##### 



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

FORM 10-Q

(XBOX)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001

OR

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

Commission File No.       0-30673

NTL INCORPORATED (Exact name of registrant as specified in its charter)


|                                              |  |                                     
|--------------------------------------------- |  | ------------------------------------
|Delaware                                      |  | 13-4105887                          
|                                             
|                                             
|                                             
|                                             
|(State or other jurisdiction of incorporation |  | (I.R.S. Employer Identification No.)
|                                             
|                                             
|                                             
|                                             
|or organization)                              |  |                                     
|                                             
|                                             
|                                             
|                                             
|                                              |  |                                     
|                                             
|                                             
|                                             
|                                             
|110 East 59th Street, New York, New York      |  | 10022                               
|                                             
|                                             
|                                             
|                                             
|(Address of principal executive offices)      |  | (Zip Code)                          

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes  (XBOX)       No  (box)

The number of shares outstanding of the issuers common stock as of September
30, 2001 was 276,626,476.





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##### 



NTL Incorporated and Subsidiaries

Index

|                              |  |                                                                                                          |  |     
|----------------------------- |  | -------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |                                                                                                          |  | Page
|                              |  |                                                                                                          |  |     
|PART I. FINANCIAL INFORMATION |  |                                                                                                         
|                             
|                             
|                             
|                             
|Item 1.                       |  | Financial Statements                                                                                     |  |     
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|                              |  | Condensed Consolidated Balance Sheets-
September 30, 2001 and December 31, 2000                          |  | 2   
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|                              |  | Condensed Consolidated Statements of Operations-
Three and nine months ended September 30, 2001 and 2000 |  | 4   
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|                              |  | Condensed Consolidated Statement of Shareholders Equity-
Nine months ended September 30, 2001           |  | 5   
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|                              |  | Condensed Consolidated Statements of Cash Flows-
Nine months ended September 30, 2001 and 2000           |  | 7   
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|                              |  | Notes to Condensed Consolidated Financial Statements                                                     |  | 8   
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|Item 2.                       |  | Managements Discussion and Analysis of Results of
Operations and Financial Condition                    |  | 19  
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|Item 3.                       |  | Quantitative and Qualitative Disclosures about Market Risk                                               |  | 32  
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|PART II. OTHER INFORMATION    |  |                                                                                                         
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|Item 2.                       |  | Changes in Securities and Use of Proceeds                                                                |  | 34  
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                         |  | 38  
|                             
|                             
|                             
|                             
|                              |  |                                                                                                          |  |     
|                             
|                             
|                             
|                             
|SIGNATURES                    |  |                                                                                                          |  | 40  





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##### 



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NTL Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions)

|                                                 |                                                                                                      |   |               |       |              |   |          |       | 
|------------------------------------------------ | ---------------------------------------------------------------------------------------------------- | - | ------------- | ----- | ------------ | - | -------- | ----- | 
|                                                 |                                                                                                      |   | September 30, |       | December 31,
|                                                 |                                                                                                      |   | 2001          |       | 2000        
|                                                 |                                                                                                      |   |               |       |             
|                                                 |                                                                                                      |   | (unaudited)   |       | (see note)  
|Assets                                           |                                                                                                      |   |               |       |              |   |          |      
|                                                
|                                                
|                                                
|                                                
|Current assets:                                  |                                                                                                      |   |               |       |              |   |          |      
|                                                
|                                                
|                                                
|                                                
|                                                 | Cash and cash equivalents                                                                            |   | $             | 520.1 |              |   | $        | 579.4 | 
|                                                
|                                                
|                                                
|                                                
|                                                 | Marketable securities                                                                                |   |               |      |              |   |          | 60.0  | 
|                                                
|                                                
|                                                
|                                                
|                                                 | Accounts receivable  trade, less allowance
for doubtful accounts of $143.1 (2001) and
$141.4 (2000) |   |               | 568.7 |              |   |          | 729.1 | 
|                                                
|                                                
|                                                
|                                                
|                                                 | Other                                                                                                |   |               | 517.7 |              |   |          | 432.0 | 
|                                                 |                                                                                                      |  
|Total current assets                             |                                                                                                      |   | 1,606.5       |       |              |   | 1,800.5  |      
|                                                
|                                                
|                                                
|                                                
|Fixed assets, net                                |                                                                                                      |   | 12,892.0      |       |              |   | 12,693.0 |      
|                                                
|                                                
|                                                
|                                                
|Intangible assets, net                           |                                                                                                      |   | 11,806.7      |       |              |   | 13,061.0 |      
|                                                
|                                                
|                                                
|                                                
|Other
assets, net of accumulated amortization of
|                                                
|                                                
|                                                
|                                                
|$132.5 (2001) and $91.9 (2000)                   |                                                                                                      |   | 1,321.7       |       |              |   | 829.2    |      
|                                                 |                                                                                                      |  
|Total assets                                     |                                                                                                      | $ | 27,626.9      |       |              | $ | 28,383.7 |      
|                                                 |                                                                                                      |  

2



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##### 



NTL Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets  continued
(in millions)

|                                                                                                                                                                                                                          |                                   |   |               |         |              |   |          |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | - | ------------- | ------- | ------------ | - | -------- | ------- | 
|                                                                                                                                                                                                                          |                                   |   | September 30, |         | December 31,
|                                                                                                                                                                                                                          |                                   |   | 2001          |         | 2000        
|                                                                                                                                                                                                                          |                                   |   |               |         |             
|                                                                                                                                                                                                                          |                                   |   | (unaudited)   |         | (see note)  
|Liabilities and shareholders equity                                                                                                                                                                                      |                                   |   |               |         |              |   |          |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Current liabilities:                                                                                                                                                                                                      |                                   |   |               |         |              |   |          |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                          | Accounts payable                  |   | $             | 443.8   |              |   | $        | 506.3   | 
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                          | Accrued expenses and other        |   |               | 1,087.0 |              |   |          | 1,280.6 | 
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                          | Accrued construction costs        |   |               | 77.6    |              |   |          | 196.9   | 
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                          | Interest payable                  |   |               | 188.6   |              |   |          | 151.3   | 
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                          | Deferred revenue                  |   |               | 418.7   |              |   |          | 492.8   | 
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                          | Current portion of long-term debt |   |               | 5.3     |              |   |          | 12.6    | 
|                                                                                                                                                                                                                          |                                   |  
|Total current liabilities                                                                                                                                                                                                 |                                   |   | 2,221.0       |         |              |   | 2,640.5  |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Long-term debt                                                                                                                                                                                                            |                                   |   | 17,340.4      |         |              |   | 15,044.1 |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Other                                                                                                                                                                                                                     |                                   |   | 60.1          |         |              |   | 43.1     |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Commitments and contingent liabilities                                                                                                                                                                                    |                                   |   |               |         |              |   |          |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Deferred income taxes                                                                                                                                                                                                     |                                   |   | 149.8         |         |              |   | 205.4    |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Redeemable preferred stock  $.01 par
value, plus accreted dividends;
liquidation preference $2,785.7; less
unamortized discount of $63.6 (2001) and
$2.5 (2000); issued and outstanding 2.1
(2001) and 2.0 (2000) shares |                                   |   | 2,722.1       |         |              |   | 2,083.2  |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Shareholders equity:                                                                                                                                                                                                     |                                   |   |               |         |              |   |          |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Series preferred stock  $.01 par value;
authorized 10.0 shares; liquidation
preference $2,962.9; issued and
outstanding 3.0 (2001) and 2.9
(2000) shares                                                                 |                                   |   |              |         |              |   |         |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Common stock  $.01 par value;
authorized 800.0 shares; issued and
outstanding 276.6 (2001) and 272.1
(2000) shares                                                                                                       |                                   |   | 2.8           |         |              |   | 2.7      |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Additional paid-in capital                                                                                                                                                                                                |                                   |   | 13,816.1      |         |              |   | 13,764.7 |        
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|Accumulated other comprehensive (loss)                                                                                                                                                                                    |                                   |   | (630.7        | )       |              |   | (448.9   | )      
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|                                                                                                                                                                                                                         
|(Deficit)                                                                                                                                                                                                                 |                                   |   | (8,054.7      | )       |              |   | (4,951.1 | )      
|                                                                                                                                                                                                                          |                                   |  
|                                                                                                                                                                                                                          |                                   |   | 5,133.5       |         |              |   | 8,367.4  |        
|                                                                                                                                                                                                                          |                                   |  
|Total liabilities and shareholders equity                                                                                                                                                                                |                                   | $ | 27,626.9      |         |              | $ | 28,383.7 |        
|                                                                                                                                                                                                                          |                                   |  

Note: The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date.

See accompanying notes.

