |   |       |  |   |   |  |  |   |          | 
|Current liabilities               |  | $   | 7,729.2  |           |  | $                 |  |       |  |   |  |  |  | $ | 7,729.2  | 
|Non current liabilities           |  |     | 94.4     |           |  |                   |  |       |  |   |  |  |  |   | 94.4     | 
|Liabilities subject to compromise |  |     | 10,132.6 |           |  |                   |  |       |  |   |  |  |  |   | 10,132.6 | 
|                                  |  |     |          |           |  |                   |   |       |  |   |   |  |  |   |          | 
|Total liabilities                 |  | $   | 17,956.2 |           |  | $                 |  |       |  | $ |  |  |  | $ | 17,956.2 | 
|                                  |  |     |          |           |  |                   |   |       |  |   |   |  |  |   |          | 

|                        |  |     |          |           |  |                   |       |       |  |   |      |  |  |   |          | 
|----------------------- |  | --- | -------- | --------- |  | ----------------- | ----- | ----- |  | - | ---- |  |  | - | -------- | 
|                        |  |     |          |           |  | December 31, 2001 |       |       |  |  
|                        |  |     |          |           |  | (in millions)     |       |       |  |  
|                        |  |     |          |           |  |                   |       |       |  |  
|                        |  | New |          | NTL       |  |                   |       |       |  |   |      | 
|                        |  | NTL |          | Australia |  | Rediffusion       |       | Total
|                        |  |     |          |           |  |                   |       |      
|Current assets          |  | $   | 1,002.7  |           |  | $                 | 32.0  |       |  | $ | 32.1 |  |  | $ | 1,066.8  | 
|Fixed assets, net       |  |     | 10,840.3 |           |  |                   | 235.2 |       |  |   | 2.9  |  |  |   | 11,078.4 | 
|Other assets            |  |     | 1,027.1  |           |  |                   | 137.9 |       |  |   | 20.8 |  |  |   | 1,185.8  | 
|                        |  |     |          |           |  |                   |       |       |  |   |      |  |  |   |          | 
|Total assets            |  | $   | 12,870.1 |           |  | $                 | 405.1 |       |  | $ | 55.8 |  |  | $ | 13,331.0 | 
|                        |  |     |          |           |  |                   |       |       |  |   |      |  |  |   |          | 
|Current liabilities     |  | $   | 16,087.3 |           |  | $                 | 71.1  |       |  | $ | 29.3 |  |  | $ | 16,187.7 | 
|Non current liabilities |  |     | 122.7    |           |  |                   | 111.9 |       |  |   | 3.9  |  |  |   | 238.5    | 
|                        |  |     |          |           |  |                   |       |       |  |   |      |  |  |   |          | 
|Total liabilities       |  | $   | 16,210.0 |           |  | $                 | 183.0 |       |  | $ | 33.2 |  |  | $ | 16,426.2 | 
|                        |  |     |          |           |  |                   |       |       |  |   |      |  |  |   |          | 

|                 |  |     |          |           |  |                              |      |       |  |   |      |   |  |   |          |  
|---------------- |  | --- | -------- | --------- |  | ---------------------------- | ---- | ----- |  | - | ---- | - |  | - | -------- | -
|                 |  |     |          |           |  | Year Ended December 31, 2002 |      |       |  |  
|                 |  |     |          |           |  | (in millions)                |      |       |  |  
|                 |  |     |          |           |  |                              |      |       |  |  
|                 |  | New |          | NTL       |  |                              |      |       |  |   |      |  
|                 |  | NTL |          | Australia |  | Rediffusion                  |      | Total
|                 |  |     |          |           |  |                              |      |      
|Revenues         |  | $   | 3,256.5  |           |  | $                            | 17.3 |       |  | $ | 49.8 |   |  | $ | 3,323.6  |  
|Operating (loss) |  |     | (1,128.4 | )         |  |                              | 0.3  |       |  |   | (7.1 | ) |  |   | (1,135.2 | )
|Net (loss)       |  |     | (2,093.4 | )         |  |                              | (0.3 | )     |  |   | (6.9 | ) |  |   | (2,100.6 | )

F-79



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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

4. Discontinued Operations (continued)

|                 |  |                              |           |           |  |             |      |       |  |   |       |   |  |   |           |  
|---------------- |  | ---------------------------- | --------- | --------- |  | ----------- | ---- | ----- |  | - | ----- | - |  | - | --------- | -
|                 |  | Year Ended December 31, 2001
|                 |  | (in millions)               
|                 |  | New                          |           | NTL       |  |             |      |       |  |   |       |  
|                 |  | NTL                          |           | Australia |  | Rediffusion |      | Total
|                 |  |                              |           |           |  |             |      |      
|Revenues         |  | $                            | 3,181.5   |           |  | $           | 61.8 |       |  | $ | 64.3  |   |  | $ | 3,307.6   |  
|Operating (loss) |  |                              | (10,409.7 | )         |  |             | (7.4 | )     |  |   | (15.4 | ) |  |   | (10,432.5 | )
|Net (loss)       |  |                              | (11,850.8 | )         |  |             | (6.5 | )     |  |   | (15.6 | ) |  |   | (11,872.9 | )

|                 |  |                              |          |           |  |             |       |       |  |   |      |  |  |   |          |  
|---------------- |  | ---------------------------- | -------- | --------- |  | ----------- | ----- | ----- |  | - | ---- |  |  | - | -------- | -
|                 |  | Year Ended December 31, 2000
|                 |  | (in millions)               
|                 |  | New                          |          | NTL       |  |             |       |       |  |   |      | 
|                 |  | NTL                          |          | Australia |  | Rediffusion |       | Total
|                 |  |                              |          |           |  |             |       |      
|Revenues         |  | $                            | 2,484.2  |           |  | $           | 55.0  |       |  | $ | 74.7 |  |  | $ | 2,613.9  |  
|Operating (loss) |  |                              | (1,525.2 | )         |  |             | (19.5 | )     |  |   | 1.4  |  |  |   | (1,543.3 | )
|Net (loss)       |  |                              | (2,388.1 | )         |  |             | (20.9 | )     |  |   | 1.5  |  |  |   | (2,407.5 | )

5. Recent Accounting Pronouncements

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

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

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

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

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, which is effective for the Company on January 1, 2003. This
Statement addresses financial accounting and reporting for obligations
associated with the retirement of tangible fixed assets and the associated
asset retirement costs. The adoption of this new standard is not expected to
have a significant effect on the results of operations, financial condition or
cash flows of the Company.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

5. Recent Accounting Pronouncements (continued)

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. Old NTL
adopted SFAS No. 141 and SFAS No. 142 on January 1, 2002. Primarily due to the
significant impairment charge that Old NTL recorded in 2001, the adoption of
this new standard did not result in an impairment upon adoption. Amortization
of goodwill and license acquisition costs ceased effective January 1, 2002.
See Note 8.

6. Asset Impairments

Asset impairment charges were $854.3 million in the year ended December 31,
2002 and almost exclusively apply to the Cablecom operations. These charges
are non-cash charges to write-down certain assets to their estimated fair
values based on an assessment that their carrying value was not recoverable.
These charges include fixed assets of $1.0 million, goodwill of $841.0 million
and other assets of $12.3 million. The charge with respect to fixed assets was
estimated based upon the technological obsolescence of certain network and
other equipment. The charge with respect to goodwill was determined in
accordance with SFAS No. 142.

As of December 31, 2001, Old NTL 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 Old NTLs stock price and significantly lower
valuations for companies within its industry. Additionally, at the time of Old
NTLs analysis, the book value of Old NTLs net assets significantly exceeded
its market capitalization. Accordingly, Old NTL performed an analysis of the
recoverability of its long-lived assets and associated goodwill. The fair
value of Old NTLs assets was determined by discounting Old NTL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. Old NTL recorded a write-down of $9,511.3 million in the fourth
quarter of 2001 as a result of this analysis and review, of which $8,161.6
million is included in loss from discontinued operations, $912.1 million is
included in asset impairments and $437.6 million is included in share of losses
from equity investments. The asset impairment charge of $912.1 million
included goodwill of $762.7 million, investments in affiliates of $25.1 million
and other assets of $124.3 million.

7. Fixed Assets

Fixed assets consist of:

|                         |  |               |         |      |  |   |         |  
|------------------------ |  | ------------- | ------- | ---- |  | - | ------- | -
|                         |  | December 31, 
|                         |  |              
|                         |  | 2002          |         | 2001
|                         |  |               |         |     
|                         |  | (in millions)
|Operating equipment      |  | $             | 2,109.2 |      |  | $ | 1,691.4 |  
|Other equipment          |  |               | 109.5   |      |  |   | 64.7    |  
|Construction-in-progress |  |               | 25.1    |      |  |   | 2.8     |  
|                         |  |               |         |      |  |   |         |  
|                         |  |               | 2,243.8 |      |  |   | 1,758.9 |  
|Accumulated depreciation |  |               | (561.7  | )    |  |   | (264.0  | )
|                         |  |               |         |      |  |   |         |  
|                         |  | $             | 1,682.1 |      |  | $ | 1,494.9 |  
|                         |  |               |         |      |  |   |         |  

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

8. Cablecom Acquisition and Intangible Assets

On March 28, 2000, Old NTL acquired the cable assets of the Cablecom group in
Switzerland for cash of CHF 5,800.0 million ($3,510.2 million), a substantial
portion of which was funded by a new bank facility of CHF 2,700.0 million
($1,630.5 million) and Old NTLs issuance of $1,850.0 million of preferred
stock to France Telecom and a group of commercial banks. This acquisition was
accounted for as a purchase and, accordingly, the net assets and results of
operations of Cablecom have been included in the consolidated financial
statements from the date of acquisition. The aggregate purchase price of
$3,528.6 million, which includes costs incurred of $18.4 million, exceeded the
fair value of net tangible assets acquired by $2,282.2 million, which was
allocated as follows: $195.9 million to customer lists, $73.1 million to
deferred taxes and $2,159.4 million to goodwill.

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

|                                                  |  |   |        |  
|------------------------------------------------- |  | - | ------ | -
|Goodwill  December 31, 2001                      |  | $ | 960.0  |  
|Impairment charge                                 |  |   | (841.0 | )
|Foreign currency exchange translation adjustments |  |   | 99.7   |  
|                                                  |  |   |        |  
|Goodwill  December 31, 2002                      |  | $ | 218.7  |  
|                                                  |  |   |        |  

Upon the adoption of SFAS No. 142, Old NTL performed an analysis of its
intangible assets acquired before July 1, 2001 to determine whether they should
be classified and accounted for as part of or separate from goodwill. Old NTL
also determined that no changes in the remaining useful lives of the customer
lists were required.

Old NTL also performed an evaluation for impairment of its goodwill as of
January 1, 2002 and determined that no impairment charge was required.

Estimated aggregate amortization expense for each of the five succeeding fiscal
years from December 31, 2002, as adjusted for the Companys emergence from
Chapter 11 reorganization, the adoption of fresh-start reporting, and prior to
the deconsolidation of Cablecom, would be approximately $10 million for each of
the next five years.

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

|                                              |          |   |                         |   |      |   |          |       |  |   |        |       | 
|--------------------------------------------- | -------- | - | ----------------------- | - | ---- | - | -------- | ----- |  | - | ------ | ----- | 
|                                              |          |   | Year Ended December 31,
|                                              |          |   |                        
|                                              |          |   | 2002                    |   | 2001 |   | 2000    
|                                              |          |   |                         |   |      |   |         
|Loss from continuing operations  as reported |          | $ | (1,348.6                | ) |      | $ | (2,368.4 | )     |  | $ | (556.2 | )    
|Amortization of:                              |          |   |                         |   |      |   |          |       |  |   |        |      
|                                              | Goodwill |   |                         |  |      |   |          | 318.2 |  |   |        | 238.8 | 
|                                              | Other    |   |                         |  |      |   |          | 32.8  |  |   |        | 0.8   | 
|                                              |          |   |                         |   |      |   |          |       |  |   |        |      
|                                              |          |   |                        |   |      |   | 351.0    |       |  |   | 239.6  |      
|                                              |          |   |                         |   |      |   |          |       |  |   |        |      
|Loss from continuing operations  as adjusted |          | $ | (1,348.6                | ) |      | $ | (2,017.4 | )     |  | $ | (316.6 | )    
|                                              |          |   |                         |   |      |   |          |       |  |   |        |      

9. Investments in and Loans to Affiliates

The Company has investments in various companies and joint ventures which are
accounted for under either the equity method or the cost method. The Companys
equity investments include its 27% interest in Noos S.A., a French broadband
company, which offers analog and digital cable television, high speed Internet
and telephone services, its 50% interest in eKabel InvestCo, which owns 65% of
iesy Hessen GmbH (iesy), the largest cable television network in the German
province of Hessen, and its 34.01% interest in B2 (Bredband) AG (B2), a
company based in Sweden, which provides access to a broadband network that
provides transmission, both to and from the customer, at the same speed and at
the same time, but, as described more fully in this Form 10-K, NTL Delaware
entered into a settlement agreement on April 30, 2003, pursuant to which, among
other things, the Company agreed to sell all of its interest in B2 in the near
future.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

9. Investments in and Loans to Affiliates (continued)

During 2002, Old NTLs share of Noos losses, reduced the investment therein to
zero. On the Effective Date, the Company released its 27.1% interest (the
Noos Interest) in Suez Lyonnais Télécom (Noos) to France Telecom as part of
a compromise and settlement under the terms of the Plan. Pursuant to the terms
of the Plan, the Noos Interest was released to France Telecom in exchange for
(i) the cancellation of the shares of Variable Coupon Redeemable Preferred
Stock, Series A of Old NTL and shares of Fixed Coupon Redeemable Preferred
Stock, Series A of Old NTL, (ii) the waiver by France Telecom of its rights to
any distribution on account of its claims as a holder of Old NTL and NTL
Delaware 5 3/4% convertible subordinated notes, (iii) the release by France
Telecom of any contingent payments due to France Telecom pursuant to the 1G
Protocol and Convention Agreement, dated May 6, 1999 (the 1G Franchises) and
the transfer of the 1G Franchises by Old NTL to Noos, and (iv) a $25 million
payment by France Telecom to the Company on the Effective Date.

On November 3, 2002, Old NTL, NTL Delaware, and Brigadoon Ventures, Inc., a
wholly-owned subsidiary of NTL Delaware, entered into an agreement, whereby (1)
Old NTL was entitled to receive a cash facilitation fee for its cooperation in
the restructuring of iesy and its subsidiaries (but not in consideration of
certain of Old NTLs subsidiaries indirect equity stake in iesy) of
approximately $1.3 million, less such subsidiaries pro rata share of expenses
and (2) such subsidiaries were entitled to receive a release of possible
liabilities and claims arising out of their indirect equity stake in iesy,
including claims alleged by certain holders of notes of iesy in the bankruptcy.
The transactions contemplated by the iesy agreement closed in January 2003.
In addition to the Companys share of iesys losses, share of losses from
equity investments includes a non-cash write-down of the investment in iesy of
$40.6 million in 2002.

B2 (Bredband)AG

On April 15, 2002, a funding request for approximately $20 million was received
by Old NTL under the terms of the investment agreement relating to Old NTLs
investment in B2. Old NTL informed B2 and the other principal investors that
it was not in a position to comply with the request for funding. The B2
investment agreement provides that if Old NTL fails to provide such funding, it
may be sued for non-payment and arguably could lose certain rights under the B2
shareholders agreement including its interest in B2.

On October 4, 2002, Old NTL filed a motion with the bankruptcy court to reject
the B2 investment agreement and shareholders agreement under section 365 of
the bankruptcy code, and the bankruptcy court subsequently authorized Old NTLs
rejection of the agreements. On November 8, 2002, B2 and the other principal
shareholders filed proofs of claim with the bankruptcy court asserting their
right to recover: (1) approximately $20 million from Old NTL in respect of the
unpaid funding request; (2) unspecified damages for Old NTLs failure to
perform under the relevant agreements; and (3) unspecified costs and expenses
incurred in the exercise of their remedies under the agreements, and reserved
their other rights to avail themselves of any remedies under the agreements.

On April 30, 2003, NTL Delaware, together with its subsidiaries NTL Sweden SPV
Inc. and Nogenta Swedish Acquisition Holding B.V., entered into an agreement
with B2 and the other principal shareholders of B2 relating to, among other
things, the transfer of the Companys securities in B2. Under the agreement,
the NTL Europe parties have agreed to transfer their interest in B2 to certain
other shareholders of B2 in exchange for approximately $375,000 in cash or
certain securities of a B2 affiliate and mutual releases among the parties
relating to a dispute stemming from an April 15, 2002 funding request for
approximately $20 million. In connection with the mutual releases, the
agreement provides that B2 and the other principal shareholders will withdraw,
or otherwise assist NTL Delaware in obtaining bankruptcy court denial of, the
proofs of claim filed by B2 and the other principal shareholders in the
bankruptcy court. The closing of this transaction is subject to customary
closing conditions, but the NTL Europe releases are effective unless the NTL
Europe parties breach their respective obligations under the agreement.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

9. Investments in and Loans to Affiliates (continued)

Premium TV Limited

Premium TV, a wholly-owned subsidiary of NTL Delaware, is obliged to provide
funding of up to approximately £39 million ($62.8 million) to fund various of
its joint venture and other contractual interests. Of this amount, the payment
of approximately £26 million ($41.7 million) has been guaranteed by NTL
Delaware. If Premium TV fails to provide its committed funding under the
relevant shareholder arrangements relating to these joint ventures, Premium TV
and, in respect of the guaranteed amounts, NTL Delaware, may be sued for
non-payment. As a result of the recapitalization process, the relevant joint
venture partners may assert that they can compulsorily acquire Premium TVs
interest in the relevant joint venture at a third party appraisal valuation.
Premium TV is currently in discussions with certain of these joint venture
partners with a view to restructuring the relevant joint ventures. In the event
that these discussions do not reach a resolution acceptable to Premium TV,
Premium TV may seek to discontinue these joint ventures and terminate their
activities. The Company believes, however, that it has various defenses and
protections under the Bankruptcy Code against such actions and intends to
enforce vigorously its rights and protections.

On September 24, 2002, Premium TV, NTL Delaware and Old NTL agreed to vary the
terms of the long-term joint venture (referred to as the Football League Joint
Venture) between Premium TV and the Football League Limited. Under the terms
of the variation, upon the payment of arrears of rights fees by Premium TV, the
Football League Limited agreed to release Premium TV from its obligation to
fund the payment of any further rights fees to the Football League Limiteds
member teams and its obligation to provide working capital funding to the
Football League Joint Venture. The Football League Limited also agreed to
release NTL Delaware from its guarantee of Premium TVs obligations and to
release Old NTL from the related undertaking. In return, Premium TV agreed to
waive repayment of loan capital by the Football League Joint Venture and to
provide certain ongoing services to the Football League Joint Venture free of
charge for an initial period. NTL Delaware deposited £10.33 million into a
designated single purpose account for use by Premium TV to finance the
provision of such services. Premium TV and the Football League Limited also
agreed to new terms relating to the distribution of revenues generated by the
Football League Joint Venture. The remaining balance in the account at
December 31, 2002 was £8.88 million and is included in Other Assets in the
accompanying consolidated balance sheet.

The Company has also guaranteed the obligations of one of its subsidiaries to
provide funding of up to approximately £4.2 million ($6.8 million) to a joint
venture whose business is the provision of programming content. If the
relevant subsidiary fails to provide such funding, under the shareholder
arrangements relating to this joint venture, such subsidiary may be sued for
damages. In addition, under the shareholder arrangements relating to this
joint venture, the relevant joint venture partner may have the option to
compulsorily acquire the Companys indirect interest in the relevant joint
venture at 70% of fair market value, resulting in the Company selling its
indirect interest at a potential loss. The Company believes that it has
various defenses and protections against such actions and intends to enforce vigorously its rights and
protections. The Company intends to negotiate with its joint venture partner
to address these issues. These negotiations may not be successful and the
Company may not be able to retain its current interest in this joint venture
company. The relevant subsidiary has ceased doing business and currently is in
the process of being wound up.

The following is a brief description of the Companys minority holdings. The
Company does not believe that these holdings, alone or in the aggregate,
represent material assets.

Two Way TV Limited

The Company has an equity interest of approximately 38% in Two Way TV Limited.
Two Way TV is a UK market leader in interactive and enhanced television.
Enhanced television allows viewers to participate in popular games, sporting
events and reality television programs. Viewers can vote, guess answers and
compete with studio contestants by using a remote control device for the set
top box in all digital delivery platforms.

Two Way TV has three product lines: eTV applications for broadcasters, eTV
technology licensing and support services for networks and a 24-hour games
channel which carries Two Way TV proprietary games.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

9. Investments in and Loans to Affiliates (continued)

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

|                         |  |                   |       |                   |  |           |      |         |  |  |       |   |  |   |       | 
|------------------------ |  | ----------------- | ----- | ----------------- |  | --------- | ---- | ------- |  |  | ----- | - |  | - | ----- | 
|                         |  | December 31, 2002 |       | December 31, 2001
|                         |  |                   |       |                  
|                         |  | Ownership         |       | Balance           |  | Ownership |      | Balance
|                         |  |                   |       |                   |  |           |      |        
|                         |  | (in millions)    
|Noos                     |  |                   | 27.00 | %                 |  | $         |     |         |  |  | 27.00 | % |  | $ | 47.0  | 
|B2                       |  |                   | 34.01 | %                 |  |           |     |         |  |  | 34.01 | % |  |   | 92.5  | 
|iesy                     |  |                   | 32.50 | %                 |  |           |     |         |  |  | 32.50 | % |  |   | 73.0  | 
|Others                   |  |                   |       |                   |  |           | 4.7  |         |  |  |       |   |  |   | 48.3  | 
|                         |  |                   |       |                   |  |           |      |         |  |  |       |   |  |   |       | 
|Total equity investments |  |                   |       |                   |  |           | 4.7  |         |  |  |       |   |  |   | 260.8 | 
|Total cost investments   |  |                   |       |                   |  |           | 8.3  |         |  |  |       |   |  |   | 7.0   | 
|                         |  |                   |       |                   |  |           |      |         |  |  |       |   |  |   |       | 
|Total                    |  |                   |       |                   |  | $         | 13.0 |         |  |  |       |   |  | $ | 267.8 | 
|                         |  |                   |       |                   |  |           |      |         |  |  |       |   |  |   |       | 

The Company has reclassified $18.3 million of credit balances to Other
Long-Term Liabilities, which related to investments where the Company has
funding commitments and losses to date, which have exceeded the Companys
investment.

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

|                                           |  |               |         |              |  |   |         | 
|------------------------------------------ |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                           |  | December 31,  |         | December 31,
|                                           |  | 2002          |         | 2001        
|                                           |  |               |         |             
|                                           |  | (in millions)
|Current assets                             |  | $             | 367.6   |              |  | $ | 454.4   | 
|Fixed assets, net                          |  |               | 1,137.8 |              |  |   | 908.1   | 
|Other assets                               |  |               | 1,171.0 |              |  |   | 2,688.5 | 
|                                           |  |               |         |              |  |   |         | 
|Total assets                               |  | $             | 2,676.4 |              |  | $ | 4,051.0 | 
|                                           |  |               |         |              |  |   |         | 
|Current liabilities                        |  | $             | 467.7   |              |  | $ | 309.1   | 
|Non current liabilities                    |  |               | 1,753.0 |              |  |   | 1,403.6 | 
|Total shareholders equity                 |  |               | 455.7   |              |  |   | 2,338.3 | 
|                                           |  |               |         |              |  |   |         | 
|Total liabilities and shareholders equity |  | $             | 2,676.4 |              |  | $ | 4,051.0 | 
|                                           |  |               |         |              |  |   |         | 

|                 |  |                        |          |      |  |               |        |   |  |   |        |  
|---------------- |  | ---------------------- | -------- | ---- |  | ------------- | ------ | - |  | - | ------ | -
|                 |  | Year Ended December 31
|                 |  |                       
|                 |  | 2002                   |          | 2001 |  | 2000         
|                 |  |                        |          |      |  |              
|                 |  |                        |          |      |  | (in millions) |        |   |  |  
|Revenues         |  | $                      | 339.2    |      |  | $             | 326.6  |   |  | $ | 115.3  |  
|Operating (loss) |  |                        | (1,773.8 | )    |  |               | (417.0 | ) |  |   | (225.1 | )
|Net (loss)       |  |                        | (1,802.5 | )    |  |               | (564.0 | ) |  |   | (296.6 | )

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

10. Liabilities Subject to Compromise

Liabilities subject to compromise consist of the following:

|                            |                   |                                                    |                                       |       |         |               |         | 
|--------------------------- | ----------------- | -------------------------------------------------- | ------------------------------------- | ----- | ------- | ------------- | ------- | 
|                            |                   |                                                    |                                       |       |         | December 31, 
|                            |                   |                                                    |                                       |       |         | 2002         
|                            |                   |                                                    |                                       |       |         | (in millions)
|Accounts payable            |                   | $                                                  | 0.3                                   |      
|Interest payable            |                   |                                                    | 30.4                                  |      
|Dividends payable           |                   |                                                    | 109.9                                 |      
|Accrued expenses            |                   |                                                    | 0.2                                   |      
|Redeemable preferred stock: |                   |                                                    |                                       |      
|                            |                   | Cumulative Convertible Preferred Stock             |                                       |       | 2,077.3 |              
|                            |                   | Variable Coupon Redeemable Preferred Stock         |                                       |       | 484.2   |              
|                            |                   | 6.5% Redeemable Preferred Stock                    |                                       |       | 98.4    |              
|                            |                   | 13% Senior Redeemable Exchangeable Preferred Stock |                                       |       | 193.4   |              
|Long term debt:             |                   |                                                    |                                       |      
|                            | NTL Europe, Inc.: |                                                    |                                       |       |        
|                            |                   |                                                    | 5 3/4% Convertible Subordinated Notes |       |         | 100.0         |        
|                            | NTL Delaware:     |                                                    |                                       |       |        
|                            |                   |                                                    | 5 3/4% Convertible Subordinated Notes |       |         | 1,200.0       |        
|                            |                   |                                                    |                                       |      
|                            |                   |                                                    |                                       | Total |         | $             | 4,294.1 | 
|                            |                   |                                                    |                                       |      

Upon emergence from Chapter 11 reorganization and in accordance with the Plan,
all of the outstanding preferred stock of Old NTL and long-term debt of Old NTL
and NTL Delaware was canceled.

11. Long-Term Debt

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

|                     |                                       |   |               |         |              |   |         |         | 
|-------------------- | ------------------------------------- | - | ------------- | ------- | ------------ | - | ------- | ------- | 
|                     |                                       |   | December 31,  |         | December 31,
|                     |                                       |   | 2002          |         | 2001        
|                     |                                       |   |               |         |             
|                     |                                       |   | (in millions)
|NTL Europe, Inc.:    |                                       |   |               |         |              |   |         |        
|                     | 5 3/4% Convertible Subordinated Notes |   | $             |        |              |   | $       | 100.0   | 
|NTL Delaware:        |                                       |   |               |         |              |   |         |        
|                     | 5 3/4% Convertible Subordinated Notes |   |               |        |              |   |         | 1,200.0 | 
|Cablecom:            |                                       |   |               |         |              |   |         |        
|                     | Term Loan Facility                    |   |               | 1,951.8 |              |   |         | 1,626.8 | 
|                     | Revolving Facility                    |   |               | 762.7   |              |   |         | 527.2   | 
|                     | Other                                 |   |               | 4.8     |              |   |         | 6.2     | 
|                     |                                       |   |               |         |              |   |         |         | 
|                     |                                       |   | 2,719.3       |         |              |   | 3,460.2 |        
|Less current portion |                                       |   | 2,719.3       |         |              |   | 3,460.2 |        
|                     |                                       |   |               |         |              |   |         |         | 
|                     |                                       | $ |              |         |              | $ |        |        
|                     |                                       |   |               |         |              |   |         |         | 

Old NTL had $100.0 million principal amount 5 3/4% Convertible Subordinated
Notes due June 22, 2011 which were canceled on the Effective Date pursuant to
the Plan. Interest of 5 3/4% per annum was payable quarterly from October 15,
2001. The notes were convertible into shares of Old NTLs common stock at a
conversion price of $35.00 per share.

NTL Delaware had $1,200.0 million 5 3/4% Convertible Subordinated Notes due
December 15, 2009 which were canceled on the Effective Date pursuant to the
Plan. Interest of 5 3/4% per annum was payable semiannually from June 15, 2000.
The notes were convertible into shares of Old NTLs common stock at a
conversion price of $108.18 per share.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

11. Long-Term Debt (continued)

In March 2000, Cablecom borrowed CHF 2,700.0 million ($1,951.8 million and
$1,626.8 million at December 31, 2002 and 2001, respectively) under its term
loan facility in connection with the acquisition of the Cablecom business.
Interest is payable at least every six months at Swiss LIBOR plus a margin rate
of 2.5% per annum, which is subject to adjustment. The effective interest rate
was 3.51% and 5.27% at December 31, 2002 and 2001, respectively. Although the
term loan facility was originally scheduled to mature on April 30, 2003, upon
the request of Cablecom, the maturity date has been extended to the business
day following May 31, 2003, with an additional automatic extension to June 30,
2003 under certain circumstances.

Cablecom had the option to draw on a revolving facility of up to an additional
CHF 1,400 million. The amount available had been capped at CHF 1,055 million
although the availability may be increased with the consent of the requisite
majority of the lenders. At December 31, 2002 and 2001, Cablecom had borrowed
CHF 1,055.0 million ($762.7 million) and CHF 875.0 million ($527.2 million),
respectively, and Cablecom has subsequently borrowed an additional CHF 37
million for accrued interest payments. Interest is payable at least every six
months at Swiss LIBOR plus a margin rate of 2.5% per annum, which is subject to
adjustment. The effective rate of interest was 3.71% and 5.49% at December 31,
2002 and 2001, respectively. 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. Although the revolving facility was
originally scheduled to mature on April 30, 2003, upon the request of Cablecom,
the maturity date has been extended to the business day following May 31, 2003,
with an additional automatic extension to June 30, 2003 under certain
circumstances.

As described in more detail in Note 22 (Commitments and Contingent Liabilities
 Cablecom), Cablecom does not have sufficient resources to satisfy these bank
obligations. In addition, Cablecom and two of its subsidiaries are
overindebted under Swiss law and, accordingly, may be required to file for
insolvency proceedings in Switzerland. Cablecom and its lenders have been
involved in ongoing discussions regarding a complete financial restructuring of
Cablecom which will, among other things, reduce the amount of bank debt
outstanding, extend the maturity date thereof and resolve the Swiss
overindebtedness issue. In the event that such negotiations are unsuccessful,
the Company expects to be deprived of all of its ownership interest in Cablecom
in the near future. Further, even if such negotiations are successful, the
Company expects to be left with no more than a small minority interest in
Cablecom. Accordingly, the Company anticipates that, in the near future, the
results of Cablecom will no longer be reported as part of the Companys
consolidated results of operations. In that regard, it should also be noted
that, in accordance with the terms of the existing Cablecom credit agreement,
no dividends, distributions or other payments have ever been or will be made by
Cablecom to the Company.

In February 2001, $109.5 million principal amount of Old NTLs 7% Convertible
Subordinated Notes due December 15, 2008 were converted into 2.8 million shares
of Old NTLs common stock at the applicable conversion price of $39.20 per
share. Old NTL issued as a premium on the conversion an additional 0.5 million
shares which were valued at the closing common stock price on the dates of
conversion. The premium, which amounted to $17.6 million, was included in Old
NTLs 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.

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

|                         |  |   |         | 
|------------------------ |  | - | ------- | 
|Year ending December 31: |  |   |         | 
|2003                     |  | $ | 2,714.7 | 
|2004                     |  |   | 0.9     | 
|2005                     |  |   | 0.1     | 
|2006                     |  |   | 0.1     | 
|2007                     |  |   | 0.1     | 
|Thereafter               |  |   | 3.4     | 
|                         |  |   |         | 
|Total debt repayments    |  |   | 2,719.3 | 
|Less: current portion    |  |   | 2,719.3 | 
|                         |  |   |         | 
|                         |  | $ |        | 
|                         |  |   |         | 

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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

12. Derivative Financial Instruments

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

On January 1, 2001, Old NTL and its subsidiaries recorded all of their
outstanding derivative instruments at their fair value. The outstanding
derivative instruments were comprised of 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.

At December 31, 2002, Cablecom had zero cost collars, with a notional amount of
CHF 1,200.0 million, to hedge exposure to the floating interest rate
indebtedness incurred under the Cablecom term loan facility and revolving loan
facility.

13. Redeemable Preferred Stock

All of Old NTLs redeemable preferred stock (which is described below) was
canceled on the Effective Date pursuant to the Plan:

On September 12, 2001, Old NTL issued 1,850,000 shares of its Cumulative
Convertible Preferred Stock, Series A (Convertible Preferred Stock) in
exchange for the 1,850,000 issued and outstanding shares of its 5% Cumulative
Preferred Stock held by France Telecom and others. The Convertible Preferred
Stock had a stated value and liquidation preference of $1,075.17 per share and
was mandatorily redeemable for cash by Old NTL on March 27, 2009. Dividends
were payable quarterly in additional shares of Convertible Preferred Stock, at
the following quarterly dividend rates: (i) from September 12, 2001 through
March 26, 2002, $13.44 per share, (ii) from March 27, 2002 through March 26,
2003, $21.23 per share and (iii) from March 27, 2003 through March 26, 2004,
$26.61 per share. In March 2002, Old NTL elected to delay the conversion of
the Convertible Preferred Stock until at least March 27, 2003. Holders of
Convertible Preferred Stock other than any commercial bank or their affiliates
had the option to elect, subject to some conditions, to exchange their
Convertible Preferred Stock for up to a 50% interest in an entity holding Old
NTLs Swiss operations.

On May 18, 2001, Old NTL issued 47,000 shares of its Variable Coupon Redeemable
Preferred Stock, Series A (Variable Coupon Redeemable Preferred Stock) and
12,000 shares of its 6.5% Fixed Coupon Redeemable Preferred Stock, Series A
(6.5% Redeemable Preferred Stock) to France Telecom in exchange for a 27%
interest in Noos. The Variable Coupon Redeemable Preferred Stock had a stated
value and liquidation preference of $10,000 per share and was mandatorily
redeemable for cash by Old NTL on May 18, 2002. Dividends were payable
quarterly at Old NTLs option in cash or additional shares of Variable Coupon
Redeemable Preferred Stock, at a quarterly rate based on a quotient of (x) the
sum of (1) the EURIBOR Rate in effect on the first day of every dividend period
plus (2) 2.5% over (y) four, per share. Old NTLs 27% interest in Noos was
pledged to France Telecom to secure the mandatory redemption obligation under
its Variable Coupon Redeemable Preferred Stock and the 6.5% Redeemable
Preferred Stock. The 6.5% Redeemable Preferred Stock had a stated value and
liquidation preference of $10,000 per share and was mandatorily redeemable for
cash by Old NTL on May 18, 2007. Dividends at a rate of 6.5% per annum were
cumulative and were payable in cash upon redemption.

In March 2000, Old NTL received $1,850.0 million in cash from France Telecom
and a group of commercial banks in exchange for 1,850,000 shares of its
redeemable 5% Cumulative Preferred Stock. As described above, in May 2001, Old
NTL issued 1,850,000 shares of its Convertible Preferred Stock in exchange for
the 1,850,000 issued and outstanding shares of its 5% Cumulative Preferred
Stock.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

13. Redeemable Preferred Stock (continued)

In February 1997, Old NTL issued 100,000 shares of its 13% Senior Redeemable
Exchangeable Preferred Stock (the Redeemable Preferred Stock). Old NTL
received net proceeds of $96.6 million after discounts and commissions from the
issuance of the Redeemable Preferred Stock. Discounts, commissions and other
fees incurred of $3.7 million were recorded as unamortized discount at
issuance. Dividends accrued at 13% per annum ($130 per share) and were payable
quarterly in arrears. Dividends accruing on or prior to February 15, 2004 may,
at the option of Old NTL, be paid in cash, by the issuance of additional
Redeemable Preferred Stock or in any combination of the foregoing. As of
December 31, 2002, Old NTL had accrued $95.4 million for dividends and had
issued approximately 84,000 shares for $83.8 million of such accrued dividends.
The Redeemable Preferred Stock was redeemable, at Old NTLs option, in whole or
in part, at any time on or after February 15, 2002 at a redemption price of
106.5% of the liquidation preference of $1,000 per share that declined annually
to 100% in 2005, in each case together with accrued and unpaid dividends to the
redemption date. The Redeemable Preferred Stock was subject to mandatory
redemption on February 15, 2009.

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

|                                                          |  |     |         |    |  |          |            |      |  |             |        |  |  |   |        |  |  |   |           | 
|--------------------------------------------------------- |  | --- | ------- | -- |  | -------- | ---------- | ---- |  | ----------- | ------ |  |  | - | ------ |  |  | - | --------- | 
|                                                          |  | 13% |         | 5% |  | Variable |            | 6.5% |  | Convertible
|                                                          |  |     |         |    |  |          |            |      |  |            
|Shares at December 31, 1999                               |  |     | 142,000 |    |  |          |           |      |  |             |       |  |  |   |       |  |  |   |          | 
|Issued for cash                                           |  |     |        |    |  |          | 1,850,000  |      |  |             |       |  |  |   |       |  |  |   |          | 
|Issued for dividends                                      |  |     | 20,000  |    |  |          |           |      |  |             |       |  |  |   |       |  |  |   |          | 
|                                                          |  |     |         |    |  |          |            |      |  |             |        |  |  |   |        |  |  |   |           | 
|Shares at December 31, 2000                               |  |     | 162,000 |    |  |          | 1,850,000  |      |  |             |       |  |  |   |       |  |  |   |          | 
|Issued for investment in Noos                             |  |     |        |    |  |          |           |      |  |             | 47,000 |  |  |   | 12,000 |  |  |   |          | 
|Issued for dividends                                      |  |     | 22,000  |    |  |          |           |      |  |             | 1,000  |  |  |   |       |  |  |   |          | 
|Exchange                                                  |  |     |        |    |  |          | (1,850,000 | )    |  |             |       |  |  |   |       |  |  |   | 1,850,000 | 
|                                                          |  |     |         |    |  |          |            |      |  |             |        |  |  |   |        |  |  |   |           | 
|Shares at December 31, 2001                               |  |     | 184,000 |    |  |          |           |      |  |             | 48,000 |  |  |   | 12,000 |  |  |   | 1,850,000 | 
|Issued for dividends                                      |  |     |        |    |  |          |           |      |  |             |       |  |  |   |       |  |  |   |          | 
|                                                          |  |     |         |    |  |          |            |      |  |             |        |  |  |   |        |  |  |   |           | 
|Shares at December 31, 2002                               |  |     | 184,000 |    |  |          |           |      |  |             | 48,000 |  |  |   | 12,000 |  |  |   | 1,850,000 | 
|                                                          |  |     |         |    |  |          |            |      |  |             |        |  |  |   |        |  |  |   |           | 
|Liquidation preference at
December 31, 2002
(in millions) |  | $   | 212.3   |    |  | $        |           |      |  | $           | 502.6  |  |  | $ | 135.4  |  |  | $ | 2,174.4   | 
|                                                          |  |     |         |    |  |          |            |      |  |             |        |  |  |   |        |  |  |   |           | 

14. Non-Cash Compensation

In July 2001, the Compensation and Option Committee of Old NTLs Board of
Directors approved modifications to certain stock options. The latest possible
expiration date of options to purchase an aggregate of approximately 4.7
million shares of Old NTLs common stock with exercise prices from $0.17 to
$14.76 per share was extended from July 30, 2001 to October 2004, as
applicable, to January 30, 2006. Old NTL recognized non-cash compensation
expense of $30.6 million based on the excess of the quoted market price of Old
NTLs common stock on the date of the modification of $12.05 per share over the
exercise price per share. All options to purchase shares of Old NTLs common
stock were canceled on the Effective Date pursuant to the Plan.

15. Other Charges Including Restructuring Charges

Other charges of $3.5 million in 2002 are for the integration of acquired
companies, mostly related to information technology integration, as well as
costs incurred for business rationalization consulting. Other charges of $12.2
million in 2001 include restructuring charges of $6.8 million and costs of $5.4
million incurred primarily to integrate the acquired companies, mostly related
to information technology integration, as well as costs incurred for business
rationalization consulting.

Restructuring charges of $6.8 million for the year ended December 31, 2001
relates to Old NTLs actions to reorganize, re-size and reduce operating costs
and create greater efficiency in various areas. These costs were for
approximately 225 employees to be terminated, none of whom are still employed
by the Company as of December 31, 2002.

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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

15. Other Charges Including Restructuring Charges (continued)

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

|                           |  |                   |      |  
|-------------------------- |  | ----------------- | ---- | -
|                           |  | Employee         
|                           |  | Severance        
|                           |  | and Related Costs
|                           |  |                  
|Charged to expense         |  | $                 | 6.8  |  
|Utilized                   |  |                   |     |  
|                           |  |                   |      |  
|Balance, December 31, 2001 |  |                   | 6.8  |  
|Utilized                   |  |                   | (4.6 | )
|                           |  |                   |      |  
|Balance, December 31, 2002 |  | $                 | 2.2  |  
|                           |  |                   |      |  

16. Income Taxes

Significant components of the provision/(benefit) for income taxes attributable
to continuing operations consists of the following:

|               |                 |   |                         |        |      |   |               |       |   |   |       |       |  
|-------------- | --------------- | - | ----------------------- | ------ | ---- | - | ------------- | ----- | - | - | ----- | ----- | -
|               |                 |   | Year Ended December 31,
|               |                 |   |                        
|               |                 |   | 2002                    |        | 2001 |   | 2000         
|               |                 |   |                         |        |      |   |              
|               |                 |   |                         |        |      |   | (in millions) |       |   |   |      
|Current:       |                 |   |                         |        |      |   |               |       |   |   |       |      
|               | Federal         |   | $                       | (4.6   | )    |   | $             |      |   |   | $     |      |  
|               | State and local |   |                         | 1.3    |      |   |               |      |   |   |       | 0.2   |  
|               | Foreign         |   |                         | 3.4    |      |   |               | 0.3   |   |   |       |      |  
|               |                 |   |                         |        |      |   |               |       |   |   |       |       |  
|Total current  |                 |   | 0.1                     |        |      |   | 0.3           |       |   |   | 0.2   |      
|               |                 |   |                         |        |      |   |               |       |   |   |       |       |  
|Deferred:      |                 |   |                         |        |      |   |               |       |   |   |       |      
|               | Foreign         |   |                         | (128.2 | )    |   |               | (51.2 | ) |   |       | (23.1 | )
|               |                 |   |                         |        |      |   |               |       |   |   |       |       |  
|Total deferred |                 |   | (128.2                  | )      |      |   | (51.2         | )     |   |   | (23.1 | )    
|               |                 |   |                         |        |      |   |               |       |   |   |       |       |  
|               |                 | $ | (128.1                  | )      |      | $ | (50.9         | )     |   | $ | (22.9 | )    
|               |                 |   |                         |        |      |   |               |       |   |   |       |       |  

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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

16. Income Taxes (continued)

The Companys deferred tax benefit relates primarily to operating loss
carryforwards for which benefit was recognized to the extent of deferred tax
liabilities. In addition, during the year ended December 31, 2002, Old NTL
merged certain Swiss subsidiaries and identified additional tax losses within
the merged entity, which allowed Old NTL to recognize a deferred tax benefit
for tax losses to the extent that the tax losses offset existing deferred tax
liabilities of the newly merged entity. The federal current benefit relates to
utilization of operating losses to offset income from discontinued operations
related to the sale of NTL Australia.

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

|                                            |                      |   |               |       |      |   |        |       | 
|------------------------------------------- | -------------------- | - | ------------- | ----- | ---- | - | ------ | ----- | 
|                                            |                      |   | December 31, 
|                                            |                      |   |              
|                                            |                      |   | 2002          |       | 2001
|                                            |                      |   |               |       |     
|                                            |                      |   | (in millions)
|Deferred tax liabilities:                   |                      |   |               |       |      |   |        |      
|                                            | Intangibles          |   | $             | 15.9  |      |   | $      | 23.0  | 
|                                            | Fixed assets         |   |               | 135.5 |      |   |        | 139.4 | 
|                                            | Accounts receivable  |   |               | 74.3  |      |   |        |      | 
|                                            | Other                |   |               | 0.3   |      |   |        | 2.2   | 
|                                            |                      |   |               |       |      |   |        |      
|Total deferred tax liabilities              |                      |   | 226.0         |       |      |   | 164.6  |      
|Deferred tax assets:                        |                      |   |               |       |      |   |        |      
|                                            | Net operating losses |   |               | 788.1 |      |   |        | 208.4 | 
|                                            | Investment and other |   |               | 103.9 |      |   |        | 59.7  | 
|                                            |                      |   |               |       |      |   |        |      
|Total deferred tax assets                   |                      |   | 892.0         |       |      |   | 268.1  |      
|Valuation allowance for deferred tax assets |                      |   | (696.7        | )     |      |   | (247.7 | )    
|                                            |                      |   |               |       |      |   |        |      
|Net deferred tax assets                     |                      |   | 195.3         |       |      |   | 20.4   |      
|                                            |                      |   |               |       |      |   |        |      
|Net deferred tax (assets) liabilities       |                      | $ | 30.7          |       |      | $ | 144.2  |      
|                                            |                      |   |               |       |      |   |        |      

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

At December 31, 2002, Old NTL had net operating loss carryforwards of
approximately $400 million for U.S. federal income tax purposes that expire in
varying amounts commencing in 2009. Old NTL also has Swiss net operating loss
carryforwards of approximately $2.5 billion that expire in varying amounts
commencing in 2008.