3



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##### 



NTL Incorporated and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(in millions, except per share data)

|                                              |  |                    |          |                   |  |      |         |      |  |   |          |   |  |   |          |  
|--------------------------------------------- |  | ------------------ | -------- | ----------------- |  | ---- | ------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                              |  | Three Months Ended |          | Nine Months Ended
|                                              |  | September 30,      |          | September 30,    
|                                              |  |                    |          |                  
|                                              |  | 2001               |          | 2000              |  | 2001 |         | 2000
|                                              |  |                    |          |                   |  |      |         |     
|Revenues                                      |  |                    |          |                   |  |      |         |      |  |   |          |   |  |   |          |  
|                                             
|                                             
|                                             
|                                             
|Consumer telecommunications and television    |  | $                  | 618.2    |                   |  | $    | 566.0   |      |  | $ | 1,847.5  |   |  | $ | 1,238.8  |  
|                                             
|                                             
|                                             
|                                             
|Business telecommunications                   |  |                    | 222.4    |                   |  |      | 185.7   |      |  |   | 621.2    |   |  |   | 511.9    |  
|                                             
|                                             
|                                             
|                                             
|Broadcast transmission and other              |  |                    | 87.4     |                   |  |      | 79.0    |      |  |   | 253.3    |   |  |   | 237.2    |  
|                                              |  |                   
|                                              |  |                    | 928.0    |                   |  |      | 830.7   |      |  |   | 2,722.0  |   |  |   | 1,987.9  |  
|                                             
|                                             
|                                             
|                                             
|Costs and expenses                            |  |                    |          |                   |  |      |         |      |  |   |          |   |  |   |          |  
|                                             
|                                             
|                                             
|                                             
|Operating expenses                            |  |                    | 440.2    |                   |  |      | 424.7   |      |  |   | 1,330.0  |   |  |   | 967.8    |  
|                                             
|                                             
|                                             
|                                             
|Selling, general and administrative expenses  |  |                    | 297.9    |                   |  |      | 314.1   |      |  |   | 913.4    |   |  |   | 769.3    |  
|                                             
|                                             
|                                             
|                                             
|Non-cash compensation                         |  |                    | 30.6     |                   |  |      | 2.2     |      |  |   | 30.6     |   |  |   | 2.2      |  
|                                             
|                                             
|                                             
|                                             
|Other charges                                 |  |                    | 31.2     |                   |  |      | 6.0     |      |  |   | 56.5     |   |  |   | 19.7     |  
|                                             
|                                             
|                                             
|                                             
|Corporate expenses                            |  |                    | 15.1     |                   |  |      | 9.5     |      |  |   | 46.9     |   |  |   | 30.7     |  
|                                             
|                                             
|                                             
|                                             
|Depreciation and amortization                 |  |                    | 748.8    |                   |  |      | 600.0   |      |  |   | 2,321.5  |   |  |   | 1,245.5  |  
|                                              |  |                   
|                                              |  |                    | 1,563.8  |                   |  |      | 1,356.5 |      |  |   | 4,698.9  |   |  |   | 3,035.2  |  
|                                              |  |                   
|Operating (loss)                              |  |                    | (635.8   | )                 |  |      | (525.8  | )    |  |   | (1,976.9 | ) |  |   | (1,047.3 | )
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|Other income (expense)                        |  |                    |          |                   |  |      |         |      |  |   |          |   |  |   |          |  
|                                             
|                                             
|                                             
|                                             
|Interest income and other, net                |  |                    | (34.9    | )                 |  |      | (1.2    | )    |  |   | (120.2   | ) |  |   | 48.1     |  
|                                             
|                                             
|                                             
|                                             
|Interest expense                              |  |                    | (355.7   | )                 |  |      | (280.9  | )    |  |   | (1,042.0 | ) |  |   | (729.1   | )
|                                             
|                                             
|                                             
|                                             
|Foreign currency transaction (losses) gains   |  |                    | (20.0    | )                 |  |      | 23.1    |      |  |   | (11.1    | ) |  |   | (89.3    | )
|                                              |  |                   
|(Loss) before income tax benefit              |  |                    | (1,046.4 | )                 |  |      | (784.8  | )    |  |   | (3,150.2 | ) |  |   | (1,817.6 | )
|                                             
|                                             
|                                             
|                                             
|Income tax benefit                            |  |                    | 14.9     |                   |  |      | 14.5    |      |  |   | 46.6     |   |  |   | 33.1     |  
|                                              |  |                   
|Net (loss)                                    |  |                    | (1,031.5 | )                 |  |      | (770.3  | )    |  |   | (3,103.6 | ) |  |   | (1,784.5 | )
|                                             
|                                             
|                                             
|                                             
|Preferred stock dividends                     |  |                    | (88.7    | )                 |  |      | (63.3   | )    |  |   | (229.6   | ) |  |   | (129.5   | )
|                                              |  |                   
|Net (loss) available to common shareholders   |  | $                  | (1,120.2 | )                 |  | $    | (833.6  | )    |  | $ | (3,333.2 | ) |  | $ | (1,914.0 | )
|                                              |  |                   
|Basic and diluted net (loss) per common share |  | $                  | (4.05    | )                 |  | $    | (3.08   | )    |  | $ | (12.09   | ) |  | $ | (9.63    | )
|                                              |  |                   
|Weighted average shares                       |  |                    | 276.5    |                   |  |      | 270.8   |      |  |   | 275.8    |   |  |   | 198.8    |  
|                                              |  |                   

See accompanying notes.

4



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##### 



NTL Incorporated and Subsidiaries
Condensed Consolidated Statement of Shareholders Equity
(Unaudited)
(in millions)

|                                         |  |                        |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|---------------------------------------- |  | ---------------------- | --- | -------------- |  | ------ | - | --- |  |  | ----- |  |  | - | --- | 
|                                         |  | Series Preferred Stock |     | Common Stock  
|                                         |  | $.01 Par Value         |     | $.01 Par Value
|                                         |  |                        |     |               
|                                         |  | Shares                 |     | Par            |  | Shares |   | Par
|                                         |  |                       
|Balance, December 31, 2000               |  |                        | 2.9 |                |  | $      |  |     |  |  | 272.1 |  |  | $ | 2.7 | 
|                                        
|                                        
|                                        
|                                        
|Exercise of stock options                |  |                        |     |                |  |        |   |     |  |  | 1.1   |  |  |   |     | 
|                                        
|                                        
|                                        
|                                        
|Non-cash compensation                    |  |                        |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|                                        
|                                        
|                                        
|                                        
|Conversion
of 7% Convertible Notes       |  |                        |     |                |  |        |   |     |  |  | 3.3   |  |  |   | 0.1 | 
|Accreted dividends on preferred stock    |  |                        | 0.1 |                |  |        |   |     |  |  |       |  |  |   |     | 
|                                        
|                                        
|                                        
|                                        
|Accretion of discount on preferred stock |  |                        |     |                |  |        |   |     |  |  | 0.1   |  |  |   |     | 
|                                        
|                                        
|                                        
|                                        
|Common
stock issued for an acquisition   |  |                        |     |                |  |        |   |     |  |  | 0.1   |  |  |   |     | 
|                                        
|                                        
|                                        
|                                        
|Comprehensive loss:                      |  |                        |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|                                        
|                                        
|                                        
|                                        
|Net loss for the nine months ended       |  |                        |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|September 30, 2001                       |  |                        |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|                                        
|                                        
|                                        
|                                        
|Currency translation adjustment          |  |                        |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|                                        
|                                        
|                                        
|                                        
|Unrealized net losses on investments     |  |                        |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|                                        
|                                        
|                                        
|                                        
|Unrealized net losses on derivatives     |  |                        |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|                                        
|                                        
|                                        
|                                        
|Total                                    |  |                        |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|                                         |  |                       
|Balance, September 30, 2001              |  |                        | 3.0 |                |  | $      |  |     |  |  | 276.6 |  |  | $ | 2.8 | 
|                                         |  |                       