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

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

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

16. Income Taxes (continued)

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

|                                                             |                                                    |   |                         |       |      |   |        |       |  |   |        |       |  
|------------------------------------------------------------ | -------------------------------------------------- | - | ----------------------- | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | -
|                                                             |                                                    |   | Year Ended December 31,
|                                                             |                                                    |   |                        
|                                                             |                                                    |   | 2002                    |       | 2001 |   | 2000  
|                                                             |                                                    |   |                         |       |      |   |       
|                                                             |                                                    |   | (in millions)          
|Expected tax expense/benefit at federal statutory rate (35%) |                                                    | $ | (522.6                  | )     |      | $ | (846.8 | )     |  | $ | (202.7 | )    
|Increase/(decrease) resulting from:                          |                                                    |   |                         |       |      |   |        |       |  |   |        |      
|                                                             | Non-deductible asset impairments                   |   |                         | 299.0 |      |   |        | 472.4 |  |   |        |      |  
|                                                             | Foreign losses with no benefit                     |   |                         | (3.3  | )    |   |        | 316.5 |  |   |        | 245.7 |  
|                                                             | U.S. losses with no benefits                       |   |                         | 94.5  |      |   |        | 7.0   |  |   |        | (66.0 | )
|                                                             | State and local income tax, net of federal benefit |   |                         | 1.3   |      |   |        |      |  |   |        | .1    |  
|                                                             | Other                                              |   |                         | 3.0   |      |   |        |      |  |   |        |      |  
|                                                             |                                                    |   |                         |       |      |   |        |       |  |   |        |      
|                                                             |                                                    | $ | (128.1                  | )     |      | $ | (50.9  | )     |  | $ | (22.9  | )    
|                                                             |                                                    |   |                         |       |      |   |        |       |  |   |        |      

17. Fair Values of Financial Instruments

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

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

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

Redeemable Preferred Stock:At December 31, 2001, the fair value of the
now-canceled 13% redeemable preferred stock was based upon the quoted market
value. At December 31, 2001, the fair value of the other two series of
now-canceled redeemable preferred stock was estimated by reference to the fair
value of the 13% redeemable preferred stock. At December 31, 2002, due to the
Companys bankruptcy, it was not possible to determine the fair values of the
redeemable preferred stock by quoted market prices due to the lack of activity
for these securities. Therefore, the fair values reflected in the table below
represent the de minimis distribution value (including, for example, cash and
new securities) which the holders of such securities received, upon the
Companys emergence from bankruptcy on January 10, 2003.

Long-term debt:The December 31, 2001 carrying amounts of the Old NTL
bank credit facilities approximate their fair values. The fair values
presented for the credit facilities at December 31, 2002, represent the values
calculated in accordance with the application of fresh-start accounting, used
in connection with the Companys emergence from bankruptcy. The fair values
of Old NTLs other now-canceled debt at December 31, 2001 were based on their
quoted market prices. At December 31, 2002, the fair value of the Convertible
Notes, represents the approximate distribution value, which the holders of
such debt received upon the Companys emergence from bankruptcy on January 10,
2003.

The carrying amounts and fair values of Old NTLs financial instruments are as
follows:

|                            |                                 |   |                   |         |                   |   |               |         |       |   |       |         |  |   |       |         | 
|--------------------------- | ------------------------------- | - | ----------------- | ------- | ----------------- | - | ------------- | ------- | ----- | - | ----- | ------- |  | - | ----- | ------- | 
|                            |                                 |   | December 31, 2002 |         | December 31, 2001
|                            |                                 |   |                   |         |                  
|                            |                                 |   | Carrying          |         | Fair              |   | Carrying      |         | Fair 
|                            |                                 |   | Amount            |         | Value             |   | Amount        |         | Value
|                            |                                 |   |                   |         |                   |   |               |         |      
|                            |                                 |   |                   |         |                   |   | (in millions) |         |       |   |      
|Cash and cash equivalents   |                                 | $ | 277.5             |         |                   | $ | 277.5         |         |       | $ | 228.3 |         |  | $ | 228.3 |        
|Marketable securities       |                                 |   | 17.3              |         |                   |   | 17.3          |         |       |   |      |         |  |   |      |        
|Long-term debt:             |                                 |   |                   |         |                   |   |               |         |       |   |       |         |  |   |       |        
|                            | 5 3/4% Convertible Notes        |   |                   | 1,200.0 |                   |   |               | 250.8   |       |   |       | 1,200.0 |  |   |       | 132.0   | 
|                            | 5 3/4% Convertible Notes        |   |                   | 100.0   |                   |   |               | 26.1    |       |   |       | 100.0   |  |   |       | 29.0    | 
|                            | Term loan facility              |   |                   | 1,951.8 |                   |   |               | 1,031.4 |       |   |       | 1,626.8 |  |   |       | 1,626.8 | 
|                            | Revolving facility              |   |                   | 762.7   |                   |   |               | 403.0   |       |   |       | 527.2   |  |   |       | 527.2   | 
|Redeemable Preferred Stock: |                                 |   |                   |         |                   |   |               |         |       |   |       |         |  |   |       |        
|                            | 13% Redeemable Preferred Stock  |   |                   | 193.4   |                   |   |               |        |       |   |       | 184.6   |  |   |       | 3.7     | 
|                            | Variable Coupon Preferred Stock |   |                   | 502.5   |                   |   |               |        |       |   |       | 477.9   |  |   |       | 7.2     | 
|                            | 6.5% Preferred Stock            |   |                   | 98.4    |                   |   |               |        |       |   |       | 89.5    |  |   |       | 1.3     | 
|                            | 5% Convertible Preferred Stock  |   |                   | 2,077.3 |                   |   |               |        |       |   |       | 2,029.1 |  |   |       | 30.5    | 

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

18. Related Party Transactions

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

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

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

On September 28, 2001, NTL Communications Corp. loaned Old NTL $150.0 million
in cash and received 15.0% Promissory Notes due September 30, 2004. Interest
was payable monthly in cash at a rate of 15.0% per annum beginning on October
31, 2001. Upon emergence from Chapter 11 reorganization and in accordance with
the Plan, these notes were canceled.

On April 5, 2002, following receipt of the proceeds from the sale of NTL
Australia, NTL Delaware loaned £90.0 million to NTL (UK) Group, Inc. Such loan
was actually made (with the approval of the lenders under the UK credit
facilities) to NTL (UK) Group, Inc. and then on-lent to certain subsidiaries of
NTL (UK) Group, Inc. Interest on the note was at 23% per annum, compounded
semiannually, and was payable, in cash, on the earlier of April 1, 2006 or the
redemption date of the notes. In connection with the DIP facility, the current
interest rate on this loan had been reduced from 23% per annum to 11% per
annum. Upon emergence from Chapter 11 reorganization and in accordance with
the Plan, such debt was repaid.

Pursuant to the DIP facility, all funding needs of the debtors were funded
through the proceeds of the DIP facility, in accordance with a budget and the
terms of the DIP facility agreement. Communications Cable Funding Corp. had
entered into intercompany note agreements with Old NTL and NTL Delaware to
evidence such transactions. The notes earned interest on the unpaid principal
amount for three months from July 15, 2002 at the rate of 11% per annum. With
respect to each successive three month period following that date, the rate per
annum increased incrementally by 1% over the immediately preceding three month
period but will not exceed 18% per annum for any three month period. Upon
emergence from Chapter 11 reorganization and in accordance with the Plan, such
debt in the amount of $69.3 million was repaid.

Certain former officers and directors of Old NTL were also officers and
directors of ATX Communications, Inc. (ATX) (formerly known as CoreComm
Holdco, Inc.). On April 12, 2001, Old NTL purchased $15.0 million of an
unsecured convertible note from ATX and received warrants to purchase 770,000
shares of ATX common stock at an exercise price of $0.01 per share that expire
in April 2011. In addition, concurrently with the note purchase and without
additional compensation, Old NTL entered into a network and software agreement
with ATX, which agreement is now with New NTL. Under the agreement, ATX will provide U.S. network for Internet
traffic from New NTLs UK 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 ATX 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 ATX common stock for a specified period. Old
NTL and ATX agreed to certain modifications to the conversion feature in
connection with ATXs recapitalization in December 2001.

Premium TV has entered into a number of agreements with New NTL, pursuant to
which Premium TV receives certain operational services covering premises,
connectivity, hosting, technology and other corporate volume purchasing
benefits. Premium TV has a co-marketing agreement linked with New NTLs broadband product and an agreement
with New NTL where New NTL is able to exploit Premium TVs pay per view rights.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

18. Related Party Transactions (continued)

In 1999, NTL Broadcast established two subsidiaries, located in Thailand and
Malaysia. Following consummation of the Plan, the Company maintained ownership
of the operations in Malaysia and Thailand through two companies, NTL Broadcast
Sdn and NTL Broadcast (Thailand) Ltd. (together, NTL Asia). The two
subsidiaries are managed as one business. Separately, New NTL maintains a
branch office in Singapore. The Companys subsidiaries rely on New NTLs
Singapore office for administration and other support services. The Company
has entered into an agreement to jointly manage the business of NTL Asia with
New NTL.

19. Shareholders Equity

The following description of the Companys Capital Structure is that of NTL
Europe, Inc. on a post reorganization basis.

Description of Capital Stock

The authorized capital stock of the Company consists of 60,000,000 shares of
Common Stock and 20,000,000 shares of Preferred Stock.

Description of Common Stock

The holders of the Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the Companys stockholders and do
not have cumulative voting rights in the election of directors. The holders of
the Companys Common Stock are not entitled to vote on any amendment to the
Companys charter that relates solely to the terms of one or more outstanding
series of the Companys preferred stock if the holders of the affected series
of preferred stock are entitled, either separately or together with the holders
of one or more other series of preferred stock, to vote thereon under the
Companys charter or under the Delaware General Corporation Law (the DGCL).

Generally, a majority of the votes cast at a meeting of stockholders by holders
of shares entitled to vote on the proposal is required for stockholder action.
However, the Companys charter provides that the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the Companys
capital stock which by its terms may be voted on all matters submitted to
stockholders of the Company generally, voting together as a single class, is
required for stockholder action relating to (a) amendments to the by-laws and
(b) the amendment or repeal of the provisions of the Companys charter relating
to (i) the classification of directors, (ii) the removal of directors, (iii)
the prohibition on action by written consent of stockholders, (iv) special
meetings of stockholders, (v) certain liabilities of directors, (vi) amendments
to the by-laws, (vii) indemnification of directors and officers, (viii) the
applicability of Section 203 of the DGCL to the Company and (ix) Article XIII
of the Companys charter which imposes these voting requirements. These voting
requirements, as well as the classification of directors on the Companys board
of directors, the super-majority voting requirements applicable in the event of
certain extraordinary corporate transactions and certain other provisions of
the Companys charter, as more fully described in the section herein relating
to Special Charter Provisions may have the effect, alone or in combination
with each other, of delaying, deferring or preventing a change in control of
the Company.

Subject to all rights and preferences of holders of any outstanding shares of
the preferred stock, holders of Common Stock are entitled to receive
proportionately such dividends as may from time to time be declared by the
board of directors out of funds legally available for the payment of dividends.

In the event of the Companys liquidation, dissolution or winding up, holders
of Common Stock would be entitled to share proportionately in all of the
Companys assets available for distribution to holders of Common Stock
remaining after payment of liabilities and liquidation preference of any
outstanding preferred stock. Holders of Common Stock have no preemptive rights
and have no rights to convert their Common Stock into any other securities, and
there are no redemption or sinking-fund provisions contained in the Companys
charter with respect to the Common Stock. There is no liability for further
calls or for assessments by the Company.

The rights, preferences and privileges of holders of Common Stock may be
adversely affected by the rights of the holders of shares of the Preferred
Stock and any other series of preferred stock that may be issued in the future.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Shareholders Equity (continued)

Description of Preferred Stock

The board of directors of the Company has the authority to issue preferred
stock in one or more series and to fix as to any series of preferred stock the
designation, title, voting powers and any other preferences, and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions, without any further vote or action by stockholders of the
Company.

The ability of the board of directors to issue one or more series of preferred
stock provides increased flexibility in structuring possible future financings
and acquisitions and in meeting other corporate needs which might arise. The
authorized shares of the Preferred Stock, as well as shares of the Common
Stock, are available for issuance without further action by stockholders,
unless any action is required by applicable law or the rules of any exchange,
automated quotation system or regulated quotation system on which the Companys
securities may be listed or quoted, as the case may be, or applicable rules of
any self-regulatory organization. The board of directors of the Company will
make any determination to issue the shares based on its judgment as to its best
interests and the best interests of its stockholders. The board of directors
of the Company, in so acting, could issue preferred stock having terms that
could discourage an acquisition attempt or other transaction that some or a
majority of the stockholders might believe to be in their best interests or in
which stockholders might receive a premium for their shares over the then
current market price of the Common Stock.

Description of the 10% Fixed Coupon Redeemable Preferred Stock

The Companys charter authorizes the issuance of 8,000,000 shares of 10% Fixed
Coupon Redeemable Preferred Stock par value $0.01 per share. Approximately
7,364,000 shares of the Preferred Stock were issued and outstanding on the
Effective Date of the plan prior to the redemption of $25 million of
liquidation preference of the Preferred Stock pursuant to the Plan.
Immediately after such redemption, approximately $343 million of liquidation
preference of the Preferred Stock remains outstanding, which is equal to
approximately 6,864,000 shares of Preferred Stock.

Each share of the Fixed Coupon Redeemable Preferred Stock entitles its holder
to receive cumulative dividends, when, as and if declared by the board of
directors, out of funds legally available for the payment of dividends. With
respect to those dividends, the Preferred Stock will rank:



| |  |  | senior to all classes of the Companys Common Stock, the
Companys Series A Junior Participating Preferred Stock and to each
other class of capital stock or series of preferred stock that are
designated to rank junior to the Preferred Stock;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | junior to all classes of preferred stock that are designated to rank senior to the Preferred Stock; and                                                                                                                                          
|
| |  |  | equal to all classes of preferred stock that are designated to rank equally with the Preferred Stock.                                                                                                                                            

Dividends are payable at the semi-annual rate of $2.50 per share (subject to
adjustment for stock splits, stock dividends, combinations, recapitalizations
or other similar transactions) payable by the Company in cash. Dividends on
the Preferred Stock are payable on a pro rata basis with respect to shares of
the Preferred Stock in arrears on June 30 and December 31 of each year
(commencing on June 30, 2003) and are cumulative from the date of issue whether
or not they have been declared and whether or not there are profits, surplus or
other funds legally available for the payment of such dividends.

Dividends on the Preferred Stock are payable to holders of record as they
appear on the Companys stock register on the applicable record dates fixed by
the board of directors, which record dates will be the fifteenth (15th) day
preceding the payment dates thereof. Dividends payable on the Preferred Stock
for any period less than a full dividend period will accrue daily and be
computed on the basis of a 360-day year of twelve (12) thirty (30) day months
and the actual number of days elapsed in the period for which such dividends
are payable. No interest, or sum of money in lieu of interest, will be payable
in respect of any dividend payment or payments which may be in arrears.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Shareholders Equity (continued)

No dividends or distributions may be declared, made, paid or set apart for
payment upon any of the Companys stock ranking on parity with the Preferred
Stock, nor may any stock ranking on parity with the Preferred Stock be
redeemed, purchased or otherwise acquired for any consideration (or any monies
paid to or made available for a sinking fund for the redemption of any parity
securities) by the Company (except by conversion into or exchange for the
Companys stock ranking on parity with the Preferred Stock) unless, in each
case: (i) full cumulative dividends on all outstanding shares of the Preferred
Stock have been paid or set apart for payment for all dividend payment periods
terminating on or prior to the date of the declaration, payment, redemption,
purchase or other acquisition and (ii) the Company is not in default with
respect to any obligation to redeem the Preferred Stock. Notwithstanding the
foregoing, if the Company is not in default with respect to any redemption of
shares of the Preferred Stock, dividends may be declared and paid or set apart
for payment on shares of parity securities if, dividends declared upon shares
of the Preferred Stock and all dividends declared upon any parity securities
are declared ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Preferred Stock and accumulated and unpaid on
such parity securities.

No dividends or distributions (other than (i) Stockholder Rights issued
pursuant to the Companys Stockholder Rights Agreement and (ii) dividends or
distributions paid in shares of, or options, warrants or rights to subscribe
for or purchase shares of, junior securities) may be declared, made, paid or
set apart for payment upon any stock ranking junior to the Preferred Stock, nor
may any stock ranking junior to the Preferred Stock be redeemed, purchased or
otherwise acquired (other than a redemption, purchase, or other acquisition of
(A) shares of Common Stock made for purposes of an employee incentive or
benefit plan of the Company or any subsidiary of the Company or (B) securities
ranking junior to the Preferred Stock paid in shares of, or options, warrants
or rights to subscribe for or purchase shares of, junior securities) for any
consideration (or any monies paid to or made available for a sinking fund for
the redemption of any junior securities) by us, except by conversion into or
exchange for the Companys stock ranking junior to the Preferred Stock.

The Companys ability to declare and pay dividends may be affected by the fact
that the Company is a holding company with no independent operations or
significant assets other than the Companys investments in and advances to the
Companys subsidiaries and affiliated joint ventures. The Company depends upon
the receipt of sufficient funds from the Companys subsidiaries and affiliated
joint ventures to meet the Companys obligations. The Companys ability to
declare and pay dividends may be limited by applicable law and the terms of the
documents governing any of the Companys future borrowings and other
indebtedness, or the future borrowings and other indebtedness of any of the
Companys subsidiaries or affiliated joint ventures. In addition, a Preferred
Stockholders right to receive dividends on or in respect of the Preferred
Stock may be adversely affected in the event of a bankruptcy of any of the
Companys subsidiaries or affiliated joint ventures. Following the liquidation
of one of the Companys subsidiaries or joint ventures, the creditors of that
subsidiary or joint venture are generally entitled to be paid in full before
the Company is entitled to a distribution of any assets in the liquidation,
which may result in us receiving little, if any, value from the Companys
investment.

Upon the Companys voluntary or involuntary dissolution, liquidation or winding
up, the holders of Preferred Stock is entitled to be paid out of the assets
available for distribution to the Companys stockholders, after payment of the
debts and other liabilities of the Company and payment of any liquidation
values of any securities senior in liquidation rights to the Preferred Stock,
and before any payment or distribution is made to holders of the Common Stock
or any other class or series of stock of the Company ranking junior to the
Preferred Stock, the stated liquidation preference per share of $50.00, plus
accumulated and unpaid dividends, if any, with respect to each share.

If, upon any liquidation, dissolution or winding up of the Company, the
remaining assets available for distribution are insufficient to pay the holders
of the Preferred Stock and all other securities ranking equally with the
Preferred Stock with respect to liquidation the full amount to which they are
entitled, the holders of Preferred Stock will share those remaining assets
ratably, together with the holders of the securities ranking equally with the
Preferred Stock. Following the payment of the liquidation value in full with
respect to each share of Preferred Stock, no additional distributions will be
made to the holders of the Preferred Stock. Neither the sale of all or
substantially all of the Companys assets (including its subsidiaries assets),
nor the Companys merger or consolidation into or with any other corporation,
will be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, of the Company.

Except as otherwise provided below or as otherwise provided by applicable law,
holders of Preferred Stock are not entitled to vote on matters brought before
the Companys stockholders, including the election of directors.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Shareholders Equity (continued)

Without the consent of the holders of at least a majority in liquidation
preference of the shares of Preferred Stock then outstanding, the Company may
not (i) issue any additional Preferred Stock; (ii) authorize, create or issue
any shares of parity securities or senior securities; (iii) increase the
authorized amount of Preferred Stock or any class or series of parity
securities or senior securities or (iv) amend, alter or appeal any provision of
the Companys charter so as to adversely affect the relative preferences,
rights or powers of any outstanding Preferred Stock, except that the Company
may issue parity securities or senior securities to refinance, redeem or refund
the Preferred Stock subject to certain restrictions set forth in the Companys
charter.

If either (i) the Company fails to discharge its mandatory redemption
obligations with respect to shares of Preferred Stock in full or (ii) either
voluntary or involuntary bankruptcy proceedings are commenced in respect of the
Company (any event described in subclauses (i) or (ii) being referred to herein
as a Trigger Event), a vote of the holders of the shares of Preferred Stock,
voting together as a single class, will be required on all matters brought
before the stockholders of the Company. In addition, upon the occurrence of
any Trigger Event, the board of directors will be increased by two members and
the holders of shares of Preferred Stock, together with the holders of any
other class or series of Preferred Stock with like rights, will vote to elect
the two additional directors. These additional voting rights and the right to
elect directors will cease to exist upon the cure of the Trigger Event which
triggered such rights, but subject to the same vesting of such rights if any
Trigger Event subsequently occurs.

In the event the Company consummates any transaction constituting an asset sale
under the terms of the Companys charter, including but not limited to (i) any
sale, transfer, conveyance or other disposition for value of any assets of the
Company or any subsidiary other than in the ordinary course of business or (ii)
any issuance, sale, transfer, conveyance or other disposition for value of
equity interests of the Companys subsidiaries (subject to exception for any
such dispositions to the Company, any subsidiary of the Company or in exchange
for capital contributions), to the extent the Company has funds legally
available for such redemption payment, the Company must apply the net proceeds
of any such asset sale to redeem any or all outstanding shares of Preferred
Stock, on a pro rata basis at a price equal to $50.00 per share, plus accrued
and unpaid dividends, if any, payable in cash. Under the Companys charter,
the Company is required to give notice to the holders of Preferred Stock not
less than 15 days prior to the scheduled consummation of the asset sale giving
rise to such redemption.

If the Company has not redeemed all outstanding shares of 10% Fixed Coupon
Redeemable Preferred Stock by January 10, 2023 (the Mandatory Redemption
Date), to the extent the Company has funds legally available for such
redemption payment, the Company must redeem all outstanding shares of Preferred
Stock on the Mandatory Redemption Date at a price equal to $50.00 per share,
plus accrued and unpaid dividends, if any, payable in cash.

The Company may redeem the Preferred Stock at any time from the date of issue
to the business day immediately preceding the Mandatory Redemption Date, out of
funds legally available for such redemption payment, on a pro rata basis at a
price equal to $50.00 per share, plus accrued and unpaid dividends, if any,
payable in cash. The Company may not purchase, redeem or otherwise acquire for
value any shares of Preferred Stock in this manner unless (x) full cumulative
dividends have been paid or contemporaneously are declared and paid or set
apart for payment for all dividend periods for the Preferred Stock and for any
parity securities terminating on or prior to the applicable redemption date or
(y) shares of Preferred Stock are redeemed pro rata.

If, and so long as, any mandatory redemption obligation with respect to shares
of Preferred Stock is not fully discharged, the Company may not (1) directly or
indirectly, redeem, purchase, or otherwise acquire any parity security or
discharge any mandatory or optional redemption, sinking fund or other similar
obligation in respect of any parity securities (except in connection with a
redemption, sinking fund or other similar obligation to be satisfied with
junior securities or satisfied pro rata with shares of 10% Fixed Coupon
Redeemable Preferred Stock), or (2) declare or make any distribution of junior
securities (other than (A) any Stockholder Rights and (B) dividends or
distributions paid in shares of, or options, warrants or rights to subscribe
for or purchase shares of, junior securities), or discharge any mandatory or
optional redemption, sinking fund or other similar obligation in respect of
junior securities (other than a redemption, sinking fund or other similar
obligation in respect of junior securities (I) paid in shares of, or options,
warrants or other rights to subscribe for or purchase shares of, junior
securities or (II) by conversion into or exchange for junior securities).

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Shareholders Equity (continued)

Holders of the Preferred Stock have no preemptive rights and have no rights to
convert their Preferred Stock into any other securities. There are no
sinking-fund provisions contained in the Companys charter with respect to the
Preferred Stock. There is no liability for further calls or for assessments by
the Company. The holders of a majority in liquidation preference of the
outstanding shares of Preferred Stock consenting or voting as a separate class,
as the case may be, may waive compliance with any provision of Part C of
Article IV of the Companys charter.

Description of the Companys Series A Junior Participating Preferred Stock

In connection with the adoption of the Companys Stockholder Rights Agreement,
which is described below, the Companys board of directors has designated and
reserved for issuance a total of one-hundred thousand (100,000) shares of the
Companys Series A Junior Participating Preferred Stock, par value $0.01 per
share (Series A Junior Participating Preferred Stock). When issued and paid
for in accordance with the Stockholder Rights Agreement, the Series A Junior
Participating Preferred Stock will be fully paid and nonassessable. The
Company will appoint a transfer agent for the Series A Junior Participating
Preferred Stock if and when any shares are issued.

Each share of Series A Junior Participating Preferred Stock will entitle its
holder to receive dividends out of the Companys funds legally available for
the payment of dividends when, as and if declared by the Companys board of
directors. With respect to those dividends, the Series A Junior Participating
Preferred Stock will rank:



| |  |  | senior to all classes of the Common Stock and to each other
class of capital stock or series of the Companys preferred stock
that are designated to rank junior to the Series A Junior
Participating Preferred Stock;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | junior to the Preferred Stock and all classes of the Companys
preferred stock that are designated to rank senior to the Series A
Junior Participating Preferred Stock; and                                           
|
| |  |  | equal to all classes of the Companys preferred stock that are
designated to rank equally with the Series A Junior Participating
Preferred Stock.                                                                     

Dividends are payable quarterly in cash on the fifteenth day of March, June,
September and December of each year, in an amount per share (subject to
adjustment for a stock dividend on, or a subdivision or combination of, the
Companys Common Stock) equal to the greater of:



| |  |  | $10.00; and                                                                                                                                    
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 1,000 times the aggregate amount per share of all dividends
declared on the Common Stock since the immediately preceding dividend
payment date.

Upon the Companys liquidation, dissolution or winding up, the holders of
outstanding shares of Series A Junior Participating Preferred Stock will be
entitled to be paid out of the assets available for distribution to the
Companys stockholders after payment of any liquidation values of any
securities senior in liquidation rights to the Series A Junior Participating
Preferred Stock. After payment of the liquidation values of senior securities,
the holders of the Series A Junior Participating Preferred Stock will be
entitled to receive (subject to adjustment for a stock dividend on, or a
subdivision or combination or consolidation of, the Companys Common Stock) the
greater of (x) $1,000.00 for each share of Series A Junior Participating
Preferred Stock they hold, plus any accrued and unpaid dividends or
distributions on those shares and (y) the aggregate amount per share equal to
1,000 times the aggregate amount to be distributed per share to holders of the
Common Stock. If, upon any liquidation, dissolution or winding up of the
Company, the remaining assets available for distribution are insufficient to
pay the holders of the Series A Junior Participating Preferred Stock and all
other securities ranking equally with the Series A Junior Participating
Preferred Stock with respect to liquidation the full amount to which they are
entitled, the holders of Series A Junior Participating Preferred Stock will
share those remaining assets ratably, together with the holders of the
securities ranking equally with the Series A Junior Participating Preferred
Stock. Following the payment of the liquidation value in full with respect to
each share of Series A Junior Participating Preferred Stock, no additional
distributions will be made to the holders of the Series A Junior Participating
Preferred Stock.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Shareholders Equity (continued)

Subject to adjustment for a stock dividend on, or a subdivision or combination
of, the Common Stock, each share of Series A Junior Participating Preferred
Stock will entitle the holder to 1,000 votes on all matters submitted to a vote
of holders of the Common Stock. The holders of the Series A Junior
Participating Preferred Stock will vote together as a single class with the
holders of the Common Stock.

If dividends on the Series A Junior Participating Preferred Stock are in
arrears in an amount equal to six quarterly dividends, whether or not
consecutive, all holders of the Companys preferred stock which have such
provision in the Companys charter governing their terms, including holders of
the Series A Junior Participating Preferred Stock, whose dividends are in
arrears with respect to six quarterly periods will, voting as a single class,
be entitled to elect two new directors to the Companys board of directors.
The directors will serve until successors to them have been elected or until
dividends on the Series A Junior Participating Preferred Stock are no longer in
arrears.

The Series A Junior Participating Preferred Stock will not be redeemable. The
Series A Junior Participating Preferred Stock will not be convertible.

Stockholder Rights Agreement

Upon issuance, each share of Common Stock (whether originally issued or from
the Companys treasury) will be accompanied by a Stockholder Right. Each
Stockholder Right entitles the registered holder to purchase from the Company
one one-thousandth of a share of Series A Junior Participating Preferred Stock
at the Stockholder Rights purchase price, subject to adjustment pursuant to the
terms of the Stockholder Rights Agreement.

The Stockholder Rights Agreement is intended to encourage a potential acquirer
to negotiate directly with the Companys board of directors, but may have
anti-takeover effects. The Stockholder Rights Agreement could cause
substantial dilution to a person or group that acquires a substantial interest
in us without the prior approval of the Companys board of directors. The
effect of the Stockholder Rights may be to delay, defer or prevent a change in
control of the Company (including through a third party tender offer at a price
which reflects a premium to then prevailing trading prices) that may be
beneficial to the Companys stockholders.

Initially, the Stockholder Rights are attached to all Common Stock certificates
representing shares then outstanding, and no separate Stockholder Rights
certificates will be distributed. Subject to some exceptions specified in the
Stockholder Rights Agreement, the Stockholder Rights will separate from the
Common Stock upon the earlier of (i) the close of business on the day of a
public announcement that (a) a person has entered into an agreement or
arrangement with the Company or any subsidiary of the Company providing for an
acquisition transaction or (b) a person or group of affiliated or associated
persons, other than the Company, its subsidiaries or certain persons exempted
by the board of directors and the Creditors Committee as of the effective date
of the Plan, has become an Acquiring Person by (1) becoming an Adverse
Person in the judgment of the board of directors of the Company or (2)
acquiring beneficial ownership of 15% or more of the outstanding shares of
Common Stock other than as a result of (w) repurchases of stock by the Company,
(x) participation in a dividend reinvestment, stock option or similar plan, (y)
certain acquisitions of shares of Common Stock from the Company, or (z) certain
inadvertent actions by institutional or certain other stockholders (each of the
events described in clauses (i)(a) and (i)(b) above, the Stock Acquisition
Date), and (ii) 10 business days (or such later date as the Companys board of
directors will determine) following the commencement of a tender offer or
exchange offer that would result in a person or group becoming an Acquiring
Person.

The Stock Acquisition Date could occur as early as the effective date of the
Plan. The earlier to occur of the events in the preceding paragraph to occur
is referred to as the Stockholder Rights Distribution Date, although in any
event the separation of the Stockholder Rights from the Common Stock will not
occur prior to the effective date of the Plan.

Until the Stockholder Rights Distribution Date, (1) the Stockholder Rights will
be evidenced by the Common Stock certificates and will be transferred with and
only with such Common Stock certificates, (2) Common Stock certificates will
contain a legend incorporating the Stockholder Rights Agreement by reference
and (3) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Stockholder Rights
associated with the Common Stock represented by such certificate. Pursuant to
the Stockholder Rights Agreement, the Company reserves the right to require
prior to the occurrence of a
Stockholder Rights Triggering Event (as defined below) that, upon any exercise
of Stockholder Rights, a number of Stockholder Rights be exercised so that only
whole shares of Stockholder Rights preferred stock will be issued.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Shareholders Equity (continued)

The Stockholder Rights are not exercisable until the Stockholder Rights
Distribution Date and expire at 5:00 p.m., New York City time, on January 10,
2013 unless such date is extended or the Stockholder Rights are earlier
redeemed or exchanged by the Company as described below.

As soon as practicable after the Stockholder Rights Distribution Date,
Stockholder Rights certificates will be mailed to holders of record of the
Common Stock as of the close of business on the Stockholder Rights Distribution
Date and, thereafter, the separate Stockholder Rights certificates alone will
represent the Stockholder Rights. Only shares of Common Stock issued prior to
the Stockholder Rights Distribution Date will be issued with Stockholder
Rights.

In the event that a person becomes an Acquiring Person, except pursuant to an
offer for all outstanding shares of Common Stock that the independent directors
determine to be fair and not inadequate and to be otherwise in the best
interests of the Company and its stockholders, after receiving advice from one
or more investment banking firms of national standing (a Qualifying Offer),
each holder of a Stockholder Right will thereafter have the right to receive,
upon exercise, Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two times the exercise
price of the Stockholder Right. Notwithstanding any of the foregoing,
following the occurrence of the event set forth in this paragraph, all
Stockholder Rights that are, or (under certain circumstances specified in the
Stockholder Rights Agreement) were, beneficially owned by any Acquiring Person
will be null and void. However, Stockholder Rights are not exercisable
following the occurrence of the event set forth above until such time as the
Stockholder Rights are no longer redeemable by the Company as set forth below.

In the event that, at any time after a Stock Acquisition Date, the Company (1)
engages in a merger or other business combination transaction in which the
Company is not the surviving corporation other than in a Qualifying Offer, (2)
the Company engages in a merger or other business combination transaction in
which the Company is the surviving corporation and any shares of Common Stock
are changed into or exchanged for other securities or assets other than in a
Qualifying Offer or (3) 50% or more of the assets, cash flow or earning power
of the Company and its subsidiaries (taken as a whole) are sold or transferred
so that each holder of a Stockholder Right (except as noted below) will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Stockholder Right, that number of shares of
common stock of the acquiring company that at the time of such transaction
would have a market value (determined as provided in the Stockholder Rights
Agreement) of two times the exercise price of the Stockholder Right. The
events set forth in this paragraph and in the preceding paragraph are referred
to as the Stockholder Rights Triggering Events.

At any time until a person becomes an Acquiring Person other than in connection
with a Qualifying Offer, the board of directors of the Company may redeem the
Stockholder Rights in whole, but not in part, at a price of $0.01 per
Stockholder Right (the Stockholder Rights Redemption Price), payable in cash,
Common Stock or other consideration deemed appropriate by the board of
directors of the Company. In addition, the board of directors of the Company
may, at any time after a person becomes an Acquiring Person other than in
connection with a Qualifying Offer and after any period during which the holder
of Stockholder Rights may exercise such Stockholder Rights expires, but prior
to any Stockholder Rights Triggering Event, redeem all but not less than all of
the then outstanding Stockholder Rights at the Stockholder Rights Redemption
Price (x) in connection with any merger, consolidation or sale or other
transfer (in one transaction or in a series of related transactions) of assets,
cash flow or earning power aggregating more than 50% of the assets or earning
power of the Company and its subsidiaries (taken as a whole), in which all
holders of shares of Common Stock are treated alike and not involving (other
than as a holder of Common Stock being treated like all other such holders) an
Acquiring Person or any affiliate or associate of an Acquiring Person or (y)(1)
if and for so long as the Acquiring Person is not thereafter the beneficial
owner of 15% of the shares of Common Stock and (2) at the time of redemption,
no other persons are Acquiring Persons. Immediately upon the action of the
board of directors of the Company electing to redeem the Stockholder Rights,
the Stockholder Rights will terminate and the only right of the holders of
Stockholder Rights will be to receive the Stockholder Rights Redemption Price.

At any time after a person becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the outstanding shares of
Common Stock, the board of directors of the Company may exchange the
Stockholder Rights (other than
Stockholder Rights owned by such person or group that have become void), in
whole or in part, for Common Stock at an exchange ratio of one share of Common
Stock, or one one-thousandth of a share of Stockholder Rights Preferred Stock
(or of a share of a class or series of the Company preferred stock having
equivalent rights, preferences and privileges), per Stockholder Right subject
to adjustment.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Shareholders Equity (continued)

Until a Stockholder Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the
Stockholder Rights should not be taxable to holders of Common Stock or to the
Company, the Company stockholders may, depending upon the circumstances,
recognize taxable income in the event that the Stockholder Rights become
exercisable for Common Stock or other consideration of the Company or for
common stock of the acquiring company or in the event of the redemption of the
Stockholder Rights as set forth above.

Any of the provisions of the Stockholder Rights Agreement may be amended by the
board of directors of the Company prior to the Stockholder Rights Distribution
Date. After the Stockholder Rights Distribution Date, the provisions of the
Stockholder Rights Agreement may be amended by the board of directors of the
Company in order to cure any ambiguity, to make changes that do not adversely
affect the interests of holders of Stockholder Rights, or to shorten or
lengthen any time period under the Stockholder Rights Agreement, except that
the Stockholder Rights Agreement may not be supplemented or amended to lengthen
(1) a time period relating to when the Stockholder Rights may be redeemed at
such time as when the Stockholder Rights are not then redeemable or (2) any
other time period unless any such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Stockholder Rights under the Stockholder Rights Agreement. The foregoing
notwithstanding, no amendment may be made to the Stockholder Rights Agreement
at a time when the Stockholder Rights are not redeemable, except to cure any
ambiguity or correct or supplement any provision contained in the Stockholder
Rights Agreement that may be defective or inconsistent with any other provision
therein.

The following description of Old NTLs Capital Structure is that of NTL
Incorporated, and relates to periods, prior to January 10, 2003.

Stock Splits

In January 2000, Old NTL declared a 5-for-4 stock split by way of a stock
dividend with respect to its now canceled common stock. The record date for
this dividend was January 31, 2000 and the payment date was February 3, 2000.
Common stock amounts in the notes to consolidated financial statements and all
per share data have been adjusted to reflect the stock splits.

Sales of Preferred Stock and Common Stock

In May 2000, in connection with the acquisition of certain assets of Cable &
Wireless Communications plc, France Telecom paid £1,555.6 million ($2,327.6
million) for 42.2 million shares of Old NTLs common stock and £1,244.4 million
($1,862.0 million) for 2.0 million shares of Old NTLs now canceled 5%
Cumulative Participating Convertible Preferred Stock.

Series Preferred Stock

In December 1998, Old NTL issued 52,000 shares of its now canceled 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. In June 2000, all of the outstanding
shares of the Series B Preferred Stock were converted into 903,000 shares of
Old NTLs common stock.

The now canceled 5% Cumulative Participating Convertible Preferred Stock (5%
Preferred Stock) had a stated value of $1,000 per share, was convertible into
common stock at a conversion price of $80 per share and was redeemable ten
years from the issue date, at Old NTLs option, for cash, shares of common
stock or a combination of both. The 5% Preferred Stock was redeemable by Old
NTL on the earlier of seven years from the issue date or the date that is both
four years from the issue date and after Old NTLs common stock has traded
above $96 per share for 25 consecutive trading days. Dividends were payable
quarterly at Old NTLs option in cash, common stock or additional shares of 5%
Preferred Stock. As of December 31, 2002, Old NTL had accrued $304.5 million
for dividends and had issued approximately 213,000 shares for $213.0 million of
such accrued dividends.

At December 31, 2002 and 2001, the 5% Preferred Stock would have been
convertible into an aggregate of 39.5 million shares and 37.0 million shares of
Old NTLs common stock, respectively.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Shareholders Equity (continued)

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

|                                    |  |          |         |       |  |    |          |   |  |  |           | 
|----------------------------------- |  | -------- | ------- | ----- |  | -- | -------- | - |  |  | --------- | 
|                                    |  | 9.9%     |         |       |  |    |          |   |  | 
|                                    |  | Series B |         | 5.25% |  | 5%
|                                    |  |          |         |       |  |   
|Balance, December 31, 1999          |  |          | 52,000  |       |  |    | 525,000  |   |  |  | 755,000   | 
|Issued for cash                     |  |          |        |       |  |    |         |   |  |  | 2,000,000 | 
|Issued for dividends                |  |          |        |       |  |    | 3,000    |   |  |  | 103,000   | 
|Conversion into common stock        |  |          | (52,000 | )     |  |    | (528,000 | ) |  |  |          | 
|                                    |  |          |         |       |  |    |          |   |  |  |           | 
|Balance, December 31, 2000          |  |          |        |       |  |    |         |   |  |  | 2,858,000 | 
|Issued for dividends                |  |          |        |       |  |    |         |   |  |  | 105,000   | 
|                                    |  |          |         |       |  |    |          |   |  |  |           | 
|Balance, December 31, 2001 and 2002 |  |          |        |       |  |    |         |   |  |  | 2,963,000 | 
|                                    |  |          |         |       |  |    |          |   |  |  |           | 

Warrants

Old NTL had the following now canceled warrants outstanding as of December 31,
2002: (a) warrants to purchase an aggregate of 243,000 shares of common stock
at $15.22 per share issued in 1996 that expire in 2006 (256,000 were originally
issued), (b) warrants to purchase an aggregate of 997,000 shares of common
stock at $27.77 per share issued in 1998 that expire in 2008 (1,197,000 were
originally issued) and (c) warrants to purchase an aggregate of 1,875,000
shares of common stock at $53.76 per share issued in 1999 that expire in 2004
(1,875,000 were originally issued). These warrants were canceled on the
Effective Date pursuant to the Plan.

Stock Options

All of Old NTLs outstanding stock options were canceled on the Effective Date
pursuant to the Plan. The stock option plans described below covered certain
of the Companys employees, as well as employees of the discontinued
operations.

There were 335,000 shares and 2,733,000 shares of common stock reserved for
issuance under the 1991 Stock Option Plan and the 1993 Stock Option Plan,
respectively. These plans provided that incentive stock options (ISOs) would
be granted at the fair market value of Old NTLs common stock on the date of
grant, and nonqualified stock options (NQSOs) would be granted at not less
than 85% of the fair market value of Old NTLs common stock on the date of
grant. Options were exercisable as to 20% of the shares subject thereto on the
date of grant and became exercisable as to an additional 20% of the shares
subject thereto on each January 1 thereafter, while the optionee remained an
employee of Old NTL. Options expired ten years after the date of the grant.

There were 16,000 shares and 67,000 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 would be granted to
members of the Board of Directors who were not employees of Old NTL or any of
its affiliates. These plans provided that all options would be granted at the
fair market value of Old NTLs common stock on the date of grant, and options
would expire ten years after the date of the grant. Options were exercisable as
to 20% of the shares subject thereto on the date of grant and became
exercisable as to an additional 20% of the shares subject thereto on each
subsequent anniversary of the grant date while the optionee remained a director
of Old NTL. Options expired ten years after the date of the grant.

There were 19,684,000 shares of common stock reserved for issuance under the
1998 Non-Qualified Stock Option Plan. The exercise price of a NQSO would have
been determined by the Compensation and Option Committee. Options were
generally exercisable ratably over five to ten years while the optionee
remained an employee of Old NTL. Options expired ten years after the date of
the grant.

In December 2000, the Board of Directors of Old NTL approved the rescission of
the exercise of ISOs for 156,000 shares of Old NTLs common stock, and Old NTL
returned cash of $1.1 million. The rescission was accounted for as a
modification of the original options that resulted in a new measurement date.
On the new measurement date, Old NTL recognized no compensation expense.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Shareholders Equity (continued)

Pro forma information regarding net loss and net loss per share is required by
SFAS No. 123, and has been determined as if Old NTL had accounted for its
employee stock options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for 2002, 2001 and 2000: risk-free interest rates of 4.47%, 4.47%
and 5.30%, respectively, dividend yield of 0%, volatility factor of the
expected market price of Old NTLs common stock of .702, .702 and .385,
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 Old NTLs stock options have characteristics significantly different
from those of traded options and because changes in the subjective input
assumptions can materially affect the fair value estimate, in managements
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options vesting period. The effects of
applying SFAS No. 123 on pro forma disclosures of net loss and net loss per
share for the years ended December 31, 2002, 2001 and 2000 are not likely to be
representative of the pro forma effects on net loss and net loss per share in
future years. Following is Old NTLs pro forma information:

|                                                 |  |                                         |          |      |  |      |           |   |  |   |          |  
|------------------------------------------------ |  | --------------------------------------- | -------- | ---- |  | ---- | --------- | - |  | - | -------- | -
|                                                 |  | Year Ended December 31,                
|                                                 |  |                                        
|                                                 |  | 2002                                    |          | 2001 |  | 2000
|                                                 |  |                                         |          |      |  |     
|                                                 |  | (in millions, except per share amounts)
|Net (loss)                                       |  | $                                       | (3,454.9 | )    |  | $    | (14,241.3 | ) |  | $ | (2,963.7 | )
|Pro forma net (loss)                             |  | $                                       | (3,719.2 | )    |  | $    | (14,509.6 | ) |  | $ | (3,219.5 | )
|Basic and diluted net (loss) per share           |  |                                         | (13.02   | )    |  |      | (52.78    | ) |  |   | (14.54   | )
|Basic and diluted pro forma net (loss) per share |  |                                         | (13.97   | )    |  |      | (53.75    | ) |  |   | (15.72   | )

A summary of Old NTLs stock option activity and related information for the
years ended December 31 follows:

|                                |  |               |      |          |  |           |       |               |  |           |      |           |  |               |       |  |  |           |      |   |  |   |       | 
|------------------------------- |  | ------------- | ---- | -------- |  | --------- | ----- | ------------- |  | --------- | ---- | --------- |  | ------------- | ----- |  |  | --------- | ---- | - |  | - | ----- | 
|                                |  | 2002          |      | 2001     |  | 2000     
|                                |  |               |      |          |  |          
|                                |  |               |      |          |  | Weighted- |       |               |  |           |      | Weighted- |  |               |       |  |  | Weighted-
|                                |  |               |      |          |  | Average   |       |               |  |           |      | Average   |  |               |       |  |  | Average  
|                                |  | Number of     |      | Exercise |  | Number of |       | Exercise      |  | Number of |      | Exercise 
|                                |  | Options       |      | Price    |  | Options   |       | Price         |  | Options   |      | Price    
|                                |  |               |      |          |  |           |       |               |  |           |      |          
|                                |  | (in millions) |      |          |  |           |       | (in millions) |  |           |      |           |  | (in millions) |       |  |  |          
|Outstanding  beginning of year |  |               | 71.9 |          |  | $         | 36.13 |               |  |           | 61.4 |           |  | $             | 41.52 |  |  |           | 29.2 |   |  | $ | 24.60 | 
|Granted                         |  |               |     |          |  |           |      |               |  |           | 14.3 |           |  |               | 12.55 |  |  |           | 34.8 |   |  |   | 54.90 | 
|Exercised                       |  |               |     |          |  |           |      |               |  |           | (1.1 | )         |  |               | 11.93 |  |  |           | (2.1 | ) |  |   | 17.13 | 
|Forfeited                       |  |               | (3.7 | )        |  |           | 39.09 |               |  |           | (2.7 | )         |  |               | 42.46 |  |  |           | (0.5 | ) |  |   | 83.31 | 
|                                |  |               |      |          |  |           |       |               |  |           |      |           |  |               |       |  |  |           |      |   |  |   |       | 
|Outstanding  end of year       |  |               | 68.2 |          |  | $         | 36.06 |               |  |           | 71.9 |           |  | $             | 36.13 |  |  |           | 61.4 |   |  | $ | 41.52 | 
|                                |  |               |      |          |  |           |       |               |  |           |      |           |  |               |       |  |  |           |      |   |  |   |       | 
|Exercisable at end of year      |  |               | 34.3 |          |  | $         | 30.37 |               |  |           | 24.7 |           |  | $             | 27.50 |  |  |           | 16.3 |   |  | $ | 21.82 | 
|                                |  |               |      |          |  |           |       |               |  |           |      |           |  |               |       |  |  |           |      |   |  |   |       | 

Weighted-average fair value of options, calculated using the Black-Scholes
option pricing model, granted during 2002, 2001 and 2000 is $5.69, $5.69 and
$32.19 respectively.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Shareholders Equity (continued)

The following table summarizes the status of the stock options outstanding and
exercisable at December 31, 2002:

|                 |  |           |      |                           |      |                           |  |           |        |           |  |  |     |               |  |           |        |  |  |  |  | 
|---------------- |  | --------- | ---- | ------------------------- | ---- | ------------------------- |  | --------- | ------ | --------- |  |  | --- | ------------- |  | --------- | ------ |  |  |  |  | 
|                 |  |           |      | Stock Options Outstanding |      | Stock Options Exercisable
|                 |  |           |      |                           |      |                          
|                 |  |           |      |                           |      |                           |  | Weighted- |        | Weighted- |  |  |     |               |  | Weighted-
|                 |  |           |      |                           |      |                           |  | Remaining |        | Average   |  |  |     |               |  | Average  
|Range of         |  | Number of |      | Contractual               |      | Exercise                  |  | Number of |        | Exercise 
|Exercise Prices  |  | Options   |      | Life                      |      | Price                     |  | Options   |        | Price    
|                 |  |           |      |                           |      |                           |  |           |        |          
|                 |  |           |      | (in millions)             |      |                           |  |           |        |           |  |  |     | (in millions) |  |           |        | 
|$0.35 to $9.36   |  |           | 4.4  |                           |      | 3.1 Years                 |  | $         | 5.434  |           |  |  | 4.3 |               |  | $         | 5.434  | 
|$10.00 to $18.40 |  |           | 14.8 |                           |      | 4.2 Years                 |  | $         | 11.136 |           |  |  | 8.0 |               |  | $         | 12.082 | 
|$19.86 to $27.84 |  |           | 12.9 |                           |      | 6.6 Years                 |  | $         | 23.395 |           |  |  | 8.2 |               |  | $         | 23.305 | 
|$28.06 to $35.64 |  |           | 0.6  |                           |      | 6.3 Years                 |  | $         | 30.372 |           |  |  | 0.5 |               |  | $         | 30.477 | 
|$36.12 to $40.19 |  |           | 0.8  |                           |      | 7.2 Years                 |  | $         | 38.823 |           |  |  | 0.5 |               |  | $         | 38.629 | 
|$42.44 to $47.44 |  |           | 13.0 |                           |      | 7.4 Years                 |  | $         | 44.437 |           |  |  | 4.5 |               |  | $         | 44.397 | 
|$48.38 to $53.76 |  |           | 4.6  |                           |      | 6.6 Years                 |  | $         | 50.383 |           |  |  | 3.2 |               |  | $         | 50.400 | 
|$57.60 to $63.63 |  |           | 16.6 |                           |      | 6.8 Years                 |  | $         | 63.409 |           |  |  | 4.7 |               |  | $         | 62.986 | 
|$68.20 to $75.56 |  |           | 0.1  |                           |      | 7.1 Years                 |  | $         | 75.413 |           |  |  | 0.1 |               |  | $         | 75.401 | 
|$91.13 to $97.50 |  |           | 0.4  |                           |      | 7.1 Years                 |  | $         | 93.713 |           |  |  | 0.3 |               |  | $         | 93.713 | 
|                 |  |           |      |                           |      |                           |  |           |        |           |  |  |     |               |  |           |        |  |  | 
|                 |  | Total     |      |                           | 68.2 |                           |  |           |        |           |  |  |     |               |  |           | 34.3   |  |  |  |  | 
|                 |  |           |      |                           |      |                           |  |           |        |           |  |  |     |               |  |           |        |  |  | 

As of December 31, 2002, Old NTL had 171.8 million shares of its common stock
reserved for issuance upon the exercise of warrants and stock options and the
conversion of debt and preferred stock, all of which have now been canceled.