5



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##### 



NTL Incorporated and Subsidiaries
Condensed Consolidated Statement of Shareholders Equity
(Unaudited)  continued
(in millions)

|                                                  |       |   |            |   |               |   |             |          |             |   |                    |   |         |   |            |   |            |   |       |   |  |   |          |   | 
|------------------------------------------------- | ----- | - | ---------- | - | ------------- | - | ----------- | -------- | ----------- | - | ------------------ | - | ------- | - | ---------- | - | ---------- | - | ----- | - |  | - | -------- | - | 
|                                                  |       |   |            |   |               |   |             |          |             |   | Accumulated Other  |   |         |   |           
|                                                  |       |   |            |   |               |   |             |          |             |   | Comprehensive Loss |   |         |   |           
|                                                  |       |   |            |   |               |   |             |          |             |   |                    |   |         |   |           
|                                                  |       |   |            |   |               |   |             |          |             |   |                    |   |         |   | Unrealized |   | Unrealized |   |       |   | 
|                                                  |       |   | Additional |   |               |   |             |          | Foreign     |   | Net                |   | Net     |   |            |   |           
|                                                  |       |   | Paid-In    |   | Comprehensive |   | Currency    |          | Losses on   |   | Losses on          |   |         |   |           
|                                                  |       |   | Capital    |   | Loss          |   | Translation |          | Investments |   | Derivatives        |   | Deficit
|                                                  |       |  
|Balance, December 31, 2000                        |       | $ | 13,764.7   |   |               |   |             |          |             | $ | (434.7             | ) |         | $ | (14.2      | ) |            |   |       |   |  | $ | (4,951.1 | )
|                                                 
|                                                 
|                                                 
|                                                 
|Exercise of stock options                         |       |   | 13.0       |   |               |   |             |          |             |   |                    |   |         |   |            |   |            |   |       |   |  |   |          |  
|                                                 
|                                                 
|                                                 
|                                                 
|Non-cash compensation                             |       |   | 30.6       |   |               |   |             |          |             |   |                    |   |         |   |            |   |            |   |       |   |  |   |          |  
|                                                 
|                                                 
|                                                 
|                                                 
|Conversion of 7% Convertible Notes                |       |   | 128.2      |   |               |   |             |          |             |   |                    |   |         |   |            |   |            |   |       |   |  |   |          |  
|                                                 
|                                                 
|                                                 
|                                                 
|Accreted dividends on preferred stock             |       |   | (109.7     | ) |               |   |             |          |             |   |                    |   |         |   |            |   |            |   |       |   |  |   |          |  
|                                                 
|                                                 
|                                                 
|                                                 
|Accretion of discount on preferred stock          |       |   | (15.0      | ) |               |   |             |          |             |   |                    |   |         |   |            |   |            |   |       |   |  |   |          |  
|                                                 
|                                                 
|                                                 
|                                                 
|Common stock issued for an acquisition            |       |   | 4.3        |   |               |   |             |          |             |   |                    |   |         |   |            |   |            |   |       |   |  |   |          |  
|                                                 
|                                                 
|                                                 
|                                                 
|Comprehensive loss:                               |       |   |            |   |               |   |             |          |             |   |                    |   |         |   |            |   |            |   |       |   |  |   |          |  
|                                                 
|                                                 
|                                                 
|                                                 
|Net loss for nine months ended
September 30, 2001 |       |   |            |   |               | $ | (3,103.6    | )        |             |   |                    |   |         |   |            |   |            |   |       |   |  |   | (3,103.6 | )
|                                                 
|                                                 
|                                                 
|                                                 
|Currency translation adjustment                   |       |   |            |   |               |   | (148.8      | )        |             |   | (148.8             | ) |         |   |            |   |            |   |       |   |  |   |          |  
|                                                 
|                                                 
|                                                 
|                                                 
|Unrealized net losses on investments              |       |   |            |   |               |   | (14.6       | )        |             |   |                    |   |         |   | (14.6      | ) |            |   |       |   |  |   |          |  
|                                                 
|                                                 
|                                                 
|                                                 
|Unrealized net losses on derivatives              |       |   |            |   |               |   | (18.4       | )        |             |   |                    |   |         |   |            |   |            | $ | (18.4 | ) |  |   |          |  
|                                                  |       |   |            |   |               |   |             |          |             |   |                    |   |         |   |            |   |            |   |       |   |  |   |          |  
|                                                  | Total |   |            |   |               |   | $           | (3,285.4 | )           |   |                    |   |         |   |            |   |            |   |       |   |  |   |          |   | 
|                                                  |       |  
|Balance, September 30, 2001                       |       | $ | 13,816.1   |   |               |   |             |          |             | $ | (583.5             | ) |         | $ | (28.8      | ) |            | $ | (18.4 | ) |  | $ | (8,054.7 | )
|                                                  |       |  

See accompanying notes.

6



---



##### 



NTL Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in millions)

|                                                      |                                                                           |   |                   |          |      |   |        |           |  
|----------------------------------------------------- | ------------------------------------------------------------------------- | - | ----------------- | -------- | ---- | - | ------ | --------- | -
|                                                      |                                                                           |   | Nine Months Ended
|                                                      |                                                                           |   | September 30,    
|                                                      |                                                                           |   |                  
|                                                      |                                                                           |   | 2001              |          | 2000
|                                                      |                                                                           |   |                   |          |     
|Net cash (used in) operating activities               |                                                                           | $ | (556.6            | )        |      | $ | (199.1 | )        
|                                                     
|                                                     
|                                                     
|                                                     
|Investing activities                                  |                                                                           |   |                   |          |      |   |        |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Acquisitions, net of cash acquired                                        |   |                   |         |      |   |        | (10,954.6 | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Payment of deferred purchase price                                        |   |                   |         |      |   |        | (3.0      | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Purchase of fixed assets                                                  |   |                   | (1,568.6 | )    |   |        | (1,541.9  | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Increase in other assets                                                  |   |                   | (146.2   | )    |   |        | (527.1    | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Due from CoreComm Limited                                                 |   |                   | (15.0    | )    |   |        |          |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Purchase of marketable securities                                         |   |                   | (9.9     | )    |   |        | (150.5    | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from sales of marketable securities                              |   |                   | 70.3     |      |   |        | 390.9     |  
|                                                      |                                                                           |  
|                                                      | Net cash (used in) investing activities                                   |   |                   | (1,669.4 | )    |   |        | (12,786.2 | )
|                                                     
|                                                     
|                                                     
|                                                     
|Financing activities                                  |                                                                           |   |                   |          |      |   |        |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from borrowings, net of financing costs                          |   |                   | 2,652.2  |      |   |        | 5,784.6   |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | 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   |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Principal payments                                                        |   |                   | (485.8   | )    |   |        | (1,114.6  | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Cash released from escrow                                                 |   |                   |         |      |   |        | 77.5      |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from exercise of stock options and warrants                      |   |                   | 13.0     |      |   |        | 44.1      |  
|                                                      |                                                                           |  
|                                                      | Net cash provided by financing activities                                 |   |                   | 2,179.4  |      |   |        | 10,831.2  |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Effect of exchange rate changes on cash                                   |   |                   | (12.7    | )    |   |        | (29.1     | )
|                                                      |                                                                           |  
|                                                      | Decrease in cash and cash equivalents                                     |   |                   | (59.3    | )    |   |        | (2,183.2  | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Cash and cash equivalents at beginning of period                          |   |                   | 579.4    |      |   |        | 2,597.2   |  
|                                                      |                                                                           |  
|                                                      | Cash and cash equivalents at end of period                                |   | $                 | 520.1    |      |   | $      | 414.0     |  
|                                                      |                                                                           |  
|Supplemental disclosure of cash flow information      |                                                                           |   |                   |          |      |   |        |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Cash paid during the period for interest exclusive of
amounts capitalized |   | $                 | 771.6    |      |   | $      | 330.4     |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Income taxes paid                                                         |   |                   | 8.4      |      |   |        | 1.4       |  
|                                                     
|                                                     
|                                                     
|                                                     
|Supplemental schedule of noncash financing activities |                                                                           |   |                   |          |      |   |        |          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Accretion of dividends and discount on preferred stock                    |   | $                 | 124.7    |      |   | $      | 67.4      |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Conversion of Convertible Notes                                           |   |                   | 128.3    |      |   |        |          |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Common stock and stock options issued for an
acquisition                  |   |                   | 4.3      |      |   |        | 5,485.4   |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Redeemable preferred stock issued for other assets                        |   |                   | 518.0    |      |   |        |          |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Conversion of series preferred stock                                      |   |                   |         |      |   |        | 7.6       |  

See accompanying notes.

7



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited)

Note A  Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three and
nine months ended September 30, 2001 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2001. For
further information, refer to the consolidated financial statements and
footnotes thereto included in NTL Incorporateds Annual Report on Form 10-K for
the year ended December 31, 2000.

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

Stock options, warrants and convertible securities are excluded from the
calculation of net loss per common share as their effect would be antidilutive.
At September 30, 2001 and 2000, the Company had 162.2 million and 93.5 million
shares, respectively, issuable upon the exercise of stock options and warrants
and the conversion of convertible securities.

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards (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 amortization of goodwill included in
our investments in equity investees will no longer be recorded upon adoption of
the new rules. Intangible assets that do not have indefinite lives will
continue to be amortized over their useful lives and reviewed for impairment in
accordance with SFAS No. 121. The Company is required to adopt SFAS No. 142 as
of January 1, 2002. The Company has not yet completed an analysis of whether
goodwill may be impaired under SFAS No. 142; this analysis will be completed
during the first six months of 2002 in accordance with the transition
provisions of SFAS No. 142. The Company expects to complete an
analysis for the fourth quarter of 2001 to determine whether goodwill is impaired under SFAS
No. 121. The magnitude of an impairment charge, if any, under either
accounting standard cannot be determined at this time.

8



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited) (continued)

Note B  Fixed Assets

Fixed assets consist of:

|                         |  |               |          |              |  |   |          |  
|------------------------ |  | ------------- | -------- | ------------ |  | - | -------- | -
|                         |  | September 30, |          | December 31,
|                         |  | 2001          |          | 2000        
|                         |  |               |          |             
|                         |  | (unaudited)   |          |              |  |  
|                         |  | (in millions)
|Operating equipment      |  | $             | 12,801.9 |              |  | $ | 11,753.2 |  
|                        
|                        
|                        
|                        
|Other equipment          |  |               | 1,345.0  |              |  |   | 1,145.2  |  
|                        
|                        
|                        
|                        
|Construction-in-progress |  |               | 1,603.6  |              |  |   | 1,611.1  |  
|                         |  |              
|                         |  |               | 15,750.5 |              |  |   | 14,509.5 |  
|                        
|                        
|                        
|                        
|Accumulated depreciation |  |               | (2,858.5 | )            |  |   | (1,816.5 | )
|                         |  |              
|                         |  | $             | 12,892.0 |              |  | $ | 12,693.0 |  
|                         |  |              

Depreciation expense for the nine months ended September 30, 2001 and 2000 was
$1,059.5 million and $616.8 million, respectively. Depreciation expense for
the three months ended September 30, 2001 and 2000 was $359.4 million and
$262.2 million, respectively.

Note C  Intangible Assets

Intangible assets consist of:

|                                                                                              |  |               |          |              |  |   |          | 
|--------------------------------------------------------------------------------------------- |  | ------------- | -------- | ------------ |  | - | -------- | 
|                                                                                              |  | September 30, |          | December 31,
|                                                                                              |  | 2001          |          | 2000        
|                                                                                              |  |               |          |             
|                                                                                              |  | (unaudited)   |          |              |  |  
|                                                                                              |  | (in millions)
|Goodwill, net of accumulated amortization
of $2,226.9 (2001) and $1,103.6 (2000)              |  | $             | 11,399.6 |              |  | $ | 12,523.0 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|License acquisition costs, net of accumulated
amortization of $252.1 (2001) and $215.8 (2000) |  |               | 101.3    |              |  |   | 139.2    | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Customer lists, net of accumulated amortization
of $183.4 (2001) and $110.7 (2000)            |  |               | 241.7    |              |  |   | 318.2    | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Other intangibles, net of accumulated amortization
of $23.3 (2001) and $13.8 (2000)           |  |               | 64.1     |              |  |   | 80.6     | 
|                                                                                              |  |              
|                                                                                              |  | $             | 11,806.7 |              |  | $ | 13,061.0 | 
|                                                                                              |  |              

In March 2000, the Company acquired the cable assets of the Cablecom Group
(Cablecom) in Switzerland. In May 2000, the Company acquired the consumer
cable telephone, Internet and television operations of Cable & Wireless
Communications plc in the United Kingdom (ConsumerCo). The acquisitions were
accounted for as purchases, and accordingly, the net assets and results of
operations of the acquired businesses have been included in the consolidated
financial statements from the dates of acquisition.

9



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited) (continued)

Note C  Intangible Assets (continued)

The pro forma unaudited consolidated results of operations for the nine months
ended September 30, 2000 assuming consummation of these transactions as of
January 1, 2000 is as follows (in millions, except per share data). A
significant component of the pro forma results is associated with the
acquisition of
ConsumerCo. The historical results of ConsumerCo reflect certain intercompany
costs and expenses as they were prior to the separation of ConsumerCo which was
completed in the second quarter of 2000. These costs and expenses do not
necessarily reflect the costs and expenses that would have been incurred had
ConsumerCo reported as a separate entity for these periods. Therefore the
historical results of ConsumerCo which are included in the pro forma results
below are not reflective of results on a going forward basis.

|                                              |  |   |          |  
|--------------------------------------------- |  | - | -------- | -
|Total revenue                                 |  | $ | 2,550.4  |  
|                                             
|                                             
|                                             
|                                             
|Net (loss)                                    |  |   | (2,830.4 | )
|                                             
|                                             
|                                             
|                                             
|Basic and diluted net (loss) per common share |  |   | (11.26   | )

Amortization of intangible and other assets charged to expense for the nine
months ended September 30, 2001 and 2000 was $1,262.0 million and $628.7
million, respectively. Amortization of intangible and other assets charged to
expense for the three months ended September 30, 2001 and 2000 was $389.4
million and $337.8 million, respectively.

Note D  Other Assets

On May 18, 2001, in partnership with Morgan Stanley Dean Witter Private Equity,
the Company completed its acquisition of France Telecoms 49.9% stake in
Suez-Lyonnaise Telecom, the operator of the Noos broadband network in France.
Pursuant to the acquisition agreement, the Company acquired 27% of Noos in
exchange for shares of preferred stock. The preferred stock was valued at
$518.0 million, the fair value at the date of acquisition. An additional 17.7
million ($16.1 million) purchase consideration is due to France Telecom on
transfer to Noos of specified networks following receipt of regulatory
approvals, which would be payable in May 2002.

Note E  Redeemable Preferred Stock

On May 18, 2001, the Company 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 has a
stated value and liquidation preference of $10,000 per share and is mandatorily
redeemable for cash by the Company on May 18, 2002. Dividends are payable
quarterly at the Company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
6.5% Redeemable Preferred Stock has a stated value and liquidation preference
of $10,000 per share and is mandatorily redeemable for cash by the Company on
May 18, 2007. Dividends at a rate of 6.5% per annum are cumulative and are
payable in cash upon redemption.

10



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited) (continued)

Note E  Redeemable Preferred Stock (continued)

On September 12, 2001, the Company 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 has a stated value and liquidation preference of $1,075.17 per share and
is mandatorily redeemable for cash by the Company on March 27, 2009. Dividends
are 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. Once the Convertibility Date (as defined below) is set, the
quarterly dividend rate resets to $16.12 per share and the Convertible
Preferred Stock becomes eligible for conversion into shares of the Companys
common stock beginning on a Convertibility Date, at which time the conversion
price is set at 125% of the immediately preceding 25 trading day
volume-weighted average price of the Companys common stock (the
Convertibility Base Price). The Convertibility Date is as follows: March 27,
2002, unless the Company elects to delay convertibility until March 27, 2003
or, alternatively, redeems, at its option, all shares of the Convertible
Preferred Stock on March 27, 2002 in cash; if the Company has delayed, March
27, 2003, unless the Company elects again to delay convertibility until March
27, 2004, which it may only do if the Convertibility Base Price would be less
than or equal to $65.00 per share (as may be adjusted for certain antidilutive
events); the Company may also elect, instead, to redeem all shares of the
Convertible Preferred Stock on March 27, 2003 in cash; if the Company has
delayed, March 27, 2004, unless the Company elects to redeem all shares of the
Convertible Preferred Stock on March 27, 2004 in cash. In no event will the
Convertibility Date be after March 27, 2004.

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

|                                                           |  |     |         |    |  |          |            |      |  |             |        |  |  |   |        |  |  |   |           | 
|---------------------------------------------------------- |  | --- | ------- | -- |  | -------- | ---------- | ---- |  | ----------- | ------ |  |  | - | ------ |  |  | - | --------- | 
|                                                           |  | 13% |         | 5% |  | Variable |            | 6.5% |  | Convertible
|                                                           |  |    
|Shares at December 31, 2000                                |  |     | 162,000 |    |  |          | 1,850,000  |      |  |             |       |  |  |   |       |  |  |   |          | 
|                                                          
|                                                          
|                                                          
|                                                          
|Issued for other assets                                    |  |     |        |    |  |          |           |      |  |             | 47,000 |  |  |   | 12,000 |  |  |   |          | 
|                                                          
|                                                          
|                                                          
|                                                          
|Issued for dividends                                       |  |     | 16,000  |    |  |          |           |      |  |             | 1,000  |  |  |   |       |  |  |   |          | 
|                                                          
|                                                          
|                                                          
|                                                          
|Exchange                                                   |  |     |        |    |  |          | (1,850,000 | )    |  |             |       |  |  |   |       |  |  |   | 1,850,000 | 
|                                                           |  |    
|Shares at September 30, 2001                               |  |     | 178,000 |    |  |          |           |      |  |             | 48,000 |  |  |   | 12,000 |  |  |   | 1,850,000 | 
|                                                           |  |    
|Liquidation preference at September 30,
2001 (in millions) |  | $   | 180.9   |    |  |          |            |      |  | $           | 484.2  |  |  | $ | 124.9  |  |  | $ | 1,995.7   | 
|                                                           |  |    

11



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited) (continued)