20. Employee Benefit Plans

Cablecom operates a defined benefit pension plan in Switzerland. The assets of
the Plan 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.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

20. Employee Benefit Plans (continued)

At December 31, 2002, the projected benefit obligations of Old NTLs defined
benefit pension plans exceeded the fair value of the plan assets by $44.5
million. The projected benefit obligations, accumulated benefit obligations
and fair value of plan assets were $156.4 million, $125.1 million and $112.0
million, respectively, at December 31, 2002.

|                                                                      |  |               |       |      |  |   |       |  
|--------------------------------------------------------------------- |  | ------------- | ----- | ---- |  | - | ----- | -
|                                                                      |  | Year Ended   
|                                                                      |  | December 31, 
|                                                                      |  |              
|                                                                      |  | 2002          |       | 2001
|                                                                      |  |               |       |     
|                                                                      |  | (in millions)
|Change in benefit obligation                                          |  |               |       |      |  |   |       |  
|Benefit obligation at beginning of year                               |  | $             | 145.7 |      |  | $ | 122.2 |  
|Disposition                                                           |  |               | (21.8 | )    |  |   |      |  
|Service cost                                                          |  |               | 7.4   |      |  |   | 7.4   |  
|Interest cost                                                         |  |               | 6.3   |      |  |   | 5.5   |  
|Actuarial losses (gains)                                              |  |               | 10.3  |      |  |   | 12.4  |  
|Benefits paid                                                         |  |               | (4.2  | )    |  |   | (3.1  | )
|Foreign currency exchange rate changes                                |  |               | 12.7  |      |  |   | 1.2   |  
|                                                                      |  |               |       |      |  |   |       |  
|Benefit obligation at end of year                                     |  | $             | 156.4 |      |  | $ | 145.6 |  
|                                                                      |  |               |       |      |  |   |       |  
|Change in plan assets                                                 |  |               |       |      |  |   |       |  
|Fair value of plan assets at beginning of year                        |  | $             | 142.3 |      |  | $ | 151.0 |  
|Disposition                                                           |  |               | (15.8 | )    |  |   |      |  
|Actual return on plan assets                                          |  |               | (30.9 | )    |  |   | (15.0 | )
|Company contributions                                                 |  |               | 4.7   |      |  |   | 4.5   |  
|Plan participants contributions                                      |  |               | 3.5   |      |  |   | 3.4   |  
|Benefits paid                                                         |  |               | (4.2  | )    |  |   | (3.1  | )
|Foreign currency exchange rates changes                               |  |               | 12.4  |      |  |   | 1.5   |  
|                                                                      |  |               |       |      |  |   |       |  
|Fair value of plan assets at end of year                              |  | $             | 112.0 |      |  | $ | 142.3 |  
|                                                                      |  |               |       |      |  |   |       |  
|Funded status of the plan                                             |  | $             | (44.5 | )    |  | $ | (3.4  | )
|Unrecognized net actuarial (gains) losses                             |  |               | 61.3  |      |  |   | 17.8  |  
|Unrecognized transition obligation                                    |  |               | 0.5   |      |  |   | 0.8   |  
|                                                                      |  |               |       |      |  |   |       |  
|Net amount recognized                                                 |  | $             | 17.3  |      |  | $ | 15.2  |  
|                                                                      |  |               |       |      |  |   |       |  
|Amounts recognized in the statement of financial position consist of: |  |               |       |      |  |   |       |  
|Prepaid benefit cost                                                  |  | $             | 16.8  |      |  | $ | 14.4  |  
|Accrued benefit liability                                             |  |               | (30.5 | )    |  |   |      |  
|Intangible asset                                                      |  |               | 1.0   |      |  |   | 0.8   |  
|Accumulated other comprehensive loss                                  |  |               | 30.0  |      |  |   |      |  
|                                                                      |  |               |       |      |  |   |       |  
|Net amount recognized                                                 |  | $             | 17.3  |      |  | $ | 15.2  |  
|                                                                      |  |               |       |      |  |   |       |  

|                       |                                                  |  |                         |      |      |  |  |      |  
|---------------------- | ------------------------------------------------ |  | ----------------------- | ---- | ---- |  |  | ---- | -
|                       |                                                  |  | Year Ended December 31,
|                       |                                                  |  |                        
|                       |                                                  |  | 2002                    |      | 2001
|                       |                                                  |  |                         |      |     
|Actuarial assumptions: |                                                  |  |                         |      |      |  |  |     
|                       | Discount rate                                    |  |                         | 4.00 | %    |  |  | 4.50 | %
|                       | Rate of compensation increase                    |  |                         | 1.00 | %    |  |  | 2.00 | %
|                       | Expected long-term rate of return on plan assets |  |                         | 4.00 | %    |  |  | 5.50 | %

F-105



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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

20. Employee Benefit Plans (continued)

The components of net pension costs are as follows:

|                                 |  |                         |      |      |  |      |      |   |  |   |       |  
|-------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  | - | ----- | -
|                                 |  | Year Ended December 31,
|                                 |  |                        
|                                 |  | 2002                    |      | 2001 |  | 2000
|                                 |  |                         |      |      |  |     
|                                 |  | (in millions)          
|Service cost                     |  | $                       | 7.4  |      |  | $    | 7.4  |   |  | $ | 6.1   |  
|Interest cost                    |  |                         | 6.3  |      |  |      | 5.5  |   |  |   | 5.5   |  
|Expected return on plan assets   |  |                         | (6.3 | )    |  |      | (8.7 | ) |  |   | (13.7 | )
|Plan participants contributions |  |                         | (3.5 | )    |  |      | (3.4 | ) |  |   | (2.8  | )
|Net amortization and deferral    |  |                         |     |      |  |      | (0.5 | ) |  |   | 4.0   |  
|                                 |  |                         |      |      |  |      |      |   |  |   |       |  
|                                 |  | $                       | 3.9  |      |  | $    | 0.3  |   |  | $ | (0.9  | )
|                                 |  |                         |      |      |  |      |      |   |  |   |       |  

21. Leases

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

|                             |  |           |      | 
|---------------------------- |  | --------- | ---- | 
|                             |  | Operating
|                             |  | Leases   
|                             |  |          
|Year ending December 31:     |  |           |      | 
|2003                         |  | $         | 4.8  | 
|2004                         |  |           | 5.1  | 
|2005                         |  |           | 5.1  | 
|2006                         |  |           | 5.3  | 
|2007                         |  |           | 5.5  | 
|Thereafter                   |  |           | 6.9  | 
|                             |  |           |      | 
|Total minimum lease payments |  | $         | 32.7 | 
|                             |  |           |      | 

Leases for buildings, office space and equipment extend through 2019. Total
rental expense for the years ended December 31, 2002, 2001 and 2000 under
operating leases was $7.0 million, $16.4 million and $10.0 million,
respectively.

22. Commitments and Contingent Liabilities

At December 31, 2002, Old NTL was committed to pay approximately $121.8 million
for equipment and services and for investments in and loans to affiliates.
This amount included approximately $48.7 million for operations and other
commitments from January 1, 2004 to 2013. The aggregate amount of the fixed
and determinable portion of these obligations for the succeeding fiscal years
is as follows (in millions):

|     |  |                          |      | 
|---- |  | ------------------------ | ---- | 
|     |  | Year
Ending December 31:
|     |  |                         
|2003 |  | $                        | 73.1 | 
|2004 |  |                          | 9.2  | 
|2005 |  |                          | 9.2  | 
|2006 |  |                          | 1.4  | 
|2007 |  |                          | 1.4  | 
|     |  |                          |      | 
|     |  | $                        | 94.3 | 
|     |  |                          |      | 

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.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

22. Commitments and Contingent Liabilities (continued)

Morgan Stanley

In connection with the bar date for filing of securities laws claims against
the debtors pursuant to an order of the bankruptcy court, proofs of claim were
filed against Old NTL, NTL Delaware and NTL Communications by Morgan Stanley
Senior Funding Inc. for $11.4 million. These claims were asserted by Morgan
Stanley Senior Funding Inc. in respect of alleged unpaid financing fees for
commitments of capital made in 1999. The Company believes it has meritorious
defenses to these claims and on May 8, 2003 filed an objection to these claims.
At this time, the Company cannot predict the outcome of these claims.

B2 (Bredband) AG

On April 15, 2002, a funding request for approximately $20 million was received
by Old NTL under the terms of the investment agreement relating to Old NTLs
investment in B2. Old NTL informed B2 and the other principal investors that
it was not in a position to comply with the request for funding. The B2
investment agreement provides that if Old NTL fails to provide such funding, it
may be sued for non-payment and arguably could lose certain rights under the B2
shareholders agreement including its interest in B2.

On October 4, 2002, Old NTL filed a motion with the bankruptcy court to reject
the B2 investment agreement and shareholders agreement under section 365 of
the bankruptcy code, and the bankruptcy court subsequently authorized Old NTLs
rejection of the agreements. On November 8, 2002, B2 and the other principal
shareholders filed proofs of claim with the bankruptcy court asserting their
right to recover: (1) approximately $20 million from Old NTL in respect of the
unpaid funding request; (2) unspecified damages for Old NTLs failure to
perform under the relevant agreements; and (3) unspecified costs and expenses
incurred in the exercise of their remedies under the agreements, and reserved
their other rights to avail themselves of any remedies under the agreements.

On April 30, 2003, NTL Delaware, together with its subsidiaries NTL Sweden SPV
Inc. and Nogenta Swedish Acquisition Holding B.V., entered into an agreement
with B2 and the other principal shareholders of B2 relating to, among other
things, the transfer of the Companys securities in B2. Under the agreement,
the NTL Europe parties have agreed to transfer their interest in B2 to certain
other shareholders of B2 in exchange for approximately $375,000 in cash or
certain securities of a B2 affiliate and mutual releases among the parties
relating to a dispute stemming from an April 15, 2002 funding request for
approximately $20 million. In connection with the mutual releases, the
agreement provides that B2 and the other principal shareholders will withdraw,
or otherwise assist NTL Delaware in obtaining bankruptcy court denial of, the
proofs of claim filed by B2 and the other principal shareholders in the
bankruptcy court. The closing of this transaction is subject to customary
closing conditions, but the NTL Europe releases are effective unless the NTL
Europe parties breach their respective obligations under the agreement.

Cablecom

Cablecom is the principal borrower under an amended and restated credit
agreement dated as of April 30, 2002 and effective as of May 2, 2002. Under
the credit agreement, Cablecom and one of its subsidiaries are indebted in an
amount of approximately CHF 3,792 million (which includes recent accrued
interest payments). Although the credit facility was originally scheduled to
mature on April 30, 2003, upon the request of Cablecom, the maturity date has
been extended to the business day following May 31, 2003, with an additional
automatic extension to June 30, 2003 under certain circumstances. In addition,
Cablecom has been notified by the lenders that it is in default under the
credit agreement. Accordingly, the lenders could seek to accelerate the
maturity of the credit facility at any time.

Cablecom does not have the resources to repay the bank debt when it comes due,
whether on the extended maturity date or upon the acceleration thereof.
Further, as security for its guaranty of Cablecoms obligations under the
credit agreement, NTL Cablecom Holding GmbH, the parent entity of Cablecom, has
pledged to the lenders all of the shares of Cablecom. Accordingly, upon the
maturity of the credit facility, whether upon acceleration or otherwise, the
lenders could seek to exercise their rights under the pledge. In such an
event, although the Company would not be liable for any of Cablecoms
obligations, it would be deprived of all of its ownership interest in Cablecom.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

22. Commitments and Contingent Liabilities (continued)

In addition, Cablecom and two of its subsidiaries are overindebted under
Swiss law. If Cablecom is unsuccessful in consummating a transaction with its
lenders to resolve that overindebtedness issue in the near future, the board
of directors of Cablecom may be required to file for insolvency proceedings
under Swiss law. Further, on April 9, 2003, in accordance with Swiss law, the
board of directors of Cablecom received a letter from its auditors, Ernst &
Young AG, notifying the board of Cablecom that Cablecom and some of its
subsidiaries are overindebted and, if there is no consensual settlement on
the overall financial restructuring of Cablecom or an extension of the maturity
date or any other measures taken which would cure the overindebtedness, the
board would be required to notify a Swiss court and deposit the balance sheets
for Cablecom and its subsidiaries immediately, thereby commencing insolvency
proceedings. If Cablecom files for insolvency proceedings, it is unlikely that
the Company will retain any interest in Cablecom.

In order to seek to address the foregoing issues, Cablecom is currently in
negotiations with its lenders regarding an overall financial restructuring of
Cablecom. If consummated, such restructuring is expected to include a
reduction in the amount of debt outstanding, an extension of maturity date of
such debt and control of Cablecom being assumed by the lenders. As part of
such negotiations, the Company is seeking to retain a small minority interest
in Cablecom in consideration for its cooperation in permitting Cablecom to
reach a consensual restructuring plan with its lenders. There is, however, no
assurance that such negotiations will be successful. Further, whether or not
such negotiations are successful, the Company expects to be deprived of the
Companys controlling interest in Cablecom in the near future. After such
occurrence, the results of Cablecom will not be reported as part of the
Companys consolidated results of operations.

On May 1, 2003, Owl Creek Asset Management, L.P., one of Old NTLs creditors,
filed an amended complaint against CRT Capital Group LLC, New NTL and the
Company in U.S. Bankruptcy Court for the Southern District of New York. The
amended complaint concerns certain when-issued trades of New NTLs common
stock made by Owl Creek with CRT prior to a subsequent modification of Old
NTLs plan of reorganization. Under the modified plan, Old NTLs creditors
were entitled to receive only one-fourth the number of shares of New NTL common
stock contemplated prior to the modification. Therefore, certain holders of
New NTL common stock sold more stock on the when-issued market than they
ultimately received under the amended plan. On January 16, 2003, the
bankruptcy court entered an order providing that sellers of New NTLs common
stock on the when-issued market may settle such trades by reducing the number
of shares traded in each such transaction by 25% and increasing the per share
purchase price for such shares by 400%. The order provided that buyers in such
trades were required to accept such a settlement, but the order was dissolved
on February 5, 2003. In addition to its claims against CRT, Owl Creek has
asserted claims against New NTL and the Company for breach of fiduciary duty,
gross negligence, breach of contract, promissory estoppel, contribution and
indemnification, alleging that Old NTLs creditors should have been better
informed of the changes to New NTLs common stock under the plan. Since the
securities that are the subject of the complaint are those of New NTL, the
Company does not believe that it has any material exposure with respect to this
claim.

23. Geographic Information

|                  |               |               |      |             |  |       |         |       |  |   |       |  |  |   |         | 
|----------------- | ------------- | ------------- | ---- | ----------- |  | ----- | ------- | ----- |  | - | ----- |  |  | - | ------- | 
|                  |               | United States |      | Switzerland |  | Other |         | Total
|                  |               |               |      |             |  |       |         |      
|                  | (in millions)
|2002              |               |               |      |             |  |       |         |       |  |   |       |  |  |   |         | 
|Revenues          |               | $             |     |             |  | $     | 401.6   |       |  | $ | 34.3  |  |  | $ | 435.9   | 
|Long-lived assets |               |               | 22.6 |             |  |       | 2,196.8 |       |  |   | 73.4  |  |  |   | 2,292.8 | 
|2001              |               |               |      |             |  |       |         |       |  |   |       |  |  |   |         | 
|Revenues          |               | $             |     |             |  | $     | 329.2   |       |  | $ | 62.4  |  |  | $ | 391.6   | 
|Long-lived assets |               |               | 41.7 |             |  |       | 2,631.6 |       |  |   | 364.2 |  |  |   | 3,037.5 | 
|2000              |               |               |      |             |  |       |         |       |  |   |       |  |  |   |         | 
|Revenues          |               | $             |     |             |  | $     | 202.5   |       |  | $ | 24.3  |  |  | $ | 226.8   | 
|Long-lived assets |               |               | 25.1 |             |  |       | 3,828.1 |       |  |   | 923.6 |  |  |   | 4,776.8 | 

F-108



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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

24. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization

The following consolidating financial statements of Old NTL and subsidiaries as
of December 31, 2002 and 2001 and for the years ended December 31, 2002, 2001
and 2000 is being provided pursuant to AICPA Statement of Position 90-7. Old
NTL, NTL Delaware, NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp. are
included in Entities in Reorganization. All other wholly owned direct and
indirect subsidiaries of Old NTL are included in Entities Not in
Reorganization.

(in millions)

|                                                                               |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |          |  
|------------------------------------------------------------------------------ | ------------------------------------------------------------- | -------------- | ---------------------------- | -------------- | -- | ----------- | ------------ | ------------ | - | - | ------- | ------- | - | - | -------- | -------- | -
|                                                                               |                                                               |                | Year Ended December 31, 2002
|                                                                               |                                                               |                |                             
|                                                                               |                                                               |                |                              |                |    |             | Entities Not |              |   |   |         |         |   |   |         
|                                                                               |                                                               |                | Entities in                  |                | in |             |              |              |   |   |         |         |  
|Statements of Operations                                                       |                                                               | Reorganization |                              | Reorganization |    | Adjustments |              | Consolidated
|                                                                               |                                                               |                |                              |                |    |             |              |             
|Revenue                                                                        |                                                               | $              |                             |                |    | $           | 435.9        |              |   | $ |        |         |   | $ | 435.9    |         
|Costs and expenses                                                             |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|Operating expenses (exclusive of depreciation shown
separately below)          |                                                               |                |                             |                |    |             | 175.4        |              |   |   |        |         |   |   | 175.4    |         
|Selling, general and administrative expenses                                   |                                                               |                | 3.7                          |                |    |             | 143.7        |              |   |   | (8.6    | )       |   |   | 138.8    |         
|Asset impairments                                                              |                                                               |                |                             |                |    |             | 854.3        |              |   |   |        |         |   |   | 854.3    |         
|Other charges                                                                  |                                                               |                |                             |                |    |             | 3.5          |              |   |   |        |         |   |   | 3.5      |         
|Corporate expenses                                                             |                                                               |                | 11.7                         |                |    |             | (0.2         | )            |   |   |        |         |   |   | 11.5     |         
|Depreciation                                                                   |                                                               |                | 0.7                          |                |    |             | 222.0        |              |   |   |        |         |   |   | 222.7    |         
|Amortization                                                                   |                                                               |                | 13.1                         |                |    |             | 82.4         |              |   |   |        |         |   |   | 95.5     |         
|                                                                               |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|                                                                               |                                                               |                | 29.2                         |                |    |             | 1,481.1      |              |   |   | (8.6    | )       |   |   | 1,501.7  |         
|                                                                               |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|Operating loss                                                                 |                                                               |                | (29.2                        | )              |    |             | (1,045.2     | )            |   |   | 8.6     |         |   |   | (1,065.8 | )       
|Other income (expense)                                                         |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|Interest income and other, net                                                 |                                                               |                | (2.1                         | )              |    |             | (13.3        | )            |   |   | 4.4     |         |   |   | (11.0    | )       
|Interest expense (contractual interest of $223.5
(2002))                       |                                                               |                | (28.1                        | )              |    |             | (128.0       | )            |   |   |        |         |   |   | (156.1   | )       
|Share of (losses) from equity investments                                      |                                                               |                | (2,787.4                     | )              |    |             | (22.4        | )            |   |   | 2,558.5 |         |   |   | (251.3   | )       
|Other gains (losses)                                                           |                                                               |                | 1.1                          |                |    |             | 1.9          |              |   |   |        |         |   |   | 3.0      |         
|Foreign currency transaction gains                                             |                                                               |                | 9.3                          |                |    |             |             |              |   |   |        |         |   |   | 9.3      |         
|                                                                               |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|(Loss) before recapitalization items, income taxes
and discontinued operations |                                                               |                | (2,836.4                     | )              |    |             | (1,207.0     | )            |   |   | 2,571.5 |         |   |   | (1,471.9 | )       
|Recapitalization items, net                                                    |                                                               |                | 0.4                          |                |    |             | (5.2         | )            |   |   |        |         |   |   | (4.8     | )       
|                                                                               |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|(Loss) before income taxes and discontinued
operations                         |                                                               |                | (2,836.0                     | )              |    |             | (1,212.2     | )            |   |   | 2,571.5 |         |   |   | (1,476.7 | )       
|Income tax (expense) benefit                                                   |                                                               |                | 3.3                          |                |    |             | 129.4        |              |   |   | (4.6    | )       |   |   | 128.1    |         
|                                                                               |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|(Loss) from continuing operations                                              |                                                               |                | (2,832.7                     | )              |    |             | (1,082.8     | )            |   |   | 2,566.9 |         |   |   | (1,348.6 | )       
|Discontinued operations:                                                       |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|                                                                               | (Loss) from discontinued operations, net of taxes             |                |                              | (7,017.7       | )  |             |              | (1,737.4     | ) |   |         | 6,654.5 |   |   |          | (2,100.6 | )
|                                                                               | (Loss) gain on sales of discontinued operations,
net of taxes |                |                              | 1.8            |    |             |              | 31.4         |   |   |         | (38.9   | ) |   |          | (5.7     | )
|                                                                               |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|(Loss) from discontinued operations                                            |                                                               |                | (7,015.9                     | )              |    |             | (1,706.0     | )            |   |   | 6,615.6 |         |   |   | (2,106.3 | )       
|                                                                               |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|Net (loss)                                                                     |                                                               | $              | (9,848.6                     | )              |    | $           | (2,788.8     | )            |   | $ | 9,182.5 |         |   | $ | (3,454.9 | )       
|                                                                               |                                                               |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         

F-109



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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

24. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |           |  
|------------------------------------------------------------------------------ | ----------------------------------------------------- | -------------- | ---------------------------- | -------------- | -- | ----------- | ------------ | ------------ | - | - | -------- | -------- |  | - | --------- | --------- | -
|                                                                               |                                                       |                | Year Ended December 31, 2001
|                                                                               |                                                       |                |                             
|                                                                               |                                                       |                |                              |                |    |             | Entities Not |              |   |   |          |          |  |   |          
|                                                                               |                                                       |                | Entities in                  |                | in |             |              |              |   |   |          |          | 
|Statements of Operations                                                       |                                                       | Reorganization |                              | Reorganization |    | Adjustments |              | Consolidated
|                                                                               |                                                       |                |                              |                |    |             |              |             
|Revenue                                                                        |                                                       | $              |                             |                |    | $           | 391.6        |              |   | $ |         |          |  | $ | 391.6     |          
|Costs and expenses                                                             |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          
|Operating expenses (exclusive of depreciation shown
separately below)          |                                                       |                |                             |                |    |             | 170.4        |              |   |   |         |          |  |   | 170.4     |          
|Selling, general and administrative expenses                                   |                                                       |                | 5.9                          |                |    |             | 180.2        |              |   |   | (8.1     | )        |  |   | 178.0     |          
|Asset impairments                                                              |                                                       |                |                             |                |    |             | 887.0        |              |   |   | 25.1     |          |  |   | 912.1     |          
|Other charges                                                                  |                                                       |                |                             |                |    |             | 12.2         |              |   |   |         |          |  |   | 12.2      |          
|Corporate expenses                                                             |                                                       |                | 42.2                         |                |    |             | 0.3          |              |   |   |         |          |  |   | 42.5      |          
|Depreciation                                                                   |                                                       |                | 2.6                          |                |    |             | 165.4        |              |   |   | (13.6    | )        |  |   | 154.4     |          
|Amortization                                                                   |                                                       |                | 3.1                          |                |    |             | 385.1        |              |   |   | 45.2     |          |  |   | 433.4     |          
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          
|                                                                               |                                                       |                | 53.8                         |                |    |             | 1,800.6      |              |   |   | 48.6     |          |  |   | 1,903.0   |          
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          
|Operating loss                                                                 |                                                       |                | (53.8                        | )              |    |             | (1,409.0     | )            |   |   | (48.6    | )        |  |   | (1,511.4  | )        
|Other income (expense)                                                         |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          
|Interest income and other, net                                                 |                                                       |                | 10.4                         |                |    |             | 14.6         |              |   |   | (4.6     | )        |  |   | 20.4      |          
|Interest expense                                                               |                                                       |                | (74.3                        | )              |    |             | (126.1       | )            |   |   | 5.3      |          |  |   | (195.1    | )        
|Share of (losses) from equity investments                                      |                                                       |                | (3,973.4                     | )              |    |             | (40.6        | )            |   |   | 3,354.0  |          |  |   | (660.0    | )        
|Other gains (losses)                                                           |                                                       |                | (109.3                       | )              |    |             | 50.8         |              |   |   | (0.4     | )        |  |   | (58.9     | )        
|Foreign currency transaction (losses)                                          |                                                       |                | (10.1                        | )              |    |             | (4.1         | )            |   |   | (0.1     | )        |  |   | (14.3     | )        
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          
|(Loss) before recapitalization items, income taxes
and discontinued operations |                                                       |                | (4,210.5                     | )              |    |             | (1,514.4     | )            |   |   | 3,305.6  |          |  |   | (2,419.3  | )        
|Recapitalization items, net                                                    |                                                       |                |                             |                |    |             |             |              |   |   |         |          |  |   |          |          
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          
|(Loss) before income taxes and discontinued
operations                         |                                                       |                | (4,210.5                     | )              |    |             | (1,514.4     | )            |   |   | 3,305.6  |          |  |   | (2,419.3  | )        
|Income tax benefit                                                             |                                                       |                | 2.4                          |                |    |             | 48.5         |              |   |   |         |          |  |   | 50.9      |          
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          
|(Loss) from continuing operations                                              |                                                       |                | (4,208.1                     | )              |    |             | (1,465.9     | )            |   |   | 3,305.6  |          |  |   | (2,368.4  | )        
|Discontinued operations:                                                       |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          
|                                                                               | (Loss) from discontinued operations, net of taxes     |                |                              | (36,554.0      | )  |             |              | (11,562.3    | ) |   |          | 36,243.4 |  |   |           | (11,872.9 | )
|                                                                               | Gain on sale of discontinued operations, net of
taxes |                |                              |               |    |             |              |             |   |   |          |         |  |   |           |          |  
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          
|(Loss) from discontinued operations                                            |                                                       |                | (36,554.0                    | )              |    |             | (11,562.3    | )            |   |   | 36,243.4 |          |  |   | (11,872.9 | )        
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          
|Net (loss)                                                                     |                                                       | $              | (40,762.1                    | )              |    | $           | (13,028.2    | )            |   | $ | 39,549.0 |          |  | $ | (14,241.3 | )        
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |          |          |  |   |           |          

F-110



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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

24. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |          |  
|------------------------------------------------------------------------------ | ------------------------------------------------------------ | -------------- | ---------------------------- | -------------- | -- | ----------- | ------------ | ------------ | - | - | ------- | ------- |  | - | -------- | -------- | -
|                                                                               |                                                              |                | Year Ended December 31, 2000
|                                                                               |                                                              |                |                             
|                                                                               |                                                              |                |                              |                |    |             | Entities Not |              |   |   |         |         |  |   |         
|                                                                               |                                                              |                | Entities in                  |                | in |             |              |              |   |   |         |         | 
|Statements of Operations                                                       |                                                              | Reorganization |                              | Reorganization |    | Adjustments |              | Consolidated
|                                                                               |                                                              |                |                              |                |    |             |              |             
|Revenue                                                                        |                                                              | $              |                             |                |    | $           | 226.8        |              |   | $ |        |         |  | $ | 226.8    |         
|Costs and expenses                                                             |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         
|Operating expenses (exclusive of
depreciation shown separately below)          |                                                              |                |                             |                |    |             | 88.9         |              |   |   |        |         |  |   | 88.9     |         
|Selling, general and administrative expenses                                   |                                                              |                |                             |                |    |             | 103.1        |              |   |   |        |         |  |   | 103.1    |         
|Asset impairments                                                              |                                                              |                |                             |                |    |             |             |              |   |   |        |         |  |   |         |         
|Other charges                                                                  |                                                              |                |                             |                |    |             |             |              |   |   |        |         |  |   |         |         
|Corporate expenses                                                             |                                                              |                | 23.9                         |                |    |             | (0.1         | )            |   |   |        |         |  |   | 23.8     |         
|Depreciation                                                                   |                                                              |                | 2.3                          |                |    |             | 99.3         |              |   |   | (14.2   | )       |  |   | 87.4     |         
|Amortization                                                                   |                                                              |                | 2.7                          |                |    |             | 282.0        |              |   |   | 14.6    |         |  |   | 299.3    |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         
|                                                                               |                                                              |                | 28.9                         |                |    |             | 573.2        |              |   |   | 0.4     |         |  |   | 602.5    |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         
|Operating loss                                                                 |                                                              |                | (28.9                        | )              |    |             | (346.4       | )            |   |   | (0.4    | )       |  |   | (375.7   | )       
|Other income (expense)                                                         |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         
|Interest income and other, net                                                 |                                                              |                | 40.0                         |                |    |             | (2.5         | )            |   |   | 8.0     |         |  |   | 45.5     |         
|Interest expense                                                               |                                                              |                | (68.6                        | )              |    |             | (84.0        | )            |   |   | 12.9    |         |  |   | (139.7   | )       
|Share of (losses) from equity investments                                      |                                                              |                | (997.4                       | )              |    |             |             |              |   |   | 950.7   |         |  |   | (46.7    | )       
|Other gains (losses)                                                           |                                                              |                |                             |                |    |             |             |              |   |   |        |         |  |   |         |         
|Foreign currency transaction gains                                             |                                                              |                | (61.1                        | )              |    |             |             |              |   |   | (1.4    | )       |  |   | (62.5    | )       
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         
|(Loss) before recapitalization items, income taxes
and discontinued operations |                                                              |                | (1,116.0                     | )              |    |             | (432.9       | )            |   |   | 969.8   |         |  |   | (579.1   | )       
|Recapitalization items, net                                                    |                                                              |                |                             |                |    |             |             |              |   |   |        |         |  |   |         |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         
|(Loss) before income taxes and discontinued operations                         |                                                              |                | (1,116.0                     | )              |    |             | (432.9       | )            |   |   | 969.8   |         |  |   | (579.1   | )       
|Income tax (expense) benefit                                                   |                                                              |                | 0.3                          |                |    |             | 23.2         |              |   |   | (0.6    | )       |  |   | 22.9     |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         
|(Loss) from continuing operations                                              |                                                              |                | (1,115.7                     | )              |    |             | (409.7       | )            |   |   | 969.2   |         |  |   | (556.2   | )       
|Discontinued operations:                                                       |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         
|                                                                               | (Loss) from discontinued operations, net of taxes            |                |                              | (7,643.9       | )  |             |              | (1,868.8     | ) |   |         | 7,105.2 |  |   |          | (2,407.5 | )
|                                                                               | (Loss) gain on sale of discontinued operations,
net of taxes |                |                              |               |    |             |              |             |   |   |         |        |  |   |          |         |  
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         
|(Loss) from discontinued operations                                            |                                                              |                | (7,643.9                     | )              |    |             | (1,868.8     | )            |   |   | 7,105.2 |         |  |   | (2,407.5 | )       
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         
|Net (loss)                                                                     |                                                              | $              | (8,759.6                     | )              |    | $           | (2,278.5     | )            |   | $ | 8,074.4 |         |  | $ | (2,963.7 | )       
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |  |   |          |         

F-111



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##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

24. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

|                                                 |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|------------------------------------------------ |  | ----------------- | -------- | -------------- |  | ------------ | -------- | ------------ |  | - | --------- | - |  | - | -------- | -
|                                                 |  | December 31, 2002
|                                                 |  |                  
|                                                 |  |                   |          |                |  | Entities Not |          |              |  |   |           |   |  |  
|                                                 |  | Entities in       |          | in             |  |              |          |              |  |   |           |  
|Balance Sheets                                   |  | Reorganization    |          | Reorganization |  | Adjustments  |          | Consolidated
|                                                 |  |                   |          |                |  |              |          |             
|Current assets                                   |  | $                 | 241.4    |                |  | $            | 386.7    |              |  | $ | (39.6     | ) |  | $ | 588.5    |  
|Discontinued operations                          |  |                   | 809.6    |                |  |              | 12,692.6 |              |  |   | (534.1    | ) |  |   | 12,968.1 |  
|Investments in and loans to affiliates, net      |  |                   | 23,001.2 |                |  |              | 16.1     |              |  |   | (23,004.3 | ) |  |   | 13.0     |  
|Fixed and noncurrent assets                      |  |                   | 67.5     |                |  |              | 2,213.5  |              |  |   | (1.2      | ) |  |   | 2,279.8  |  
|                                                 |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Total assets                                     |  | $                 | 24,119.7 |                |  | $            | 15,308.9 |              |  | $ | (23,579.2 | ) |  | $ | 15,849.4 |  
|                                                 |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Current liabilities                              |  | $                 | 12.2     |                |  | $            | 5,399.9  |              |  | $ | (2,271.9  | ) |  | $ | 3,140.2  |  
|Discontinued operations                          |  |                   | 13,331.4 |                |  |              | 14,764.0 |              |  |   | (10,139.2 | ) |  |   | 17,956.2 |  
|Noncurrent liabilities                           |  |                   | 12,838.0 |                |  |              | 356.3    |              |  |   | (12,835.6 | ) |  |   | 358.7    |  
|Liabilities subject to compromise                |  |                   | 4,310.4  |                |  |              |         |              |  |   | (16.3     | ) |  |   | 4,294.1  |  
|Shareholders (deficiency)                       |  |                   | (6,372.3 | )              |  |              | (5,211.3 | )            |  |   | 1,683.8   |   |  |   | (9,899.8 | )
|                                                 |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Total liabilities and shareholders (deficiency) |  | $                 | 24,119.7 |                |  | $            | 15,308.9 |              |  | $ | (23,579.2 | ) |  | $ | 15,849.4 |  
|                                                 |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  

|                                                 |  |                   |           |                |  |              |          |              |  |   |          |   |  |   |          |  
|------------------------------------------------ |  | ----------------- | --------- | -------------- |  | ------------ | -------- | ------------ |  | - | -------- | - |  | - | -------- | -
|                                                 |  | December 31, 2001
|                                                 |  |                  
|                                                 |  |                   |           |                |  | Entities Not |          |              |  |   |          |   |  |  
|                                                 |  | Entities in       |           | in             |  |              |          |              |  |   |          |  
|Balance Sheets                                   |  | Reorganization    |           | Reorganization |  | Adjustments  |          | Consolidated
|                                                 |  |                   |           |                |  |              |          |             
|Current assets                                   |  | $                 | 134.3     |                |  | $            | 833.3    |              |  | $ | (477.2   | ) |  | $ | 490.4    |  
|Discontinued operations                          |  |                   | 414.0     |                |  |              | 12,713.6 |              |  |   | 203.4    |   |  |   | 13,331.0 |  
|Investments and loans to affiliates, net         |  |                   | 5,962.3   |                |  |              | 56.9     |              |  |   | (5,751.4 | ) |  |   | 267.8    |  
|Fixed and noncurrent assets                      |  |                   | 78.3      |                |  |              | 2,655.5  |              |  |   | 35.9     |   |  |   | 2,769.7  |  
|                                                 |  |                   |           |                |  |              |          |              |  |   |          |   |  |   |          |  
|Total assets                                     |  | $                 | 6,588.9   |                |  | $            | 16,259.3 |              |  | $ | (5,989.3 | ) |  | $ | 16,858.9 |  
|                                                 |  |                   |           |                |  |              |          |              |  |   |          |   |  |   |          |  
|Current liabilities                              |  | $                 | 186.8     |                |  | $            | 4,802.3  |              |  | $ | (1,108.9 | ) |  | $ | 3,880.2  |  
|Discontinued operations                          |  |                   | 9,598.8   |                |  |              | 12,748.7 |              |  |   | (5,921.3 | ) |  |   | 16,426.2 |  
|Noncurrent liabilities                           |  |                   | 10,670.7  |                |  |              | 272.8    |              |  |   | (7,848.6 | ) |  |   | 3,094.9  |  
|Liabilities subject to compromise                |  |                   |          |                |  |              |         |              |  |   |         |   |  |   |         |  
|Shareholders (deficiency)                       |  |                   | (13,867.4 | )              |  |              | (1,564.5 | )            |  |   | 8,889.5  |   |  |   | (6,542.4 | )
|                                                 |  |                   |           |                |  |              |          |              |  |   |          |   |  |   |          |  
|Total liabilities and shareholders (deficiency) |  | $                 | 6,588.9   |                |  | $            | 16,259.3 |              |  | $ | (5,989.3 | ) |  | $ | 16,858.9 |  
|                                                 |  |                   |           |                |  |              |          |              |  |   |          |   |  |   |          |  

F-112



---



##### Table of Contents



NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

24. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

|                                                                         |  |                              |          |                |  |              |        |              |  |   |          |   |  |   |        |  
|------------------------------------------------------------------------ |  | ---------------------------- | -------- | -------------- |  | ------------ | ------ | ------------ |  | - | -------- | - |  | - | ------ | -
|                                                                         |  | Year Ended December 31, 2002
|                                                                         |  |                             
|                                                                         |  |                              |          |                |  | Entities Not |        |              |  |   |          |   |  |  
|                                                                         |  | Entities in                  |          | in             |  |              |        |              |  |   |          |  
|Statements of Cash Flows                                                 |  | Reorganization               |          | Reorganization |  | Adjustments  |        | Consolidated
|                                                                         |  |                              |          |                |  |              |        |             
|Net cash provided by (used in) operating activities                      |  | $                            | (4,517.3 | )              |  | $            | 285.4  |              |  | $ | 4,387.0  |   |  | $ | 155.1  |  
|Net cash provided by (used in) investing activities                      |  |                              | 4,317.8  |                |  |              | (826.1 | )            |  |   | (4,084.0 | ) |  |   | (592.3 | )
|Net cash provided by financing activities                                |  |                              | 230.4    |                |  |              | 733.3  |              |  |   | (302.8   | ) |  |   | 660.9  |  
|Effect of exchange rate changes on cash and cash
equivalents             |  |                              |         |                |  |              | 51.2   |              |  |   |         |   |  |   | 51.2   |  
|                                                                         |  |                              |          |                |  |              |        |              |  |   |          |   |  |   |        |  
|Increase in cash and cash equivalents                                    |  |                              | 30.9     |                |  |              | 243.8  |              |  |   | 0.2      |   |  |   | 274.9  |  
|Cash and cash equivalents at beginning of year 
continuing operations   |  |                              | 127.3    |                |  |              | 101.0  |              |  |   |         |   |  |   | 228.3  |  
|Cash and cash equivalents at beginning of year 
discontinued operations |  |                              | 78.9     |                |  |              | 197.4  |              |  |   |         |   |  |   | 276.3  |  
|Cash and cash equivalents at end of year 
discontinued operations       |  |                              | (56.3    | )              |  |              | (445.7 | )            |  |   |         |   |  |   | (502.0 | )
|                                                                         |  |                              |          |                |  |              |        |              |  |   |          |   |  |   |        |  
|Cash and cash equivalents at end of year 
continuing operations         |  | $                            | 180.8    |                |  | $            | 96.5   |              |  | $ | 0.2      |   |  | $ | 277.5  |  
|                                                                         |  |                              |          |                |  |              |        |              |  |   |          |   |  |   |        |  

|                                                                         |  |                              |           |                |  |              |          |              |  |   |           |   |  |   |          |  
|------------------------------------------------------------------------ |  | ---------------------------- | --------- | -------------- |  | ------------ | -------- | ------------ |  | - | --------- | - |  | - | -------- | -
|                                                                         |  | Year Ended December 31, 2001
|                                                                         |  |                             
|                                                                         |  |                              |           |                |  | Entities Not |          |              |  |   |           |   |  |  
|                                                                         |  | Entities in                  |           | in             |  |              |          |              |  |   |           |  
|Statements of Cash Flows                                                 |  | Reorganization               |           | Reorganization |  | Adjustments  |          | Consolidated
|                                                                         |  |                              |           |                |  |              |          |             
|Net cash provided by (used in) operating activities                      |  | $                            | (24,348.7 | )              |  | $            | 814.1    |              |  | $ | 22,936.8  |   |  | $ | (597.8   | )
|Net cash provided by (used in) investing activities                      |  |                              | 22,332.3  |                |  |              | (2,093.4 | )            |  |   | (22,338.7 | ) |  |   | (2,099.8 | )
|Net cash provided by financing activities                                |  |                              | 1,982.1   |                |  |              | 1,249.8  |              |  |   | (598.0    | ) |  |   | 2,633.9  |  
|Effect of exchange rate changes on cash and cash equivalents             |  |                              |          |                |  |              | (11.1    | )            |  |   |          |   |  |   | (11.1    | )
|                                                                         |  |                              |           |                |  |              |          |              |  |   |           |   |  |   |          |  
|(Decrease) in cash and cash equivalents                                  |  |                              | (34.3     | )              |  |              | (40.6    | )            |  |   | 0.1       |   |  |   | (74.8    | )
|Cash and cash equivalents at beginning of year  continuing operations   |  |                              | 71.8      |                |  |              | 54.7     |              |  |   | (0.1      | ) |  |   | 126.4    |  
|Cash and cash equivalents at beginning of year  discontinued operations |  |                              | 168.7     |                |  |              | 284.3    |              |  |   |          |   |  |   | 453.0    |  
|Cash and cash equivalents at end of year  discontinued operations       |  |                              | (78.9     | )              |  |              | (197.4   | )            |  |   |          |   |  |   | (276.3   | )
|                                                                         |  |                              |           |                |  |              |          |              |  |   |           |   |  |   |          |  
|Cash and cash equivalents at end of year 
continuing operations         |  | $                            | 127.3     |                |  | $            | 101.0    |              |  | $ |          |   |  | $ | 228.3    |  
|                                                                         |  |                              |           |                |  |              |          |              |  |   |           |   |  |   |          |  