Note F  Long-Term Debt

Long-term debt consists of:

|                            |                                                         |   |               |         |              |   |          |         | 
|--------------------------- | ------------------------------------------------------- | - | ------------- | ------- | ------------ | - | -------- | ------- | 
|                            |                                                         |   | September 30, |         | December 31,
|                            |                                                         |   | 2001          |         | 2000        
|                            |                                                         |   |               |         |             
|                            |                                                         |   | (unaudited)   |         |              |   |         
|                            |                                                         |   | (in millions)
|NTL Incorporated:           |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | 5-3/4% Convertible Subordinated Notes                   |   | $             | 100.0   |              |   | $        |        | 
|                           
|                           
|                           
|                           
|NTL Delaware:               |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | 5-3/4% Convertible Subordinated Notes                   |   |               | 1,200.0 |              |   |          | 1,200.0 | 
|                           
|                           
|                           
|                           
|ConsumerCo:                 |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | Term Loan Facility and other                            |   |               |        |              |   |          | 21.7    | 
|                           
|                           
|                           
|                           
|NTL Business:               |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | Credit Agreement                                        |   |               |        |              |   |          | 3,030.3 | 
|                           
|                           
|                           
|                           
|Cablecom:                   |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | Term Loan Facility                                      |   |               | 1,667.8 |              |   |          | 1,666.4 | 
|                           
|                           
|                           
|                           
|                            | Revolving Facility                                      |   |               | 478.7   |              |   |          | 320.9   | 
|                           
|                           
|                           
|                           
|                            | Other                                                   |   |               | 7.2     |              |   |          | 15.3    | 
|                           
|                           
|                           
|                           
|NTL Australia:              |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | Credit Agreement                                        |   |               | 98.9    |              |   |          |        | 
|                           
|                           
|                           
|                           
|NTL Communications:         |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | 12-3/4% Senior Deferred Coupon Notes                    |   |               | 277.8   |              |   |          | 277.8   | 
|                           
|                           
|                           
|                           
|                            | 11-1/2% Senior Deferred Coupon Notes                    |   |               | 1,050.0 |              |   |          | 1,040.5 | 
|                           
|                           
|                           
|                           
|                            | 10% Senior Notes                                        |   |               | 400.0   |              |   |          | 400.0   | 
|                           
|                           
|                           
|                           
|                            | 9-1/2% Senior Sterling Notes, less unamortized discount |   |               | 183.2   |              |   |          | 186.5   | 
|                           
|                           
|                           
|                           
|                            | 10-3/4% Senior Deferred Coupon Sterling Notes           |   |               | 376.0   |              |   |          | 353.6   | 
|                           
|                           
|                           
|                           
|                            | 9-3/4% Senior Deferred Coupon Notes                     |   |               | 1,126.2 |              |   |          | 1,048.5 | 
|                           
|                           
|                           
|                           
|                            | 9-3/4% Senior Deferred Coupon Sterling Notes            |   |               | 380.6   |              |   |          | 360.8   | 
|                           
|                           
|                           
|                           
|                            | 11-1/2% Senior Notes                                    |   |               | 625.0   |              |   |          | 625.0   | 
|                           
|                           
|                           
|                           
|                            | 12-3/8% Senior Deferred Coupon Notes                    |   |               | 353.9   |              |   |          | 323.6   | 
|                           
|                           
|                           
|                           
|                            | 7% Convertible Subordinated Notes                       |   |               | 489.8   |              |   |          | 599.3   | 
|                           
|                           
|                           
|                           
|                            | 9-1/4% Senior Euro Notes                                |   |               | 227.5   |              |   |          | 234.7   | 
|                           
|                           
|                           
|                           
|                            | 9-7/8% Senior Euro Notes                                |   |               | 318.5   |              |   |          | 328.6   | 
|                           
|                           
|                           
|                           
|                            | 11-1/2% Senior Deferred Coupon Euro Notes               |   |               | 134.7   |              |   |          | 127.9   | 
|                           
|                           
|                           
|                           
|                            | 11-7/8% Senior Notes, less unamortized discount         |   |               | 490.4   |              |   |          | 489.6   | 
|                           
|                           
|                           
|                           
|                            | 12-3/8% Senior Euro Notes, plus unamortized premium     |   |               | 273.8   |              |   |          |        | 
|                           
|                           
|                           
|                           
|                            | 6-3/4% Convertible Senior Notes                         |   |               | 1,150.0 |              |   |          |        | 
|                           
|                           
|                           
|                           
|NTL Communications Limited: |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | Credit Agreement                                        |   |               | 3,672.8 |              |   |          | 375.3   | 
|                           
|                           
|                           
|                           
|                            | Working Capital Credit Agreement                        |   |               | 146.9   |              |   |          |        | 
|                           
|                           
|                           
|                           
|                            | Other                                                   |   |               | 60.9    |              |   |          |        | 
|                           
|                           
|                           
|                           
|NTL Triangle:               |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | 11.2% Senior Discount Debentures                        |   |               | 517.3   |              |   |          | 517.3   | 
|                           
|                           
|                           
|                           
|                            | Other                                                   |   |               | 4.8     |              |   |          | 5.2     | 
|                           
|                           
|                           
|                           
|Diamond:                    |                                                         |   |               |         |              |   |          |        
|                           
|                           
|                           
|                           
|                            | 13-1/4% Senior Discount Notes                           |   |               | 285.1   |              |   |          | 285.1   | 
|                           
|                           
|                           
|                           
|                            | 11-3/4% Senior Discount Notes                           |   |               | 531.0   |              |   |          | 531.0   | 
|                           
|                           
|                           
|                           
|                            | 10-3/4% Senior Discount Notes                           |   |               | 404.4   |              |   |          | 373.9   | 
|                           
|                           
|                           
|                           
|                            | 10% Senior Sterling Notes                               |   |               | 198.3   |              |   |          | 201.9   | 
|                           
|                           
|                           
|                           
|                            | 9-1/8% Senior Notes                                     |   |               | 110.0   |              |   |          | 110.0   | 
|                           
|                           
|                           
|                           
|                            | Other                                                   |   |               | 4.2     |              |   |          | 6.0     | 
|                            |                                                         |  
|                            |                                                         |   | 17,345.7      |         |              |   | 15,056.7 |        
|                           
|                           
|                           
|                           
|Less current portion        |                                                         |   | 5.3           |         |              |   | 12.6     |        
|                            |                                                         |  
|                            |                                                         | $ | 17,340.4      |         |              | $ | 15,044.1 |        
|                            |                                                         |  

12



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited) (continued)

Note F  Long-Term Debt (continued)

In May 2000, NTL Business Limited (NTL Business) and NTL Communications
Limited (NTLCL), wholly-owned indirect subsidiaries of the Company, entered
into a £2,500.0 million ($3,672.8 million) credit agreement in connection with
the ConsumerCo acquisition. As of September 30, 2001, there was £2,500.00
million ($3,672.8 million) outstanding under the credit agreement. The
effective interest rate at September 30, 2001 was 6.79%.

In March 2000, a subsidiary of the Company borrowed CHF 2,700.0 million
($1,667.8 million) under its term loan facility in connection with the
acquisition of Cablecom. The effective interest rate at September 30, 2001 was
5.27%. Cablecom has the option to draw on a revolving loan facility up to an
additional
CHF 1,400.0 million ($864.8 million). As of September 30, 2001, Cablecom had
borrowed CHF 775.0 million ($478.7 million) under the revolving loan facility
with an effective interest rate of 5.65%.

In January 2001, NTL Communications Corp. (NTL Communications), a
wholly-owned indirect subsidiary of the Company, issued 200.0 million ($182.0
million) aggregate principal amount of 12-3/8% Senior Euro Notes due February
1, 2008. In February 2001, NTL Communications issued an additional 100.0
million principal amount of 12-3/8% Senior Euro Notes due February 1, 2008 at a
price of 100.1% of the aggregate principal amount at maturity or 101.0 million
($91.9 million). NTL Communications received aggregate proceeds of
approximately $271.2 million after underwriters commissions and other fees.
Interest is payable semiannually in cash at a rate of 12-3/8% per annum
beginning on August 1, 2001. These notes may not be redeemed by NTL
Communications except in limited circumstances.

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 the Companys 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 the Companys 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.

On February 21, 2001, as required by the NTL Business and NTLCL credit
agreement, NTL Communications completed a transaction whereby it acquired the
entire issued share capital of NTL (CWC Holdings) Limited (the entity that owns
ConsumerCo) from NTL Incorporated and the entire issued share capital of NTL
Business from NTL (Delaware), Inc. (NTL Delaware) in exchange for shares of
its common stock. As a result of this transaction, ConsumerCo and NTL Business
became subsidiaries of NTL Communications, and NTL Business rights and
obligations under the £2,500.0 million credit agreement were assigned to a
subsidiary of NTLCL.