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

24. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

|                                                                         |  |                              |           |                |  |              |          |              |  |   |           |   |  |   |           |  
|------------------------------------------------------------------------ |  | ---------------------------- | --------- | -------------- |  | ------------ | -------- | ------------ |  | - | --------- | - |  | - | --------- | -
|                                                                         |  | Year Ended December 31, 2000
|                                                                         |  |                             
|                                                                         |  |                              |           |                |  | Entities Not |          |              |  |   |           |   |  |  
|                                                                         |  | Entities in                  |           | in             |  |              |          |              |  |   |           |  
|Statements of Cash Flows                                                 |  | Reorganization               |           | Reorganization |  | Adjustments  |          | Consolidated
|                                                                         |  |                              |           |                |  |              |          |             
|Net cash provided by (used in) operating activities                      |  | $                            | (5,323.1  | )              |  | $            | 1,049.4  |              |  | $ | 3,983.5   |   |  | $ | (290.2    | )
|Net cash provided by (used in) investing activities                      |  |                              | (12,922.0 | )              |  |              | (7,159.6 | )            |  |   | 6,653.4   |   |  |   | (13,428.2 | )
|Net cash provided by financing activities                                |  |                              | 16,096.1  |                |  |              | 6,269.2  |              |  |   | (10,636.9 | ) |  |   | 11,728.4  |  
|Effect of exchange rate changes on cash and cash
equivalents             |  |                              | (12.2     | )              |  |              | (15.8    | )            |  |   | 0.2       |   |  |   | (27.8     | )
|                                                                         |  |                              |           |                |  |              |          |              |  |   |           |   |  |   |           |  
|Increase (decrease) in cash and cash equivalents                         |  |                              | (2,161.2  | )              |  |              | 143.2    |              |  |   | 0.2       |   |  |   | (2,017.8  | )
|Cash and cash equivalents at beginning of year 
continuing operations   |  |                              | 1,501.4   |                |  |              | 9.1      |              |  |   | (0.3      | ) |  |   | 1,510.2   |  
|Cash and cash equivalents at beginning of year 
discontinued operations |  |                              | 900.3     |                |  |              | 186.7    |              |  |   |          |   |  |   | 1,087.0   |  
|Cash and cash equivalents at end of year 
discontinued operations       |  |                              | (168.7    | )              |  |              | (284.3   | )            |  |   |          |   |  |   | (453.0    | )
|                                                                         |  |                              |           |                |  |              |          |              |  |   |           |   |  |   |           |  
|Cash and cash equivalents at end of year 
continuing operations         |  | $                            | 71.8      |                |  | $            | 54.7     |              |  | $ | (0.1      | ) |  | $ | 126.4     |  
|                                                                         |  |                              |           |                |  |              |          |              |  |   |           |   |  |   |           |  

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

25. Quarterly Financial Information (Unaudited)

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

|                                            |                                     |   |                    |       |          |   |               |       |              |   |        |       |   |   |          |       |   |   |          |        |  
|------------------------------------------- | ----------------------------------- | - | ------------------ | ----- | -------- | - | ------------- | ----- | ------------ | - | ------ | ----- | - | - | -------- | ----- | - | - | -------- | ------ | -
|                                            |                                     |   | (in millions)     
|                                            |                                     |   |                   
|                                            |                                     |   | 2002(1,2)         
|                                            |                                     |   |                   
|                                            |                                     |   | Three Months Ended |       |          |   |              
|                                            |                                     |   |                    |       |          |   |              
|                                            |                                     |   | March 31,          |       | June 30, |   | September 30, |       | December 31, |   | Total 
|                                            |                                     |   |                    |       |          |   |               |       |              |   |       
|Revenues                                    |                                     | $ | 88.6               |       |          | $ | 100.2         |       |              | $ | 109.7  |       |   | $ | 137.4    |       |   | $ | 435.9    |       
|Operating (loss)                            |                                     |   | (61.4              | )     |          |   | (83.8         | )     |              |   | (64.1  | )     |   |   | (856.5   | )     |   |   | (1,065.8 | )     
|(Loss) from continuing operations           |                                     |   | (135.4             | )     |          |   | (147.7        | )     |              |   | (152.9 | )     |   |   | (912.6   | )     |   |   | (1,348.6 | )     
|(Loss) from discontinued operations         |                                     |   | (470.5             | )     |          |   | (408.4        | )     |              |   | (295.9 | )     |   |   | (931.5   | )     |   |   | (2,106.3 | )     
|Net (loss)                                  |                                     |   | (605.9             | )     |          |   | (556.1        | )     |              |   | (448.8 | )     |   |   | (1,844.1 | )     |   |   | (3,454.9 | )     
|Preferred stock dividends                   |                                     |   | (98.4              | )     |          |   | (43.5         | )     |              |   | (1.6   | )     |   |   | (1.6     | )     |   |   | (145.1   | )     
|Net (loss) available to common
shareholders |                                     |   | (704.3             | )     |          |   | (599.6        | )     |              |   | (450.4 | )     |   |   | (1,845.7 | )     |   |   | (3,600.0 | )     
|Basic and diluted net loss per share:       |                                     |   |                    |       |          |   |               |       |              |   |        |       |   |   |          |       |   |   |          |       
|                                            | (Loss) from continuing operations   |   | $                  | (0.85 | )        |   | $             | (0.69 | )            |   | $      | (0.56 | ) |   | $        | (3.30 | ) |   | $        | (5.40  | )
|                                            | (Loss) from discontinued operations |   |                    | (1.70 | )        |   |               | (1.48 | )            |   |        | (1.07 | ) |   |          | (3.37 | ) |   |          | (7.62  | )
|                                            |                                     |   |                    |       |          |   |               |       |              |   |        |       |   |   |          |       |   |   |          |       
|                                            | Net (loss) per common share         |   | $                  | (2.55 | )        |   | $             | (2.17 | )            |   | $      | (1.63 | ) |   | $        | (6.67 | ) |   | $        | (13.02 | )
|                                            |                                     |   |                    |       |          |   |               |       |              |   |        |       |   |   |          |       |   |   |          |       
|Weighted average shares                     |                                     |   | 276.6              |       |          |   | 276.6         |       |              |   | 276.6  |       |   |   | 276.6    |       |   |   | 276.6    |       

|                                            |                                     |   |                    |       |          |   |               |       |              |   |          |       |   |   |           |        |   |   |           |        |  
|------------------------------------------- | ----------------------------------- | - | ------------------ | ----- | -------- | - | ------------- | ----- | ------------ | - | -------- | ----- | - | - | --------- | ------ | - | - | --------- | ------ | -
|                                            |                                     |   | (in millions)     
|                                            |                                     |   |                   
|                                            |                                     |   | 2001(1,3)         
|                                            |                                     |   |                   
|                                            |                                     |   | Three Months Ended |       |          |   |              
|                                            |                                     |   |                    |       |          |   |              
|                                            |                                     |   | March 31,          |       | June 30, |   | September 30, |       | December 31, |   | Total   
|                                            |                                     |   |                    |       |          |   |               |       |              |   |         
|Revenues                                    |                                     | $ | 93.1               |       |          | $ | 92.8          |       |              | $ | 79.4     |       |   | $ | 126.3     |        |   | $ | 391.6     |       
|Operating (loss)                            |                                     |   | (124.1             | )     |          |   | (137.6        | )     |              |   | (139.8   | )     |   |   | (1,109.9  | )      |   |   | (1,511.4  | )     
|(Loss) from continuing operations           |                                     |   | (205.8             | )     |          |   | (227.4        | )     |              |   | (220.4   | )     |   |   | (1,714.8  | )      |   |   | (2,368.4  | )     
|(Loss) from discontinued operations         |                                     |   | (837.1             | )     |          |   | (801.8        | )     |              |   | (811.1   | )     |   |   | (9,422.9  | )      |   |   | (11,872.9 | )     
|Net (loss)                                  |                                     |   | (1,042.9           | )     |          |   | (1,029.2      | )     |              |   | (1,031.5 | )     |   |   | (11,137.7 | )      |   |   | (14,241.3 | )     
|Preferred stock dividends                   |                                     |   | (65.1              | )     |          |   | (75.8         | )     |              |   | (88.7    | )     |   |   | (96.1     | )      |   |   | (325.7    | )     
|Net (loss) available to common
shareholders |                                     |   | (1,108.0           | )     |          |   | (1,105.0      | )     |              |   | (1,120.2 | )     |   |   | (11,233.8 | )      |   |   | (14,567.0 | )     
|Basic and diluted net loss per share:       |                                     |   |                    |       |          |   |               |       |              |   |          |       |   |   |           |        |   |   |           |       
|                                            | (Loss) from continuing operations   |   | $                  | (0.99 | )        |   | $             | (1.10 | )            |   | $        | (1.11 | ) |   | $         | (6.56  | ) |   | $         | (9.76  | )
|                                            | (Loss) from discontinued operations |   |                    | (3.05 | )        |   |               | (2.90 | )            |   |          | (2.93 | ) |   |           | (34.14 | ) |   |           | (43.02 | )
|                                            |                                     |   |                    |       |          |   |               |       |              |   |          |       |   |   |           |        |   |   |           |       
|                                            | Net (loss) per common share         |   | $                  | (4.04 | )        |   | $             | (4.00 | )            |   | $        | (4.04 | ) |   | $         | (40.70 | ) |   | $         | (52.78 | )
|                                            |                                     |   |                    |       |          |   |               |       |              |   |          |       |   |   |           |        |   |   |           |       
|Weighted average shares                     |                                     |   | 274.5              |       |          |   | 276.3         |       |              |   | 276.5    |       |   |   | 276.6     |        |   |   | 276.0     |       



|(1) |  | As more fully described in Notes 1, 2 and 3 to the Consolidated Financial
Statements, on May 8, 2002, Old NTL filed the Plan which became effective on
January 10, 2003. Under the terms of the Plan, the operations of New NTL have
been accounted for as a discontinued operation of the Company, beginning with
the quarter ended September 30, 2002 and, accordingly, its operating results
have been excluded from the Companys results from continuing operations for
the periods presented. In addition, the operating results for NTL Australia
and Rediffusion also qualified for discontinued operations treatment (because
both units were sold during the current year) for all periods presented.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | During the fourth quarter of 2002, the Company recorded an asset
impairment charge of $838.8 million, which was associated with a goodwill
impairment provision at Cablecom. The fourth quarter loss in 2002 from
discontinued operations also included an asset impairment charge of $418.5
million and a restructuring charge of $99.2 million relating to the operations
of New NTL.                                                                                                                                                                                                                                                                                                                        

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|(3) |  | During the fourth quarter of 2001, the Company recorded an asset
impairment charge of $912.1 million, which was associated with a goodwill
impairment provision at Cablecom and the write-down of various long-term assets
at Premium TV. The fourth quarter loss in 2001 from discontinued operations
also included an asset impairment charge of $8,161.6 million and a
restructuring charge of $202.8 million relating to the operations of New NTL.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant
Condensed Balance Sheets
(dollars in millions)

|                                                                                         |                                        |   |              |           |      |   |          |           |  
|---------------------------------------------------------------------------------------- | -------------------------------------- | - | ------------ | --------- | ---- | - | -------- | --------- | -
|                                                                                         |                                        |   | December 31,
|                                                                                         |                                        |   |             
|                                                                                         |                                        |   | 2002         |           | 2001
|                                                                                         |                                        |   |              |           |     
|Assets                                                                                   |                                        |   |              |           |      |   |          |          
|Current assets:                                                                          |                                        |   |              |           |      |   |          |          
|                                                                                         | Cash and cash equivalents              |   | $            | 70.4      |      |   | $        | 124.3     |  
|                                                                                         | Marketable securities                  |   |              | 4.3       |      |   |          |          |  
|                                                                                         | Other                                  |   |              | 0.4       |      |   |          | 0.5       |  
|                                                                                         |                                        |   |              |           |      |   |          |           |  
|Total current assets                                                                     |                                        |   | 75.1         |           |      |   | 124.8    |          
|Deferred financing costs, net of accumulated
amortization of $0.7 (2002) and $0.3 (2001) |                                        |   | 3.5          |           |      |   | 3.9      |          
|Note receivable from CoreComm Limited, net of allowance of $17.6 (2002)
and $7.0 (2001)  |                                        |   |             |           |      |   | 9.2      |          
|Other assets                                                                             |                                        |   |             |           |      |   | 0.5      |          
|                                                                                         |                                        |   |              |           |      |   |          |          
|Total assets                                                                             |                                        | $ | 78.6         |           |      | $ | 138.4    |          
|                                                                                         |                                        |   |              |           |      |   |          |          
|Liabilities and shareholders (deficiency)                                               |                                        |   |              |           |      |   |          |          
|Liabilities not subject to compromise                                                    |                                        |   |              |           |      |   |          |          
|Current liabilities                                                                      |                                        | $ | 2.7          |           |      | $ | 148.1    |          
|Liabilities subject to compromise                                                        |                                        |   | 3,066.7      |           |      |   |         |          
|Investments in and loans to discontinued operations                                      |                                        |   | 4,986.1      |           |      |   | 3,095.2  |          
|Investments in and loans to affiliates, net                                              |                                        |   | 1,922.9      |           |      |   | 663.8    |          
|Long-term debt                                                                           |                                        |   |             |           |      |   |         |          
|Redeemable preferred stock                                                               |                                        |   |             |           |      |   | 2,773.7  |          
|Shareholders (deficiency):                                                              |                                        |   |              |           |      |   |          |          
|                                                                                         | Common stock                           |   |              | 2.8       |      |   |          | 2.8       |  
|                                                                                         | Additional paid-in capital             |   |              | 13,574.9  |      |   |          | 13,720.0  |  
|                                                                                         | Accumulated other comprehensive (loss) |   |              | (830.2    | )    |   |          | (1,072.8  | )
|                                                                                         | (Deficit)                              |   |              | (22,647.3 | )    |   |          | (19,192.4 | )
|                                                                                         |                                        |   |              |           |      |   |          |          
|                                                                                         |                                        |   | (9,899.8     | )         |      |   | (6,542.4 | )        
|                                                                                         |                                        |   |              |           |      |   |          |          
|Total liabilities and shareholders (deficiency)                                         |                                        | $ | 78.6         |           |      | $ | 138.4    |          
|                                                                                         |                                        |   |              |           |      |   |          |          

See accompanying notes.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant (continued)
Condensed Statements of Operations
(dollars in millions)

|                                                                                                                            |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |          |  
|--------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | - | ----------------------- | -------- | ---- | - | --------- | --------- | - | - | -------- | -------- | -
|                                                                                                                            |                                                                                                                |   | Year Ended December 31,
|                                                                                                                            |                                                                                                                |   |                        
|                                                                                                                            |                                                                                                                |   | 2002                    |          | 2001 |   | 2000     
|                                                                                                                            |                                                                                                                |   |                         |          |      |   |          
|Cost and expenses                                                                                                           |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|Corporate expenses                                                                                                          |                                                                                                                | $ | 11.1                    |          |      | $ | 29.4      |           |   | $ | 9.4      |         
|Amortization                                                                                                                |                                                                                                                |   | 0.4                     |          |      |   | 0.3       |           |   |   |         |         
|                                                                                                                            |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|Operating (loss)                                                                                                            |                                                                                                                |   | (11.5                   | )        |      |   | (29.7     | )         |   |   | (9.4     | )       
|Other income (expense)                                                                                                      |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|Interest income and other, net                                                                                              |                                                                                                                |   | (7.8                    | )        |      |   | 4.7       |           |   |   | 10.9     |         
|Interest expense (contractual interest of $25.3 (2002))                                                                     |                                                                                                                |   | (3.8                    | )        |      |   | (5.3      | )         |   |   |         |         
|Foreign currency transaction gains (losses)                                                                                 |                                                                                                                |   | 0.2                     |          |      |   | (0.4      | )         |   |   | 1.9      |         
|                                                                                                                            |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|(Loss) income before recapitalization items, income taxes,
equity in net (loss) of subsidiaries and discontinued operations |                                                                                                                |   | (22.9                   | )        |      |   | (30.7     | )         |   |   | 3.4      |         
|Recapitalization items, net                                                                                                 |                                                                                                                |   | 6.6                     |          |      |   |          |           |   |   |         |         
|                                                                                                                            |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|(Loss) income before income taxes, equity in net (loss) of
subsidiaries and discontinued operations                         |                                                                                                                |   | (16.3                   | )        |      |   | (30.7     | )         |   |   | 3.4      |         
|Income tax (expense) benefit                                                                                                |                                                                                                                |   | (1.3                    | )        |      |   |          |           |   |   | 0.3      |         
|                                                                                                                            |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|(Loss) income before equity in net (loss) of subsidiaries                                                                   |                                                                                                                |   | (17.6                   | )        |      |   | (30.7     | )         |   |   | 3.7      |         
|Equity in net (loss) of subsidiaries                                                                                        |                                                                                                                |   | (1,331.0                | )        |      |   | (2,337.7  | )         |   |   | (559.9   | )       
|                                                                                                                            |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|(Loss) from continuing operations                                                                                           |                                                                                                                |   | (1,348.6                | )        |      |   | (2,368.4  | )         |   |   | (556.2   | )       
|Discontinued operations:                                                                                                    |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|                                                                                                                            | (Loss) from discontinued operations, net of income tax
benefit of $26.3 (2002), $114.1 (2001) and $88.1 (2000) |   |                         | (2,100.6 | )    |   |           | (11,872.9 | ) |   |          | (2,407.5 | )
|                                                                                                                            | Net (loss) on sales of discontinued operations, net of income
tax expense of $4.6 (2002)                       |   |                         | (5.7     | )    |   |           |          |   |   |          |         |  
|                                                                                                                            |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|(Loss) from discontinued operations                                                                                         |                                                                                                                |   | (2,106.3                | )        |      |   | (11,872.9 | )         |   |   | (2,407.5 | )       
|                                                                                                                            |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|Net (loss)                                                                                                                  |                                                                                                                |   | (3,454.9                | )        |      |   | (14,241.3 | )         |   |   | (2,963.7 | )       
|Preferred stock dividends (contractual dividends of $370.6 (2002))                                                          |                                                                                                                |   | (145.1                  | )        |      |   | (325.7    | )         |   |   | (194.0   | )       
|                                                                                                                            |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|Net (loss) available to common shareholders                                                                                 |                                                                                                                | $ | (3,600.0                | )        |      | $ | (14,567.0 | )         |   | $ | (3,157.7 | )       
|                                                                                                                            |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         

See accompanying notes.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant (continued)
Condensed Statements of Cash Flows
(dollars in millions)

|                                                                 |  |                         |          |      |  |      |           |   |  |   |          |  
|---------------------------------------------------------------- |  | ----------------------- | -------- | ---- |  | ---- | --------- | - |  | - | -------- | -
|                                                                 |  | Year Ended December 31,
|                                                                 |  |                        
|                                                                 |  | 2002                    |          | 2001 |  | 2000
|                                                                 |  |                         |          |      |  |     
|Net cash (used in) operating activities                          |  | $                       | (2,109.0 | )    |  | $    | (11,873.3 | ) |  | $ | (2,407.3 | )
|Investing activities                                             |  |                         |          |      |  |      |           |   |  |   |          |  
|Purchase of marketable securities                                |  |                         | (29.4    | )    |  |      |          |   |  |   | (96.9    | )
|Proceeds from sales of marketable securities                     |  |                         | 25.2     |      |  |      | 60.3      |   |  |   | 202.6    |  
|Investments in and loans to affiliates                           |  |                         | (91.2    | )    |  |      | (200.6    | ) |  |   | 2,466.8  |  
|(Increase) decrease in other assets                              |  |                         | (1.8     | )    |  |      | 0.1       |   |  |   |         |  
|Due from CoreComm Limited                                        |  |                         |         |      |  |      | (15.0     | ) |  |   |         |  
|Distribution to NTL (Delaware), Inc.                             |  |                         |         |      |  |      |          |   |  |   | (4.3     | )
|                                                                 |  |                         |          |      |  |      |           |   |  |   |          |  
|Net cash (used in) provided by continuing operations             |  |                         | (97.2    | )    |  |      | (155.2    | ) |  |   | 2,568.2  |  
|Net cash provided by (used in) discontinued operations           |  |                         | 2,152.3  |      |  |      | 11,974.7  |   |  |   | (4,288.1 | )
|                                                                 |  |                         |          |      |  |      |           |   |  |   |          |  
|Net cash provided by (used in) investing activities              |  |                         | 2,055.1  |      |  |      | 11,819.5  |   |  |   | (1,719.9 | )
|Financing activities                                             |  |                         |          |      |  |      |           |   |  |   |          |  
|Proceeds from borrowings, net of financing costs                 |  |                         |         |      |  |      | 95.9      |   |  |   |         |  
|Proceeds from issuance of common stock                           |  |                         |         |      |  |      | 13.0      |   |  |   | 2,327.6  |  
|Proceeds from exercise of stock options and warrants             |  |                         |         |      |  |      |          |   |  |   | 6.8      |  
|Proceeds from issuance of preferred stock                        |  |                         |         |      |  |      |          |   |  |   | 1,862.0  |  
|                                                                 |  |                         |          |      |  |      |           |   |  |   |          |  
|Net cash provided by continuing operations                       |  |                         |         |      |  |      | 108.9     |   |  |   | 4,196.4  |  
|Net cash provided by discontinued operations                     |  |                         |         |      |  |      |          |   |  |   |         |  
|                                                                 |  |                         |          |      |  |      |           |   |  |   |          |  
|Net cash provided by financing activities                        |  |                         |         |      |  |      | 108.9     |   |  |   | 4,196.4  |  
|(Decrease) increase in cash and cash equivalents                 |  |                         | (53.9    | )    |  |      | 55.1      |   |  |   | 69.2     |  
|Cash and cash equivalents at beginning of year                   |  |                         | 124.3    |      |  |      | 69.2      |   |  |   |         |  
|                                                                 |  |                         |          |      |  |      |           |   |  |   |          |  
|Cash and cash equivalents at end of year                         |  | $                       | 70.4     |      |  | $    | 124.3     |   |  | $ | 69.2     |  
|                                                                 |  |                         |          |      |  |      |           |   |  |   |          |  
|Supplemental disclosure of cash flow information                 |  |                         |          |      |  |      |           |   |  |   |          |  
|Cash paid for interest                                           |  | $                       | 2.5      |      |  | $    | 3.1       |   |  | $ |         |  
|Supplemental schedule of non-cash financing activities           |  |                         |          |      |  |      |           |   |  |   |          |  
|Accretion of dividends and discount on preferred stock           |  | $                       | 145.1    |      |  | $    | 220.8     |   |  | $ | 78.1     |  
|Conversion of notes, net of unamortized deferred financing
Costs |  |                         |         |      |  |      | 128.3     |   |  |   |         |  
|Common stock issued for acquisitions                             |  |                         |         |      |  |      | 4.3       |   |  |   |         |  
|Redeemable preferred stock issued for investment in affiliates   |  |                         |         |      |  |      | 518.0     |   |  |   |         |  
|Conversion of series preferred stock                             |  |                         |         |      |  |      |          |   |  |   | 7.6      |  

See accompanying notes.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant (continued)
Notes to Condensed Financial Statements

1. Corporate Restructuring

The accompanying financial statements do not reflect any adjustments in
connection with the emergence of NTL Europe, Inc. (NTL Europe or the
Company) from Chapter 11 reorganization.

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

Pursuant to the Plan, Old NTL and its subsidiaries were split into two separate
companies. The entity formerly known as NTL Incorporated was renamed NTL
Europe, Inc. and became the holding company for Old NTLs European and certain
other assets. The entity formerly known as NTL Communications Corp. was
renamed NTL Incorporated and became the holding company for Old NTLs
principal UK and Ireland assets (New NTL). Pursuant to the Plan, all of the
outstanding securities of Old NTL and certain of its subsidiaries were
canceled, and the Company issued shares of its common stock, par value $0.01
per share (the Common Stock), and 10% Fixed Coupon Redeemable Preferred
Stock, Series A, par value $0.01 per share (with a $50.00 liquidation
preference per share) (the Preferred Stock) and New NTL issued shares of its
common stock and Series A warrants to various former creditors and stockholders
of Old NTL and its subsidiaries. The precise mix of new securities received by
holders of each particular type of security of Old NTL and its subsidiaries was
set forth in the Plan. New NTL is an independent entity which is no longer
owned by or affiliated with the Company.

Historical Structure of the Company

On May 18, 2000, the entity formerly known as NTL Incorporated (currently
named NTL (Delaware), Inc. (NTL Delaware)) completed a corporate
restructuring to create a holding company structure. The formation of the
holding company was part of NTL Delawares acquisition of certain assets of
Cable & Wireless Communications plc (CWC). The holding company restructuring
was accomplished through a merger so that all the stockholders of NTL Delaware
at the effective time of the merger became stockholders of the new holding
company, and NTL Delaware became a subsidiary of the new holding company. The
new holding company was called NTL Incorporated (which is now known as NTL
Europe, Inc.) and the holding companys subsidiary simultaneously changed its
name to NTL (Delaware), Inc.

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

2. Basis of Presentation

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

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant (continued)
Notes to Condensed Financial Statements

3. Liabilities Subject to Compromise

Liabilities subject to compromise consist of the following:

|                            |                   |                                                    |                                       |       |         |               |         | 
|--------------------------- | ----------------- | -------------------------------------------------- | ------------------------------------- | ----- | ------- | ------------- | ------- | 
|                            |                   |                                                    |                                       |       |         | December 31, 
|                            |                   |                                                    |                                       |       |         | 2002         
|                            |                   |                                                    |                                       |       |         |              
|                            |                   |                                                    |                                       |       |         | (in millions)
|Accounts payable            |                   | $                                                  | 0.3                                   |      
|Interest payable            |                   |                                                    | 3.2                                   |      
|Dividends payable           |                   |                                                    | 109.9                                 |      
|Redeemable preferred stock: |                   |                                                    |                                       |      
|                            |                   | Cumulative Convertible Preferred Stock             |                                       |       | 2,077.3 |              
|                            |                   | Variable Coupon Redeemable Preferred Stock         |                                       |       | 484.2   |              
|                            |                   | 6.5% Redeemable Preferred Stock                    |                                       |       | 98.4    |              
|                            |                   | 13% Senior Redeemable Exchangeable Preferred Stock |                                       |       | 193.4   |              
|Long term debt:             |                   |                                                    |                                       |      
|                            | NTL Europe, Inc.: |                                                    |                                       |       |        
|                            |                   |                                                    | 5 3/4% Convertible Subordinated Notes |       |         | 100.0         |        
|                            |                   |                                                    |                                       |      
|                            |                   |                                                    |                                       | Total |         | $             | 3,066.7 | 
|                            |                   |                                                    |                                       |      

Upon emergence from Chapter 11 reorganization and in accordance with the Plan,
all of the outstanding preferred stock of Old NTL and long-term debt of Old NTL
were canceled.

4. Redeemable Preferred Stock

All of Old NTLs redeemable preferred stock was canceled on the Effective Date
pursuant to the Plan.

Dividends on the Cumulative Convertible Preferred Stock, Series A (Convertible
Preferred Stock) were payable quarterly in additional shares of Convertible
Preferred Stock, at the following quarterly dividend rates: (i) from September
12, 2001 through March 26, 2002, $13.44 per share, (ii) from March 27, 2002
through March 26, 2003, $21.23 per share and (iii) from March 27, 2003 through
March 26, 2004, $26.61 per share. In March 2002, Old NTL elected to delay the
conversion of the Convertible Preferred Stock until at least March 27, 2003.
The Convertible Preferred Stock had a stated value and liquidation preference
of $1,075.17 per share and was mandatorily redeemable for cash by Old NTL on
March 27, 2009. Holders of Convertible Preferred Stock other than any
commercial bank or their affiliates had the option to elect, subject to some
conditions, to exchange their Convertible Preferred Stock for up to a 50%
interest in an entity holding Old NTLs Swiss operations.

Dividends on the Variable Coupon Redeemable Preferred Stock, Series A
(Variable Coupon Redeemable Preferred Stock) were payable quarterly at Old
NTLs option in cash or additional shares of Variable Coupon Redeemable
Preferred Stock, at a quarterly rate based on a quotient of (x) the sum of (1)
the EURIBOR Rate in effect on the first day of every dividend period plus (2)
2.5% over (y) four, per share. The Variable Coupon Redeemable Preferred Stock
had a stated value and liquidation preference of $10,000 per share and was
mandatorily redeemable for cash by Old NTL on May 18, 2002. Old NTLs 27%
interest in Noos was pledged to France Telecom to secure the mandatory
redemption obligation under its Variable Coupon Redeemable Preferred Stock.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant (continued)
Notes to Condensed Financial Statements

4. Redeemable Preferred Stock (continued)

Dividends on the 6.5% Fixed Coupon Redeemable Preferred Stock, Series A (6.5%
Redeemable Preferred Stock) were cumulative and were payable at a rate of 6.5%
per annum in cash upon redemption. The 6.5% Redeemable Preferred Stock had a
stated value and liquidation preference of $10,000 per share and was
mandatorily redeemable for cash by Old NTL on May 18, 2007.

Dividends on the 13% Senior Redeemable Exchangeable Preferred Stock (the
Redeemable Preferred Stock) accrued at 13% per annum ($130 per share) and
were payable quarterly in arrears. Dividends accruing on or prior to February
15, 2004 may, at the option of Old NTL, be paid in cash, by the issuance of
additional Redeemable Preferred Stock or in any combination of the foregoing.
The Redeemable Preferred Stock was redeemable, at Old NTLs option, in whole or
in part, at any time on or after February 15, 2002 at a redemption price of
106.5% of the liquidation preference of $1,000 per share that declined annually
to 100% in 2005, in each case together with accrued and unpaid dividends to the
redemption date. The Redeemable Preferred Stock was subject to mandatory
redemption on February 15, 2009.

5. Note Payable to NTL Incorporated

On September 28, 2001, NTL Communications Corp. loaned Old NTL $150.0 million
in cash and received 15.0% Promissory Notes due September 30, 2004. Interest
was payable monthly in cash at a rate of 15.0% per annum beginning on October
31, 2001. Upon emergence from Chapter 11 reorganization and in accordance with
the Plan, these notes were canceled.

6. Other

No cash dividends were paid to Old NTL by subsidiaries for the years ended
December 31, 2002 and 2001 and during the period from May 18, 2000 to December
31, 2000.

Old NTL was a joint obligor for the
NTL Delaware 5-3/4% Convertible
Subordinated Notes due December 15, 2009 and for the NTL Communications Corp.
7% Convertible Subordinated Notes due December 15, 2008. Old NTL was a
co-obligor on a subordinated basis for the NTL Communications Corp. 6-3/4%
Convertible Senior Notes due May 15, 2008.

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NTL Europe, Inc. (formerly NTL Incorporated) (Debtor-in-Possession)
Schedule II  Valuation and Qualifying Accounts

|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |       |      |  |   |      | 
|---------------------------- | ------------------------------- | ------ | ---------- | -------- | --------- | -------- | --------- | -------- | ------------ | --------- | ------- | - |  |  | - | ----- | ---- |  | - | ---- | 
|Col. A                       |                                 | Col. B |            | Col. C   |           | Col. D   |           | Col. E  
|                             |                                 |        |            |          |           |          |           |         
|                             |                                 |        |            |          |           |          | Additions |          |              |           |         |   |  |  |  
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |  
|                             |                                 |        |            |          |           |          |           |          |              |           | (2)     |   |  |  |   |       |      |  |  
|                             |                                 |        |            |          |           |          | (1)       |          | Charged      |           |         |   |  |  |   |       |     
|                             |                                 |        | Balance at |          | Charged   |          | to        |          |              |           |         |   |  |  |  
|                             |                                 |        | Beginning  |          | to        |          | Other     |          | (Deductions) |           | Balance
|                             |                                 |        | of         |          | Costs and |          | Accounts  |          | /Additions   |           | at End 
|Description                  |                                 | Period |            | Expenses |           | Describe |           | Describe |              | of Period
|                             |                                 |        |            |          |           |          |           |          |              |          
|Year ended December 31, 2002 |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |       |      |  |   |     
|                             | Allowance for doubtful accounts |        | $          | 6.6      |           |          | $         | 7.2      |              |           | $       |  |  |  | $ | (4.4  | )(a) |  | $ | 9.4  | 
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |       |      |  |   |     
|                             | Allowance for loans receivable  |        | $          | 37.2     |           |          | $         | 21.0     |              |           | $       |  |  |  | $ | (40.6 | )(b) |  | $ | 17.6 | 
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |       |      |  |   |     
|Year ended December 31, 2001 |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |       |      |  |   |     
|                             | Allowance for doubtful accounts |        | $          | 6.2      |           |          | $         | 2.5      |              |           | $       |  |  |  | $ | (2.1  | )(c) |  | $ | 6.6  | 
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |       |      |  |   |     
|                             | Allowance for loans receivable  |        | $          |         |           |          | $         | 37.2     |              |           | $       |  |  |  | $ |      |      |  | $ | 37.2 | 
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |       |      |  |   |     
|Year ended December 31, 2000 |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |       |      |  |   |     
|                             | Allowance for doubtful accounts |        | $          | 0.7      |           |          | $         | 0.4      |              |           | $       |  |  |  | $ | 5.1   | (d)  |  | $ | 6.2  | 
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |       |      |  |   |     



|(a) |  | Uncollectible accounts written-off, net of recoveries of $5.9 million,
offset by $1.5 million foreign currency exchange translation adjustments.                                                                                             
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Write off of loan receivable from Football League Joint Venture.                                                                                                                                                                             
|   
|(c) |  | Uncollectible accounts written-off, net of recoveries of $2.0 million and
$0.1 million foreign currency translation adjustments.                                                                                                             
|   
|(d) |  | Recoveries, net of uncollectible accounts written-off of $1.2 million
plus $0.2 million foreign currency exchange translation adjustments and
$3.7 million allowance for doubtful accounts as of acquisition dates of
purchased subsidiaries.

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

Consolidated Financial Statements and Financial Statement Schedules

[remainder of page intentionally left blank]

F-124



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REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholder
NTL (Delaware), Inc.

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

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

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

As discussed in Note 5, the Company changed its method of accounting for
goodwill and other intangibles effective January 1, 2002.

/s/ ERNST & YOUNG LLP

New York, New York
May 28, 2003

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

|                                                                                  |                                                                                                  |   |              |          |      |   |          |          | 
|--------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | - | ------------ | -------- | ---- | - | -------- | -------- | 
|                                                                                  |                                                                                                  |   | December 31,
|                                                                                  |                                                                                                  |   |             
|                                                                                  |                                                                                                  |   | 2002         |          | 2001
|                                                                                  |                                                                                                  |   |              |          |     
|Assets                                                                            |                                                                                                  |   |              |          |      |   |          |         
|Current assets:                                                                   |                                                                                                  |   |              |          |      |   |          |         
|                                                                                  | Cash and cash equivalents                                                                        |   | $            | 204.9    |      |   | $        | 91.0     | 
|                                                                                  | Marketable securities                                                                            |   |              | 13.1     |      |   |          |         | 
|                                                                                  | Accounts receivable  trade, less allowance for doubtful
accounts of $9.4 (2002) and $6.6 (2001) |   |              | 240.7    |      |   |          | 192.1    | 
|                                                                                  | Affiliate Receivable                                                                             |   |              | 35.1     |      |   |          | 5.5      | 
|                                                                                  | Other                                                                                            |   |              | 48.7     |      |   |          | 66.7     | 
|                                                                                  | Discontinued operations                                                                          |   |              | 12,974.0 |      |   |          | 13,492.6 | 
|                                                                                  |                                                                                                  |   |              |          |      |   |          |         
|Total current assets                                                              |                                                                                                  |   | 13,516.5     |          |      |   | 13,847.9 |         
|Fixed assets, net                                                                 |                                                                                                  |   | 1,681.9      |          |      |   | 1,494.6  |         
|Goodwill                                                                          |                                                                                                  |   | 220.1        |          |      |   | 959.8    |         
|Customer lists, net of accumulated amortization of $171.4 (2002)
and $91.1 (2001) |                                                                                                  |   | 62.8         |          |      |   | 104.1    |         
|Investments in and loans to affiliates, net                                       |                                                                                                  |   | 7.8          |          |      |   | 216.1    |         
|Deferred tax asset                                                                |                                                                                                  |   | 200.9        |          |      |   | 20.4     |         
|Other assets, net of accumulated amortization of
$61.7 (2002) and $24.7 (2001)    |                                                                                                  |   | 117.3        |          |      |   | 175.8    |         
|                                                                                  |                                                                                                  |   |              |          |      |   |          |         
|Total assets                                                                      |                                                                                                  | $ | 15,807.3     |          |      | $ | 16,818.7 |         
|                                                                                  |                                                                                                  |   |              |          |      |   |          |         

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##### Table of Contents



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

|                                                 |                                                                                                        |   |              |           |      |   |          |           |  
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------ | - | ------------ | --------- | ---- | - | -------- | --------- | -
|                                                 |                                                                                                        |   | December 31,
|                                                 |                                                                                                        |   |             
|                                                 |                                                                                                        |   | 2002         |           | 2001
|                                                 |                                                                                                        |   |              |           |     
|Liabilities and shareholders (deficiency)       |                                                                                                        |   |              |           |      |   |          |          
|Liabilities not subject to compromise            |                                                                                                        |   |              |           |      |   |          |          
|Current liabilities:                             |                                                                                                        |   |              |           |      |   |          |          
|                                                 | Accounts payable                                                                                       |   | $            | 48.3      |      |   | $        | 36.3      |  
|                                                 | Accrued expenses and other                                                                             |   |              | 87.4      |      |   |          | 111.2     |  
|                                                 | Interest payable                                                                                       |   |              | 43.5      |      |   |          | 48.4      |  
|                                                 | Deferred revenue                                                                                       |   |              | 235.6     |      |   |          | 173.2     |  
|                                                 | Affiliate payable                                                                                      |   |              | 7.8       |      |   |          | 34.9      |  
|                                                 | Current portion of long-term debt                                                                      |   |              | 2,719.3   |      |   |          | 3,360.2   |  
|                                                 | Discontinued operations (including liabilities subject to
compromise of $10,157.8)                     |   |              | 17,973.2  |      |   |          | 16,430.6  |  
|                                                 |                                                                                                        |   |              |           |      |   |          |          
|Total current liabilities                        |                                                                                                        |   | 21,115.1     |           |      |   | 20,194.8 |          
|Long-term debt                                   |                                                                                                        |   |             |           |      |   |         |          
|Other                                            |                                                                                                        |   | 164.8        |           |      |   | 123.1    |          
|Deferred income taxes                            |                                                                                                        |   | 231.6        |           |      |   | 164.6    |          
|Commitments and contingent liabilities           |                                                                                                        |   |              |           |      |   |          |          
|Liabilities subject to compromise                |                                                                                                        |   | 1,243.7      |           |      |   |         |          
|Shareholders (deficiency):                      |                                                                                                        |   |              |           |      |   |          |          
|                                                 | Common stock  $.01 par value; authorized 100 shares; issued and outstanding
11 shares (2002 and 2001) |   |              |          |      |   |          |          |  
|                                                 | Additional paid-in capital                                                                             |   |              | 16,193.8  |      |   |          | 16,070.1  |  
|                                                 | Accumulated other comprehensive (loss)                                                                 |   |              | (821.9    | )    |   |          | (1,072.7  | )
|                                                 | (Deficit)                                                                                              |   |              | (22,319.8 | )    |   |          | (18,661.2 | )
|                                                 |                                                                                                        |   |              |           |      |   |          |          
|                                                 |                                                                                                        |   | (6,947.9     | )         |      |   | (3,663.8 | )        
|                                                 |                                                                                                        |   |              |           |      |   |          |          
|Total liabilities and shareholders (deficiency) |                                                                                                        | $ | 15,807.3     |           |      | $ | 16,818.7 |          
|                                                 |                                                                                                        |   |              |           |      |   |          |          

See accompanying notes.

F-127



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Consolidated Statements of Operations
(dollars in millions, except per share amounts)

|                                                                               |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |          |  
|------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------- | - | ----------------------- | -------- | ---- | - | --------- | --------- | - | - | -------- | -------- | -
|                                                                               |                                                                                                                |   | Year Ended December 31,
|                                                                               |                                                                                                                |   |                        
|                                                                               |                                                                                                                |   | 2002                    |          | 2001 |   | 2000     
|                                                                               |                                                                                                                |   |                         |          |      |   |          
|Revenues                                                                       |                                                                                                                | $ | 432.2                   |          |      | $ | 387.8     |           |   | $ | 226.8    |         
|Costs and expenses                                                             |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|Operating expenses (exclusive of depreciation
shown separately below)          |                                                                                                                |   | 160.2                   |          |      |   | 161.6     |           |   |   | 88.9     |         
|Selling, general and administrative expenses                                   |                                                                                                                |   | 149.8                   |          |      |   | 183.8     |           |   |   | 103.1    |         
|Asset impairments                                                              |                                                                                                                |   | 854.3                   |          |      |   | 485.8     |           |   |   |         |         
|Other charges                                                                  |                                                                                                                |   | 3.5                     |          |      |   | 12.1      |           |   |   |         |         
|Corporate expenses                                                             |                                                                                                                |   | 0.6                     |          |      |   | 12.8      |           |   |   | 14.5     |         
|Depreciation                                                                   |                                                                                                                |   | 222.6                   |          |      |   | 168.0     |           |   |   | 87.4     |         
|Amortization                                                                   |                                                                                                                |   | 95.1                    |          |      |   | 388.0     |           |   |   | 299.3    |         
|                                                                               |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|                                                                               |                                                                                                                |   | 1,486.1                 |          |      |   | 1,412.1   |           |   |   | 593.2    |         
|                                                                               |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|Operating (loss)                                                               |                                                                                                                |   | (1,053.9                | )        |      |   | (1,024.3  | )         |   |   | (366.4   | )       
|Other income (expense)                                                         |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|Interest income and other, net                                                 |                                                                                                                |   | (6.3                    | )        |      |   | 22.2      |           |   |   | 34.1     |         
|Interest expense (contractual interest of $198.2 (2002))                       |                                                                                                                |   | (155.7                  | )        |      |   | (189.9    | )         |   |   | (139.7   | )       
|Share of (losses) from equity investments                                      |                                                                                                                |   | (199.2                  | )        |      |   | (619.9    | )         |   |   | (46.3    | )       
|Other gains (losses)                                                           |                                                                                                                |   | 3.0                     |          |      |   | (59.3     | )         |   |   |         |         
|Foreign currency transaction gains (losses)                                    |                                                                                                                |   | 9.0                     |          |      |   | (13.7     | )         |   |   | (64.4    | )       
|                                                                               |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|(Loss) before recapitalization items, income taxes and
discontinued operations |                                                                                                                |   | (1,403.1                | )        |      |   | (1,884.9  | )         |   |   | (582.7   | )       
|Recapitalization items, net                                                    |                                                                                                                |   | (4.8                    | )        |      |   |          |           |   |   |         |         
|                                                                               |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|(Loss) before income taxes and discontinued operations                         |                                                                                                                |   | (1,407.9                | )        |      |   | (1,884.9  | )         |   |   | (582.7   | )       
|Income tax benefit (expense)                                                   |                                                                                                                |   | 129.4                   |          |      |   | 51.0      |           |   |   | 23.2     |         
|                                                                               |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|(Loss) from continuing operations                                              |                                                                                                                |   | (1,278.5                | )        |      |   | (1,833.9  | )         |   |   | (559.5   | )       
|Discontinued operations:                                                       |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|                                                                               | (Loss) from discontinued operations, net of income tax
benefit of $26.3 (2002), $114.1 (2001) and $88.1
(2000) |   |                         | (2,374.4 | )    |   |           | (11,872.9 | ) |   |          | (2,407.5 | )
|                                                                               | Net (loss) on sales of discontinued operations, net of
income tax expense of $4.6 (2002)                       |   |                         | (5.7     | )    |   |           |          |   |   |          |         |  
|                                                                               |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|(Loss) from discontinued operations                                            |                                                                                                                |   | (2,380.1                | )        |      |   | (11,872.9 | )         |   |   | (2,407.5 | )       
|                                                                               |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         
|Net (loss)                                                                     |                                                                                                                | $ | (3,658.6                | )        |      | $ | (13,706.8 | )         |   | $ | (2,967.0 | )       
|                                                                               |                                                                                                                |   |                         |          |      |   |           |           |   |   |          |         

See accompanying notes.

F-128



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Consolidated Statement of Shareholders (Deficiency) Equity
(dollars in millions)

|                                              |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   |           |           |  
|--------------------------------------------- | ----- |  | ---------------- | - | -------------- | - | ---------- |  | ------------- |  | ------------ | - | ------ | - | ---- | - |  | - | --------------------- | - |  | - | --------- | --------- | -
|                                              |       |  | Series Preferred |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                      
|                                              |       |  | Stock $.01 Par   |   | Common Stock   |   |            |  |               |  |             
|                                              |       |  | Value            |   | $.01 Par Value |   | Additional |  |              
|                                              |       |  |                  |   |                |   | Paid-In    |  | Comprehensive
|                                              |       |  | Shares           |   | Par            |   | Shares     |  | Par           |  | Capital      |   | (Loss)
|                                              |       |  |                  |   |                |   |            |  |               |  |              |   |       
|                                              |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   | (Dollars in millions)
|Balance, December 31, 1999                    |       |  | 1,332,000        |   |                |   |           |  |               |  | 132,416,000  |   |        |   | 1.3  |   |  | $ | 4,125.1               |   |  |   |           |          
|Exercise of stock options                     |       |  |                  |   |                |   |            |  |               |  | 1,775,000    |   |        |   |     |   |  |   | 32.2                  |   |  |   |           |          
|Exercise of warrants                          |       |  |                  |   |                |   |            |  |               |  | 192,000      |   |        |   |     |   |  |   | 5.1                   |   |  |   |           |          
|Conversion of series preferred stock          |       |  | (528,000         | ) |                |   |           |  |               |  | 8,229,000    |   |        |   | 0.1  |   |  |   | (0.1                  | ) |  |   |           |          
|Preferred stock issued for dividends          |       |  | 9,000            |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   | 9.4                   |   |  |   |           |          
|Accreted dividends on preferred stock         |       |  | 13,000           |   |                |   |           |  |               |  |              |   |        |   |      |   |  |   | (20.0                 | ) |  |   |           |          
|Accretion of discount on preferred stock      |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   | (0.1                  | ) |  |   |           |          
|Contribution from NTL Incorporated            |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   | 11,644.1              |   |  |   |           |          
|Corporate restructuring                       |       |  | (826,000         | ) |                |   |           |  |               |  | (142,611,989 | ) |        |   | (1.4 | ) |  |   |                       |   |  |   |           |          
|Comprehensive Loss:                           |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   |           |          
|Net loss for the year ended December 31, 2000 |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  | $ | (2,967.0  | )        
|Currency translation adjustment               |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | (432.7    | )        
|Unrealized net losses on investments          |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | (14.2     | )        
|                                              |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   |           |          
|Total                                         |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  | $ | (3,413.9  | )        
|                                              |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   |           |          
|Balance, December 31, 2000                    |       |  |                 |   |                |   |           |  |               |  | 11           |   |        |   |     |   |  |   | 15,795.7              |   |  |   |           |          
|Contribution from NTL Incorporated, net       |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   | 243.8                 |   |  |   |           |          
|Non-cash compensation                         |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   | 30.6                  |   |  |   |           |          
|Comprehensive loss:                           |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   |           |          
|Net loss for the year ended December 31, 2001 |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  | $ | (13,706.8 | )        
|Currency translation adjustment               |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | (607.6    | )        
|Unrealized net losses on investments          |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | (1.1      | )        
|Unrealized net losses on derivatives          |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | (15.0     | )        
|                                              |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   |           |          
|                                              | Total |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | $         | (14,330.5 | )
|                                              |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   |           |          
|Balance, December 31, 2001                    |       |  |                 |   |                | $ |            |  |               |  | 11           |   |        | $ |      |   |  | $ | 16,070.1              |   |  |   |           |          
|Contribution from NTL Incorporated, net       |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   | 123.7                 |   |  |   |           |          
|Net loss for the year ended December 31, 2002 |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  | $ | (3,658.6  | )        
|Currency translation adjustment               |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | 280.6     |          
|Reclassification adjustment                   |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | 15.3      |          
|Additional minimum pension liability          |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | (30.0     | )        
|Unrealized net losses on derivatives          |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | (15.1     | )        
|                                              |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   |           |          
|                                              | Total |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   | $         | (3,407.8  | )
|                                              |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   |           |          
|Balance, December 31, 2002                    |       |  |                 |   |                | $ |           |  |               |  | 11           |   |        | $ |     |   |  | $ | 16,193.8              |   |  |   |           |          
|                                              |       |  |                  |   |                |   |            |  |               |  |              |   |        |   |      |   |  |   |                       |   |  |   |           |          

See accompanying notes.