On March 30, 2001, NTL Australia, a wholly-owned indirect subsidiary of the
Company, entered into a A$350.0 million ($173.1 million) credit agreement with
a group of banks. As of September 30, 2001, NTL Australia had borrowed A$200.0
million ($98.9 million) under this credit agreement. NTL Australia may use
the proceeds under this credit agreement to repay NTL Delaware for part of its
original investment as well as funding general capital expenditures, working
capital and corporate purposes. As of September 30, 2001, NTL Australia repaid
A$200.0 million ($98.9 million) to NTL Delaware. Interest is payable at least

13



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited) (continued)

Note F  Long-Term Debt (continued)

every six months at the A$ Bank Bill Bid Rate plus a margin of 1.85% per annum,
which is subject to adjustment based on the ratio of senior debt to EBITDA of
NTL Australia. The effective interest rate at September 30, 2001 was 6.69%.
The unused portion of the commitment is subject to a commitment fee of 0.6%,
which is subject to adjustment based on the ratio of senior debt to EBITDA of
NTL Australia.
Principal is due in four semiannual installments beginning on June 30, 2004 of
a maximum of A$7.5 million, A$7.5 million, A$12.5 million and A$12.5 million.
The balance is due in full on March 30, 2006. The credit agreement contains
various financial and other covenants with respect to NTL Australia and
restrictions on dividends and distributions by NTL Australia.

On April 27, 2001, the Company received a financing commitment from a unit of
GE Capital. In June 2001, the Company issued $100.0 million aggregate
principal amount of 5-3/4% Convertible Subordinated Notes due June 22, 2011 to
GE Capital and received proceeds of approximately $95.9 million. Interest is
payable quarterly in cash at a rate of 5-3/4% per annum beginning on October
15, 2001. These notes are convertible into shares of the Companys common
stock at the option of the holder at a conversion price of $35.00 per share,
subject to adjustment. After December 22, 2007, the notes are redeemable, in
whole or from time to time in part, at the option of the Company.

In May 2001, NTL Communications issued $1,150.0 million aggregate principal
amount of 6-3/4% Convertible Senior Notes due May 15, 2008. NTL Communications
received proceeds of approximately $1,114.8 million after underwriters
commission and other fees. Interest is payable semiannually in cash at a rate
of 6-3/4% per annum beginning on November 15, 2001. These notes are
convertible into shares of the Companys common stock at the option of the
holder after August 13, 2001 at a conversion price of $32.728 per share. After
May 20, 2004, the notes are redeemable, in whole or from time to time in part,
at the option of the Company or NTL Communications. The Company is a
co-obligator of the notes on a subordinated basis.

NTLCL has a £1,300.0 million ($1,909.8 million) credit agreement with a group
of banks which is available to finance working capital requirements of the U.K.
Group, as defined. For purposes of this credit agreement, Diamond Cable
Communications Limited and subsidiaries, NTL (Triangle) LLC and subsidiaries
and certain other entities are excluded from the U.K. Group. Pursuant to the
credit agreement, in connection with the issuance of new debt beginning in
October 2000, the commitment has been reduced by £882.5 million ($1,296.5
million). As of September 30, 2001, £100.0 million ($146.9 million) was
outstanding under this credit agreement with an effective interest rate of
10.01%.

In October 2001, the Company completed £169.6 million ($249.2 million) of
vendor financing plus £200.0 million ($293.8 million) of GE Capital senior
secured financing. The vendor financing was an addition to NTLCLs £2,500.0
million credit agreement with the same terms and conditions. The Company
borrowed £84.8 million ($124.6 million) of the vendor financing in October
2001. The remaining £84.8 million is committed to the
Company by the vendors, who will increase their commitment to the
bank facility at the Company's request, provided that certain
purchase commitments are met. Interest on the GE Capital senior secured financing is payable at least
every six months at LIBOR plus a margin rate of 3.5% per annum. The senior
secured financing is repayable in eight quarterly installments beginning on
June 30, 2006.

14



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited) (continued)

Note G  Series Preferred Stock

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

|                            |  |    |           | 
|--------------------------- |  | -- | --------- | 
|                            |  | 5%
|                            |  |    |           | 
|Balance, December 31, 2000  |  |    | 2,858,000 | 
|                           
|                           
|                           
|                           
|Issued for dividends        |  |    | 105,000   | 
|                            |  |    |           | 
|Balance, September 30, 2001 |  |    | 2,963,000 | 
|                            |  |    |           | 

Note H  Derivative Financial Instruments

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

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 $9.0 million, of which $6.8 million
was recorded as an expense and $2.2 million 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 nine months ended
September 30, 2001, the Company recorded income of $3.3 million and other
comprehensive loss of $16.2 million as a result of changes in the fair values.
The aggregate fair value at September 30, 2001 was a net liability of $21.9
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. This agreement and the
underlying contracts do not qualify for hedge accounting under SFAS No. 133 (as
amended). Instead, it will be accounted for as a financial instrument under
SFAS No. 107, with any change in fair value recorded in results of operations.
As of September 30, 2001, the fair value of this instrument was a liability of
$0.1 million.

Note I  Non-Cash Compensation

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

15



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited) (continued)

Note I  Non-Cash Compensation (continued)

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

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

Note J  Other Charges

Other charges of $56.5 million and $19.7 million for the nine months ended
September 30, 2001 and 2000, respectively include costs incurred primarily to
integrate the acquired companies, mostly related to information technology
integration, as well as costs incurred for business rationalization consulting.

Note K  Restructuring Costs

The Company recorded restructuring costs in November 2000 as a result of the
completion of a consolidation review. This charge consisted of employee
severance and related costs of $47.9 million for approximately 2,300 employees
to be terminated and lease exit costs of $18.0 million. As of September 30,
2001, $42.1 million of the provision had been used, including $36.1 million for
employee severance and related costs and $6.0 million for lease exit costs. As
of September 30, 2001, approximately 1,600 employees had been
terminated. The remaining restructuring reserve of $23.8 million includes
$11.8 million for employee severance and related costs and $12.0 million for
lease exit costs.

Note L  Comprehensive Loss

The Companys comprehensive loss for the three months ended September 30, 2001
and 2000 was $872.0 million and $980.7 million, respectively. The Companys
comprehensive loss for the nine months ended September 30, 2001 and 2000 was
$3,285.4 million and $2,255.3 million, respectively.

16



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited) (continued)

Note M  Related Party Transactions

On April 12, 2001, the Company purchased $15.0 million of an unsecured
convertible note of CoreComm Limited, a company that offers telecommunications
and Internet services to residential and business customers in the United
States. In addition, concurrently with the note purchase and without
additional compensation, the Company entered into a network and software
agreement with CoreComm. Under the agreement, CoreComm will provide U.S.
network access for Internet traffic from the Companys U.K. customers, as well
as a royalty free license to use certain billing and provisioning software and
know-how. Certain officers and directors of the Company are also officers and
directors of CoreComm. In light of this relationship, the independent
directors of the Company examined the transaction with CoreComm. The Board of
Directors of the Company determined that the transaction was inherently fair to
the Company and provided the Company with benefits that exceeded those that
could be obtained from a third party.

Note N  Segment Data

|                                     |  |               |         |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|------------------------------------ |  | ------------- | ------- | -------- |  | -------- | -------- | ------ |  | ----- | ------- |  |  | - | ------- | - |  | - | -------- | 
|                                     |  | Broadcast     |         | Consumer |  | Business |          | Shared |  | Total
|                                     |  |               |         |          |  |          |          |        |  |      
|                                     |  | (in millions)
|Nine months ended
September 30, 2001 |  |               |         |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|                                    
|                                    
|                                    
|                                    
|Revenues                             |  | $             | 253.3   |          |  | $        | 1,847.5  |        |  | $     | 621.2   |  |  | $ |        |   |  | $ | 2,722.0  | 
|EBITDA(1)                            |  |               | 127.2   |          |  |          | 573.9    |        |  |       | 233.7   |  |  |   | (456.2  | ) |  |   | 478.6    | 
|                                    
|                                    
|                                    
|                                    
|Nine months ended
September 30, 2000 |  |               |         |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|                                    
|                                    
|                                    
|                                    
|Revenues                             |  | $             | 237.2   |          |  | $        | 1,238.8  |        |  | $     | 511.9   |  |  | $ |        |   |  | $ | 1,987.9  | 
|EBITDA(1)                            |  |               | 114.6   |          |  |          | 353.8    |        |  |       | 172.1   |  |  |   | (389.7  | ) |  |   | 250.8    | 
|                                    
|                                    
|                                    
|                                    
|Total assets                         |  |               |         |          |  |          |          |        |  |       |         |  |  |   |         |   |  |   |          | 
|                                    
|                                    
|                                    
|                                    
|September 30, 2001(2)                |  | $             | 1,057.9 |          |  | $        | 22,277.4 |        |  | $     | 1,630.4 |  |  | $ | 2,661.2 |   |  | $ | 27,626.9 | 
|December 31, 2000(3)                 |  |               | 1,051.1 |          |  |          | 23,582.5 |        |  |       | 1,753.3 |  |  |   | 1,996.8 |   |  |   | 28,383.7 | 



|(1) |  | Represents earnings before interest, taxes, depreciation and
amortization, non-cash compensation, other charges, corporate expenses,
and foreign currency transaction (losses) gains.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | At September 30, 2001, shared assets included $431.4 million of cash and
cash equivalents, $468.8 million of goodwill and $1,761.0 million of other
assets.                          
|   
|   
|   
|   
|(3) |  | At December 31, 2000, shared assets included $487.1 million of cash, cash
equivalents and marketable securities, $422.2 million of goodwill and
$1,087.5 million of other assets.    