F-129



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Consolidated Statement of Shareholders (Deficiency) Equity
(dollars in millions)

|                                              |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |   | 
|--------------------------------------------- | ----- | - | -------------------------------------- | - | ----------- | - | ----------- | - | ---------- | - | --------- | - |  | - | ----- | - |  | - | --------- | - | 
|                                              |       |   | Accumulated Other Comprehensive (Loss)
|                                              |       |   |                                       
|                                              |       |   |                                        |   |             |   | Unrealized  |   | Unrealized |   |           |   |  |   |       |   | 
|                                              |       |   | Foreign                                |   | Net Losses  |   | Net Losses  |   | Minimum    |   |           |   | 
|                                              |       |   | Currency                               |   | On          |   | On          |   | Pension    |   |           |   | 
|                                              |       |   | Translation                            |   | Investments |   | Derivatives |   | Liability  |   | (Deficit)
|                                              |       |   |                                        |   |             |   |             |   |            |   |          
|Balance, December 31, 1999                    |       | $ | (2.1                                   | ) |             |   |             |   |            |   |           |   |  |   |       |   |  | $ | (1,987.4  | )
|Exercise of stock options                     |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Exercise of warrants                          |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Conversion of series preferred stock          |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Preferred stock issued for dividends          |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Accreted dividends on preferred stock         |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Accretion of discount on preferred stock      |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Contribution from NTL Incorporated            |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Corporate restructuring                       |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Comprehensive Loss:                           |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Net loss for the year ended December 31, 2000 |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   | (2,967.0  | )
|Currency translation adjustment               |       |   | (432.7                                 | ) |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Unrealized net losses on investments          |       |   |                                        |   |             | $ | (14.2       | ) |            |   |           |   |  |   |       |   |  |   |           |  
|                                              | Total |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |   | 
|Balance, December 31, 2000                    |       |   | (434.8                                 | ) |             |   | (14.2       | ) |            |   |           |   |  |   |       |   |  |   | (4,954.4  | )
|Contribution from NTL Incorporated, net       |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Non-cash compensation                         |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Comprehensive loss:                           |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Net loss for the year ended December 31, 2001 |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   | (13,706.8 | )
|Currency translation adjustment               |       |   | (607.6                                 | ) |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Unrealized net losses on investments          |       |   |                                        |   |             |   | (1.1        | ) |            |   |           |   |  |   |       |   |  |   |           |  
|Unrealized net losses on derivatives          |       |   |                                        |   |             |   |             |   |            | $ | (15.0     | ) |  |   |       |   |  |   |           |  
|                                              | Total |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |   | 
|Balance, December 31, 2001                    |       | $ | (1,042.4                               | ) |             | $ | (15.3       | ) |            | $ | (15.0     | ) |  |   |       |   |  | $ | (18,661.2 | )
|Contribution from NTL Incorporated, net       |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Net loss for the year ended December 31, 2002 |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   | (3,658.6  | )
|Currency translation adjustment               |       |   | 280.6                                  |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  
|Reclassification adjustment                   |       |   |                                        |   |             |   | 15.3        |   |            |   |           |   |  |   |       |   |  |   |           |  
|Additional minimum pension liability          |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   | (30.0 | ) |  |   |           |  
|Unrealized net losses on derivatives          |       |   |                                        |   |             |   |             |   |            | $ | (15.1     | ) |  |   |       |   |  |   |           |  
|                                              | Total |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |   | 
|Balance, December 31, 2002                    |       | $ | (761.8                                 | ) |             |   |            |   |            | $ | (30.1     | ) |  | $ | (30.0 | ) |  | $ | (22,319.8 | )
|                                              |       |   |                                        |   |             |   |             |   |            |   |           |   |  |   |       |   |  |   |           |  

See accompanying notes.

F-130



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Consolidated Statement of Cash Flows
(dollars in millions)

|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |        |  
|------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | - | ----------------------- | ------ | ---- | - | --------- | ----- | - | - | --------- | ------ | -
|                                                                                                        |                                                 |   | Year Ended December 31,
|                                                                                                        |                                                 |   |                        
|                                                                                                        |                                                 |   | 2002                    |        | 2001 |   | 2000     
|                                                                                                        |                                                 |   |                         |        |      |   |          
|Operating activities                                                                                    |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Net (loss)                                                                                              |                                                 | $ | (3,658.6                | )      |      | $ | (13,706.8 | )     |   | $ | (2,967.0  | )     
|(Loss) from discontinued operations                                                                     |                                                 |   | (2,374.4                | )      |      |   | (11,872.9 | )     |   |   | (2,407.5  | )     
|Net (loss) on sales of discontinued operations                                                          |                                                 |   | (5.7                    | )      |      |   |          |       |   |   |          |       
|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Loss from continuing operations                                                                         |                                                 |   | (1,278.5                | )      |      |   | (1,833.9  | )     |   |   | (559.5    | )     
|Adjustments to reconcile to net cash provided by
(used in) continuing operations:                       |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|                                                                                                        | Depreciation and amortization                   |   |                         | 317.7  |      |   |           | 556.2 |   |   |           | 386.7  |  
|                                                                                                        | Asset impairments                               |   |                         | 854.3  |      |   |           | 485.8 |   |   |           |       |  
|                                                                                                        | Write-down of other assets                      |   |                         | 17.2   |      |   |           |      |   |   |           |       |  
|                                                                                                        | Equity in losses of unconsolidated subsidiaries |   |                         | 199.2  |      |   |           | 619.9 |   |   |           | 46.3   |  
|                                                                                                        | (Gain) loss on sale of assets                   |   |                         | (6.2   | )    |   |           | 58.5  |   |   |           |       |  
|                                                                                                        | Provision for losses on accounts receivable     |   |                         | 7.2    |      |   |           | 32.7  |   |   |           | 0.4    |  
|                                                                                                        | Deferred income taxes                           |   |                         | (127.5 | )    |   |           | (50.3 | ) |   |           | (23.1  | )
|                                                                                                        | Amortization of original issue discount         |   |                         |       |      |   |           | 0.2   |   |   |           | 0.3    |  
|                                                                                                        | Other                                           |   |                         | (6.1   | )    |   |           | 50.0  |   |   |           | (2.1   | )
|Changes in operating assets and liabilities, net of
effect from business acquisitions and dispositions: |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|                                                                                                        | Accounts receivable                             |   |                         | (11.5  | )    |   |           | (9.3  | ) |   |           | (116.7 | )
|                                                                                                        | Other current assets                            |   |                         | (15.3  | )    |   |           | 24.6  |   |   |           | (106.8 | )
|                                                                                                        | Other assets                                    |   |                         | 2.9    |      |   |           | (3.6  | ) |   |           | 2.0    |  
|                                                                                                        | Accounts payable                                |   |                         | 8.3    |      |   |           | 1.4   |   |   |           | 11.4   |  
|                                                                                                        | Accrued expenses and other                      |   |                         | (27.6  | )    |   |           | 9.5   |   |   |           | 53.8   |  
|                                                                                                        | Deferred revenue                                |   |                         | 25.3   |      |   |           | 9.0   |   |   |           | 58.0   |  
|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Net cash (used in) continuing operations                                                                |                                                 |   | (40.6                   | )      |      |   | (49.3     | )     |   |   | (249.3    | )     
|Net cash provided by (used in) discontinued operations                                                  |                                                 |   | 251.9                   |        |      |   | (518.8    | )     |   |   | (129.0    | )     
|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Net cash provided by (used in) operating activities                                                     |                                                 |   | 211.3                   |        |      |   | (568.1    | )     |   |   | (378.3    | )     
|Investing activities                                                                                    |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Acquisitions, net of cash acquired                                                                      |                                                 |   |                        |        |      |   |          |       |   |   | (3,425.1  | )     
|Purchase of fixed assets                                                                                |                                                 |   | (120.8                  | )      |      |   | (244.9    | )     |   |   | (277.7    | )     
|Investments in and loans to affiliates                                                                  |                                                 |   | (10.9                   | )      |      |   | (119.9    | )     |   |   | (344.4    | )     
|Increase in other assets                                                                                |                                                 |   | (7.0                    | )      |      |   | (49.1     | )     |   |   | (120.8    | )     
|Proceeds from sales of assets                                                                           |                                                 |   | 432.2                   |        |      |   | 30.9      |       |   |   |          |       
|Purchase of marketable securities                                                                       |                                                 |   | (34.0                   | )      |      |   |          |       |   |   | (58.2     | )     
|Proceeds from sales of marketable securities                                                            |                                                 |   | 21.1                    |        |      |   |          |       |   |   | 241.7     |       
|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Net cash provided by (used in) continuing operations                                                    |                                                 |   | 280.6                   |        |      |   | (383.0    | )     |   |   | (3,984.5  | )     
|Net cash (used in) discontinued operations                                                              |                                                 |   | (734.4                  | )      |      |   | (1,906.0  | )     |   |   | (9,527.5  | )     
|                                                                                                        |                                                 |   |                         |        |      |   |           |       |   |   |           |       
|Net cash (used in) investing activities                                                                 |                                                 |   | (453.8                  | )      |      |   | (2,289.0  | )     |   |   | (13,512.0 | )     

F-131



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Consolidated Statements of Cash Flows  continued
(dollars in millions)

|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|------------------------------------------------------------------------ |  | ----------------------- | ------ | ---- |  | ---- | ------- | - |  | - | -------- | -
|                                                                         |  | Year Ended December 31,
|                                                                         |  |                        
|                                                                         |  | 2002                    |        | 2001 |  | 2000
|                                                                         |  |                         |        |      |  |     
|Financing activities                                                     |  |                         |        |      |  |      |         |   |  |   |          |  
|Proceeds from borrowings, net of financing costs                         |  |                         | 104.1  |      |  |      | 365.4   |   |  |   | 1,860.3  |  
|Proceeds from issuance of redeemable preferred stock                     |  |                         |       |      |  |      |        |   |  |   | 1,850.0  |  
|Proceeds from exercise of stock options and warrants                     |  |                         |       |      |  |      |        |   |  |   | 37.3     |  
|Principal payments                                                       |  |                         | (2.9   | )    |  |      | (68.3   | ) |  |   | (39.1    | )
|Repayment of the NTL Australia bank loan                                 |  |                         | (121.7 | )    |  |      |        |   |  |   |         |  
|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Net cash provided by (used in) continuing activities                     |  |                         | (20.5  | )    |  |      | 297.1   |   |  |   | 3,708.5  |  
|Net cash provided by discontinued activities                             |  |                         | 552.2  |      |  |      | 2,428.4 |   |  |   | 8,122.4  |  
|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Net cash provided by financing activities                                |  |                         | 531.7  |      |  |      | 2,725.5 |   |  |   | 11,830.9 |  
|Effect of exchange rate changes on cash                                  |  |                         | 50.4   |      |  |      | (11.0   | ) |  |   | (27.9    | )
|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Increase (decrease) increase in cash and cash equivalents                |  |                         | 339.6  |      |  |      | (142.6  | ) |  |   | (2,087.3 | )
|Cash and cash equivalents at beginning of year  continuing
operations   |  |                         | 91.0   |      |  |      | 56.9    |   |  |   | 1,511.6  |  
|Cash and cash equivalents at beginning of year  discontinued
operations |  |                         | 276.3  |      |  |      | 453.0   |   |  |   | 1,085.6  |  
|Cash and cash equivalents at end of year  discontinued operations       |  |                         | (502.0 | )    |  |      | (276.3  | ) |  |   | (453.0   | )
|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Cash and cash equivalents at end of year  continuing operations         |  | $                       | 204.9  |      |  | $    | 91.0    |   |  | $ | 56.9     |  
|                                                                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Supplemental disclosure of cash flow information                         |  |                         |        |      |  |      |         |   |  |   |          |  
|Cash paid during the year for interest
exclusive of amounts capitalized  |  | $                       | 127.9  |      |  | $    | 168.1   |   |  | $ | 131.1    |  
|Income taxes paid                                                        |  |                         |       |      |  |      | 13.2    |   |  |   | 5.2      |  
|Supplemental schedule of non-cash financing activities                   |  |                         |        |      |  |      |         |   |  |   |          |  
|Accretion of dividend and discount on preferred stock                    |  |                         |       |      |  | $    |        |   |  | $ | 20.1     |  
|Conversion of notes, net of unamortized deferred financing costs         |  |                         |       |      |  |      | (109.5  | ) |  |   |         |  

See accompanying notes.

F-132



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements



|1. |  | Organization and Business
|-- |  | -------------------------

Summary

The accompanying financial statements do not reflect any adjustments in
connection with the emergence of NTL (Delaware), Inc. (NTL Delaware or the
Company), a wholly-owned subsidiary of NTL Europe (as defined below) which
holds most of NTL Europes assets, from Chapter 11 reorganization nor the
likely deconsolidation of Cablecom GmbH, an indirect wholly-owned subsidiary of
the Company (Cablecom), and, therefore, are not indicative of the Companys
future results of operations, financial position or cash flows.

NTLs Completed Restructuring

On May 8, 2002, the entity then known as NTL Incorporated (Old NTL) and
certain of its subsidiaries (including the Company) as of that time each filed
a pre-arranged joint reorganization plan (the Plan) under Chapter 11 of the
U.S. Bankruptcy Code. Old NTLs operating subsidiaries were not included in
the Chapter 11 filing. The Plan became effective on January 10, 2003 (the
Effective Date) at which time Old NTL emerged from Chapter 11 reorganization.

Pursuant to the Plan, Old NTL and its subsidiaries were split into two separate
companies. The entity formerly known as NTL Incorporated was renamed NTL
Europe, Inc. and became the holding company for Old NTLs European and certain
other assets (NTL Europe). The entity formerly known as NTL Communications
Corp. was renamed NTL Incorporated and became the holding company for Old
NTLs principal UK and Ireland assets (New NTL). Pursuant to the Plan, all
of the outstanding securities of Old NTL and certain of its subsidiaries were
canceled (including the Companys long-term debt), and NTL Europe issued shares
of its common stock, par value $0.01 per share (the Common Stock), and 10%
Fixed Coupon Redeemable Preferred Stock, Series A, par value $0.01 per share
(with a $50.00 liquidation preference per share) (the Preferred Stock), and
New NTL issued shares of its common stock and Series A warrants to various
former creditors and stockholders of Old NTL and its subsidiaries. The precise
mix of new securities received by holders of each particular type of security
of Old NTL and its subsidiaries was set forth in the Plan. New NTL is an
independent entity which is no longer owned by or affiliated with NTL Europe or
the Company.

New NTL has been accounted for as a discontinued operation beginning with the
quarter ended September 30, 2002 and, accordingly, it is excluded from assets
and liabilities of continuing operations as of December 31, 2002 and 2001, and
from results of continuing operations for the years ended December 31, 2002,
2001 and 2000.

With the separation of Old NTL into two entities, the majority of the
significant assets and holdings formerly owned and consolidated by Old NTL were
retained by New NTL. Generally, other than Cablecom (which is itself being
restructured as described below), the Companys assets are not material
compared to those of New NTL. In addition, as described in more detail in Note
22, as a result of the existing defaults under Cablecoms debt agreements and
its overindebtedness, in the near future, the Company expects its interest in
Cablecom to be reduced to, at most, a small minority position. Further, NTL
Europes board of directors and management will explore the strategic and
financial alternatives available to it, including NTL Europes possible
liquidation, a going-private transaction and the sale of its remaining assets.
Accordingly, the Companys historic financial statements presented herein are
not particularly meaningful to the Companys current and anticipated future
business and should not be relied upon as indicative of the Companys future
performance.

Historical Structure of the Company

On May 18, 2000, the entity then known as NTL Incorporated (currently named NTL
(Delaware), Inc.) completed a corporate restructuring to create a holding
company structure. The formation of the holding company was part of NTL
Delawares acquisition of certain assets of Cable & Wireless Communications plc
(CWC). The holding company restructuring was accomplished through a merger
so that all the stockholders of NTL Delaware at the effective time of the
merger became stockholders of the new holding company, and NTL Delaware became
a subsidiary of the new holding company. The new holding company was called
NTL Incorporated (which is now known as NTL Europe, Inc.) and the holding
companys subsidiary simultaneously changed its name to NTL (Delaware), Inc.
NTL (Delaware), Inc. continues to be wholly-owned by NTL Europe.

The Company conducts its operations through direct and indirect wholly-owned
subsidiaries.

F-133



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|1. |  | Organization and Business (continued)
|-- |  | -------------------------------------

Business

The Company, through its direct and indirect wholly-owned subsidiaries, owns
and operates Premium TV Limited, Cablecom, NTL Lanbase, SL, NTL Broadcast
(Thailand) Ltd. and NTL Broadcast Sdn, Ltd. Premium TV Limited (Premium TV)
develops sports-related Internet and media rights in the United Kingdom.
Cablecom is the largest television operator in Switzerland, but, as discussed
below, it is overindebted under Swiss law and it is unlikely that the Company
will retain any significant interest in Cablecom. NTL Lanbase, SL is based in
Spain and is a value-added reseller of equipment for corporate data networks in
the United Kingdom. NTL Broadcast (Thailand) Ltd. and NTL Broadcast Sdn, Ltd.,
together with New NTLs branch office in Singapore, offer design and build,
consultancy and system integration services to broadcasters in Malaysia and
Thailand.

Cablecom has approximately CHF 3,792 million in bank debt (which includes
recently accrued interest payments) maturing on the business day following May
31, 2003 (with an additional automatic extension to June 30, 2003 under certain
circumstances), and insufficient resources to satisfy such obligation. In
addition, Cablecom and two of its subsidiaries are overindebted under Swiss
law and, accordingly, may be required to file for insolvency proceedings in
Switzerland. Cablecom and its lenders have been involved in ongoing
discussions regarding a complete financial restructuring of Cablecom which
will, among other things, reduce the amount of bank debt outstanding, extend
the maturity date thereof and resolve the Swiss overindebtedness issue. In the
event that such negotiations are unsuccessful, the Company expects to be
deprived of all of its ownership interest in Cablecom in the near future.
Further, even if such negotiations are successful, the Company expects to be
left with no more than a small minority interest in Cablecom. Accordingly, the
Company anticipates that, in the near future, the results of Cablecom will no
longer be reported as part of the Companys consolidated results of operations.
In that regard, it should also be noted that, in accordance with the terms of
the existing Cablecom credit agreement, no dividends, distributions or other
payments have ever been or will be made by Cablecom to the Company. Further,
the lenders under Cablecoms credit facility have no legal recourse to any
assets of the NTL Europe group, other than to the shares of Cablecom, certain
assets of the Cablecom group and certain assets of the Companys subsidiaries
which hold, directly or indirectly, the shares of the Cablecom group.

The Company also has various equity and cost method investments detailed in
Note 9.

The Companys most significant holdings are currently being restructured, and
the Company is reviewing all of its holdings to determine the most appropriate
course of action, which may result in one or more of these holdings being sold,
transferred, foreclosed on, liquidated, wound-up or otherwise disposed of in
the near future or at a later date. The Company may not receive any proceeds
from any of these transactions after the payment of outstanding debt that some
of these companies may owe and any fees and expenses incurred in connection
with these transactions. See, in particular, Note 21 Commitments and
Contingent Liabilities  Cablecom. To the extent NTL Europe receives cash
proceeds from any asset sale it or its subsidiaries complete, the Preferred
Stock will be entitled to mandatory redemption in a like amount, subject to
some limited exceptions set forth in NTL Europes charter, until all shares of
the Preferred Stock (having an aggregate of $343 million in liquidation
preference) have been redeemed.



|2. |  | Reorganization and Emergence from Chapter 11
|-- |  | --------------------------------------------

Background of Restructuring

On January 31, 2002, Old NTL announced that it had appointed professional
advisors to advise on strategic and recapitalization alternatives to strengthen
its balance sheet, reduce debt and put an appropriate capital structure in
place for its business.

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities in March 2002, Old NTL and certain of its subsidiaries commenced
negotiations with a steering committee of the unofficial committee of its
bondholders and the committees legal and financial advisors.

Old NTL and its subsidiaries failed to make interest payments on some of the
outstanding notes starting on April 1, 2002. Old NTL also failed to declare or
pay dividends on certain series of its outstanding preferred stock due to a
lack of available surplus under Delaware law.

F-134



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|2. |  | Reorganization and Emergence from Chapter 11 (continued)
|-- |  | --------------------------------------------------------

On April 16, 2002, Old NTL announced that it and an unofficial committee of its
bondholders had reached an agreement in principle on a comprehensive
recapitalization of Old NTL and its subsidiaries. To implement the proposed
recapitalization plan, on May 8, 2002, Old NTL and certain of the other
subsidiaries of Old NTL, namely NTL Delaware, NTL Communications Corp., Diamond
Cable Communications Limited, Diamond Holdings Limited and Communications Cable
Funding Corp., filed cases and a pre-arranged joint reorganization plan under
Chapter 11 of the U.S. Bankruptcy Code. In connection with the filing, some
members of the unofficial creditors committee of bondholders entered into a
credit facility agreement (referred to as the DIP facility) committing to
provide Communications Cable Funding Corp. with up to $500.0 million in new
debt financing (NTL Delaware committed to provide up to an additional $130.0
million under the DIP facility.)

As a result of the payment defaults, as well as the voluntary filing under
Chapter 11 by Old NTL and certain of its subsidiaries, on May 8, 2002, there
was an event of default under all of Old NTL and its subsidiaries credit
facilities and the indentures governing all of their publicly traded debt,
other than debt of NTL (Triangle) LLC.

The Plan was confirmed by the Bankruptcy Court on September 5, 2002. During
the fall of 2002, Old NTL negotiated with a group of lenders to enter into a
new financing arrangement to repay the DIP facility, to repay certain
obligations and to provide liquidity to Old NTL and its subsidiaries. The Plan
became effective on January 10, 2003, at which time Old NTL emerged from
Chapter 11 reorganization. In connection with Old NTLs emergence from Chapter
11 reorganization, NTL Communications Corp. issued $558.2 million aggregate
principal face amount of 19% Senior Secured Notes due 2010 and 500,000 shares
of its common stock on January 10, 2003. The proceeds were used in part to
repay amounts outstanding under the DIP facility and to purchase from NTL
Delaware a £90.0 million note of NTL (UK) Group Inc. and to repay certain other
obligations.

Liquidity and Capital Resources

NTL Delaware emerged from bankruptcy on January 10, 2003, at which time, as
part of the reorganization plan, its debt was cancelled.

NTL Delaware is primarily a holding company for the stock of its subsidiaries
with no material independent source of cash in the next twelve months other
than approximately $1 million from the disposition of its interest in iesy (as
defined in Note 9) that was received in January 2003 and the expected
collection of a note receivable relating to the 2002 sale of NTL Australia in
the amount of approximately $6 million due in September 2003. At the time NTL
Delaware emerged from bankruptcy, it had no cash on hand. NTL Delaware does
not anticipate receiving any material cash proceeds from any of its
subsidiaries during 2003. NTL Delawares operating expenses are expected to be
minimal in 2003. NTL Delaware also had minimal liabilities upon emergence from
bankruptcy. However, NTL Delaware is the guarantor of approximately $42
million of commitments of one of its subsidiaries, Premium TV Limited. Premium
TV Limited is expected to have the resources to meet its obligations as they
come due in the normal course of business through at least January 1, 2004 and,
accordingly, management does not believe that NTL Delaware would be required to
pay any amounts in connection with the guarantees through such date.

As described in Notes 1, 2 and 21, the Company expects to either complete a
restructuring of the debt and equity of Cablecom, in the near future, which
would result in a dilution of the Companys ownership interest to less than
five percent or, if such restructuring is not successful, to file for the
insolvency of Cablecom in Switzerland, which would result in the Companys
having no remaining ownership in Cablecom. In either of these events, the
lenders under Cablecoms credit facility would have no legal recourse to any
assets of the NTL Europe group, other than to the shares of Cablecom, certain
assets of the Cablecom group and certain assets of the Companys subsidiaries
which hold, directly or indirectly, the shares of the Cablecom group.

F-135



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|2. |  | Reorganization and Emergence from Chapter 11 (continued)
|-- |  | --------------------------------------------------------

Recapitalization Expense

The joint reorganization plan provided that recapitalization costs be allocated
among the Company, NTL Europe and New NTL.

Recapitalization items, net consist of the following:

|                                                                   |  |               |      |      |  |      |   |  |  |   |   | 
|------------------------------------------------------------------ |  | ------------- | ---- | ---- |  | ---- | - |  |  | - | - | 
|                                                                   |  | Year Ended   
|                                                                   |  | December 31, 
|                                                                   |  |              
|                                                                   |  | 2002          |      | 2001 |  | 2000
|                                                                   |  |               |      |      |  |     
|                                                                   |  | (in millions)
|Payroll and related costs paid                                     |  | $             | (0.1 | )    |  | $    |  |  |  | $ |  | 
|Professional fees                                                  |  |               | (6.9 | )    |  |      |  |  |  |   |  | 
|Interest earned on accumulated cash from Chapter 11 proceeding (1) |  |               | 2.2  |      |  |      |  |  |  |   |  | 
|                                                                   |  |               |      |      |  |      |   |  |  |   |   | 
|                                                                   |  | $             | (4.8 | )    |  | $    |  |  |  | $ |  | 
|                                                                   |  |               |      |      |  |      |   |  |  |   |   | 

Details of operating cash receipts and payments resulting from the
recapitalization are as follows. NTL Europe and NTL Delaware made payments on
behalf of New NTL which were charged to New NTL. The recapitalization items
charged to New NTL are included in loss from discontinued operations.

|                                                     |  |                   |       |  
|---------------------------------------------------- |  | ----------------- | ----- | -
|                                                     |  | Year Ended       
|                                                     |  | December 31, 2002
|                                                     |  |                  
|                                                     |  | (in millions)    
|Interest income (1)                                  |  | $                 | 2.2   |  
|Payroll and related costs paid                       |  |                   |      |  
|Professional fees                                    |  |                   | (45.9 | )
|                                                     |  |                   |       |  
|Net operating cash flows from recapitalization items |  | $                 | (43.7 | )
|                                                     |  |                   |       |  

(1)  Interest income resulting from the recapitalization is for the period May
8, 2002 through December 31, 2002.

Pro Forma Consolidated Balance Sheet

The following pro forma consolidated balance sheet as of December 31, 2002
gives effect to the Companys emergence from Chapter 11 reorganization and the
adoption of fresh-start reporting as if both had occurred on December 31, 2002.
The Company adopted fresh-start reporting in January 2003 in accordance with
AICPA Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code (SOP 90-7). The Company adopted
fresh-start reporting because the holders of Old NTLs voting common shares
immediately before filing and confirmation of the Plan received less than 50%
of the voting shares of the emerging company, and because the Companys
reorganization value is less than its post-petition liabilities and allowed
claims.

The adjustments entitled Emergence from Chapter 11 reflect the consummation
of the Plan, including the deconsolidation of New NTL.

The adjustments entitled Fresh-Start reflect the adoption of fresh-start
reporting. The Company engaged an independent financial advisor to assist in
the determination of the reorganization value (or fair value) of its assets and
the present value of its liabilities. This determination resulted in the
fresh-start reporting adjustments to write-down fixed assets and write-up of
intangible assets to their fair values. The determination of the
reorganization value is preliminary since the valuation of certain of the
Companys assets is still in process. In addition, the Companys total
reorganization value exceeded the amounts allocable to identifiable assets that
resulted in a new indefinite-lived intangible asset.

F-136



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|2. |  | Reorganization and Emergence from Chapter 11 (continued)
|-- |  | --------------------------------------------------------

The emergence from Chapter 11 and the adoption of fresh-start reporting in
January 2003 resulted in the following items of income (expense) that will be
recognized in the Companys financial statements for the quarter ended March
31, 2003:

|                                               |  |               |         |  
|---------------------------------------------- |  | ------------- | ------- | -
|                                               |  | (in millions)
|                                               |  |              
|Gain on debt discharge                         |  | $             | 1,037.8 |  
|Gain related to deconsolidation of New NTL     |  |               | 4,999.2 |  
|Fresh-start adoption  intangible assets       |  |               | 142.1   |  
|Fresh-start adoption  long-term debt          |  |               | 1,284.9 |  
|Fresh-start adoption  deferred tax liability  |  |               | (13.5   | )
|Fresh-start adoption  non-current liabilities |  |               | (61.2   | )
|Fresh-start adoption  accrued expenses        |  |               |        |  
|Fresh-start adoption  fixed assets            |  |               | (507.0  | )
|Fresh-start adoption  other assets            |  |               | (33.5   | )
|                                               |  |               |         |  
|TOTAL                                          |  | $             | 6,848.8 |  
|                                               |  |               |         |  

The adjustments entitled Deconsolidation of Cablecom reflect the likelihood
that the Company will not retain a significant interest in Cablecom and that
Cablecom will no longer be reported as part of the Companys consolidated
results of operations. As described in more detail in Note 22 (Commitments and
Contingent Liabilities  Cablecom), Cablecom has approximately CHF 3,792
million in bank debt (which includes recently accrued interest payments)
maturing on the business day following May 31, 2003 (with an additional
automatic extension to June 30, 2003 under certain circumstances), and
insufficient resources to satisfy such obligation. In addition, Cablecom and
two of its subsidiaries are overindebted under Swiss law and, accordingly,
may be required to file for insolvency proceedings in Switzerland. Cablecom and
its lenders have been involved in ongoing discussions regarding a complete
financial restructuring of Cablecom which will, among other things, reduce the
amount of bank debt outstanding, extend the maturity date thereof and resolve
the Swiss overindebtedness issue. In the event that such negotiations are
unsuccessful, the Company expects to be deprived of all of its ownership
interest in Cablecom in the near future. Further, even if such negotiations
are successful, the Company expects to be left with no more than a small
minority interest in Cablecom. Accordingly, the Company anticipates that, in
the near future, the results of Cablecom will no longer be reported as part of
the Companys consolidated results of operations. In that regard, it should
also be noted that, in accordance with the terms of the existing Cablecom
credit agreement, no dividends, distributions or other payments have ever been
or will be made by Cablecom to the Company. Further, the lenders under
Cablecoms credit facility have no legal recourse to any assets of the NTL
Europe group, other than to the shares of Cablecom, certain assets of the
Cablecom group and certain assets of the Companys subsidiaries which hold,
directly or indirectly, the shares of the Cablecom group.

F-137



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|2. |  | Reorganization and Emergence from Chapter 11 (continued)
|-- |  | --------------------------------------------------------

|                                                                           |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |         | 
|-------------------------------------------------------------------------- | --------------------------------------------------------------- | - | ----------------- | --------- | ---------- | - | --------- | --------- | --------------- | - | --------------- | --------- | ----------------- | - | ------- | ------- | --------- | - | -------- | -------- | - | - | ------- | ------- | 
|                                                                           |                                                                 |   | Historical        |           | Emergence  |   |           |           |                 |   | Before          |           |                   |   |         |         | Pro Forma
|                                                                           |                                                                 |   | as of             |           | from       |   | Fresh-    |           | Deconsolidation |   | Deconsolidation |           | as of            
|                                                                           |                                                                 |   | December 31, 2002 |           | Chapter 11 |   | Start     |           | of Cablecom     |   | of Cablecom     |           | December 31, 2002
|                                                                           |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                  
|                                                                           |                                                                 |   | (in millions)    
|Assets                                                                     |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |        
|Current assets:                                                            |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |        
|                                                                           | Cash and cash equivalents                                       |   | $                 | 204.9     |            |   | $         | (110.4    | )               |   | $               |          |                   |   | $       | 94.5    |           |   | $        | (85.9    | ) |   | $       | 8.6     | 
|                                                                           | Marketable securities                                           |   |                   | 13.1      |            |   |           | (13.1     | )               |   |                 |          |                   |   |         |        |           |   |          |         |   |   |         |        | 
|                                                                           | Accounts receivable-trade, less allowance
for doubtful accounts |   |                   | 240.7     |            |   |           |          |                 |   |                 |          |                   |   |         | 240.7   |           |   |          | (230.8   | ) |   |         | 9.9     | 
|                                                                           | Affiliate receivable                                            |   |                   | 35.1      |            |   |           | (18.8     | )               |   |                 |          |                   |   |         | 16.3    |           |   |          |         |   |   |         | 16.3    | 
|                                                                           | Other                                                           |   |                   | 48.7      |            |   |           |          |                 |   |                 |          |                   |   |         | 48.7    |           |   |          | (38.5    | ) |   |         | 10.2    | 
|                                                                           | Discontinued operations                                         |   |                   | 12,974.0  |            |   |           | (12,974.0 | )               |   |                 |           |                   |   |         |        |           |   |          | 2,189.1  |   |   |         | 2,189.1 | 
|                                                                           |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |         | 
|Total current assets                                                       |                                                                 |   | 13,516.5          |           |            |   | (13,116.3 | )         |                 |   |                |           |                   |   | 400.2   |         |           |   | 1,833.9  |          |   |   | 2,234.1 |        
|Fixed assets, net                                                          |                                                                 |   | 1,681.9           |           |            |   |          |           |                 |   | (506.9          | )         |                   |   | 1,175.0 |         |           |   | (1,166.8 | )        |   |   | 8.2     |        
|Goodwill                                                                   |                                                                 |   | 220.1             |           |            |   | (1.4      | )         |                 |   | (218.7          | )         |                   |   |        |         |           |   |         |          |   |   |        |        
|Reorganization value in excess of amounts
Allocable to identifiable assets |                                                                 |   |                  |           |            |   |          |           |                 |   | 213.9           |           |                   |   | 213.9   |         |           |   | (213.9   | )        |   |   |        |        
|Customer lists, net                                                        |                                                                 |   | 62.8              |           |            |   |          |           |                 |   | 146.8           |           |                   |   | 209.6   |         |           |   | (209.6   | )        |   |   |        |        
|Investments in and loans to affiliates, net                                |                                                                 |   | 7.8               |           |            |   | (0.1      | )         |                 |   |                |           |                   |   | 7.7     |         |           |   | (7.7     | )        |   |   |        |        
|Deferred tax asset                                                         |                                                                 |   | 200.9             |           |            |   |          |           |                 |   | 69.2            |           |                   |   | 270.1   |         |           |   | (235.5   | )        |   |   | 34.6    |        
|Other assets, net                                                          |                                                                 |   | 117.3             |           |            |   | (19.0     | )         |                 |   | (50.8           | )         |                   |   | 47.5    |         |           |   | (0.4     | )        |   |   | 47.1    |        
|                                                                           |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |         | 
|Total assets                                                               |                                                                 | $ | 15,807.3          |           |            | $ | (13,136.8 | )         |                 | $ | (346.5          | )         |                   | $ | 2,324.0 |         |           | $ |         |          |   | $ | 2,324.0 |        
|                                                                           |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |         | 
|Liabilities and shareholders (deficiency)                                 |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |        
|Liabilities not subject to compromise                                      |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |        
|Current liabilities:                                                       |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |        
|                                                                           | Accounts payable                                                |   | $                 | 48.3      |            |   | $         |          |                 |   | $               |          |                   |   | $       | 48.3    |           |   | $        | (40.6    | ) |   | $       | 7.7     | 
|                                                                           | Accrued expenses and other                                      |   |                   | 87.4      |            |   |           |           |                 |   |                 |          |                   |   |         | 87.4    |           |   |          | (64.2    | ) |   |         | 23.2    | 
|                                                                           | Interest payable                                                |   |                   | 43.5      |            |   |           |          |                 |   |                 |          |                   |   |         | 43.5    |           |   |          | (43.5    | ) |   |         |        | 
|                                                                           | Deferred revenue                                                |   |                   | 235.6     |            |   |           |          |                 |   |                 |          |                   |   |         | 235.6   |           |   |          | (229.8   | ) |   |         | 5.8     | 
|                                                                           | Affiliate payable                                               |   |                   | 7.8       |            |   |           |          |                 |   |                 |          |                   |   |         | 7.8     |           |   |          |         |   |   |         | 7.8     | 
|                                                                           | Current portion of long-term debt                               |   |                   | 2,719.3   |            |   |           |          |                 |   |                 | (1,284.9  | )                 |   |         | 1,434.4 |           |   |          | (1,434.4 | ) |   |         |        | 
|                                                                           | Discontinued operations                                         |   |                   | 17,973.2  |            |   |           | (17,973.2 | )               |   |                 |          |                   |   |         |        |           |   |          | 2,189.1  |   |   |         | 2,189.1 | 
|                                                                           |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |         | 
|Total
current liabilities                                                  |                                                                 |   | 21,115.1          |           |            |   | (17,973.2 | )         |                 |   | (1,284.9        | )         |                   |   | 1,857.0 |         |           |   | 376.6    |          |   |   | 2,233.6 |        
|Long-term debt                                                             |                                                                 |   |                  |           |            |   |          |           |                 |   |                |           |                   |   |        |         |           |   |         |          |   |   |         |        
|Other                                                                      |                                                                 |   | 164.8             |           |            |   |          |           |                 |   | (16.2           | )         |                   |   | 148.6   |         |           |   | (96.9    | )        |   |   | 51.7    |        
|Deferred income taxes                                                      |                                                                 |   | 231.6             |           |            |   |          |           |                 |   | 82.7            |           |                   |   | 314.3   |         |           |   | (279.7   | )        |   |   | 34.6    |        
|Commitments and contingent liabilities                                     |                                                                 |   |                  |           |            |   |          |           |                 |   |                |           |                   |   |        |         |           |   |         |          |   |   |        |        
|Senior Redeemable Preferred                                                |                                                                 |   |                  |           |            |   |          |           |                 |   |                |           |                   |   |        |         |           |   |         |          |   |   |        |        
|Liabilities subject to compromise                                          |                                                                 |   | 1,243.7           |           |            |   | (1,243.7  | )         |                 |   |                |           |                   |   |        |         |           |   |         |          |   |   |        |        
|Shareholders (deficiency):                                                |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |        
|                                                                           | Common stock-old                                                |   |                   |          |            |   |           |          |                 |   |                 |          |                   |   |         |        |           |   |          |         |   |   |         |        | 
|                                                                           | Common stock-new                                                |   |                   |          |            |   |           |          |                 |   |                 |          |                   |   |         |        |           |   |          |         |   |   |         |        | 
|                                                                           | Additional paid-in capital                                      |   |                   | 16,193.8  |            |   |           |          |                 |   |                 | (16,189.7 | )                 |   |         | 4.1     |           |   |          |         |   |   |         | 4.1     | 
|                                                                           | Accumulated other comprehensive (loss)                          |   |                   | (821.9    | )          |   |           |          |                 |   |                 | 821.9     |                   |   |         |        |           |   |          |         |   |   |         |        | 
|                                                                           | (Deficit)                                                       |   |                   | (22,319.8 | )          |   |           | 6,080.1   |                 |   |                 | 16,239.7  |                   |   |         |        |           |   |          |         |   |   |         |        | 
|                                                                           |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |         | 
|Shareholders (deficiency)                                                 |                                                                 |   | (6,947.9          | )         |            |   | 6,080.1   |           |                 |   | 871.9           |           |                   |   | 4.1     |         |           |   |         |          |   |   | 4.1     |        
|                                                                           |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |         | 
|Total liabilities and shareholders
(deficiency)                           |                                                                 | $ | 15,807.3          |           |            | $ | (13,136.8 | )         |                 | $ | (346.5          | )         |                   | $ | 2,324.0 |         |           | $ |         |          |   | $ | 2,324.0 |        
|                                                                           |                                                                 |   |                   |           |            |   |           |           |                 |   |                 |           |                   |   |         |         |           |   |          |          |   |   |         |         | 

F-138



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|3. |  | Significant Accounting Policies
|-- |  | -------------------------------

Basis of Presentation and Use of Estimates

The accompanying financial statements have been prepared on a going concern
basis. As described in Notes 1, 2 and 21, the Company expects to either
complete a restructuring of the debt and equity of Cablecom in the near future,
which would result in a dilution of the Companys ownership interest to less
than five percent or, if such restructuring is not successful, to file for the
insolvency of Cablecom in Switzerland, which would result in the Company having
no remaining ownership in Cablecom. In either of these events, the lenders
under Cablecoms credit facility would have no legal recourse to any assets of
the NTL Europe group, other than to the shares of Cablecom, certain assets of
the Cablecom group and certain assets of the Companys subsidiaries which hold,
directly or indirectly, the shares of the Cablecom group.

NTL Delaware is primarily a holding company for the stock of its subsidiaries
with no material independent source of cash in the next twelve months other
than approximately $1 million from the disposition of its interest in iesy that
was received in January 2003 and the expected collection of a note receivable
relating to the 2002 sale of NTL Australia in the amount of approximately $6
million due in September 2003. At the time NTL Delaware emerged from
bankruptcy, it had no cash on hand. NTL Delaware does not anticipate receiving
any material cash proceeds from any of its subsidiaries during 2003. NTL
Delawares operating expenses are expected to be minimal in 2003. NTL Delaware
also had minimal liabilities upon emergence from bankruptcy. However, NTL
Delaware is the guarantor of approximately $42 million of commitments of one of
its subsidiaries, Premium TV Limited. Premium TV Limited is expected to have
the resources to meet its obligations as they come due in the normal course of
business through at least January 1, 2004 and, accordingly, management does not
believe that NTL Delaware would be required to pay any amounts in connection
with the guarantees through such date.

The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States,
including AICPA Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code (SOP 90-7). Old NTL had determined
that there was insufficient collateral to cover the interest portion of
scheduled payments on certain of its prepetition debt obligations. Old NTL had
therefore discontinued accruing interest on these obligations. For the year
ended December 31, 2002, contractual interest was $198.2 million, which was
$42.5 million in excess of reported interest expense.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Such estimates and assumptions impact, among
others, the following: the amount of uncollectible accounts and notes
receivable, the amount to be paid 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.

Reclassification

Certain prior year amounts have been reclassified to conform to the current
year presentation.

Foreign Currency Translation

The financial statements of the Companys foreign subsidiaries have been
translated into U.S. dollars in accordance with Statement of Financial
Accounting Standards (SFAS) No. 52, Foreign Currency Translation. All
balance sheet accounts have been translated using the current exchange rates at
the respective balance sheet dates. Statement of operations amounts have been
translated using the average exchange rates for the respective years. The
translation gains or losses resulting from the change in exchange rates have
been reported as a component of accumulated other comprehensive (loss).
Foreign currency transaction losses and gains are included in the results of
operations as incurred.

F-139



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|3. |  | Significant Accounting Policies (continued)
|-- |  | -------------------------------------------

Cash Equivalents

Cash equivalents are short-term highly liquid investments purchased with a
maturity of three months or less. Cash equivalents were $105.3 million and
$1.6 million at December 31, 2002 and 2001, respectively, which consisted
primarily of bank time deposits and corporate commercial paper. At December
31, 2002 and 2001, none and $1.5 million, respectively, of the cash equivalents
were denominated in foreign currencies.

Marketable Securities

Marketable securities at December 31, 2002 consist of commercial paper.
Marketable securities are classified as available-for-sale, which are carried
at fair value. Unrealized holding gains and losses on securities, net of tax,
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 are 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, 2002, 2001 and 2000, there were no realized
gains or losses on sales of securities.

Fixed Assets

Fixed assets are stated at cost, which includes amounts capitalized for labor
and overhead expended in connection with the design and installation of
operating equipment. Internal costs directly related to the construction of
such facilities, including payroll and overhead costs of certain employees, are
capitalized. Depreciation is computed by the straight-line method over the
estimated useful lives of the assets. Estimated useful lives of fixed assets
range from 5 years to 30 years.

Intangible Assets

Intangible assets include goodwill and customer lists. Goodwill is the excess
of the purchase price over the fair value of net assets acquired in business
combinations accounted for as purchases. Prior to the adoption of SFAS No.
142, Goodwill and Other Intangible Assets, goodwill was amortized on a
straight-line basis over 10 years. Upon the adoption of SFAS No. 142,
goodwill is no longer amortized. Instead goodwill is reviewed annually (or more
frequently under certain conditions) for impairment in accordance with this
statement.

Customer lists represent the portion of the purchase price allocated to the
value of the customer base. Customer lists are amortized on a straight-line
basis over 3 or 5 years.

Impairment of Long-Lived Assets

Long-lived assets, including fixed assets and amortizable definite lived
intangible assets, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the
sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset, a loss is recognized for the difference between the fair
value and the carrying value of the asset.

Investments

All investments in which the Company has the ability to exercise significant
influence over the investee, but less than a controlling voting interest, are
accounted for using the equity method. Equity method investments are recorded
at original cost and adjusted periodically to recognize the Companys
proportionate share of the investees net income or losses after the date of
investment, additional contributions made and dividends received. Prior to the
adoption of SFAS No. 142, the difference between the Companys recorded
investment and its proportionate interest in the book value of the investees
net assets were being amortized on a straight-line basis over 10 years. The
Company evaluates the carrying value of its equity method investments and tests
for impairment in accordance with APB Opinion No. 18.

F-140



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|3. |  | Significant Accounting Policies (continued)
|-- |  | -------------------------------------------

Investments in which the Company does not have the ability to exercise
significant influence (less than 20% ownership) are accounted for on the cost
method.

Deferred Financing Costs

Deferred financing costs, net of $33.9 million and $70.9 million as of December
31, 2002 and 2001, respectively, are included in other assets. Deferred
financing costs are incurred in connection with the issuance of debt and are
amortized over the term of the related debt.

Revenue Recognition

Revenues are recognized at the time the service is rendered to the customer or
the performance of the service has been completed. Charges for services that
are billed in advance are deferred and recognized when earned. Rental revenues
are recognized when earned on a monthly basis. Installation and maintenance
service revenues are recognized when the performance of the service has been
completed.

Cable Television System Costs, Expenses and Revenues

The Company accounts for costs, expenses and revenues applicable to the
construction and operation of its broadband communications networks in
accordance with SFAS No. 51, Financial Reporting by Cable Television
Companies.

Advertising Expense

The Company charges the cost of advertising to expense as incurred.
Advertising costs were $9.4 million, $13.1 million and $19.0 million in 2002,
2001 and 2000, respectively.

Stock-Based Compensation

The Company follows the disclosure-only provisions of SFAS No. 123, Accounting
for Stock-Based Compensation. The Company applies APB Opinion No. 25,
Accounting for Stock Issued to Employees and related interpretations in
accounting for its stock option plans.

Had compensation for stock options granted by Old NTL been determined
consistent with the provisions of SFAS No. 123, the effect on the Companys net
loss would have been changed to the following pro forma amounts (See Note 18):

|                                           |  |                                         |          |      |  |      |           |   |  |   |          |  
|------------------------------------------ |  | --------------------------------------- | -------- | ---- |  | ---- | --------- | - |  | - | -------- | -
|                                           |  | For the Year Ended December 31,        
|                                           |  |                                        
|                                           |  | 2002                                    |          | 2001 |  | 2000
|                                           |  |                                         |          |      |  |     
|                                           |  | (in millions, except per share amounts)
|Non-cash compensation expense, as reported |  | $                                       |         |      |  | $    | 30.6      |   |  | $ |         |  
|Non-cash compensation expense, pro forma   |  | $                                       | 264.3    |      |  | $    | 268.3     |   |  | $ | 255.8    |  
|Net loss, as reported                      |  | $                                       | (3,658.6 | )    |  | $    | (13,706.8 | ) |  | $ | (2,967.0 | )
|Net loss, pro forma                        |  | $                                       | (3,922.9 | )    |  | $    | (13,975.1 | ) |  | $ | (3,222.8 | )

Derivative Financial Instruments

Old NTL has used financial instruments to hedge a portion, but not all, of its
exposure from floating interest rate debt and from movements in foreign
exchange rates. Gains and losses on these instruments were deferred and
recognized in the statement of operations when the related hedged transactions
were recognized. To date, premiums paid for these contracts have not been
material. The Company does not use derivative financial instruments for trading
or speculative purposes.

F-141



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|4. |  | Discontinued Operations
|-- |  | -----------------------

Pursuant to the Plan, Old NTL was split into two separate companies on the
Effective Date. The entity formerly known as NTL Communications Corp. was
renamed NTL Incorporated and became the holding company for Old NTLs
principal UK and Ireland assets. Prior to consummation of the Plan, NTL
Communications Corp. was a wholly-owned subsidiary of Old NTL, which, pursuant
to the Plan, was renamed NTL Europe, Inc. and which became the holding
company for Old NTLs European and certain other assets. Pursuant to the Plan,
all of the outstanding securities of the Old NTL and certain of its
subsidiaries were canceled, and NTL Europe issued shares of its Common Stock
and Preferred Stock and New NTL issued shares of its common stock and Series A
warrants to various former creditors and stockholders of the Old NTL and its
subsidiaries. The precise mix of new securities received by holders of each
particular type of security of Old NTL and its subsidiaries was set forth in
the Plan.

New NTL is accounted for as a discontinued operation, and accordingly, it is
excluded from assets and liabilities of continuing operations as of December
31, 2002 and 2001, and from results of continuing operations for the years
ended December 31, 2002, 2001 and 2000.

On April 2, 2002, Old NTL had completed the previously announced sale of its
Australian broadcast business to Macquarie Communications Infrastructure
Holding Pty Limited for A$850 million (US$451.3 million). The net proceeds
from the sale after the repayment of the outstanding bank credit facility and
transaction related costs were approximately A$575.3 million (US$304.5
million). Old NTL recognized a gain on the sale of approximately US$7.5
million, net of income tax expense of US$4.6 million, in April 2002. NTL
Australia is accounted for as a discontinued operation and, accordingly, NTL
Australia is excluded from assets and liabilities of continuing operations as
of December 31, 2002 and 2001 and from results of continuing operations for the
years ended December 31, 2002, 2001 and 2000.

In October 2002, Cablecom sold its consumer electronics retail stores
(Rediffusion) for approximately CHF 5.0 million. The Company recognized a
loss on the sale of approximately US$13.2 million in October 2002. Rediffusion
is accounted for as a discontinued operation and, accordingly, Rediffusion is
excluded from assets and liabilities of continuing operations as of December
31, 2002 and 2001 and from results of continuing operations for the years ended
December 31, 2002, 2001 and 2000.

The following are the assets, liabilities and results of operations of New NTL, NTL Australia and Rediffusion:

|                                  |  |                   |          |           |  |             |   |       |  |   |   |  |  |   |          | 
|--------------------------------- |  | ----------------- | -------- | --------- |  | ----------- | - | ----- |  | - | - |  |  | - | -------- | 
|                                  |  | December 31, 2002
|                                  |  | (in millions)    
|                                  |  |                  
|                                  |  | New               |          | NTL       |  |             |   |       |  |   |   | 
|                                  |  | NTL               |          | Australia |  | Rediffusion |   | Total
|                                  |  |                   |          |           |  |             |   |      
|Current assets                    |  | $                 | 1,103.3  |           |  | $           |  |       |  | $ |  |  |  | $ | 1,103.3  | 
|Fixed assets, net                 |  |                   | 11,088.9 |           |  |             |  |       |  |   |  |  |  |   | 11,088.9 | 
|Other assets                      |  |                   | 781.8    |           |  |             |  |       |  |   |  |  |  |   | 781.8    | 
|                                  |  |                   |          |           |  |             |   |       |  |   |   |  |  |   |          | 
|Total assets                      |  | $                 | 12,974.0 |           |  | $           |  |       |  | $ |  |  |  | $ | 12,974.0 | 
|                                  |  |                   |          |           |  |             |   |       |  |   |   |  |  |   |          | 
|Current liabilities               |  | $                 | 7,746.2  |           |  | $           |  |       |  |   |  |  |  | $ | 7,746.2  | 
|Non current liabilities           |  |                   | 94.4     |           |  |             |  |       |  |   |  |  |  |   | 94.4     | 
|Liabilities subject to compromise |  |                   | 10,132.6 |           |  |             |  |       |  |   |  |  |  |   | 10,132.6 | 
|                                  |  |                   |          |           |  |             |   |       |  |   |   |  |  |   |          | 
|Total liabilities                 |  | $                 | 17,973.2 |           |  | $           |  |       |  | $ |  |  |  | $ | 17,973.2 | 
|                                  |  |                   |          |           |  |             |   |       |  |   |   |  |  |   |          | 

|                        |  |                   |          |           |  |             |       |       |  |   |      |  |  |   |          | 
|----------------------- |  | ----------------- | -------- | --------- |  | ----------- | ----- | ----- |  | - | ---- |  |  | - | -------- | 
|                        |  | December 31, 2001
|                        |  | (in millions)    
|                        |  |                  
|                        |  | New               |          | NTL       |  |             |       |       |  |   |      | 
|                        |  | NTL               |          | Australia |  | Rediffusion |       | Total
|                        |  |                   |          |           |  |             |       |      
|Current assets          |  | $                 | 1,164.3  |           |  | $           | 32.0  |       |  | $ | 32.1 |  |  | $ | 1,228.4  | 
|Fixed assets, net       |  |                   | 10,840.3 |           |  |             | 235.2 |       |  |   | 2.9  |  |  |   | 11,078.4 | 
|Other assets            |  |                   | 1,027.1  |           |  |             | 137.9 |       |  |   | 20.8 |  |  |   | 1,185.8  | 
|                        |  |                   |          |           |  |             |       |       |  |   |      |  |  |   |          | 
|Total assets            |  | $                 | 13,031.7 |           |  | $           | 405.1 |       |  | $ | 55.8 |  |  | $ | 13,492.6 | 
|                        |  |                   |          |           |  |             |       |       |  |   |      |  |  |   |          | 
|Current liabilities     |  | $                 | 16,091.7 |           |  | $           | 71.1  |       |  | $ | 29.3 |  |  | $ | 16,192.1 | 
|Non current liabilities |  |                   | 122.7    |           |  |             | 111.9 |       |  |   | 3.9  |  |  |   | 238.5    | 
|                        |  |                   |          |           |  |             |       |       |  |   |      |  |  |   |          | 
|Total liabilities       |  | $                 | 16,214.4 |           |  | $           | 183.0 |       |  | $ | 33.2 |  |  | $ | 16,430.6 | 
|                        |  |                   |          |           |  |             |       |       |  |   |      |  |  |   |          | 

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|4. |  | Discontinued Operations (continued)
|-- |  | -----------------------------------

|                 |  |                              |          |           |  |             |      |       |  |   |      |   |  |   |          |  
|---------------- |  | ---------------------------- | -------- | --------- |  | ----------- | ---- | ----- |  | - | ---- | - |  | - | -------- | -
|                 |  | Year Ended December 31, 2002
|                 |  | (in millions)               
|                 |  |                             
|                 |  | New                          |          | NTL       |  |             |      |       |  |   |      |  
|                 |  | NTL                          |          | Australia |  | Rediffusion |      | Total
|                 |  |                              |          |           |  |             |      |      
|Revenues         |  | $                            | 3,256.5  |           |  | $           | 17.3 |       |  | $ | 49.8 |   |  | $ | 3,323.6  |  
|Operating (loss) |  |                              | (1,128.4 | )         |  |             | 0.3  |       |  |   | (7.1 | ) |  |   | (1,135.2 | )
|Net (loss)       |  |                              | (2,367.2 | )         |  |             | (0.3 | )     |  |   | (6.9 | ) |  |   | (2,374.4 | )

|                 |  |                              |           |           |  |             |      |       |  |   |       |   |  |   |           |  
|---------------- |  | ---------------------------- | --------- | --------- |  | ----------- | ---- | ----- |  | - | ----- | - |  | - | --------- | -
|                 |  | Year Ended December 31, 2001
|                 |  | (in millions)               
|                 |  |                             
|                 |  | New                          |           | NTL       |  |             |      |       |  |   |       |  
|                 |  | NTL                          |           | Australia |  | Rediffusion |      | Total
|                 |  |                              |           |           |  |             |      |      
|Revenues         |  | $                            | 3,181.5   |           |  | $           | 61.8 |       |  | $ | 64.3  |   |  | $ | 3,307.6   |  
|Operating (loss) |  |                              | (10,409.7 | )         |  |             | (7.4 | )     |  |   | (15.4 | ) |  |   | (10,432.5 | )
|Net (loss)       |  |                              | (11,850.8 | )         |  |             | (6.5 | )     |  |   | (15.6 | ) |  |   | (11,872.9 | )

|                 |  |                              |          |           |  |             |       |       |  |   |      |  |  |   |          |  
|---------------- |  | ---------------------------- | -------- | --------- |  | ----------- | ----- | ----- |  | - | ---- |  |  | - | -------- | -
|                 |  | Year Ended December 31, 2000
|                 |  | (in millions)               
|                 |  |                             
|                 |  | New                          |          | NTL       |  |             |       |       |  |   |      | 
|                 |  | NTL                          |          | Australia |  | Rediffusion |       | Total
|                 |  |                              |          |           |  |             |       |      
|Revenues         |  | $                            | 2,484.2  |           |  | $           | 55.0  |       |  | $ | 74.7 |  |  | $ | 2,613.9  |  
|Operating (loss) |  |                              | (1,525.2 | )         |  |             | (19.5 | )     |  |   | 1.4  |  |  |   | (1,543.3 | )
|Net (loss)       |  |                              | (2,388.1 | )         |  |             | (20.9 | )     |  |   | 1.5  |  |  |   | (2,407.5 | )



|5. |  | Recent Accounting Pronouncements
|-- |  | --------------------------------

On December 31, 2002, Old NTL adopted the disclosure provisions of SFAS No.
148, Accounting for Stock-Based Compensation  Transition and Disclosure.
SFAS No. 148 amends SFAS No. 123, Accounting for Stock Based Compensation, to
provide alternative methods of transition to SFAS No. 123s fair value method
of accounting for stock-based employee compensation. SFAS No. 148 also amends
the disclosure provisions of SFAS No. 123 and APB Opinion No. 28, Interim
Financial Reporting.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS No. 146 replaces Emerging Issues Task
Force Issue No. 94-3 Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring). SFAS No. 146 requires that a liability for costs
associated with an exit or disposal activity is recognized when the liability
is incurred. Under Issue No. 94-3, a liability for an exit cost as defined is
recognized at the date of a commitment to an exit or disposal plan. SFAS No.
146 is effective for exit or disposal activities that are initiated after
December 31, 2002. The adoption of this standard is not expected to have a
significant effect on the results of operations, financial condition or cash
flows of the Company.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections,
which is effective for the Company on January 1, 2003. The adoption of SFAS
No. 145 will require any gain or loss recognized on the extinguishment of debt
to be classified as income or loss from continuing operations. Prior to SFAS
No. 145, gain or loss recognized on the extinguishment of debt was classified
as an extraordinary item.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which was effective for the Company on January
1, 2002. This Statement supercedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
and other related accounting guidance. The adoption of this new standard had
no effect on the results of operations, financial condition or cash flows of
the Company, except that it required the Company to treat NTL Australia as a
discontinued operation beginning in the first quarter of 2002. The Company
also accounted for NTL Communications and Rediffusion as discontinued
operations in the third and fourth quarter of 2002, respectively.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|5. |  | Recent Accounting Pronouncements (continued)
|-- |  | --------------------------------------------

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, which is effective for the Company on January 1, 2003. This
Statement addresses financial accounting and reporting for obligations
associated with the retirement of tangible fixed assets and the associated
asset retirement costs. The adoption of this new standard is not expected to
have a significant effect on the results of operations, financial condition or
cash flows of the Company.

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also includes guidance on the initial recognition and
measurement of goodwill and other intangible assets acquired in a business
combination that is completed after June 30, 2001. SFAS No. 142 ends the
amortization of goodwill and indefinite-lived intangible assets. Instead,
these assets must be reviewed annually (or more frequently under certain
conditions) for impairment in accordance with this statement. This impairment
test uses a fair value approach rather than the undiscounted cash flow approach
previously required by SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. Old NTL
adopted SFAS No. 141 and SFAS No. 142 on January 1, 2002. Primarily due to the
significant impairment charge that Old NTL recorded in 2001, the adoption of
this new standard did not result in an impairment upon adoption. Amortization
of goodwill and license acquisition costs ceased effective January 1, 2002.
See Note 8.



|6. |  | Asset Impairments
|-- |  | -----------------

Asset impairment charges were $854.3 million in the year ended December 31,
2002 and almost exclusively apply to the Cablecom operations. These charges
are non-cash charges to write-down certain assets to their estimated fair
values based on an assessment that their carrying value was not recoverable.
These charges include fixed assets of $1.0 million, goodwill of $841.0 million
and other assets of $12.3 million. The charge with respect to fixed assets was
estimated based upon the technological obsolescence of certain network and
other equipment. The charge with respect to goodwill was determined in
accordance with SFAS No. 142.

As of December 31, 2001, Old NTL 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 Old NTLs stock price and significantly lower
valuations for companies within its industry. Additionally, at the time of Old
NTLs analysis, the book value of Old NTLs net assets significantly exceeded
its market capitalization. Accordingly, Old NTL performed an analysis of the
recoverability of its long-lived assets and associated goodwill. The fair
value of Old NTLs assets was determined by discounting Old NTL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. Old NTL recorded a write-down of $9,511.3 million in the fourth
quarter of 2001 as a result of this analysis and review, of which $8,161.6
million is included in loss from discontinued operations, $912.1 million is
included in asset impairments and $437.6 million is included in share of losses
from equity investments. The asset impairment charge of $912.1 million
included goodwill of $762.7 million, investments in affiliates of $25.1 million
and other assets of $124.3 million.



|7. |  | Fixed Assets
|-- |  | ------------

Fixed assets consist of:

|                         |  |               |         |      |  |   |         |  
|------------------------ |  | ------------- | ------- | ---- |  | - | ------- | -
|                         |  | December 31, 
|                         |  |              
|                         |  | 2002          |         | 2001
|                         |  |               |         |     
|                         |  | (in millions)
|Operating equipment      |  | $             | 2,109.2 |      |  | $ | 1,691.4 |  
|Other equipment          |  |               | 109.1   |      |  |   | 64.4    |  
|Construction-in-progress |  |               | 25.1    |      |  |   | 2.8     |  
|                         |  |               |         |      |  |   |         |  
|                         |  |               | 2,243.4 |      |  |   | 1,758.6 |  
|Accumulated depreciation |  |               | (561.5  | )    |  |   | (264.0  | )
|                         |  |               |         |      |  |   |         |  
|                         |  | $             | 1,681.9 |      |  | $ | 1,494.6 |  
|                         |  |               |         |      |  |   |         |  

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|8. |  | Cablecom Acquisition and Intangible Assets
|-- |  | ------------------------------------------

On March 28, 2000, Old NTL acquired the cable assets of the Cablecom group in
Switzerland for cash of CHF 5,800.0 million ($3,510.2 million), a substantial
portion of which was funded by a new bank facility of CHF 2,700.0 million
($1,630.5 million) and Old NTLs issuance of $1,850.0 million of preferred
stock to France Telecom and a group of commercial banks. This acquisition was
accounted for as a purchase and, accordingly, the net assets and results of
operations of Cablecom have been included in the consolidated financial
statements from the date of acquisition. The aggregate purchase price of
$3,528.6 million, which includes costs incurred of $18.4 million, exceeded the
fair value of net tangible assets acquired by $2,282.2 million, which was
allocated as follows: $195.9 million to customer lists, $73.1 million to
deferred taxes and $2,159.4 million to goodwill.

The change in the carrying amount of goodwill during the year ended December
31, 2002 is as follows (in millions):

|                                                  |  |   |        |  
|------------------------------------------------- |  | - | ------ | -
|Goodwill  December 31, 2001                      |  | $ | 959.8  |  
|Impairment charge                                 |  |   | (841.0 | )
|Foreign currency exchange translation adjustments |  |   | 101.3  |  
|                                                  |  |   |        |  
|Goodwill  December 31, 2002                      |  | $ | 220.1  |  
|                                                  |  |   |        |  

Upon the adoption of SFAS No. 142, Old NTL performed an analysis of its
intangible assets acquired before July 1, 2001 to determine whether they should
be classified and accounted for as part of or separate from goodwill. Old NTL
also determined that no changes in the remaining useful lives of the customer
lists were required.

Old NTL also performed an evaluation for impairment of its goodwill as of
January 1, 2002 and determined that no impairment charge was required.

Estimated aggregate amortization expense for each of the five succeeding fiscal
years from December 31, 2002, as adjusted for the Companys emergence from
Chapter 11 reorganization, the adoption of fresh-start reporting, and prior to
the deconsolidation of Cablecom, would be approximately $10 million for each of
the next five years.

The following table shows the Companys net loss as adjusted for the adoption
of SFAS No. 142, had SFAS No. 142 been in effect on January 1 of each period
(unaudited) (in millions):

|                                              |          |   |              |   |      |   |          |       |  |   |        |       | 
|--------------------------------------------- | -------- | - | ------------ | - | ---- | - | -------- | ----- |  | - | ------ | ----- | 
|                                              |          |   | Year Ended  
|                                              |          |   | December 31,
|                                              |          |   |             
|                                              |          |   | 2002         |   | 2001 |   | 2000    
|                                              |          |   |              |   |      |   |         
|Loss from continuing operations  as reported |          | $ | (1,278.5     | ) |      | $ | (1,833.9 | )     |  | $ | (559.5 | )    
|Amortization of:                              |          |   |              |   |      |   |          |       |  |   |        |      
|                                              | Goodwill |   |              |  |      |   |          | 318.2 |  |   |        | 238.8 | 
|                                              | Other    |   |              |  |      |   |          | 32.8  |  |   |        | 0.8   | 
|                                              |          |   |              |   |      |   |          |       |  |   |        |      
|                                              |          |   |             |   |      |   | 351.0    |       |  |   | 239.6  |      
|                                              |          |   |              |   |      |   |          |       |  |   |        |      
|Loss from continuing operations  as adjusted |          | $ | (1,278.5     | ) |      | $ | (1,482.9 | )     |  | $ | (319.9 | )    
|                                              |          |   |              |   |      |   |          |       |  |   |        |      



|9. |  | Investments in and Loans to Affiliates
|-- |  | --------------------------------------

The Company has investments in various companies and joint ventures which are
accounted for under either the equity method or the cost method. The Companys
equity investments include its 50% interest in eKabel InvestCo, which owns 65%
of iesy Hessen GmbH (iesy), the largest cable television network in the
German province of Hessen, and its 34.01% interest in B2 (Bredband) AG (B2),
a company based in Sweden, which provides access to a broadband network that
provides transmission, both to and from the customer, at the same speed and at
the same time, but, as described more fully in this Form 10-K, the Company
entered into a settlement agreement on April 30, 2003, pursuant to which, among
other things, the Company agreed to sell all of its interest in B2 in the near
future.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|9. |  | Investments in and Loans to Affiliates (continued)
|-- |  | --------------------------------------------------

On November 3, 2002, Old NTL, NTL Delaware, and Brigadoon Ventures, Inc., a
wholly-owned subsidiary of NTL Delaware, entered into an agreement, whereby (1)
Old NTL was entitled to receive a cash facilitation fee for its cooperation in
the restructuring of iesy and its subsidiaries (but not in consideration of
certain of Old NTLs subsidiaries indirect equity stake in iesy) of
approximately $1.3 million, less such subsidiaries pro rata share of expenses
and (2) such subsidiaries were entitled to receive a release of possible
liabilities and claims arising out of their indirect equity stake in iesy,
including claims alleged by certain holders of notes of iesy in the bankruptcy.
The transactions contemplated by the iesy agreement closed in January 2003.
In addition to the Companys share of iesys losses, share of losses from
equity investments includes a non-cash write-down of the investment in iesy of
$40.6 million in 2002.

B2 (Bredband)AG

On April 15, 2002, a funding request for approximately $20 million was received
by Old NTL under the terms of the investment agreement relating to Old NTLs
investment in B2. Old NTL informed B2 and the other principal investors that
it was not in a position to comply with the request for funding. The B2
investment agreement provides that if Old NTL fails to provide such funding, it
may be sued for non-payment and arguably could lose certain rights under the B2
shareholders agreement including its interest in B2.

On October 4, 2002, Old NTL filed a motion with the bankruptcy court to reject
the B2 investment agreement and shareholders agreement under section 365 of
the bankruptcy code, and the bankruptcy court subsequently authorized Old NTLs
rejection of the agreements. On November 8, 2002, B2 and the other principal
shareholders filed proofs of claim with the bankruptcy court asserting their
right to recover: (1) approximately $20 million from Old NTL in respect of the
unpaid funding request; (2) unspecified damages for Old NTLs failure to
perform under the relevant agreements; and (3) unspecified costs and expenses
incurred in the exercise of their remedies under the agreements, and reserved
their other rights to avail themselves of any remedies under the agreements.

On April 30, 2003, NTL Delaware, together with its subsidiaries NTL Sweden SPV
Inc. and Nogenta Swedish Acquisition Holding B.V., entered into an agreement
with B2 and the other principal shareholders of B2 relating to, among other
things, the transfer of the Companys securities in B2. Under the agreement,
the NTL Europe parties have agreed to transfer their interest in B2 to certain
other shareholders of B2 in exchange for approximately $375,000 in cash or
certain securities of a B2 affiliate and mutual releases among the parties
relating to a dispute stemming from an April 15, 2002 funding request for
approximately $20 million. In connection with the mutual releases, the
agreement provides that B2 and the other principal shareholders will withdraw,
or otherwise assist NTL Delaware in obtaining bankruptcy court denial of, the
proofs of claim filed by B2 and the other principal shareholders in the
bankruptcy court. The closing of this transaction is subject to customary
closing conditions, but the NTL Europe releases are effective unless the NTL
Europe parties breach their respective obligations under the agreement.

F-146



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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|9. |  | Investments in and Loans to Affiliates (continued)
|-- |  | --------------------------------------------------

Premium TV Limited

Premium TV, a wholly-owned subsidiary of NTL Delaware, is obliged to provide
funding of up to approximately £39 million ($62.8 million) to fund various of
its joint venture and other contractual interests. Of this amount, the payment
of approximately £26 million ($41.7 million) has been guaranteed by NTL
Delaware. If Premium TV fails to provide its committed funding under the
relevant shareholder arrangements relating to these joint ventures, Premium TV
and, in respect of the guaranteed amounts, NTL Delaware, may be sued for
non-payment. As a result of the recapitalization process, the relevant joint
venture partners may assert that they can compulsorily acquire Premium TVs
interest in the relevant joint venture at a third party appraisal valuation.
Premium TV is currently in discussions with certain of these joint venture
partners with a view to restructuring the relevant joint ventures. In the event
that these discussions do not reach a resolution acceptable to Premium TV,
Premium TV may seek to discontinue these joint ventures and terminate their
activities. The Company believes, however, that it has various defenses and
protections under the Bankruptcy Code against such actions and intends to
enforce vigorously its rights and protections.

On September 24, 2002, Premium TV, NTL Delaware and Old NTL agreed to vary the
terms of the long-term joint venture (referred to as the Football League Joint
Venture) between Premium TV and the Football League Limited. Under the terms
of the variation, upon the payment of arrears of rights fees by Premium TV, the
Football League Limited agreed to release Premium TV from its obligation to
fund the payment of any further rights fees to the Football League Limiteds
member teams and its obligation to provide working capital funding to the
Football League Joint Venture. The Football League Limited also agreed to
release NTL Delaware from its guarantee of Premium TVs obligations and to
release Old NTL from the related undertaking. In return, Premium TV agreed to
waive repayment of loan capital by the Football League Joint Venture and to
provide certain ongoing services to the Football League Joint Venture free of
charge for an initial period. NTL Delaware deposited £10.33 million into a
designated single purpose account for use by Premium TV to finance the
provision of such services. Premium TV and the Football League Limited also
agreed to new terms relating to the distribution of revenues generated by the
Football League Joint Venture. The remaining balance in the account at
December 31, 2002 was £8.88 million and is included in Other Assets in the
accompanying consolidated balance sheet.

NTL Europe has also guaranteed the obligations of one of its subsidiaries to
provide funding of up to approximately £4.2 million ($6.8 million) to a joint
venture whose business is the provision of programming content. If the
relevant subsidiary fails to provide such funding, under the shareholder
arrangements relating to this joint venture, such subsidiary may be sued for
damages. In addition, under the shareholder arrangements relating to this
joint venture, the relevant joint venture partner may have the option to
compulsorily acquire NTL Europes indirect interest in the relevant joint
venture at 70% of fair market value, resulting in NTL Europes selling its
indirect interest at a potential loss. NTL Europe believes that it has
various defenses and protections against such actions and intends to enforce vigorously its rights and
protections. NTL Europe intends to negotiate with its joint venture partner
to address these issues. These negotiations may not be successful and NTL Europe may not be able to retain its current interest in this joint venture
company. The relevant subsidiary has ceased doing business and currently is in
the process of being wound up.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|9. |  | Investments in and Loans to Affiliates (continued)
|-- |  | --------------------------------------------------

The Companys investments in and loans to affiliates are as follows:

|                         |  |                       |       |                   |  |           |     |         |  |  |       |   |  |   |       | 
|------------------------ |  | --------------------- | ----- | ----------------- |  | --------- | --- | ------- |  |  | ----- | - |  | - | ----- | 
|                         |  | December 31, 2002     |       | December 31, 2001
|                         |  |                       |       |                  
|                         |  | Ownership             |       | Balance           |  | Ownership |     | Balance
|                         |  |                       |       |                   |  |           |     |        
|                         |  | (dollars in millions)
|B2                       |  |                       | 34.01 | %                 |  | $         |    |         |  |  | 34.01 | % |  | $ | 92.5  | 
|iesy                     |  |                       | 32.50 | %                 |  |           |    |         |  |  | 32.50 | % |  |   | 73.0  | 
|Others                   |  |                       |       |                   |  |           |    |         |  |  |       |   |  |   | 44.0  | 
|                         |  |                       |       |                   |  |           |     |         |  |  |       |   |  |   |       | 
|Total equity investments |  |                       |       |                   |  |           |    |         |  |  |       |   |  |   | 209.5 | 
|Total cost investments   |  |                       |       |                   |  |           | 7.8 |         |  |  |       |   |  |   | 6.6   | 
|                         |  |                       |       |                   |  |           |     |         |  |  |       |   |  |   |       | 
|Total                    |  |                       |       |                   |  | $         | 7.8 |         |  |  |       |   |  | $ | 216.1 | 
|                         |  |                       |       |                   |  |           |     |         |  |  |       |   |  |   |       | 

The Company has reclassified $16.7 million of credit balances to Other
Long-Term Liabilities, which related to investments where the Company has
funding commitments and losses to date, which have exceeded the Companys
investment.

A summary of combined financial information as reported by the Companys equity
investees is set forth below (unaudited):

|                                           |  |               |       |              |  |   |         | 
|------------------------------------------ |  | ------------- | ----- | ------------ |  | - | ------- | 
|                                           |  | December 31,  |       | December 31,
|                                           |  | 2002          |       | 2001        
|                                           |  |               |       |             
|                                           |  | (in millions)
|Current assets                             |  | $             | 157.7 |              |  | $ | 284.9   | 
|Fixed assets, net                          |  |               | 414.5 |              |  |   | 391.7   | 
|Other assets                               |  |               | 385.2 |              |  |   | 801.4   | 
|                                           |  |               |       |              |  |   |         | 
|Total assets                               |  | $             | 957.4 |              |  | $ | 1,478.0 | 
|                                           |  |               |       |              |  |   |         | 
|Current liabilities                        |  | $             | 138.2 |              |  | $ | 185.5   | 
|Non current liabilities                    |  |               | 891.5 |              |  |   | 837.6   | 
|Total shareholders equity                 |  |               | (72.3 | )            |  |   | 454.9   | 
|                                           |  |               |       |              |  |   |         | 
|Total liabilities and shareholders equity |  | $             | 957.4 |              |  | $ | 1,478.0 | 
|                                           |  |               |       |              |  |   |         | 

|                 |  |               |        |      |  |      |        |   |  |   |        |  
|---------------- |  | ------------- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                 |  | Year Ended   
|                 |  | December 31  
|                 |  |              
|                 |  | 2002          |        | 2001 |  | 2000
|                 |  |               |        |      |  |     
|                 |  | (in millions)
|Revenues         |  | $             | 145.4  |      |  | $    | 126.2  |   |  | $ | 115.3  |  
|Operating (loss) |  |               | (431.5 | )    |  |      | (254.7 | ) |  |   | (225.1 | )
|Net (loss)       |  |               | (412.4 | )    |  |      | (374.5 | ) |  |   | (296.6 | )

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|10. |  | Liabilities Subject to Compromise
|--- |  | ---------------------------------

Liabilities subject to compromise consist of the following:

|                        |                                       |       |      |               |         | 
|----------------------- | ------------------------------------- | ----- | ---- | ------------- | ------- | 
|                        |                                       |       |      | December 31, 
|                        |                                       |       |      | 2002         
|                        |                                       |       |      |              
|                        |                                       |       |      | (in millions)
|Interest payable        |                                       |       | 27.2 |              
|Accrued expenses        |                                       |       | 0.2  |              
|Payable to subsidiaries |                                       |       | 16.3 |              
|Long term debt:         |                                       |       |      |              
|                        | 5 3/4% Convertible Subordinated Notes |       |      | 1,200.0       |        
|                        |                                       |       |      |              
|                        |                                       | Total |      | $             | 1,243.7 | 
|                        |                                       |       |      |              

Upon emergence from Chapter 11 reorganization and in accordance with the Plan,
all of the outstanding preferred stock of Old NTL and long-term debt of Old NTL
and NTL Delaware was canceled.



|11. |  | Long-Term Debt
|--- |  | --------------

Long-term debt, exclusive of amounts subject to compromise, consisted of:

|                     |                                       |   |               |         |              |   |         |         | 
|-------------------- | ------------------------------------- | - | ------------- | ------- | ------------ | - | ------- | ------- | 
|                     |                                       |   | December 31,  |         | December 31,
|                     |                                       |   | 2002          |         | 2001        
|                     |                                       |   |               |         |             
|                     |                                       |   | (in millions)
|                     | 5 3/4% Convertible Subordinated Notes |   | $             |        |              |   | $       | 1,200.0 | 
|Cablecom:            |                                       |   |               |         |              |   |         |        
|                     | Term Loan Facility                    |   |               | 1,951.8 |              |   |         | 1,626.8 | 
|                     | Revolving Facility                    |   |               | 762.7   |              |   |         | 527.2   | 
|                     | Other                                 |   |               | 4.8     |              |   |         | 6.2     | 
|                     |                                       |   |               |         |              |   |         |         | 
|                     |                                       |   | 2,719.3       |         |              |   | 3,360.2 |        
|Less current portion |                                       |   | 2,719.3       |         |              |   | 3,360.2 |        
|                     |                                       |   |               |         |              |   |         |         | 
|                     |                                       | $ |              |         |              | $ |        |        
|                     |                                       |   |               |         |              |   |         |         | 

NTL Delaware had $1,200.0 million 5 3/4% Convertible Subordinated Notes due
December 15, 2009 which were canceled on the Effective Date pursuant to the
Plan. Interest of 5 3/4% per annum was payable semiannually from June 15, 2000.
The notes were convertible into shares of Old NTLs common stock at a
conversion price of $108.18 per share.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|11. |  | Long-Term Debt (continued)
|--- |  | --------------------------

In March 2000, Cablecom borrowed CHF 2,700.0 million ($1,951.8 million and
$1,626.8 million at December 31, 2002 and 2001, respectively) under its term
loan facility in connection with the acquisition of the Cablecom business.
Interest is payable at least every six months at Swiss LIBOR plus a margin rate
of 2.5% per annum, which is subject to adjustment. The effective interest rate
was 3.51% and 5.27% at December 31, 2002 and 2001, respectively. Although the
term loan facility was originally scheduled to mature on April 30, 2003, upon
the request of Cablecom, the maturity date has been extended to the business
day following May 31, 2003, with an additional automatic extension to June 30,
2003 under certain circumstances.

Cablecom had the option to draw on a revolving facility of up to an additional
CHF 1,400 million. The amount available had been capped at CHF 1,055 million
although the availability may be increased with the consent of the requisite
majority of the lenders. At December 31, 2002 and 2001, Cablecom had borrowed
CHF 1,055.0 million ($762.7 million) and CHF 875.0 million ($527.2 million),
respectively, and Cablecom has subsequently borrowed an additional CHF 37
million for accrued interest payments. Interest is payable at least every six
months at Swiss LIBOR plus a margin rate of 2.5% per annum, which is subject to
adjustment. The effective rate of interest was 3.71% and 5.49% at December 31,
2002 and 2001, respectively. 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. Although the revolving facility was
originally scheduled to mature on April 30, 2003, upon the request of Cablecom,
the maturity date has been extended to the business day following May 31, 2003,
with an additional automatic extension to June 30, 2003 under certain
circumstances.

As described in more detail in Note 21 (Commitments and Contingent Liabilities
 Cablecom), Cablecom does not have sufficient resources to satisfy these bank
obligations. In addition, Cablecom and two of its subsidiaries are
overindebted under Swiss law and, accordingly, may be required to file for
insolvency proceedings in Switzerland. Cablecom and its lenders have been
involved in ongoing discussions regarding a complete financial restructuring of
Cablecom which will, among other things, reduce the amount of bank debt
outstanding, extend the maturity date thereof and resolve the Swiss
overindebtedness issue. In the event that such negotiations are unsuccessful,
the Company expects to be deprived of all of its ownership interest in Cablecom
in the near future. Further, even if such negotiations are successful, the
Company expects to be left with no more than a small minority interest in
Cablecom. Accordingly, the Company anticipates that, in the near future, the
results of Cablecom will no longer be reported as part of the Companys
consolidated results of operations. In that regard, it should also be noted
that, in accordance with the terms of the existing Cablecom credit agreement,
no dividends, distributions or other payments have ever been or will be made by
Cablecom to the Company.

In February 2001, $109.5 million principal amount of Old NTLs 7% Convertible
Subordinated Notes due December 15, 2008 were converted into 2.8 million shares
of Old NTLs common stock at the applicable conversion price of $39.20 per
share. Old NTL issued as a premium on the conversion an additional 0.5 million
shares which were valued at the closing common stock price on the dates of
conversion. The premium, which amounted to $17.6 million, was included in Old
NTLs 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.

Long-term debt repayments are due as follows (in millions). The table reflects
the Companys contractual obligations as of December 31, 2002 as adjusted for
the emergence from Chapter 11 reorganization.

|                         |  |   |         | 
|------------------------ |  | - | ------- | 
|Year ending December 31: |  |   |         | 
|2003                     |  | $ | 2,714.7 | 
|2004                     |  |   | 0.9     | 
|2005                     |  |   | 0.1     | 
|2006                     |  |   | 0.1     | 
|2007                     |  |   | 0.1     | 
|Thereafter               |  |   | 3.4     | 
|                         |  |   |         | 
|Total debt repayments    |  |   | 2,719.3 | 
|Less: current portion    |  |   | 2,719.3 | 
|                         |  |   |         | 
|                         |  | $ |        | 
|                         |  |   |         | 

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|12. |  | Derivative Financial Instruments
|--- |  | --------------------------------

Effective January 1, 2001, Old NTL adopted SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended by SFAS Nos. 137 and
138. The new accounting standard requires that all derivative instruments be
recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in the results of operations or in other
comprehensive loss, depending on whether a derivative is designated as a fair
value or cash flow hedge. The ineffective portion of all hedges is recognized
in the results of operations. Beginning in October 1, 2001, Old NTL has
recorded the change in the fair value of derivatives related to changes in time
value each period in other comprehensive loss for certain qualifying cash flow
hedges.

On January 1, 2001, Old NTL and its subsidiaries recorded all of their
outstanding derivative instruments at their fair value. The outstanding
derivative instruments were comprised of 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.

At December 31, 2002, Cablecom had zero cost collars, with a notional amount of
CHF 1,200.0 million, to hedge exposure to the floating interest rate
indebtedness incurred under the Cablecom term loan facility and revolving loan
facility.



|13. |  | Non-Cash Compensation
|--- |  | ---------------------

In July 2001, the Compensation and Option Committee of Old NTLs Board of
Directors approved modifications to certain stock options. The latest possible
expiration date of options to purchase an aggregate of approximately 4.7
million shares of Old NTLs common stock with exercise prices from $0.17 to
$14.76 per share was extended from July 30, 2001 to October 2004, as
applicable, to January 30, 2006. Old NTL recognized non-cash compensation
expense of $30.6 million based on the excess of the quoted market price of Old
NTLs common stock on the date of the modification of $12.05 per share over the
exercise price per share. All options to purchase shares of Old NTLs common
stock were canceled on the Effective Date pursuant to the Plan.



|14. |  | Other Charges Including Restructuring Charges
|--- |  | ---------------------------------------------

Other charges of $3.5 million in 2002 are for the integration of acquired
companies, mostly related to information technology integration, as well as
costs incurred for business rationalization consulting. Other charges
of $12.1 million in 2001 include restructuring charges of
$6.8 million and costs of $5.3 million incurred primarily to integrate the acquired companies, mostly related
to information technology integration, as well as costs incurred for business
rationalization consulting.

Restructuring charges of $6.8 million for the year ended December 31, 2001
relates to Old NTLs actions to reorganize, re-size and reduce operating costs
and create greater efficiency in various areas. These costs were for
approximately 225 employees to be terminated, none of whom are still employed
by the Company as of December 31, 2002.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|14. |  | Other Charges Including Restructuring Charges (continued)
|--- |  | ---------------------------------------------------------

The following table summarizes the restructuring charges incurred and utilized
in 2001 and 2002:

|                           |  |                   |      |  
|-------------------------- |  | ----------------- | ---- | -
|                           |  | Employee         
|                           |  | Severance        
|                           |  | and Related Costs
|                           |  |                  
|Charged to expense         |  | $                 | 6.8  |  
|Utilized                   |  |                   |     |  
|                           |  |                   |      |  
|Balance, December 31, 2001 |  |                   | 6.8  |  
|Utilized                   |  |                   | (4.6 | )
|                           |  |                   |      |  
|Balance, December 31, 2002 |  | $                 | 2.2  |  
|                           |  |                   |      |  



|15. |  | Income Taxes
|--- |  | ------------

Significant components of the provision/(benefit) for income taxes attributable
to continuing operations consists of the following:

|               |         |   |                         |        |      |   |       |       |   |   |       |       |  
|-------------- | ------- | - | ----------------------- | ------ | ---- | - | ----- | ----- | - | - | ----- | ----- | -
|               |         |   | Year Ended December 31,
|               |         |   |                        
|               |         |   | 2002                    |        | 2001 |   | 2000 
|               |         |   |                         |        |      |   |      
|               |         |   | (in millions)          
|Current:       |         |   |                         |        |      |   |       |       |   |   |       |      
|               | Federal |   | $                       | (4.6   | )    |   | $     |      |   |   | $     |      |  
|               | Foreign |   |                         | 3.4    |      |   |       | 0.3   |   |   |       |      |  
|               |         |   |                         |        |      |   |       |       |   |   |       |       |  
|Total current  |         |   | (1.2                    | )      |      |   | 0.3   |       |   |   |      |      
|               |         |   |                         |        |      |   |       |       |   |   |       |       |  
|Deferred:      |         |   |                         |        |      |   |       |       |   |   |       |      
|               | Foreign |   |                         | (128.2 | )    |   |       | (51.3 | ) |   |       | (23.2 | )
|               |         |   |                         |        |      |   |       |       |   |   |       |       |  
|Total deferred |         |   | (128.2                  | )      |      |   | (51.3 | )     |   |   | (23.2 | )    
|               |         |   |                         |        |      |   |       |       |   |   |       |       |  
|               |         | $ | (129.4                  | )      |      | $ | (51.0 | )     |   | $ | (23.2 | )    
|               |         |   |                         |        |      |   |       |       |   |   |       |       |  

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|15. |  | Income Taxes (continued)
|--- |  | ------------------------

The Companys deferred tax benefit relates primarily to operating loss
carryforwards for which benefit was recognized to the extent of deferred tax
liabilities. In addition, during the year ended December 31, 2002, Old NTL
merged certain Swiss subsidiaries and identified additional tax losses within
the merged entity, which allowed Old NTL to recognize a deferred tax benefit
for tax losses to the extent that the tax losses offset existing deferred tax
liabilities of the newly merged entity. The federal current benefit relates to
utilization of operating losses to offset income from discontinued operations
related to the sale of NTL Australia.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the deferred tax liabilities and assets are as follows:

|                                            |                      |   |               |       |      |   |        |       | 
|------------------------------------------- | -------------------- | - | ------------- | ----- | ---- | - | ------ | ----- | 
|                                            |                      |   | December 31, 
|                                            |                      |   |              
|                                            |                      |   | 2002          |       | 2001
|                                            |                      |   |               |       |     
|                                            |                      |   | (in millions)
|Deferred tax liabilities:                   |                      |   |               |       |      |   |        |      
|                                            | Intangibles          |   | $             | 15.9  |      |   | $      | 23.0  | 
|                                            | Fixed assets         |   |               | 137.4 |      |   |        | 139.4 | 
|                                            | Accounts receivable  |   |               | 78.0  |      |   |        |      | 
|                                            | Other                |   |               | 0.3   |      |   |        | 2.2   | 
|                                            |                      |   |               |       |      |   |        |       | 
|Total deferred tax liabilities              |                      |   | 231.6         |       |      |   | 164.6  |      
|Deferred tax assets:                        |                      |   |               |       |      |   |        |      
|                                            | Net operating losses |   |               | 751.9 |      |   |        | 174.9 | 
|                                            | Investment and other |   |               | 65.9  |      |   |        | 46.0  | 
|                                            |                      |   |               |       |      |   |        |       | 
|Total deferred tax assets                   |                      |   | 817.8         |       |      |   | 220.9  |      
|Valuation allowance for deferred tax assets |                      |   | (616.9        | )     |      |   | (200.5 | )    
|                                            |                      |   |               |       |      |   |        |       | 
|Net deferred tax assets                     |                      |   | 200.9         |       |      |   | 20.4   |      
|                                            |                      |   |               |       |      |   |        |       | 
|Net deferred tax (assets) liabilities       |                      | $ | 30.7          |       |      | $ | 144.2  |      
|                                            |                      |   |               |       |      |   |        |       | 

At December 31, 2002, Old NTL had a valuation allowance against its deferred
tax assets to the extent it was not more likely than not that such assets would
be realized in the future.