17



---



##### 



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements (unaudited) (continued)

Note N  Segment Data (continued)

The reconciliation of segment combined EBITDA to loss before income tax benefit
is as follows:

|                                    |  |                   |          |      |  |   |          |  
|----------------------------------- |  | ----------------- | -------- | ---- |  | - | -------- | -
|                                    |  | Nine Months Ended
|                                    |  | September 30,    
|                                    |  |                  
|                                    |  | 2001              |          | 2000
|                                    |  |                   |          |     
|                                    |  | (in millions)    
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|Segment Combined EBITDA             |  | $                 | 478.6    |      |  | $ | 250.8    |  
|                                   
|                                   
|                                   
|                                   
|                                    |  |                   |          |      |  |   |          |  
|                                   
|                                   
|                                   
|                                   
|(Add) Deduct:                       |  |                   |          |      |  |   |          |  
|                                   
|                                   
|                                   
|                                   
|Non-cash compensation               |  |                   | 30.6     |      |  |   | 2.2      |  
|                                   
|                                   
|                                   
|                                   
|Other charges                       |  |                   | 56.5     |      |  |   | 19.7     |  
|                                   
|                                   
|                                   
|                                   
|Corporate expenses                  |  |                   | 46.9     |      |  |   | 30.7     |  
|                                   
|                                   
|                                   
|                                   
|Depreciation and amortization       |  |                   | 2,321.5  |      |  |   | 1,245.5  |  
|                                   
|                                   
|                                   
|                                   
|Interest income and other, net      |  |                   | 120.2    |      |  |   | (48.1    | )
|                                   
|                                   
|                                   
|                                   
|Interest expense                    |  |                   | 1,042.0  |      |  |   | 729.1    |  
|                                   
|                                   
|                                   
|                                   
|Foreign currency transaction losses |  |                   | 11.1     |      |  |   | 89.3     |  
|                                    |  |                   |          |      |  |   |          |  
|                                    |  |                   | 3,628.8  |      |  |   | 2,068.4  |  
|                                    |  |                   |          |      |  |   |          |  
|(Loss) before income tax benefit    |  | $                 | (3,150.2 | )    |  | $ | (1,817.6 | )
|                                    |  |                   |          |      |  |   |          |  

Note O  Commitments and Contingent Liabilities

At September 30, 2001, the Company was committed to pay approximately $1,400.0
million for equipment and services, which includes approximately $920.0 million
for operations and maintenance and other contracts through 2006.

A wholly-owned indirect subsidiary of the Company, Premium TV Limited, has
entered into media partnerships with various United Kingdom football clubs
whereby Premium TV Limited will receive certain marketing and sponsorship
rights. Premium TV Limited will provide loan facilities to the clubs, repayable
through the issue of shares in the football clubs, as well as provide funding
to joint ventures with the clubs. At September 30, 2001, the aggregate
commitment was £14.3 million ($21.0 million). In addition, Premium TV Limited
expects to pay fees of up to £40.0 million ($58.8 million) over five years for
the right to enter into a joint venture with the Football League to set-up an
Internet portal for all 72 Football League clubs who wish to participate. In
June 2001, Premium TV Limited entered into an agreement for rights to broadcast
the Premiere Football League on a pay-per-view basis. Premium TV Limited
expects to pay fees of approximately £11.2 million ($16.5 million) per year
over the next three years in accordance with this agreement.

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.

18



---



##### 



NTL Incorporated and Subsidiaries



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

Operating Statistics as of September 30, 2001
(subscriber totals in thousands)