At December 31, 2002, Old NTL had net operating loss carryforwards of
approximately $300 million for U.S. federal income tax purposes that expire in
varying amounts commencing in 2009. Old NTL also has Swiss net operating loss
carryforwards of approximately $2.5 billion that expire in varying amounts
commencing in 2008.

As discussed in Note 1, the Company emerged from Chapter 11 bankruptcy on
January 10, 2003. A restructuring of the Companys debt will give rise to
cancellation of indebtedness income (COD) in 2003, which will be non-taxable
since the debt cancellation is in connection with a bankruptcy reorganization.
However, to the extent that such amount is excluded from U.S. taxable income,
certain tax attributes are subject to reduction, including certain U.S. net
operating loss carryforwards and U.S. capital loss carryforwards. The
reduction of tax attributes should have no material impact on the Companys
financial statement position since the deferred tax assets related to these tax
attributes are offset by a corresponding valuation allowance. Furthermore, the
reorganization will cause an ownership change pursuant to Internal Revenue Code
Section 382. Section 382 will severely limit the Companys ability to utilize
any remaining U.S. net operating loss carryforwards and may limit the Companys
ability to deduct any built-in losses recognized within the subsequent
five-year period.

In 2002, the Internal Revenue Service completed its federal income tax audit of
Old NTL for the years 1996, 1997 and 1998. The audit resulted in a reduction
in U.S. net operating loss carryforwards that had no material impact on the
Company.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|15. |  | Income Taxes (continued)
|--- |  | ------------------------

The reconciliation of income taxes computed at U.S. federal statutory rates to
income tax expense is as follows:

|                                                             |                                  |   |                         |       |      |   |        |       |  |   |        |       |  
|------------------------------------------------------------ | -------------------------------- | - | ----------------------- | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | -
|                                                             |                                  |   | Year Ended December 31,
|                                                             |                                  |   |                        
|                                                             |                                  |   | 2002                    |       | 2001 |   | 2000  
|                                                             |                                  |   |                         |       |      |   |       
|                                                             |                                  |   | (in millions)          
|Expected tax expense/benefit at federal statutory
rate (35%) |                                  | $ | (493.2                  | )     |      | $ | (659.7 | )     |  | $ | (203.9 | )    
|Increase/(decrease) resulting from:                          |                                  |   |                         |       |      |   |        |       |  |   |        |      
|                                                             | Non-deductible asset impairments |   |                         | 299.0 |      |   |        | 323.2 |  |   |        |      |  
|                                                             | Foreign losses with no benefit   |   |                         | (0.1  | )    |   |        | 171.5 |  |   |        | 200.3 |  
|                                                             | U.S. losses with no benefits     |   |                         | 61.8  |      |   |        | 113.8 |  |   |        | (19.6 | )
|                                                             | Other                            |   |                         | 2.9   |      |   |        | 0.2   |  |   |        |      |  
|                                                             |                                  |   |                         |       |      |   |        |       |  |   |        |      
|                                                             |                                  | $ | (129.4                  | )     |      | $ | (51.0  | )     |  | $ | (23.2  | )    
|                                                             |                                  |   |                         |       |      |   |        |       |  |   |        |      



|16. |  | Fair Values of Financial Instruments
|--- |  | ------------------------------------

The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:

Cash and cash equivalents: The carrying amounts reported in the consolidated
balance sheets approximate fair value.

Marketable securities:The carrying amounts reported in the consolidated
balance sheets approximate fair value.

Long-term debt:The December 31, 2001 carrying amounts of the Old NTL
bank credit facilities approximate their fair values. The fair values
presented for the credit facilities at December 31, 2002, represent the values
calculated in accordance with the application of fresh-start accounting, used
in connection with the Companys emergence from bankruptcy. The fair values
of Old NTLs other now-canceled debt at December 31, 2001 were based on their
quoted market prices. At December 31, 2002, the fair value of the Convertible
Notes, represents the approximate distribution value, which the holders of
such debt received upon the Companys emergence from bankruptcy on January 10,
2003.

The carrying amounts and fair values of Old NTLs financial instruments are as
follows:

|                          |                          |   |                   |         |                   |   |          |         |       |   |      |         |  |   |      |         | 
|------------------------- | ------------------------ | - | ----------------- | ------- | ----------------- | - | -------- | ------- | ----- | - | ---- | ------- |  | - | ---- | ------- | 
|                          |                          |   | December 31, 2002 |         | December 31, 2001
|                          |                          |   |                   |         |                  
|                          |                          |   | Carrying          |         | Fair              |   | Carrying |         | Fair 
|                          |                          |   | Amount            |         | Value             |   | Amount   |         | Value
|                          |                          |   |                   |         |                   |   |          |         |      
|                          |                          |   | (in millions)    
|Cash and cash equivalents |                          | $ | 204.9             |         |                   | $ | 204.9    |         |       | $ | 91.0 |         |  | $ | 91.0 |        
|Marketable securities     |                          |   | 13.1              |         |                   |   | 13.1     |         |       |   |     |         |  |   |     |        
|Long-term debt:           |                          |   |                   |         |                   |   |          |         |       |   |      |         |  |   |      |        
|                          | 5 3/4% Convertible Notes |   |                   | 1,200.0 |                   |   |          | 250.8   |       |   |      | 1,200.0 |  |   |      | 132.0   | 
|                          | Term loan facility       |   |                   | 1,951.8 |                   |   |          | 1,031.4 |       |   |      | 1,626.8 |  |   |      | 1,626.8 | 
|                          | Revolving facility       |   |                   | 762.7   |                   |   |          | 403.0   |       |   |      | 527.2   |  |   |      | 527.2   | 

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|17. |  | Related Party Transactions
|--- |  | --------------------------

On the Effective Date, NTL Europe entered into a Transitional Services
Agreement with New NTL. Under the Transitional Services Agreement, New NTL has
agreed to provide NTL Europe with certain administrative and technical support
for a limited period of time where its personnel had previously been providing
support to the companies now comprised within NTL Europes group of companies.
New NTL has agreed to provide NTL Europe with support if and when requested in
the following areas: accounting, payroll and financial reporting support,
technical and purchasing assistance to NTL Europes Spanish business, access to
New NTLs internal legal and tax advisors with respect to historic matters and
continued support in the management and monitoring of certain of the joint
ventures in which NTL Europe has investments. This agreement provides that New
NTLs employees shall, as appropriate, prioritize work performed for New NTL
ahead of work performed on behalf of NTL Europe.

In addition, under the Transitional Services Agreement, New NTL provides the
services of five of its employees to NTL Europe seconded on a full-time basis
for a period of up to two years (at NTL Europes option) and permits NTL Europe
and its group of companies to continue to use the NTL name for a period of up
to one year, in the case of NTL Europe, and three years, in the case of certain
other of its subsidiaries.

NTL Europe pays New NTL pre-determined charges set out in the Transitional
Services Agreement in respect of the services provided by New NTL and its
subsidiaries under the agreement based on the amount of time spent by the
relevant personnel in carrying out such work.

On September 28, 2001, NTL Communications Corp. loaned Old NTL $150.0 million
in cash and received 15.0% Promissory Notes due September 30, 2004. Interest
was payable monthly in cash at a rate of 15.0% per annum beginning on October
31, 2001. Upon emergence from Chapter 11 reorganization and in accordance with
the Plan, these notes were canceled.

On April 5, 2002, following receipt of the proceeds from the sale of NTL
Australia, NTL Delaware loaned £90.0 million to NTL (UK) Group, Inc. Such loan
was actually made (with the approval of the lenders under the UK credit
facilities) to NTL (UK) Group, Inc. and then on-lent to certain subsidiaries of
NTL (UK) Group, Inc. Interest on the note was at 23% per annum, compounded
semiannually, and was payable, in cash, on the earlier of April 1, 2006 or the
redemption date of the notes. In connection with the DIP facility, the current
interest rate on this loan had been reduced from 23% per annum to 11% per
annum. Upon emergence from Chapter 11 reorganization and in accordance with
the Plan, such debt was repaid.

Pursuant to the DIP facility, all funding needs of the debtors were funded
through the proceeds of the DIP facility, in accordance with a budget and the
terms of the DIP facility agreement. Communications Cable Funding Corp. had
entered into intercompany note agreements with Old NTL and NTL Delaware to
evidence such transactions. The notes earned interest on the unpaid principal
amount for three months from July 15, 2002 at the rate of 11% per annum. With
respect to each successive three month period following that date, the rate per
annum increased incrementally by 1% over the immediately preceding three month
period but will not exceed 18% per annum for any three month period. Upon
emergence from Chapter 11 reorganization and in accordance with the Plan, such
debt in the amount of $69.3 million was repaid.

Certain former officers and directors of Old NTL were also officers and
directors of ATX Communications, Inc. (ATX) (formerly known as CoreComm
Holdco, Inc.). On April 12, 2001, Old NTL purchased $15.0 million of an
unsecured convertible note from ATX and received warrants to purchase 770,000
shares of ATX common stock at an exercise price of $0.01 per share that expire
in April 2011. In addition, concurrently with the note purchase and without
additional compensation, Old NTL entered into a network and software agreement
with ATX, which agreement is now with New NTL. Under the agreement, ATX will provide U.S. network for Internet
traffic from New NTLs UK 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 ATX 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 ATX common stock for a specified period. Old
NTL and ATX agreed to certain modifications to the conversion feature in
connection with ATXs recapitalization in December 2001.

Premium TV has entered into a number of agreements with New NTL, pursuant to
which Premium TV receives certain operational services covering premises,
connectivity, hosting, technology and other corporate volume purchasing
benefits. Premium TV has a co-marketing agreement linked with New NTLs
broadband product and an agreement with New NTL where New NTL is able to
exploit Premium TVs pay per view rights.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)



|17. |  | Related Party Transactions (continued)
|--- |  | --------------------------------------

In 1999, NTL Broadcast established two subsidiaries, located in Thailand and
Malaysia. Following consummation of the Plan, the Company maintained ownership
of the operations in Malaysia and Thailand through two companies, NTL Broadcast
Sdn and NTL Broadcast (Thailand) Ltd. (together, NTL Asia). The two
subsidiaries are managed as one business. Separately, New NTL maintains a
branch office in Singapore. The Companys subsidiaries rely on New NTLs
Singapore office for administration and other support services. The Company
has entered into an agreement to jointly manage the business of NTL Asia with
New NTL.



|18. |  | Shareholders Equity
|--- |  | --------------------

Sales of Preferred Stock, Common Stock and Warrants

In August 1999, the Company received $1,000.0 million in cash from France
Telecom in exchange for 750,000 shares of the Companys 5% Cumulative
Participating Convertible Preferred Stock and 4.2 million shares of the
Companys common stock.

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 (the 5.25% 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. Dividends were payable quarterly at the Companys option
in cash, common stock or additional shares of preferred stock. The Company
issued approximately 25,000 shares of 5.25% Preferred Stock for dividend
payments of $24.6 million through December 31, 1999. In February 2000, all of
the 5.25% Preferred Stock was converted into 8.3 million shares of the
Companys common stock.

Series 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 1999, all of the outstanding shares of the
Series A Preferred Stock were redeemed for cash of $140.8 million, which
included $15.5 million for accrued dividends.

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 sated value per share. Dividends were payable when and if declared by the
Board of Directors.

The changes in the number of shares of Series Preferred Stock, excluding the
Redeemable Preferred Stock were as follows:

|                                    |  |             |   |          |  |          |          |       |  |    |         |   |  |  |          |   |  |  |          |  
|----------------------------------- |  | ----------- | - | -------- |  | -------- | -------- | ----- |  | -- | ------- | - |  |  | -------- | - |  |  | -------- | -
|                                    |  | Convertible |   | 9.9%     |  | 9.9%     |          |       |  |    |         |   |  | 
|                                    |  | Series A    |   | Series A |  | Series B |          | 5.25% |  | 5%
|                                    |  |             |   |          |  |          |          |       |  |   
|Balance, December 31, 1998          |  |             |  |          |  |          | 125,000  |       |  |    | 52,000  |   |  |  |         |   |  |  |         |  
|Issued for cash                     |  |             |  |          |  |          |         |       |  |    |        |   |  |  | 500,000  |   |  |  | 750,000  |  
|Issued for dividends                |  |             |  |          |  |          |         |       |  |    |        |   |  |  | 25,000   |   |  |  | 5,000    |  
|Redemption                          |  |             |  |          |  |          | (125,000 | )     |  |    |        |   |  |  |         |   |  |  |         |  
|                                    |  |             |   |          |  |          |          |       |  |    |         |   |  |  |          |   |  |  |          |  
|Balance, December 31, 1999          |  |             |  |          |  |          |         |       |  |    | 52,000  |   |  |  | 525,000  |   |  |  | 755,000  |  
|Issued for dividends                |  |             |  |          |  |          |         |       |  |    |        |   |  |  | 3,000    |   |  |  | 19,000   |  
|Conversion into common stock        |  |             |  |          |  |          |         |       |  |    |        |   |  |  | (528,000 | ) |  |  |         |  
|Corporate restructuring             |  |             |  |          |  |          |         |       |  |    | (52,000 | ) |  |  |         |   |  |  | (774,000 | )
|                                    |  |             |   |          |  |          |          |       |  |    |         |   |  |  |          |   |  |  |          |  
|Balance, December 31, 2001 and 2000 |  |             |  |          |  |          |         |       |  |    |        |   |  |  |         |   |  |  |         |  
|                                    |  |             |   |          |  |          |          |       |  |    |         |   |  |  |          |   |  |  |          |  

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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

Stock Options

All of Old NTLs outstanding stock options were canceled on the Effective Date
pursuant to the Plan. The stock option plans described below covered certain
of the Companys employees, as well as employees of the discontinued
operations.

There were 335,000 shares and 2,733,000 shares of common stock reserved for
issuance under the 1991 Stock Option Plan and the 1993 Stock Option Plan,
respectively. These plans provided that incentive stock options (ISOs) would
be granted at the fair market value of Old NTLs common stock on the date of
grant, and nonqualified stock options (NQSOs) would be granted at not less
than 85% of the fair market value of Old NTLs common stock on the date of
grant. Options were exercisable as to 20% of the shares subject thereto on the
date of grant and became exercisable as to an additional 20% of the shares
subject thereto on each January 1 thereafter, while the optionee remained an
employee of Old NTL. Options expired ten years after the date of the grant.

There were 16,000 shares and 67,000 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 would be granted to
members of the Board of Directors who were not employees of Old NTL or any of
its affiliates. These plans provided that all options would be granted at the
fair market value of Old NTLs common stock on the date of grant, and options
would expire ten years after the date of the grant. Options were exercisable as
to 20% of the shares subject thereto on the date of grant and became
exercisable as to an additional 20% of the shares subject thereto on each
subsequent anniversary of the grant date while the optionee remained a director
of Old NTL. Options expired ten years after the date of the grant.

There were 19,684,000 shares of common stock reserved for issuance under the
1998 Non-Qualified Stock Option Plan. The exercise price of a NQSO would have
been determined by the Compensation and Option Committee. Options were
generally exercisable ratably over five to ten years while the optionee
remained an employee of Old NTL. Options expired ten years after the date of
the grant.

In December 2000, the Board of Directors of Old NTL approved the rescission of
the exercise of ISOs for 156,000 shares of Old NTLs common stock, and Old NTL
returned cash of $1.1 million. The rescission was accounted for as a
modification of the original options that resulted in a new measurement date.
On the new measurement date, Old NTL recognized no compensation expense.

Pro forma information regarding net loss and net loss per share is required by
SFAS No. 123, and has been determined as if Old NTL had accounted for its
employee stock options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for 2002, 2001 and 2000: risk-free interest rates of 4.47%, 4.47%
and 5.30%, respectively, dividend yield of 0%, volatility factor of the
expected market price of Old NTLs common stock of .702, .702 and .385,
respectively, and a weighted-average expected life of the option of 10 years.

F-157



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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

18. Shareholders Equity (continued)

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 Old NTLs stock options have characteristics significantly different
from those of traded options and because changes in the subjective input
assumptions can materially affect the fair value estimate, in managements
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options vesting period. The effects of
applying SFAS No. 123 on pro forma disclosures of net loss and net loss per
share for the years ended December 31, 2002, 2001 and 2000 are not likely to be
representative of the pro forma effects on net loss and net loss per share in
future years. Had compensation for stock options granted by Old NTL been
determined consistent with the provisions of SFAS No. 123, the effect on the
Companys net loss would have been changed to the following pro forma amounts:

|                     |  |                                      |          |      |  |      |           |   |  |   |          |  
|-------------------- |  | ------------------------------------ | -------- | ---- |  | ---- | --------- | - |  | - | -------- | -
|                     |  | Year Ended December 31,             
|                     |  |                                     
|                     |  | 2002                                 |          | 2001 |  | 2000
|                     |  |                                      |          |      |  |     
|                     |  | (in millions, except per share data)
|Net (loss)           |  | $                                    | (3,658.6 | )    |  | $    | (13,706.8 | ) |  | $ | (2,967.0 | )
|Pro forma net (loss) |  | $                                    | (3,922.9 | )    |  | $    | (13,975.1 | ) |  | $ | (3,222.8 | )

A summary of Old NTLs stock option activity and related information for the
years ended December 31 follows:

|                                |  |               |      |               |  |               |       |          |  |           |      |           |  |   |       |  |  |           |      |   |  |   |       | 
|------------------------------- |  | ------------- | ---- | ------------- |  | ------------- | ----- | -------- |  | --------- | ---- | --------- |  | - | ----- |  |  | --------- | ---- | - |  | - | ----- | 
|                                |  | 2002          |      | 2001          |  | 2000         
|                                |  |               |      |               |  |              
|                                |  |               |      |               |  | Weighted-     |       |          |  |           |      | Weighted- |  |   |       |  |  | Weighted-
|                                |  |               |      |               |  | Average       |       |          |  |           |      | Average   |  |   |       |  |  | Average  
|                                |  | Number of     |      | Exercise      |  | Number of     |       | Exercise |  | Number of |      | Exercise 
|                                |  | Options       |      | Price         |  | Options       |       | Price    |  | Options   |      | Price    
|                                |  |               |      |               |  |               |       |          |  |           |      |          
|                                |  | (in millions) |      | (in millions) |  | (in millions)
|Outstanding  beginning of year |  |               | 71.9 |               |  | $             | 36.13 |          |  |           | 61.4 |           |  | $ | 41.52 |  |  |           | 29.2 |   |  | $ | 24.60 | 
|Granted                         |  |               |     |               |  |               |      |          |  |           | 14.3 |           |  |   | 12.55 |  |  |           | 34.8 |   |  |   | 54.90 | 
|Exercised                       |  |               |     |               |  |               |      |          |  |           | (1.1 | )         |  |   | 11.93 |  |  |           | (2.1 | ) |  |   | 17.13 | 
|Forfeited                       |  |               | (3.7 | )             |  |               | 39.09 |          |  |           | (2.7 | )         |  |   | 42.46 |  |  |           | (0.5 | ) |  |   | 83.31 | 
|                                |  |               |      |               |  |               |       |          |  |           |      |           |  |   |       |  |  |           |      |   |  |   |       | 
|Outstanding  end of year       |  |               | 68.2 |               |  | $             | 36.06 |          |  |           | 71.9 |           |  | $ | 36.13 |  |  |           | 61.4 |   |  | $ | 41.52 | 
|                                |  |               |      |               |  |               |       |          |  |           |      |           |  |   |       |  |  |           |      |   |  |   |       | 
|Exercisable at end of year      |  |               | 34.3 |               |  | $             | 30.37 |          |  |           | 24.7 |           |  | $ | 27.50 |  |  |           | 16.3 |   |  | $ | 21.82 | 
|                                |  |               |      |               |  |               |       |          |  |           |      |           |  |   |       |  |  |           |      |   |  |   |       | 

Weighted-average fair value of options, calculated using the Black-Scholes
option pricing model, granted during 2002, 2001 and 2000 is $5.69, $5.69 and
$32.19 respectively.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

18. Shareholders Equity (continued)

The following table summarizes the status of the stock options outstanding and
exercisable at December 31, 2002:

|                 |  |           |      |                           |      |                           |  |           |        |           |  |  |     |               |  |           |        |  |  |  |  | 
|---------------- |  | --------- | ---- | ------------------------- | ---- | ------------------------- |  | --------- | ------ | --------- |  |  | --- | ------------- |  | --------- | ------ |  |  |  |  | 
|                 |  |           |      | Stock Options Outstanding |      | Stock Options Exercisable
|                 |  |           |      |                           |      |                          
|                 |  |           |      |                           |      |                           |  | Weighted- |        | Weighted- |  |  |     |               |  | Weighted-
|                 |  |           |      |                           |      |                           |  | Remaining |        | Average   |  |  |     |               |  | Average  
|Range of         |  | Number of |      | Contractual               |      | Exercise                  |  | Number of |        | Exercise 
|Exercise Prices  |  | Options   |      | Life                      |      | Price                     |  | Options   |        | Price    
|                 |  |           |      |                           |      |                           |  |           |        |          
|                 |  |           |      | (in millions)             |      |                           |  |           |        |           |  |  |     | (in millions) |  |           |        | 
|$  0.35 to $9.36 |  |           | 4.4  |                           |      | 3.1 Years                 |  | $         | 5.434  |           |  |  | 4.3 |               |  | $         | 5.434  | 
|$10.00 to $18.40 |  |           | 14.8 |                           |      | 4.2 Years                 |  | $         | 11.136 |           |  |  | 8.0 |               |  | $         | 12.082 | 
|$19.86 to $27.84 |  |           | 12.9 |                           |      | 6.6 Years                 |  | $         | 23.395 |           |  |  | 8.2 |               |  | $         | 23.305 | 
|$28.06 to $35.64 |  |           | 0.6  |                           |      | 6.3 Years                 |  | $         | 30.372 |           |  |  | 0.5 |               |  | $         | 30.477 | 
|$36.12 to $40.19 |  |           | 0.8  |                           |      | 7.2 Years                 |  | $         | 38.823 |           |  |  | 0.5 |               |  | $         | 38.629 | 
|$42.44 to $47.44 |  |           | 13.0 |                           |      | 7.4 Years                 |  | $         | 44.437 |           |  |  | 4.5 |               |  | $         | 44.397 | 
|$48.38 to $53.76 |  |           | 4.6  |                           |      | 6.6 Years                 |  | $         | 50.383 |           |  |  | 3.2 |               |  | $         | 50.400 | 
|$57.60 to $63.63 |  |           | 16.6 |                           |      | 6.8 Years                 |  | $         | 63.409 |           |  |  | 4.7 |               |  | $         | 62.986 | 
|$68.20 to $75.56 |  |           | 0.1  |                           |      | 7.1 Years                 |  | $         | 75.413 |           |  |  | 0.1 |               |  | $         | 75.401 | 
|$91.13 to $97.50 |  |           | 0.4  |                           |      | 7.1 Years                 |  | $         | 93.713 |           |  |  | 0.3 |               |  | $         | 93.713 | 
|                 |  |           |      |                           |      |                           |  |           |        |           |  |  |     |               |  |           |        |  |  | 
|                 |  | Total     |      |                           | 68.2 |                           |  |           |        |           |  |  |     |               |  |           | 34.3   |  |  |  |  | 
|                 |  |           |      |                           |      |                           |  |           |        |           |  |  |     |               |  |           |        |  |  | 

As of December 31, 2002, Old NTL had 171.8 million shares of its common stock
reserved for issuance upon the exercise of warrants and stock options and the
conversion of debt and preferred stock, all of which have now been canceled.

19. Employee Benefit Plans

Cablecom operates a defined benefit pension plan in Switzerland. The assets of
the Plan 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.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Employee Benefit Plans (continued)

At December 31, 2002, the projected benefit obligations of Old NTLs defined
benefit pension plans exceeded the fair value of the plan assets by $44.5
million. The projected benefit obligations, accumulated benefit obligations
and fair value of plan assets were $156.4 million, $125.1 million and $112.0
million, respectively, at December 31, 2002.

|                                                                      |  |               |       |      |  |   |       |  
|--------------------------------------------------------------------- |  | ------------- | ----- | ---- |  | - | ----- | -
|                                                                      |  | Year Ended   
|                                                                      |  | December 31, 
|                                                                      |  |              
|                                                                      |  | 2002          |       | 2001
|                                                                      |  |               |       |     
|                                                                      |  | (in millions)
|Change in benefit obligation                                          |  |               |       |      |  |   |       |  
|Benefit obligation at beginning of year                               |  | $             | 145.7 |      |  | $ | 122.2 |  
|Disposition                                                           |  |               | (21.8 | )    |  |   |      |  
|Service cost                                                          |  |               | 7.4   |      |  |   | 7.4   |  
|Interest cost                                                         |  |               | 6.3   |      |  |   | 5.5   |  
|Actuarial losses (gains)                                              |  |               | 10.3  |      |  |   | 12.4  |  
|Benefits paid                                                         |  |               | (4.2  | )    |  |   | (3.1  | )
|Foreign currency exchange rate changes                                |  |               | 12.7  |      |  |   | 1.2   |  
|                                                                      |  |               |       |      |  |   |       |  
|Benefit obligation at end of year                                     |  | $             | 156.4 |      |  | $ | 145.6 |  
|                                                                      |  |               |       |      |  |   |       |  
|Change in plan assets                                                 |  |               |       |      |  |   |       |  
|Fair value of plan assets at beginning of year                        |  | $             | 142.3 |      |  | $ | 151.0 |  
|Disposition                                                           |  |               | (15.8 | )    |  |   |      |  
|Actual return on plan assets                                          |  |               | (30.9 | )    |  |   | (15.0 | )
|Company contributions                                                 |  |               | 4.7   |      |  |   | 4.5   |  
|Plan participants contributions                                      |  |               | 3.5   |      |  |   | 3.4   |  
|Benefits paid                                                         |  |               | (4.2  | )    |  |   | (3.1  | )
|Foreign currency exchange rates changes                               |  |               | 12.4  |      |  |   | 1.5   |  
|                                                                      |  |               |       |      |  |   |       |  
|Fair value of plan assets at end of year                              |  | $             | 112.0 |      |  | $ | 142.3 |  
|                                                                      |  |               |       |      |  |   |       |  
|Funded status of the plan                                             |  | $             | (44.5 | )    |  | $ | (3.4  | )
|Unrecognized net actuarial (gains) losses                             |  |               | 61.3  |      |  |   | 17.8  |  
|Unrecognized transition obligation                                    |  |               | 0.5   |      |  |   | 0.8   |  
|                                                                      |  |               |       |      |  |   |       |  
|Net amount recognized                                                 |  | $             | 17.3  |      |  | $ | 15.2  |  
|                                                                      |  |               |       |      |  |   |       |  
|Amounts recognized in the statement of financial position consist of: |  |               |       |      |  |   |       |  
|Prepaid benefit cost                                                  |  | $             | 16.8  |      |  | $ | 14.4  |  
|Accrued benefit liability                                             |  |               | (30.5 | )    |  |   |      |  
|Intangible asset                                                      |  |               | 1.0   |      |  |   | 0.8   |  
|Accumulated other comprehensive loss                                  |  |               | 30.0  |      |  |   |      |  
|                                                                      |  |               |       |      |  |   |       |  
|Net amount recognized                                                 |  | $             | 17.3  |      |  | $ | 15.2  |  
|                                                                      |  |               |       |      |  |   |       |  

|                       |                                                  |  |                         |      |      |  |  |      |  
|---------------------- | ------------------------------------------------ |  | ----------------------- | ---- | ---- |  |  | ---- | -
|                       |                                                  |  | Year Ended December 31,
|                       |                                                  |  |                        
|                       |                                                  |  | 2002                    |      | 2001
|                       |                                                  |  |                         |      |     
|Actuarial assumptions: |                                                  |  |                         |      |      |  |  |     
|                       | Discount rate                                    |  |                         | 4.00 | %    |  |  | 4.50 | %
|                       | Rate of compensation increase                    |  |                         | 1.00 | %    |  |  | 2.00 | %
|                       | Expected long-term rate of return on plan assets |  |                         | 4.00 | %    |  |  | 5.50 | %

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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Employee Benefit Plans (continued)

The components of net pension costs are as follows:

|                                 |  |                         |      |      |  |      |      |   |  |   |       |  
|-------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  | - | ----- | -
|                                 |  | Year Ended December 31,
|                                 |  |                        
|                                 |  | 2002                    |      | 2001 |  | 2000
|                                 |  |                         |      |      |  |     
|                                 |  | (in millions)          
|Service cost                     |  | $                       | 7.4  |      |  | $    | 7.4  |   |  | $ | 6.1   |  
|Interest cost                    |  |                         | 6.3  |      |  |      | 5.5  |   |  |   | 5.5   |  
|Expected return on plan assets   |  |                         | (6.3 | )    |  |      | (8.7 | ) |  |   | (13.7 | )
|Plan participants contributions |  |                         | (3.5 | )    |  |      | (3.4 | ) |  |   | (2.8  | )
|Net amortization and deferral    |  |                         |     |      |  |      | (0.5 | ) |  |   | 4.0   |  
|                                 |  |                         |      |      |  |      |      |   |  |   |       |  
|                                 |  | $                       | 3.9  |      |  | $    | 0.3  |   |  | $ | (0.9  | )
|                                 |  |                         |      |      |  |      |      |   |  |   |       |  

20. Leases

Future minimum annual payments at December 31, 2002 are as follows (in
millions). The table reflects Old NTLs contractual obligations.

|                             |  |           |      | 
|---------------------------- |  | --------- | ---- | 
|                             |  | Operating
|                             |  | Leases   
|                             |  |          
|Year ending December 31:     |  |           |      | 
|2003                         |  | $         | 4.8  | 
|2004                         |  |           | 5.1  | 
|2005                         |  |           | 5.1  | 
|2006                         |  |           | 5.3  | 
|2007                         |  |           | 5.5  | 
|Thereafter                   |  |           | 6.9  | 
|                             |  |           |      | 
|Total minimum lease payments |  | $         | 32.7 | 
|                             |  |           |      | 

Leases for buildings, office space and equipment extend through 2019. Total
rental expense for the years ended December 31, 2002, 2001 and 2000 under
operating leases was $7.0 million, $16.4 million and $10.0 million,
respectively.

21. Commitments and Contingent Liabilities

At December 31, 2002, Old NTL was committed to pay approximately $121.8 million
for equipment and services and for investments in and loans to affiliates.
This amount included approximately $48.7 million for operations and other
commitments from January 1, 2004 to 2013. The aggregate amount of the fixed
and determinable portion of these obligations for the succeeding fiscal years
is as follows (in millions):

|     |  |              |      | 
|---- |  | ------------ | ---- | 
|     |  | Year Ending 
|     |  | December 31:
|     |  |             
|2003 |  | $            | 73.1 | 
|2004 |  |              | 9.2  | 
|2005 |  |              | 9.2  | 
|2006 |  |              | 1.4  | 
|2007 |  |              | 1.4  | 
|     |  |              |      | 
|     |  | $            | 94.3 | 
|     |  |              |      | 

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.

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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

21. Commitments and Contingent Liabilities (continued)

Morgan Stanley

In connection with the bar date for filing of securities laws claims against
the debtors pursuant to an order of the bankruptcy court, proofs of claim were
filed against Old NTL, NTL Delaware and NTL Communications by Morgan Stanley
Senior Funding Inc. for $11.4 million. These claims were asserted by Morgan
Stanley Senior Funding Inc. in respect of alleged unpaid financing fees for
commitments of capital made in 1999. The Company believes it has meritorious
defenses to these claims and on May 8, 2003 filed an objection to these claims.
At this time, the Company cannot predict the outcome of these claims.

B2 (Bredband) AG

On April 15, 2002, a funding request for approximately $20 million was received
by Old NTL under the terms of the investment agreement relating to Old NTLs
investment in B2. Old NTL informed B2 and the other principal investors that
it was not in a position to comply with the request for funding. The B2
investment agreement provides that if Old NTL fails to provide such funding, it
may be sued for non-payment and arguably could lose certain rights under the B2
shareholders agreement including its interest in B2.

On October 4, 2002, Old NTL filed a motion with the bankruptcy court to reject
the B2 investment agreement and shareholders agreement under section 365 of
the bankruptcy code, and the bankruptcy court subsequently authorized Old NTLs
rejection of the agreements. On November 8, 2002, B2 and the other principal
shareholders filed proofs of claim with the bankruptcy court asserting their
right to recover: (1) approximately $20 million from Old NTL in respect of the
unpaid funding request; (2) unspecified damages for Old NTLs failure to
perform under the relevant agreements; and (3) unspecified costs and expenses
incurred in the exercise of their remedies under the agreements, and reserved
their other rights to avail themselves of any remedies under the agreements.

On April 30, 2003, NTL Delaware, together with its subsidiaries NTL Sweden SPV
Inc. and Nogenta Swedish Acquisition Holding B.V., entered into an agreement
with B2 and the other principal shareholders of B2 relating to, among other
things, the transfer of the Companys securities in B2. Under the agreement,
the NTL Europe parties have agreed to transfer their interest in B2 to certain
other shareholders of B2 in exchange for approximately $375,000 in cash or
certain securities of a B2 affiliate and mutual releases among the parties
relating to a dispute stemming from an April 15, 2002 funding request for
approximately $20 million. In connection with the mutual releases, the
agreement provides that B2 and the other principal shareholders will withdraw,
or otherwise assist NTL Delaware in obtaining bankruptcy court denial of, the
proofs of claim filed by B2 and the other principal shareholders in the
bankruptcy court. The closing of this transaction is subject to customary
closing conditions, but the NTL Europe releases are effective unless the NTL
Europe parties breach their respective obligations under the agreement.

Cablecom

Cablecom is the principal borrower under an amended and restated credit
agreement dated as of April 30, 2002 and effective as of May 2, 2002. Under
the credit agreement, Cablecom and one of its subsidiaries are indebted in an
amount of approximately CHF 3,792 million (which includes recent accrued
interest payments). Although the credit facility was originally scheduled to
mature on April 30, 2003, upon the request of Cablecom, the maturity date has
been extended to the business day following May 31, 2003, with an additional
automatic extension to June 30, 2003 under certain circumstances. In addition,
Cablecom has been notified by the lenders that it is in default under the
credit agreement. Accordingly, the lenders could seek to accelerate the
maturity of the credit facility at any time.

Cablecom does not have the resources to repay the bank debt when it comes due,
whether on the extended maturity date or upon the acceleration thereof.
Further, as security for its guaranty of Cablecoms obligations under the
credit agreement, NTL Cablecom Holding GmbH, the parent entity of Cablecom, has
pledged to the lenders all of the shares of Cablecom. Accordingly, upon the
maturity of the credit facility, whether upon acceleration or otherwise, the
lenders could seek to exercise their rights under the pledge. In such an
event, although the Company would not be liable for any of Cablecoms
obligations, it would be deprived of all of its ownership interest in Cablecom.

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

21. Commitments and Contingent Liabilities (continued)

In addition, Cablecom and two of its subsidiaries are overindebted under
Swiss law. If Cablecom is unsuccessful in consummating a transaction with its
lenders to resolve that overindebtedness issue in the near future, the board
of directors of Cablecom may be required to file for insolvency proceedings
under Swiss law. Further, on April 9, 2003, in accordance with Swiss law, the
board of directors of Cablecom received a letter from its auditors, Ernst &
Young AG, notifying the board of Cablecom that Cablecom and some of its
subsidiaries are overindebted and, if there is no consensual settlement on
the overall financial restructuring of Cablecom or an extension of the maturity
date or any other measures taken which would cure the overindebtedness, the
board would be required to notify a Swiss court and deposit the balance sheets
for Cablecom and its subsidiaries immediately, thereby commencing insolvency
proceedings. If Cablecom files for insolvency proceedings, it is unlikely that
the Company will retain any interest in Cablecom.

In order to seek to address the foregoing issues, Cablecom is currently in
negotiations with its lenders regarding an overall financial restructuring of
Cablecom. If consummated, such restructuring is expected to include a
reduction in the amount of debt outstanding, an extension of maturity date of
such debt and control of Cablecom being assumed by the lenders. As part of
such negotiations, the Company is seeking to retain a small minority interest
in Cablecom in consideration for its cooperation in permitting Cablecom to
reach a consensual restructuring plan with its lenders. There is, however, no
assurance that such negotiations will be successful. Further, whether or not
such negotiations are successful, the Company expects to be deprived of the
Companys controlling interest in Cablecom in the near future. After such
occurrence, the results of Cablecom will not be reported as part of the
Companys consolidated results of operations.

On May 1, 2003, Owl Creek Asset Management, L.P., one of Old NTLs creditors,
filed an amended complaint against CRT Capital Group LLC, New NTL and NTL
Europe in U.S. Bankruptcy Court for the Southern District of New York. The
amended complaint concerns certain when-issued trades of New NTLs common
stock made by Owl Creek with CRT prior to a subsequent modification of Old
NTLs plan of reorganization. Under the modified plan, Old NTLs creditors
were entitled to receive only one-fourth the number of shares of New NTL common
stock contemplated prior to the modification. Therefore, certain holders of
New NTL common stock sold more stock on the when-issued market than they
ultimately received under the amended plan. On January 16, 2003, the
bankruptcy court entered an order providing that sellers of New NTLs common
stock on the when-issued market may settle such trades by reducing the number
of shares traded in each such transaction by 25% and increasing the per share
purchase price for such shares by 400%. The order provided that buyers in such
trades were required to accept such a settlement, but the order was dissolved
on February 5, 2003. In addition to its claims against CRT, Owl Creek has
asserted claims against New NTL and NTL Europe for breach of fiduciary duty,
gross negligence, breach of contract, promissory estoppel, contribution and
indemnification, alleging that Old NTLs creditors should have been better
informed of the changes to New NTLs common stock under the plan. Since the
securities that are the subject of the complaint are those of New NTL, NTL
Europe does not believe that it has any material exposure with respect to this
claim.

22. Geographic Information

|                  |  |               |      |             |  |       |         |       |  |   |       |  |  |   |         | 
|----------------- |  | ------------- | ---- | ----------- |  | ----- | ------- | ----- |  | - | ----- |  |  | - | ------- | 
|                  |  | United States |      | Switzerland |  | Other |         | Total
|                  |  |               |      |             |  |       |         |      
|                  |  | (in millions)
|2002              |  |               |      |             |  |       |         |       |  |   |       |  |  |   |         | 
|Revenues          |  | $             |     |             |  | $     | 401.6   |       |  | $ | 30.6  |  |  | $ | 432.2   | 
|Long-lived assets |  |               | 19.1 |             |  |       | 2,196.8 |       |  |   | 74.9  |  |  |   | 2,290.8 | 
|2001              |  |               |      |             |  |       |         |       |  |   |       |  |  |   |         | 
|Revenues          |  | $             |     |             |  | $     | 329.2   |       |  | $ | 58.6  |  |  | $ | 387.8   | 
|Long-lived assets |  |               | 28.1 |             |  |       | 2,631.6 |       |  |   | 311.1 |  |  |   | 2,970.8 | 
|2000              |  |               |      |             |  |       |         |       |  |   |       |  |  |   |         | 
|Revenues          |  | $             |     |             |  | $     | 202.5   |       |  | $ | 24.3  |  |  | $ | 226.8   | 
|Long-lived assets |  |               | 16.7 |             |  |       | 3,828.1 |       |  |   | 910.2 |  |  |   | 4,755.0 | 

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NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

23. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization

The following consolidating financial statements of Old NTL and subsidiaries as
of December 31, 2002 and 2001 and for the years ended December 31, 2002, 2001
and 2000 is being provided pursuant to AICPA Statement of Position 90-7. Old
NTL, NTL Delaware, NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp. are
included in Entities in Reorganization. All other wholly owned direct and
indirect subsidiaries of Old NTL are included in Entities Not in
Reorganization.

(in millions)

|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |          |  
|------------------------------------------------------------------------------ | ------------------------------------------------------------ | -------------- | ---------------------------- | -------------- | -- | ----------- | ------------ | ------------ | - | - | ------- | ------- | - | - | -------- | -------- | -
|                                                                               |                                                              |                | Year Ended December 31, 2002
|                                                                               |                                                              |                |                             
|                                                                               |                                                              |                |                              |                |    |             | Entities Not |              |   |   |         |         |   |   |         
|                                                                               |                                                              |                | Entities in                  |                | in |             |              |              |   |   |         |         |  
|Statements of Operations                                                       |                                                              | Reorganization |                              | Reorganization |    | Adjustments |              | Consolidated
|                                                                               |                                                              |                |                              |                |    |             |              |             
|Revenue                                                                        |                                                              | $              |                             |                |    | $           | 432.2        |              |   | $ |        |         |   | $ | 432.2    |         
|Costs and expenses                                                             |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|Operating expenses (exclusive of depreciation shown
separately below)          |                                                              |                |                             |                |    |             | 160.2        |              |   |   |        |         |   |   | 160.2    |         
|Selling, general and administrative expenses                                   |                                                              |                | 3.7                          |                |    |             | 154.8        |              |   |   | (8.7    | )       |   |   | 149.8    |         
|Asset impairments                                                              |                                                              |                |                             |                |    |             | 854.3        |              |   |   |        |         |   |   | 854.3    |         
|Other charges                                                                  |                                                              |                |                             |                |    |             | 3.5          |              |   |   |        |         |   |   | 3.5      |         
|Corporate expenses                                                             |                                                              |                | 0.6                          |                |    |             |             |              |   |   |         |         |   |   | 0.6      |         
|Depreciation                                                                   |                                                              |                | 0.7                          |                |    |             | 221.9        |              |   |   |        |         |   |   | 222.6    |         
|Amortization                                                                   |                                                              |                | 12.7                         |                |    |             | 82.4         |              |   |   |        |         |   |   | 95.1     |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|                                                                               |                                                              |                | 17.7                         |                |    |             | 1,477.1      |              |   |   | (8.7    | )       |   |   | 1,486.1  |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|Operating loss                                                                 |                                                              |                | (17.7                        | )              |    |             | (1,044.9     | )            |   |   | 8.7     |         |   |   | (1,053.9 | )       
|Other income (expense)                                                         |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|Interest income and other, net                                                 |                                                              |                | 6.5                          |                |    |             | (13.0        | )            |   |   | 0.2     |         |   |   | (6.3     | )       
|Interest expense (contractual interest of $198.2
(2002))                       |                                                              |                | (24.3                        | )              |    |             | (128.0       | )            |   |   | (3.4    | )       |   |   | (155.7   | )       
|Share of (losses) from equity investments                                      |                                                              |                | (1,353.5                     | )              |    |             | (22.4        | )            |   |   | 1,176.7 |         |   |   | (199.2   | )       
|Other gains (losses)                                                           |                                                              |                | 1.1                          |                |    |             | 1.9          |              |   |   |        |         |   |   | 3.0      |         
|Foreign currency transaction gains                                             |                                                              |                | 9.1                          |                |    |             |             |              |   |   | (0.1    | )       |   |   | 9.0      |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|(Loss) before recapitalization items, income taxes
and discontinued operations |                                                              |                | (1,378.8                     | )              |    |             | (1,206.4     | )            |   |   | 1,182.1 |         |   |   | (1,403.1 | )       
|Recapitalization items, net                                                    |                                                              |                | (7.1                         | )              |    |             | (5.2         | )            |   |   | 7.5     |         |   |   | (4.8     | )       
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|(Loss) before income taxes and discontinued
operations                         |                                                              |                | (1,385.9                     | )              |    |             | (1,211.6     | )            |   |   | 1,189.6 |         |   |   | (1,407.9 | )       
|Income tax (expense) benefit                                                   |                                                              |                | 4.6                          |                |    |             | 129.4        |              |   |   | (4.6    | )       |   |   | 129.4    |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|(Loss) from continuing operations                                              |                                                              |                | (1,381.3                     | )              |    |             | (1,082.2     | )            |   |   | 1,185.0 |         |   |   | (1,278.5 | )       
|Discontinued operations:                                                       |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|                                                                               | (Loss) from discontinued operations, net of taxes            |                |                              | (4,762.0       | )  |             |              | (1,737.4     | ) |   |         | 4,125.0 |   |   |          | (2,374.4 | )
|                                                                               | (Loss) gain on sale of discontinued operations,
net of taxes |                |                              | (5.7           | )  |             |              | 31.4         |   |   |         | (31.4   | ) |   |          | (5.7     | )
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|(Loss) from discontinued operations                                            |                                                              |                | (4,767.7                     | )              |    |             | (1,706.0     | )            |   |   | 4,093.6 |         |   |   | (2,380.1 | )       
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         
|Net (loss)                                                                     |                                                              | $              | (6,149.0                     | )              |    | $           | (2,788.2     | )            |   | $ | 5,278.6 |         |   | $ | (3,658.6 | )       
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |         |         |   |   |          |         

F-164



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

23. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |           |  
|------------------------------------------------------------------------------ | ----------------------------------------------------- | -------------- | ---------------------------- | -------------- | -- | ----------- | ------------ | ------------ | - | - | ------- | ---- |  | - | --------- | --------- | -
|                                                                               |                                                       |                | Year Ended December 31, 2001
|                                                                               |                                                       |                |                             
|                                                                               |                                                       |                |                              |                |    |             | Entities Not |              |   |   |         |      |  |   |          
|                                                                               |                                                       |                | Entities in                  |                | in |             |              |              |   |   |         |      | 
|Statements of Operations                                                       |                                                       | Reorganization |                              | Reorganization |    | Adjustments |              | Consolidated
|                                                                               |                                                       |                |                              |                |    |             |              |             
|Revenue                                                                        |                                                       | $              |                             |                |    | $           | 387.8        |              |   | $ |        |      |  | $ | 387.8     |          
|Costs and expenses                                                             |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          
|Operating expenses (exclusive of depreciation shown
separately below)          |                                                       |                |                             |                |    |             | 161.6        |              |   |   |        |      |  |   | 161.6     |          
|Selling, general and administrative expenses                                   |                                                       |                | 5.9                          |                |    |             | 186.0        |              |   |   | (8.1    | )    |  |   | 183.8     |          
|Asset impairments                                                              |                                                       |                |                             |                |    |             | 887.0        |              |   |   | (401.2  | )    |  |   | 485.8     |          
|Other charges                                                                  |                                                       |                |                             |                |    |             | 12.1         |              |   |   |         |      |  |   | 12.1      |          
|Corporate expenses                                                             |                                                       |                | 12.8                         |                |    |             |             |              |   |   |         |      |  |   | 12.8      |          
|Depreciation                                                                   |                                                       |                | 2.7                          |                |    |             | 165.3        |              |   |   |         |      |  |   | 168.0     |          
|Amortization                                                                   |                                                       |                | 2.9                          |                |    |             | 385.1        |              |   |   |         |      |  |   | 388.0     |          
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          
|                                                                               |                                                       |                | 24.3                         |                |    |             | 1,797.1      |              |   |   | (409.3  | )    |  |   | 1,412.1   |          
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          
|Operating loss                                                                 |                                                       |                | (24.3                        | )              |    |             | (1,409.3     | )            |   |   | 409.3   |      |  |   | (1,024.3  | )        
|Other income (expense)                                                         |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          
|Interest income and other, net                                                 |                                                       |                | 5.7                          |                |    |             | 14.2         |              |   |   | 2.3     |      |  |   | 22.2      |          
|Interest expense                                                               |                                                       |                | (69.0                        | )              |    |             | (126.0       | )            |   |   | 5.1     |      |  |   | (189.9    | )        
|Share of (losses) from equity investments                                      |                                                       |                | (1,635.7                     | )              |    |             | (40.6        | )            |   |   | 1,056.4 |      |  |   | (619.9    | )        
|Other gains (losses)                                                           |                                                       |                | (109.3                       | )              |    |             | 50.4         |              |   |   | (0.4    | )    |  |   | (59.3     | )        
|Foreign currency transaction (losses)                                          |                                                       |                | (9.7                         | )              |    |             | (4.0         | )            |   |   |        |      |  |   | (13.7     | )        
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          
|(Loss) before recapitalization items, income taxes
and discontinued operations |                                                       |                | (1,842.3                     | )              |    |             | (1,515.3     | )            |   |   | 1,472.7 |      |  |   | (1,884.9  | )        
|Recapitalization items, net                                                    |                                                       |                |                             |                |    |             |             |              |   |   |        |      |  |   |          |          
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          
|(Loss) before income taxes and discontinued operations                         |                                                       |                | (1,842.3                     | )              |    |             | (1,515.3     | )            |   |   | 1,472.7 |      |  |   | (1,884.9  | )        
|Income tax benefit                                                             |                                                       |                | 2.4                          |                |    |             | 48.6         |              |   |   |        |      |  |   | 51.0      |          
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          
|(Loss) from continuing operations                                              |                                                       |                | (1,839.9                     | )              |    |             | (1,466.7     | )            |   |   | 1,472.7 |      |  |   | (1,833.9  | )        
|Discontinued operations:                                                       |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          
|                                                                               | (Loss) from discontinued operations, net of taxes     |                |                              | (11,867.1      | )  |             |              | (30.7        | ) |   |         | 24.9 |  |   |           | (11,872.9 | )
|                                                                               | Gain on sale of discontinued operations, net of
taxes |                |                              |               |    |             |              |             |   |   |         |     |  |   |           |          |  
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          
|(Loss) from discontinued operations                                            |                                                       |                | (11,867.1                    | )              |    |             | (30.7        | )            |   |   | 24.9    |      |  |   | (11,872.9 | )        
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          
|Net (loss)                                                                     |                                                       | $              | (13,707.0                    | )              |    | $           | (1,497.4     | )            |   | $ | 1,497.6 |      |  | $ | (13,706.8 | )        
|                                                                               |                                                       |                |                              |                |    |             |              |              |   |   |         |      |  |   |           |          

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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

23. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |          |  
|------------------------------------------------------------------------------ | ------------------------------------------------------------ | -------------- | ---------------------------- | -------------- | -- | ----------- | ------------ | ------------ | - | - | ----- | ---- |  | - | -------- | -------- | -
|                                                                               |                                                              |                | Year Ended December 31, 2000
|                                                                               |                                                              |                |                             
|                                                                               |                                                              |                |                              |                |    |             | Entities Not |              |   |   |       |      |  |   |         
|                                                                               |                                                              |                | Entities in                  |                | in |             |              |              |   |   |       |      | 
|Statements of Operations                                                       |                                                              | Reorganization |                              | Reorganization |    | Adjustments |              | Consolidated
|                                                                               |                                                              |                |                              |                |    |             |              |             
|Revenue                                                                        |                                                              | $              |                             |                |    | $           | 226.8        |              |   | $ |      |      |  | $ | 226.8    |         
|Costs and expenses                                                             |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         
|Operating expenses (exclusive of depreciation shown
separately below)          |                                                              |                |                             |                |    |             | 88.9         |              |   |   |      |      |  |   | 88.9     |         
|Selling, general and administrative expenses                                   |                                                              |                |                             |                |    |             | 103.1        |              |   |   |      |      |  |   | 103.1    |         
|Asset impairments                                                              |                                                              |                |                             |                |    |             |             |              |   |   |       |      |  |   |         |         
|Other charges                                                                  |                                                              |                |                             |                |    |             |             |              |   |   |       |      |  |   |         |         
|Corporate expenses                                                             |                                                              |                | 14.5                         |                |    |             |             |              |   |   |       |      |  |   | 14.5     |         
|Depreciation                                                                   |                                                              |                | 2.3                          |                |    |             | 99.3         |              |   |   | (14.2 | )    |  |   | 87.4     |         
|Amortization                                                                   |                                                              |                | 2.7                          |                |    |             | 282.0        |              |   |   | 14.6  |      |  |   | 299.3    |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         
|                                                                               |                                                              |                | 19.5                         |                |    |             | 573.3        |              |   |   | 0.4   |      |  |   | 593.2    |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         
|Operating loss                                                                 |                                                              |                | (19.5                        | )              |    |             | (346.5       | )            |   |   | (0.4  | )    |  |   | (366.4   | )       
|Other income (expense)                                                         |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         
|Interest income and other, net                                                 |                                                              |                | 29.1                         |                |    |             | (2.6         | )            |   |   | 7.6   |      |  |   | 34.1     |         
|Interest expense                                                               |                                                              |                | (68.6                        | )              |    |             | (84.0        | )            |   |   | 12.9  |      |  |   | (139.7   | )       
|Share of (losses) from equity investments                                      |                                                              |                | (437.5                       | )              |    |             |             |              |   |   | 391.2 |      |  |   | (46.3    | )       
|Other gains (losses)                                                           |                                                              |                |                             |                |    |             |             |              |   |   |      |      |  |   |         |         
|Foreign currency transaction gains                                             |                                                              |                | (63.0                        | )              |    |             |             |              |   |   | (1.4  | )    |  |   | (64.4    | )       
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         
|(Loss) before recapitalization items, income taxes
and discontinued operations |                                                              |                | (559.5                       | )              |    |             | (433.1       | )            |   |   | 409.9 |      |  |   | (582.7   | )       
|Recapitalization items, net                                                    |                                                              |                |                             |                |    |             |             |              |   |   |      |      |  |   |         |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         
|(Loss) before income taxes and discontinued
operations                         |                                                              |                | (559.5                       | )              |    |             | (433.1       | )            |   |   | 409.9 |      |  |   | (582.7   | )       
|Income tax (expense) benefit                                                   |                                                              |                |                              |                |    |             | 23.2         |              |   |   |       |      |  |   | 23.2     |         
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         
|(Loss) from continuing operations                                              |                                                              |                | (559.5                       | )              |    |             | (409.9       | )            |   |   | 409.9 |      |  |   | (559.5   | )       
|Discontinued operations:                                                       |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         
|                                                                               | (Loss) from discontinued operations, net of taxes            |                |                              | (2,407.5       | )  |             |              | (19.7        | ) |   |       | 19.7 |  |   |          | (2,407.5 | )
|                                                                               | (Loss) gain on sale of discontinued operations,
net of taxes |                |                              |               |    |             |              |             |   |   |       |     |  |   |          |         |  
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         
|(Loss) from discontinued operations                                            |                                                              |                | (2,407.5                     | )              |    |             | (19.7        | )            |   |   | 19.7  |      |  |   | (2,407.5 | )       
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         
|Net (loss)                                                                     |                                                              | $              | (2,967.0                     | )              |    | $           | (429.6       | )            |   | $ | 429.6 |      |  | $ | (2,967.0 | )       
|                                                                               |                                                              |                |                              |                |    |             |              |              |   |   |       |      |  |   |          |         

F-166



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

23. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

|                                                 |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|------------------------------------------------ |  | ----------------- | -------- | -------------- |  | ------------ | -------- | ------------ |  | - | --------- | - |  | - | -------- | -
|                                                 |  | December 31, 2002
|                                                 |  |                  
|                                                 |  |                   |          |                |  | Entities Not |          |              |  |   |           |   |  |  
|                                                 |  | Entities in       |          | in             |  |              |          |              |  |   |           |  
|Balance Sheets                                   |  | Reorganization    |          | Reorganization |  | Adjustments  |          | Consolidated
|                                                 |  |                   |          |                |  |              |          |             
|Current assets                                   |  | $                 | 166.3    |                |  | $            | 376.5    |              |  | $ | (0.3      | ) |  | $ | 542.5    |  
|Discontinued operations                          |  |                   | 809.6    |                |  |              | 12,692.6 |              |  |   | (528.2    | ) |  |   | 12,974.0 |  
|Investments in and loans to affiliates, net      |  |                   | 23,001.2 |                |  |              | 16.1     |              |  |   | (23,009.5 | ) |  |   | 7.8      |  
|Fixed and noncurrent assets                      |  |                   | 64.0     |                |  |              | 2,219.0  |              |  |   |          |   |  |   | 2,283.0  |  
|                                                 |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Total assets                                     |  | $                 | 24,041.1 |                |  | $            | 15,304.2 |              |  | $ | (23,538.0 | ) |  | $ | 15,807.3 |  
|                                                 |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Current liabilities                              |  | $                 | 9.5      |                |  | $            | 5,391.5  |              |  | $ | (2,259.1  | ) |  | $ | 3,141.9  |  
|Discontinued operations                          |  |                   | 13,331.4 |                |  |              | 14,764.0 |              |  |   | (10,122.2 | ) |  |   | 17,973.2 |  
|Noncurrent liabilities                           |  |                   | 5,927.0  |                |  |              | 361.9    |              |  |   | (5,892.5  | ) |  |   | 396.4    |  
|Liabilities subject to compromise                |  |                   | 1,243.7  |                |  |              |         |              |  |   |          |   |  |   | 1,243.7  |  
|Shareholders (deficiency)                       |  |                   | 3,529.5  |                |  |              | (5,213.2 | )            |  |   | (5,264.2  | ) |  |   | (6,947.9 | )
|                                                 |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  
|Total liabilities and shareholders (deficiency) |  | $                 | 24,041.1 |                |  | $            | 15,304.2 |              |  | $ | (23,538.0 | ) |  | $ | 15,807.3 |  
|                                                 |  |                   |          |                |  |              |          |              |  |   |           |   |  |   |          |  

|                                                 |  |                   |          |                |  |              |          |              |  |   |          |   |  |   |          |  
|------------------------------------------------ |  | ----------------- | -------- | -------------- |  | ------------ | -------- | ------------ |  | - | -------- | - |  | - | -------- | -
|                                                 |  | December 31, 2001
|                                                 |  |                  
|                                                 |  |                   |          |                |  | Entities Not |          |              |  |   |          |   |  |  
|                                                 |  | Entities in       |          | In             |  |              |          |              |  |   |          |  
|Balance Sheets                                   |  | Reorganization    |          | Reorganization |  | Adjustments  |          | Consolidated
|                                                 |  |                   |          |                |  |              |          |             
|Current assets                                   |  | $                 | 10.1     |                |  | $            | 815.9    |              |  | $ | (470.6   | ) |  | $ | 355.3    |  
|Discontinued operations                          |  |                   | 414.0    |                |  |              | 12,713.6 |              |  |   | 365.0    |   |  |   | 13,492.6 |  
|Investments and loans to affiliates, net         |  |                   | 5,962.3  |                |  |              | 56.9     |              |  |   | (5,803.1 | ) |  |   | 216.1    |  
|Fixed and noncurrent assets                      |  |                   | 64.2     |                |  |              | 2,655.2  |              |  |   | 35.3     |   |  |   | 2,754.7  |  
|                                                 |  |                   |          |                |  |              |          |              |  |   |          |   |  |   |          |  
|Total assets                                     |  | $                 | 6,450.5  |                |  | $            | 16,241.6 |              |  | $ | (5,873.4 | ) |  | $ | 16,818.7 |  
|                                                 |  |                   |          |                |  |              |          |              |  |   |          |   |  |   |          |  
|Current liabilities                              |  | $                 | 38.7     |                |  | $            | 4,787.1  |              |  | $ | (1,061.6 | ) |  | $ | 3,764.2  |  
|Discontinued operations                          |  |                   | 9,598.8  |                |  |              | 12,748.7 |              |  |   | (5,916.9 | ) |  |   | 16,430.6 |  
|Noncurrent liabilities                           |  |                   | 4,138.0  |                |  |              | 272.8    |              |  |   | (4,123.1 | ) |  |   | 287.7    |  
|Liabilities subject to compromise                |  |                   |         |                |  |              |         |              |  |   |         |   |  |   |         |  
|Shareholders (deficiency)                       |  |                   | (7,325.0 | )              |  |              | (1,567.0 | )            |  |   | 5,228.2  |   |  |   | (3,663.8 | )
|                                                 |  |                   |          |                |  |              |          |              |  |   |          |   |  |   |          |  
|Total liabilities and shareholders (deficiency) |  | $                 | 6,450.5  |                |  | $            | 16,241.6 |              |  | $ | (5,873.4 | ) |  | $ | 16,818.7 |  
|                                                 |  |                   |          |                |  |              |          |              |  |   |          |   |  |   |          |  

F-167



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

23. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

|                                                                         |  |                              |          |                |  |              |        |              |  |   |          |   |  |   |        |  
|------------------------------------------------------------------------ |  | ---------------------------- | -------- | -------------- |  | ------------ | ------ | ------------ |  | - | -------- | - |  | - | ------ | -
|                                                                         |  | Year Ended December 31, 2002
|                                                                         |  |                             
|                                                                         |  |                              |          |                |  | Entities Not |        |              |  |   |          |   |  |  
|                                                                         |  | Entities in                  |          | In             |  |              |        |              |  |   |          |  
|Statements of Cash Flows                                                 |  | Reorganization               |          | Reorganization |  | Adjustments  |        | Consolidated
|                                                                         |  |                              |          |                |  |              |        |             
|Net cash provided by (used in) operating activities                      |  | $                            | (2,390.9 | )              |  | $            | (36.0  | )            |  | $ | 2,638.2  |   |  | $ | 211.3  |  
|Net cash provided by (used in) investing activities                      |  |                              | 2,508.3  |                |  |              | (150.5 | )            |  |   | (2,811.6 | ) |  |   | (453.8 | )
|Net cash provided by financing activities                                |  |                              | (10.0    | )              |  |              | 153.1  |              |  |   | 388.6    |   |  |   | 531.7  |  
|Effect of exchange rate changes on cash and cash
equivalents             |  |                              |         |                |  |              | 14.6   |              |  |   | 35.8     |   |  |   | 50.4   |  
|                                                                         |  |                              |          |                |  |              |        |              |  |   |          |   |  |   |        |  
|Increase in cash and cash equivalents                                    |  |                              | 107.4    |                |  |              | (18.8  | )            |  |   | 251.0    |   |  |   | 339.6  |  
|Cash and cash equivalents at beginning of year 
continuing operations   |  |                              | 3.0      |                |  |              | 88.0   |              |  |   |         |   |  |   | 91.0   |  
|Cash and cash equivalents at beginning of year 
discontinued operations |  |                              |         |                |  |              | 25.2   |              |  |   | 251.1    |   |  |   | 276.3  |  
|Cash and cash equivalents at end of year 
discontinued operations       |  |                              |         |                |  |              |       |              |  |   | (502.0   | ) |  |   | (502.0 | )
|                                                                         |  |                              |          |                |  |              |        |              |  |   |          |   |  |   |        |  
|Cash and cash equivalents at end of year 
continuing operations         |  | $                            | 110.4    |                |  | $            | 94.4   |              |  | $ | 0.1      |   |  | $ | 204.9  |  
|                                                                         |  |                              |          |                |  |              |        |              |  |   |          |   |  |   |        |  

|                                                                         |  |                              |           |                |  |              |        |              |  |   |           |   |  |   |          |  
|------------------------------------------------------------------------ |  | ---------------------------- | --------- | -------------- |  | ------------ | ------ | ------------ |  | - | --------- | - |  | - | -------- | -
|                                                                         |  | Year Ended December 31, 2001
|                                                                         |  |                             
|                                                                         |  |                              |           |                |  | Entities Not |        |              |  |   |           |   |  |  
|                                                                         |  | Entities in                  |           | In             |  |              |        |              |  |   |           |  
|Statements of Cash Flows                                                 |  | Reorganization               |           | Reorganization |  | Adjustments  |        | Consolidated
|                                                                         |  |                              |           |                |  |              |        |             
|Net cash provided by (used in) operating activities                      |  | $                            | (12,013.3 | )              |  | $            | 12.1   |              |  | $ | 11,433.1  |   |  | $ | (568.1   | )
|Net cash provided by (used in) investing activities                      |  |                              | 11,813.2  |                |  |              | (393.6 | )            |  |   | (13,708.6 | ) |  |   | (2,289.0 | )
|Net cash provided by financing activities                                |  |                              | 200.5     |                |  |              | 414.1  |              |  |   | 2,110.9   |   |  |   | 2,725.5  |  
|Effect of exchange rate changes on cash and cash equivalents             |  |                              |          |                |  |              | (3.2   | )            |  |   | (7.8      | ) |  |   | (11.0    | )
|                                                                         |  |                              |           |                |  |              |        |              |  |   |           |   |  |   |          |  
|(Decrease) in cash and cash equivalents                                  |  |                              | 0.4       |                |  |              | 29.4   |              |  |   | (172.4    | ) |  |   | (142.6   | )
|Cash and cash equivalents at beginning of year  continuing operations   |  |                              | 2.6       |                |  |              | 54.3   |              |  |   |          |   |  |   | 56.9     |  
|Cash and cash equivalents at beginning of year  discontinued operations |  |                              |          |                |  |              | 29.5   |              |  |   | 423.5     |   |  |   | 453.0    |  
|Cash and cash equivalents at end of year  discontinued operations       |  |                              |          |                |  |              | (25.2  | )            |  |   | (251.1    | ) |  |   | (276.3   | )
|                                                                         |  |                              |           |                |  |              |        |              |  |   |           |   |  |   |          |  
|Cash and cash equivalents at end of year 
continuing operations         |  | $                            | 3.0       |                |  | $            | 88.0   |              |  | $ |          |   |  | $ | 91.0     |  
|                                                                         |  |                              |           |                |  |              |        |              |  |   |           |   |  |   |          |  

F-168



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

23. Consolidating Financial Statements of Entities in Reorganization and Entities Not in Reorganization (continued)

(in millions)

|                                                                         |  |                              |          |                |  |              |          |              |  |   |          |   |  |   |           |  
|------------------------------------------------------------------------ |  | ---------------------------- | -------- | -------------- |  | ------------ | -------- | ------------ |  | - | -------- | - |  | - | --------- | -
|                                                                         |  | Year Ended December 31, 2000
|                                                                         |  |                             
|                                                                         |  |                              |          |                |  | Entities Not |          |              |  |   |          |   |  |  
|                                                                         |  | Entities in                  |          | In             |  |              |          |              |  |   |          |  
|Statements of Cash Flows                                                 |  | Reorganization               |          | Reorganization |  | Adjustments  |          | Consolidated
|                                                                         |  |                              |          |                |  |              |          |             
|Net cash provided by (used in) operating activities                      |  | $                            | (2,526.0 | )              |  | $            | 38.9     |              |  | $ | 2,108.8  |   |  | $ | (378.3    | )
|Net cash provided by (used in) investing activities                      |  |                              | (5,158.2 | )              |  |              | (1,965.1 | )            |  |   | (6,388.7 | ) |  |   | (13,512.0 | )
|Net cash provided by financing activities                                |  |                              | 6,185.4  |                |  |              | 1,990.8  |              |  |   | 3,654.7  |   |  |   | 11,830.9  |  
|Effect of exchange rate changes on cash and cash
equivalents             |  |                              |         |                |  |              | (2.4     | )            |  |   | (25.5    | ) |  |   | (27.9     | )
|                                                                         |  |                              |          |                |  |              |          |              |  |   |          |   |  |   |           |  
|Increase (decrease) in cash and cash equivalents                         |  |                              | (1,498.8 | )              |  |              | 62.2     |              |  |   | (650.7   | ) |  |   | (2,087.3  | )
|Cash and cash equivalents at beginning of year 
continuing operations   |  |                              | 1,501.4  |                |  |              | 8.8      |              |  |   | 1.4      |   |  |   | 1,511.6   |  
|Cash and cash equivalents at beginning of year 
discontinued operations |  |                              |         |                |  |              | 12.8     |              |  |   | 1,072.8  |   |  |   | 1,085.6   |  
|Cash and cash equivalents at end of year 
discontinued operations       |  |                              |         |                |  |              | (29.5    | )            |  |   | (423.5   | ) |  |   | (453.0    | )
|                                                                         |  |                              |          |                |  |              |          |              |  |   |          |   |  |   |           |  
|Cash and cash equivalents at end of year 
continuing operations         |  | $                            | 2.6      |                |  | $            | 54.3     |              |  | $ |         |   |  | $ | 56.9      |  
|                                                                         |  |                              |          |                |  |              |          |              |  |   |          |   |  |   |           |  

F-169



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##### Table of Contents



NTL (Delaware), Inc. (Debtor-in-Possession) and Subsidiaries
Notes to Consolidated Financial Statements (continued)

24. Quarterly Financial Information (Unaudited)

The following is a summary of the quarterly results of operations for the years ended December 31, 2002 and 2001.

|                                    |  |                    |        |          |  |               |        |              |  |       |        |   |  |   |          |   |  |   |          |  
|----------------------------------- |  | ------------------ | ------ | -------- |  | ------------- | ------ | ------------ |  | ----- | ------ | - |  | - | -------- | - |  | - | -------- | -
|                                    |  | (in millions)     
|                                    |  |                   
|                                    |  | 2002(1,2)         
|                                    |  |                   
|                                    |  | Three Months Ended
|                                    |  | March 31,          |        | June 30, |  | September 30, |        | December 31, |  | Total
|                                    |  |                    |        |          |  |               |        |              |  |      
|Revenues                            |  | $                  | 87.7   |          |  | $             | 99.2   |              |  | $     | 108.8  |   |  | $ | 136.5    |   |  | $ | 432.2    |  
|Operating (loss)                    |  |                    | (44.0  | )        |  |               | (73.8  | )            |  |       | (62.0  | ) |  |   | (874.1   | ) |  |   | (1,053.9 | )
|(Loss) from continuing operations   |  |                    | (104.5 | )        |  |               | (124.1 | )            |  |       | (142.5 | ) |  |   | (907.4   | ) |  |   | (1,278.5 | )
|(Loss) from discontinued operations |  |                    | (464.9 | )        |  |               | (406.1 | )            |  |       | (583.5 | ) |  |   | (925.6   | ) |  |   | (2,380.1 | )
|Net (loss)                          |  |                    | (569.4 | )        |  |               | (530.2 | )            |  |       | (726.0 | ) |  |   | (1,833.0 | ) |  |   | (3,658.6 | )

|                                    |  |                    |          |          |  |               |          |              |  |       |          |   |  |   |           |   |  |   |           |  
|----------------------------------- |  | ------------------ | -------- | -------- |  | ------------- | -------- | ------------ |  | ----- | -------- | - |  | - | --------- | - |  | - | --------- | -
|                                    |  | (in millions)     
|                                    |  |                   
|                                    |  | 2001(1,3)         
|                                    |  |                   
|                                    |  | Three Months Ended
|                                    |  | March 31,          |          | June 30, |  | September 30, |          | December 31, |  | Total
|                                    |  |                    |          |          |  |               |          |              |  |      
|Revenues                            |  | $                  | 92.1     |          |  | $             | 91.8     |              |  | $     | 78.7     |   |  | $ | 125.2     |   |  | $ | 387.8     |  
|Operating (loss)                    |  |                    | (117.9   | )        |  |               | (126.9   | )            |  |       | (128.6   | ) |  |   | (650.9    | ) |  |   | (1,024.3  | )
|(Loss) from continuing operations   |  |                    | (199.1   | )        |  |               | (212.2   | )            |  |       | (195.2   | ) |  |   | (1,227.4  | ) |  |   | (1,833.9  | )
|(Loss) from discontinued operations |  |                    | (837.1   | )        |  |               | (801.8   | )            |  |       | (811.1   | ) |  |   | (9,422.9  | ) |  |   | (11,872.9 | )
|Net (loss)                          |  |                    | (1,036.2 | )        |  |               | (1,014.0 | )            |  |       | (1,006.3 | ) |  |   | (10,650.3 | ) |  |   | (13,706.8 | )



|(1) |  | As more fully described in Notes 1, 2 and 3 to the Consolidated Financial
Statements, on May 8, 2002, Old NTL filed the Plan which became effective on
January 10, 2003. Under the terms of the Plan, the operations of New NTL have
been accounted for as a discontinued operation of the Company, beginning with
the quarter ended September 30, 2002 and, accordingly, its operating results
have been excluded from the Companys results from continuing operations for
the periods presented. In addition, the operating results for NTL Australia
and Rediffusion also qualified for discontinued operations treatment (because
both units were sold during the current year) for all periods presented.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | During the fourth quarter of 2002, the Company recorded an asset
impairment charge of $838.8 million, which was associated with a goodwill
impairment provision at Cablecom. The fourth quarter loss in 2002 from
discontinued operations also included an asset impairment charge of $418.5
million and a restructuring charge of $99.2 million relating to the operations
of New NTL.                                                                                                                                                                                                                                                                                                                        
|   
|(3) |  | During the fourth quarter of 2001, the Company recorded an asset
impairment charge of $912.1 million, which was associated with a goodwill
impairment provision at Cablecom and the write-down of various long-term assets
at Premium TV. The fourth quarter loss in 2001 from discontinued operations
also included an asset impairment charge of $8,161.6 million and a
restructuring charge of $202.8 million relating to the operations of New NTL.                                                                                                                                                                                                                                                        

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NTL (Delaware), Inc. (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant
Condensed Balance Sheets
(dollars in millions)

|                                                                                          |                                        |   |              |           |      |   |          |           |  
|----------------------------------------------------------------------------------------- | -------------------------------------- | - | ------------ | --------- | ---- | - | -------- | --------- | -
|                                                                                          |                                        |   | December 31,
|                                                                                          |                                        |   |             
|                                                                                          |                                        |   | 2002         |           | 2001
|                                                                                          |                                        |   |              |           |     
|Assets                                                                                    |                                        |   |              |           |      |   |          |          
|Current assets:                                                                           |                                        |   |              |           |      |   |          |          
|                                                                                          | Cash and cash equivalents              |   | $            | 110.4     |      |   | $        | 3.0       |  
|                                                                                          | Marketable securities                  |   |              | 13.0      |      |   |          |          |  
|                                                                                          | Affiliate receivables                  |   |              | 35.1      |      |   |          | 5.5       |  
|                                                                                          | Other                                  |   |              | 7.8       |      |   |          | 1.5       |  
|                                                                                          |                                        |   |              |           |      |   |          |           |  
|Total current assets                                                                      |                                        |   | 166.3        |           |      |   | 10.0     |          
|Fixed assets, net                                                                         |                                        |   |             |           |      |   | 6.3      |          
|Deferred financing costs, net of accumulated
amortization of $18.5 (2002) and $5.7 (2001) |                                        |   | 19.1         |           |      |   | 21.8     |          
|Other assets                                                                              |                                        |   | 44.9         |           |      |   | 36.1     |          
|                                                                                          |                                        |   |              |           |      |   |          |          
|Total assets                                                                              |                                        | $ | 230.3        |           |      | $ | 74.2     |          
|                                                                                          |                                        |   |              |           |      |   |          |          
|Liabilities and shareholders (deficiency)                                                |                                        |   |              |           |      |   |          |          
|Liabilities not subject to compromise                                                     |                                        |   |              |           |      |   |          |          
|Current liabilities                                                                       |                                        | $ | 1.7          |           |      | $ | 5.3      |          
|Affiliate payable                                                                         |                                        |   | 7.8          |           |      |   | 33.4     |          
|                                                                                          |                                        |   |              |           |      |   |          |          
|Total current liabilities                                                                 |                                        |   | 9.5          |           |      |   | 38.7     |          
|Long-term debt                                                                            |                                        |   |             |           |      |   | 1,200.0  |          
|Liabilities subject to compromise                                                         |                                        |   | 1,243.7      |           |      |   |         |          
|Investments in and loans to discontinued operations                                       |                                        |   | 4,999.2      |           |      |   | 2,938.0  |          
|Investments in and loans to affiliates, net                                               |                                        |   | 925.8        |           |      |   | (438.7   | )        
|Shareholders (deficiency):                                                               |                                        |   |              |           |      |   |          |          
|                                                                                          | Common stock                           |   |              |          |      |   |          |          |  
|                                                                                          | Additional paid-in capital             |   |              | 16,193.9  |      |   |          | 16,070.1  |  
|                                                                                          | Accumulated other comprehensive (loss) |   |              | (821.9    | )    |   |          | (1,072.7  | )
|                                                                                          | (Deficit)                              |   |              | (22,319.9 | )    |   |          | (18,661.2 | )
|                                                                                          |                                        |   |              |           |      |   |          |          
|                                                                                          |                                        |   | (6,947.9     | )         |      |   | (3,663.8 | )        
|                                                                                          |                                        |   |              |           |      |   |          |          
|Total liabilities and shareholders (deficiency)                                          |                                        | $ | 230.3        |           |      | $ | 74.2     |          
|                                                                                          |                                        |   |              |           |      |   |          |          

See accompanying notes.

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NTL (Delaware), Inc. (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant (continued)
Condensed Statements of Operations
(dollars in millions)

|                                                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | -------- | ---- |  | ---- | --------- | - |  | - | -------- | -
|                                                                                                                            |  | Year Ended December 31,
|                                                                                                                            |  |                        
|                                                                                                                            |  | 2002                    |          | 2001 |  | 2000
|                                                                                                                            |  |                         |          |      |  |     
|Cost and expenses                                                                                                           |  |                         |          |      |  |      |           |   |  |   |          |  
|Operating expenses (exclusive of depreciation shown
separately below)                                                       |  | $                       |         |      |  | $    |          |   |  | $ |         |  
|Selling, general and administrative expenses                                                                                |  |                         | 3.6      |      |  |      | 5.8       |   |  |   |         |  
|Asset impairments                                                                                                           |  |                         | 2.2      |      |  |      |          |   |  |   |         |  
|Other charges                                                                                                               |  |                         |         |      |  |      |          |   |  |   |         |  
|Corporate expenses                                                                                                          |  |                         | 0.6      |      |  |      | 12.8      |   |  |   | 14.5     |  
|Depreciation and amortization                                                                                               |  |                         | 13.4     |      |  |      | 5.5       |   |  |   | 5.0      |  
|                                                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|Operating (loss)                                                                                                            |  |                         | (19.8    | )    |  |      | (24.1     | ) |  |   | (19.5    | )
|Other income (expense)                                                                                                      |  |                         |          |      |  |      |           |   |  |   |          |  
|Interest income and other, net                                                                                              |  |                         | 4.1      |      |  |      | 5.7       |   |  |   | 29.2     |  
|Interest expense                                                                                                            |  |                         | (24.3    | )    |  |      | (69.0     | ) |  |   | (68.6    | )
|Other gains (losses)                                                                                                        |  |                         | 1.1      |      |  |      | (109.3    | ) |  |   |         |  
|Foreign currency transaction gains (losses)                                                                                 |  |                         | 9.1      |      |  |      | (9.7      | ) |  |   | (63.0    | )
|                                                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) income before recapitalization items, income
taxes, equity in net (loss) of subsidiaries and
discontinued operations |  |                         | (29.8    | )    |  |      | (206.4    | ) |  |   | (121.9   | )
|Recapitalization items, net                                                                                                 |  |                         | (4.8     | )    |  |      |          |   |  |   |         |  
|                                                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) income before income taxes, equity in net (loss)
of subsidiaries and discontinued operations                         |  |                         | (34.6    | )    |  |      | (206.4    | ) |  |   | (121.9   | )
|Income tax (expense) benefit                                                                                                |  |                         | 4.6      |      |  |      | 2.4       |   |  |   |         |  
|                                                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) income before equity in net (loss) of subsidiaries                                                                   |  |                         | (30.0    | )    |  |      | (204.0    | ) |  |   | (121.9   | )
|Equity in net (loss) of subsidiaries                                                                                        |  |                         | (1,248.5 | )    |  |      | (1,635.7  | ) |  |   | (437.6   | )
|                                                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) from continuing operations                                                                                           |  |                         | (1,278.5 | )    |  |      | (1839.7   | ) |  |   | (559.6   | )
|Discontinued operations:                                                                                                    |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) from discontinued operations, net of income tax
benefit (charge) of $26.3 (2002), $114.1 (2001) and
$88.1 (2000)     |  |                         | (2,374.4 | )    |  |      | (11,867.1 | ) |  |   | (2,407.5 | )
|Net (loss) on sales of discontinued operations, net of
income tax expense of $4.6 (2002)                                    |  |                         | (5.7     | )    |  |      |          |   |  |   |         |  
|                                                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|(Loss) from discontinued operations                                                                                         |  |                         | (2,380.1 | )    |  |      | (11,867.1 | ) |  |   | (2,407.5 | )
|                                                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  
|Net (loss)                                                                                                                  |  | $                       | (3,658.6 | )    |  | $    | (13,706.8 | ) |  | $ | (2,967.0 | )
|                                                                                                                            |  |                         |          |      |  |      |           |   |  |   |          |  

See accompanying notes.

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NTL (Delaware), Inc. (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant (continued)
Condensed Statements of Cash Flows
(dollars in millions)

|                                                       |  |                         |          |      |  |      |           |   |  |   |          |  
|------------------------------------------------------ |  | ----------------------- | -------- | ---- |  | ---- | --------- | - |  | - | -------- | -
|                                                       |  | Year Ended December 31,
|                                                       |  |                        
|                                                       |  | 2002                    |          | 2001 |  | 2000
|                                                       |  |                         |          |      |  |     
|Net cash (used in) operating activities                |  | $                       | (3,744.4 | )    |  | $    | (13,531.2 | ) |  | $ | (2,963.5 | )
|Investing activities                                   |  |                         |          |      |  |      |           |   |  |   |          |  
|Purchase of marketable securities                      |  |                         | (34.0    | )    |  |      |          |   |  |   | (58.2    | )
|Proceeds from sales of marketable securities           |  |                         | 21.1     |      |  |      |          |   |  |   | 241.6    |  
|Purchase of fixed assets                               |  |                         |         |      |  |      |          |   |  |   | (4.0     | )
|Investments in and loans to affiliates                 |  |                         | (95.8    | )    |  |      | (88.2     | ) |  |   | (2,435.3 | )
|Increase(decrease) in other assets                     |  |                         |         |      |  |      | (5.5      | ) |  |   |         |  
|Proceeds from the sale of assets                       |  |                         | 8.9      |      |  |      |          |   |  |   |         |  
|                                                       |  |                         |          |      |  |      |           |   |  |   |          |  
|Net cash (used in) provided by continuing operations   |  |                         | (99.8    | )    |  |      | (93.7     | ) |  |   | (2,255.9 | )
|Net cash provided by (used in) discontinued operations |  |                         | 1,655.4  |      |  |      | 1,517.9   |   |  |   | 437.5    |  
|                                                       |  |                         |          |      |  |      |           |   |  |   |          |  
|Net cash provided by (used in) investing activities    |  |                         | 1,555.6  |      |  |      | 1,424.2   |   |  |   | (1,818.4 | )
|Financing activities                                   |  |                         |          |      |  |      |           |   |  |   |          |  
|Proceeds from borrowings, net of financing costs       |  |                         | (10.0    | )    |  |      |          |   |  |   | (0.8     | )
|Proceeds from issuance of common stock                 |  |                         |          |      |  |      |          |   |  |   | 37.3     |  
|Proceeds from issuance of preferred stock              |  |                         |         |      |  |      |          |   |  |   | 1,850.0  |  
|                                                       |  |                         |          |      |  |      |           |   |  |   |          |  
|Net cash provided by (used in) continuing operations   |  |                         | (10.0    | )    |  |      |          |   |  |   | 1,886.5  |  
|Net cash provided by discontinued operations           |  |                         | 2,306.2  |      |  |      | 12,107.4  |   |  |   | 1,396.7  |  
|                                                       |  |                         |          |      |  |      |           |   |  |   |          |  
|Net cash provided by financing activities              |  |                         | 2,296.2  |      |  |      | 12,107.4  |   |  |   | 3,283.2  |  
|Increase (decrease) in cash and cash equivalents       |  |                         | 107.4    |      |  |      | 0.4       |   |  |   | (1,498.7 | )
|Cash and cash equivalents at beginning of year         |  |                         | 3.0      |      |  |      | 2.6       |   |  |   | 1,501.3  |  
|                                                       |  |                         |          |      |  |      |           |   |  |   |          |  
|Cash and cash equivalents at end of year               |  | $                       | 110.4    |      |  | $    | 3.0       |   |  | $ | 2.6      |  
|                                                       |  |                         |          |      |  |      |           |   |  |   |          |  
|Supplemental disclosure of cash flow information       |  |                         |          |      |  |      |           |   |  |   |          |  
|Cash paid for interest                                 |  |                         |         |      |  | $    | 69.0      |   |  | $ | 68.0     |  
|Supplemental schedule of non-cash financing activities |  |                         |          |      |  |      |           |   |  |   |          |  
|Accretion of dividends and discount on preferred stock |  |                         |         |      |  |      |          |   |  | $ | 10.6     |  

See accompanying notes.

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NTL (Delaware), Inc. (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant (continued)
Notes to Condensed Financial Statements

1. Corporate Restructuring

The accompanying financial statements do not reflect any adjustments in
connection with the emergence of NTL (Delaware), Inc. (NTL Delaware or the
Company), a wholly-owned subsidiary of NTL Europe (as defined below) which
holds must of NTL Europes assets, from Chapter 11 reorganization.

On May 8, 2002, the entity then known as NTL Incorporated (Old NTL) and
certain of its subsidiaries (including NTL Delaware) as of that time each filed
a pre-arranged joint reorganization plan (the Plan) under Chapter 11 of the
U.S. Bankruptcy Code. Old NTLs operating subsidiaries were not included in
the Chapter 11 filing. The Plan became effective on January 10, 2003 (the
Effective Date) at which time the Company emerged from Chapter 11
reorganization.

Pursuant to the Plan, Old NTL and its subsidiaries were split into two separate
companies. The entity formerly known as NTL Incorporated was renamed NTL
Europe, Inc. and became the holding company for Old NTLs European and certain
other assets (NTL Europe). The entity formerly known as NTL Communications
Corp. was renamed NTL Incorporated and became the holding company for Old
NTLs principal UK and Ireland assets (New NTL). Pursuant to the Plan, all
of the outstanding securities of Old NTL and certain of its subsidiaries were
canceled (including the long-term debt of NTL Delaware), and NTL Europe issued
shares of its common stock, par value $0.01 per share (the Common Stock), and
10% Fixed Coupon Redeemable Preferred Stock, Series A, par value $0.01 per
share (with a $50.00 liquidation preference per share) (the Preferred Stock)
and New NTL issued shares of its common stock and Series A warrants to various
former creditors and stockholders of Old NTL and its subsidiaries. The precise
mix of new securities received by holders of each particular type of security
of Old NTL and its subsidiaries was set forth in the Plan. New NTL is an
independent entity which is no longer owned by or affiliated with the Company
or NTL Europe.

Historical Structure of the Company

On May 18, 2000, the entity formerly known as NTL Incorporated (currently
named NTL (Delaware), Inc.) completed a corporate restructuring to create a
holding company structure. The formation of the holding company was part of
NTL Delawares acquisition of certain assets of Cable & Wireless Communications
plc (CWC). The holding company restructuring was accomplished through a
merger so that all the stockholders of NTL Delaware at the effective time of
the merger became stockholders of the new holding company, and NTL Delaware
became a subsidiary of the new holding company. The new holding company was
called NTL Incorporated (which is now known as NTL Europe, Inc.) and the
holding companys subsidiary simultaneously changed its name to NTL (Delaware),
Inc.

The Company conducts its operations through direct and indirect wholly-owned
subsidiaries.

2. Basis of Presentation

In the Companys condensed financial statements, the Companys investment in
subsidiaries is stated at cost plus equity in the undistributed earnings of the
subsidiaries. The Companys share of net loss of its subsidiaries is included
in net loss using the equity method of accounting. The condensed financial
statements should be read in conjunction with the Companys consolidated
financial statements.

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NTL (Delaware), Inc. (Debtor-in-Possession)
Schedule I  Condensed Financial Information of Registrant (continued)
Notes to Condensed Financial Statements

3. Liabilities Subject to Compromise

Liabilities subject to compromise consist of the following:

|                        |                       |                                       |       |  |               |         | 
|----------------------- | --------------------- | ------------------------------------- | ----- |  | ------------- | ------- | 
|                        |                       |                                       |       |  | December 31, 
|                        |                       |                                       |       |  | 2002         
|                        |                       |                                       |       |  |              
|                        |                       |                                       |       |  | (in millions)
|Accounts payable        |                       | $                                     | 0.2   | 
|Interest payable        |                       |                                       | 27.2  | 
|Payable to subsidiaries |                       |                                       | 16.3  | 
|Long term debt:         |                       |                                       |       | 
|                        | NTL (Delaware), Inc.: |                                       |       |  |              
|                        |                       | 5 3/4% Convertible Subordinated Notes |       |  | 1,200.0       |        
|                        |                       |                                       |       | 
|                        |                       |                                       | Total |  | $             | 1,243.7 | 
|                        |                       |                                       |       | 

Upon emergence from Chapter 11 reorganization and in accordance with the Plan,
all of the outstanding preferred stock of Old NTL and long-term debt of Old NTL
were canceled.

4. Note Payable to NTL Incorporated

On September 28, 2001, NTL Communications Corp. loaned Old NTL $150.0 million
in cash and received 15.0% Promissory Notes due September 30, 2004. Interest
was payable monthly in cash at a rate of 15.0% per annum beginning on October
31, 2001. Upon emergence from Chapter 11 reorganization and in accordance with
the Plan, these notes were canceled.

5. Other

No cash dividends were paid to Old NTL by subsidiaries for the years ended
December 31, 2002 and 2001 and during the period from May 18, 2000 to December
31, 2000.

Old NTL was a joint obligor for the NTL Communications Corp. 7% Convertible
Subordinated Notes due December 15, 2008. Old NTL was a co-obligor on a
subordinated basis for the NTL Communications Corp. 6 3/4% Convertible Senior
Notes due May 15, 2008. All of this debt was subject to the provisions of the
Plan.

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NTL (Delaware), Inc. (Debtor-in-Possession)
Schedule II  Valuation and Qualifying Accounts

|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |        |      |  |   |      | 
|---------------------------- | ------------------------------- | ------ | ---------- | -------- | --------- | -------- | --------- | -------- | ------------ | --------- | ------- | - |  |  | - | ------ | ---- |  | - | ---- | 
|Col. A                       |                                 | Col. B |            | Col. C   |           | Col. D   |           | Col. E  
|                             |                                 |        |            |          |           |          |           |         
|                             |                                 |        |            |          |           |          | Additions |          |              |           |         |   |  |  |  
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |  
|                             |                                 |        |            |          |           |          |           |          |              |           | (2)     |   |  |  |   |        |      |  |  
|                             |                                 |        |            |          |           |          | (1)       |          | Charged      |           |         |   |  |  |   |        |     
|                             |                                 |        | Balance at |          | Charged   |          | to        |          |              |           |         |   |  |  |  
|                             |                                 |        | Beginning  |          | to        |          | Other     |          | (Deductions) |           | Balance
|                             |                                 |        | of         |          | Costs and |          | Accounts  |          | /Additions   |           | at End 
|Description                  |                                 | Period |            | Expenses |           | Describe |           | Describe |              | of Period
|                             |                                 |        |            |          |           |          |           |          |              |          
|Year ended December 31, 2002 |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |        |      |  |   |     
|                             | Allowance for doubtful accounts |        | $          | 6.6      |           |          | $         | 7.2      |              |           | $       |  |  |  | $ | (4.4   | )(a) |  | $ | 9.4  | 
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |        |      |  |   |     
|                             | Allowance for loans receivable  |        | $          | 37.2     |           |          | $         | 21.0     |              |           | $       |  |  |  | $ | (40.6) | (b)  |  | $ | 17.6 | 
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |        |      |  |   |     
|Year ended December 31, 2001 |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |        |      |  |   |     
|                             | Allowance for doubtful accounts |        | $          | 6.2      |           |          | $         | 2.5      |              |           | $       |  |  |  | $ | (2.1   | )(c) |  | $ | 6.6  | 
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |        |      |  |   |     
|                             | Allowance for loans receivable  |        | $          |         |           |          | $         | 37.2     |              |           | $       |  |  |  | $ |       |      |  | $ | 37.2 | 
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |        |      |  |   |     
|Year ended December 31, 2000 |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |        |      |  |   |     
|                             | Allowance for doubtful accounts |        | $          | 0.7      |           |          | $         | 0.4      |              |           | $       |  |  |  | $ | 5.1    | (d)  |  | $ | 6.2  | 
|                             |                                 |        |            |          |           |          |           |          |              |           |         |   |  |  |   |        |      |  |   |     



|(a) |  | Uncollectible accounts written-off, net of recoveries of $5.9 million,
offset by $1.5 million foreign currency exchange translation adjustments.                                                                                             
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Write off of loan receivable from Football League Joint Venture.                                                                                                                                                                             
|   
|(c) |  | Uncollectible accounts written-off, net of recoveries of $2.0 million and
$0.1 million foreign currency translation adjustments.                                                                                                             
|   
|(d) |  | Recoveries, net of uncollectible accounts written-off of $1.2 million
plus $0.2 million foreign currency exchange translation adjustments and
$3.7 million allowance for doubtful accounts as of acquisition dates of
purchased subsidiaries.

F-176