|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |       |         | 
|------------------------------ | -------------------- | -------------------------- | -------- | ----- | ------- | --------- | ----- | -------- | ----- | -------- | ----- | -------- | ---- | --------- | ------- | -------- | ------- | ------ | ------- | ----- | ----- |  | ------- | ---- | ------- |  | ----- | ---- | ---- |  | -------- | ----- | ------- |  | -------- | ----- | ------- | 
|                               |                      |                            |          | NTL   |         | NTL       |       | 1G       |       | Cablecom |       | Noos     |      | eKabel    |         | B2       |         |        |         |       |       |  |         |     
|                               |                      |                            |          | (UK)  |         | (Ireland) |       | (France) |       | (Swiss)  |       | (France) |      | (Germany) |         | (Sweden) |         | Equity |         | Gross
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |      
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|RESIDENTIAL                    |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|Ownership Interest             |                      |                            | 100      | %     |         |           | 100   | %        |       |          | 100   | %        |      |           | 100     | %(1)     |         |        | 27.0    | %     |       |  | 32.5    | %    |         |  | 34.0  | %    |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|Homes in Franchise             |                      |                            | 11,411.2 |       |         |           | 424.0 |          |       |          | 287.0 |          |      |           | 1,904.7 |          |         |        | 3,179.0 |       |       |  | 2,800.0 |      |         |  | 299.0 |      |      |  | 15,709.0 |       |         |  | 20,304.9 |      
|                              
|                              
|                              
|                              
|Homes passed                   |                      |                            | 8,404.1  |       |         |           | 424.0 |          |       |          | 267.0 |          |      |           | 1,904.7 |          |         |        | 2,563.0 |       |       |  | 1,828.0 |      |         |  | 204.0 |      |      |  | 12,167.4 |       |         |  | 15,594.8 |      
|                              
|                              
|                              
|                              
|Homes marketed (Telco)         |                      |                            | 7,506.4  |       |         |           | 20.0  |          |       |          |      |          |      |           |        |          |         |        | 5.0     |       |       |  |        |      |         |  |      |      |      |  | 7,527.8  |       |         |  | 7,531.4  |      
|                              
|                              
|                              
|                              
|Homes marketed (CATV)          |                      |                            | 7,729.8  |       |         |           | 424.0 |          |       |          | 214.9 |          |      |           | 1,728.0 |          |         |        | 2,563.0 |       |       |  | 1,828.0 |      |         |  | 167.0 |      |      |  | 11,278.5 |       |         |  | 14,654.7 |      
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|Customers                      |                      |                            | 2,881.8  |       |         |           | 374.6 |          |       |          | 75.5  |          |      |           | 1,580.1 |          |         |        | 819.5   |       |       |  | 1,294.0 |      |         |  | 50.5  |      |      |  | 5,419.1  |       |         |  | 7,076.0  |      
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                               |                      | Dual/Triple RGU            |          |       | 2,059.8 |           |       |          | 6.4   |          |       |          | 0.4  |           |         |          | 54.8    |        |         |       | 65.7  |  |         |      |        |  |       |      |     |  |          |       | 2,138.3 |  |          |       | 2,187.1 | 
|                              
|                              
|                              
|                              
|                               |                      | Single RGU                 |          |       | 822.0   |           |       |          | 368.2 |          |       |          | 75.1 |           |         |          | 1,525.3 |        |         |       | 753.8 |  |         |      | 1,294.0 |  |       |      | 50.5 |  |          |       | 3,280.8 |  |          |       | 4,888.9 | 
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|CATV                           |                      |                            | 2,326.7  |       |         |           | 374.6 |          |       |          | 75.5  |          |      |           | 1,580.1 |          |         |        | 801.9   |       |       |  | 1,294.0 |      |         |  |      |      |      |  | 4,842.1  |       |         |  | 6,452.8  |      
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                               |                      | Digital                    |          |       | 1,143.5 |           |       |          |      |          |       |          | 2.7  |           |         |          | 45.9    |        |         |       | 291.7 |  |         |      |        |  |       |      |     |  |          |       | 1,268.9 |  |          |       | 1,483.8 | 
|                              
|                              
|                              
|                              
|                               |                      | Analog                     |          |       | 1,183.2 |           |       |          | 374.6 |          |       |          | 43.5 |           |         |          | 1,534.2 |        |         |       | 205.9 |  |         |      | 1,294.0 |  |       |      |     |  |          |       | 3,461.7 |  |          |       | 4,635.4 | 
|                              
|                              
|                              
|                              
|                               |                      | Antenna                    |          |       |        |           |       |          |      |          |       |          | 29.3 |           |         |          |        |        |         |       | 304.3 |  |         |      |        |  |       |      |     |  |          |       | 111.5   |  |          |       | 333.6   | 
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|Telephone                      |                      |                            | 2,614.9  |       |         |           | 6.4   |          |       |          |      |          |      |           |        |          |         |        | 2.3     |       |       |  |        |      |         |  |      |      |      |  | 2,621.9  |       |         |  | 2,623.6  |      
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|Internet                       |                      |                            | 815.2    |       |         |           |      |          |       |          | 0.4   |          |      |           | 212.0   |          |         |        | 83.6    |       |       |  |        |      |         |  | 50.5  |      |      |  | 1,066.5  |       |         |  | 1,161.7  |      
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                               |                      | Dial-Up (ntlworld + other) |          |       | 708.8   |           |       |          |      |          |       |          |     |           |         |          | 157.2   |        |         |       |      |  |         |      |        |  |       |      |     |  |          |       | 866.0   |  |          |       | 866.0   | 
|                              
|                              
|                              
|                              
|                               |                      | Digital TV Access          |          |       | 27.2    |           |       |          |      |          |       |          |     |           |         |          |        |        |         |       |      |  |         |      |        |  |       |      |     |  |          |       | 27.2    |  |          |       | 27.2    | 
|                              
|                              
|                              
|                              
|                               |                      | Broadband                  |          |       | 79.2    |           |       |          |      |          |       |          | 0.4  |           |         |          | 54.8    |        |         |       | 83.6  |  |         |      |        |  |       |      | 50.5 |  |          |       | 173.3   |  |          |       | 268.5   | 
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|RGUs (TV, Telco, BB)           |                      |                            | 5,020.8  |       |         |           | 381.0 |          |       |          | 75.9  |          |      |           | 1,634.9 |          |         |        | 887.8   |       |       |  | 1,294.0 |      |         |  | 50.5  |      |      |  | 7,637.3  |       |         |  | 9,344.9  |      
|                              
|                              
|                              
|                              
|Service Units (TV, Telco, Int) |                      |                            | 5,756.8  |       |         |           | 381.0 |          |       |          | 75.9  |          |      |           | 1,792.1 |          |         |        | 887.8   |       |       |  | 1,294.0 |      |         |  | 50.5  |      |      |  | 8,530.5  |       |         |  | 10,238.1 |      
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|RGUs/Customer                  |                      |                            | 1.74x    |       |         |           | 1.02x |          |       |          | 1.01x |          |      |           | 1.03x   |          |         |        | 1.08x   |       |       |  | 1.00x   |      |         |  | 1.00x |      |      |  | 1.41x    |       |         |  | 1.32x    |      
|                              
|                              
|                              
|                              
|Service Units/Customer         |                      |                            | 2.00x    |       |         |           | 1.02x |          |       |          | 1.01x |          |      |           | 1.13x   |          |         |        | 1.08x   |       |       |  | 1.00x   |      |         |  | 1.00x |      |      |  | 1.57x    |       |         |  | 1.45x    |      
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|Penetration:                   |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|                               | CATV                 |                            |          | 30.1  | %       |           |       | 88.3     | %     |          |       | 35.1     | %    |           |         | 91.4     | %       |        |         | 31.3  | %     |  |         | 70.8 | %       |  |       | 0.0  | %    |  |          | 42.9  | %       |  |          | 44.0  | %      
|                              
|                              
|                              
|                              
|                               | Telephone            |                            |          | 34.8  | %       |           |       | 32.0     | %     |          |       |         |      |           |         |         |         |        |         | 46.0  | %     |  |         |     |         |  |       |     |      |  |          | 34.8  | %       |  |          | 34.8  | %      
|                              
|                              
|                              
|                              
|                               | Customer             |                            |          | 37.3  | %       |           |       | 88.3     | %     |          |       | 35.1     | %    |           |         | 91.4     | %       |        |         | 32.0  | %     |  |         | 70.8 | %       |  |       | 30.2 | %    |  |          | 48.0  | %       |  |          | 48.3  | %      
|                              
|                              
|                              
|                              
|                               | RGU                  |                            |          | 65.0  | %       |           |       | 89.9     | %     |          |       | 35.3     | %    |           |         | 94.6     | %       |        |         | 34.6  | %     |  |         | 70.8 | %       |  |       | 30.2 | %    |  |          | 67.7  | %       |  |          | 63.8  | %      
|                              
|                              
|                              
|                              
|                               | Service Unit         |                            |          | 74.5  | %       |           |       | 89.9     | %     |          |       | 35.3     | %    |           |         | 103.7    | %       |        |         | 34.6  | %     |  |         | 70.8 | %       |  |       | 30.2 | %    |  |          | 75.6  | %       |  |          | 69.9  | %      
|                              
|                              
|                              
|                              
|                               | Dual / Triple        |                            |          | 71.5  | %       |           |       | 1.7      | %     |          |       | 0.5      | %    |           |         | 3.5      | %       |        |         | 8.0   | %     |  |         | 0.0  | %       |  |       | 0.0  | %    |  |          | 39.5  | %       |  |          | 30.9  | %      
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|Quarterly Growth:              |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|                               | Customers            |                            |          | 13.3  |         |           |       | 0.5      |       |          |       | (0.2     | )    |           |         | 11.0     |         |        |         | 13.4  |       |  |         |     |         |  |       | 18.4 |      |  |          | 35.9  |         |  |          | 56.4  |        
|                              
|                              
|                              
|                              
|                               | RGUs                 |                            |          | 63.6  |         |           |       | 3.4      |       |          |       |         |      |           |         | 19.5     |         |        |         | 19.1  |       |  |         |     |         |  |       | 18.4 |      |  |          | 99.2  |         |  |          | 124.0 |        
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|Off-Net Telephony              |                      |                            | 374.3    |       |         |           |      |          |       |          |      |          |      |           |        |          |         |        |        |       |       |  |        |      |         |  |      |      |      |  | 374.3    |       |         |  | 374.3    |      
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                               | Telephone            |                            |          | 281.2 |         |           |       |         |       |          |       |         |      |           |         |         |         |        |         |      |       |  |         |     |         |  |       |     |      |  |          | 281.2 |         |  |          | 281.2 |        
|                              
|                              
|                              
|                              
|                               | Telephone + Internet |                            |          | 93.1  |         |           |       |         |       |          |       |         |      |           |         |         |         |        |         |      |       |  |         |     |         |  |       |     |      |  |          | 93.1  |         |  |          | 93.1  |        
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|BUSINESS DIVISION              |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|Business Customers             |                      |                            | 75.4     |       |         |           | 1.0   |          |       |          |      |          |      |           | 3.8     |          |         |        | 37.2    |       |       |  |        |      |         |  |      |      |      |  | 90.2     |       |         |  | 117.4    |      
|                              
|                              
|                              
|                              
|Business Lines                 |                      |                            | 388.0    |       |         |           |      |          |       |          |      |          |      |           |        |          |         |        |        |       |       |  |        |      |         |  |      |      |      |  | 388.0    |       |         |  | 388.0    |      
|                              
|                              
|                              
|                              
|Wholesale Internet Subs        |                      |                            | 1,197.8  |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  | 1,197.8  |       |         |  | 1,197.8  |      
|                              
|                              
|                              
|                              
|                               |                      |                            |          |       |         |           |       |          |       |          |       |          |      |           |         |          |         |        |         |       |       |  |         |      |         |  |       |      |      |  |          |       |         |  |          |      
|                              
|                              
|                              
|                              
|TOTAL CUSTOMERS                |                      |                            | 4,529.3  |       |         |           | 375.6 |          |       |          | 75.5  |          |      |           | 1,583.9 |          |         |        | 856.7   |       |       |  | 1,294.0 |      |         |  | 50.5  |      |      |  | 7,081.4  |       |         |  | 8,765.5  |      
|                              
|                              
|                              
|                              
|TOTAL SERVICE UNITS            |                      |                            | 7,810.0  |       |         |           | 381.0 |          |       |          | 75.9  |          |      |           | 1,792.1 |          |         |        | 887.8   |       |       |  | 1,294.0 |      |         |  | 50.5  |      |      |  | 10,583.7 |       |         |  | 12,291.3 |      



|(1) |  | Cablecom has equity interests in 28 cable systems in Switzerland. The
following statistics reflect the proportional operating data in which
Cablecom does not maintain an equity interest: 187,900 homes passed,
161,100 homes marketed, 151,900 subscribers, 800 broadband Internet
subscribers and 152,700 RGUs.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19



---



##### 



NTL Incorporated and Subsidiaries

RESULTS OF OPERATIONS

Certain costs have been reclassified from selling, general and administrative
expenses to operating expenses in the first and second quarters of 2001 to
conform to the current presentation. The amounts reclassified were $10.8
million in the first quarter of 2001 and $34.7 million in the second quarter of
2001. Cablecom consumer revenue and operating expenses for the first quarter
of 2001 were reclassified in the second quarter of 2001 to conform to the
second quarter and current presentation. In addition, certain revenues have
been reclassified from business telecommunications to broadcast transmission
and other, and certain costs have been reclassified from operating expenses to
selling, general and administrative expenses in 2000 to conform to the 2001
classifications.

In 2000 and 2001, the substantial majority of revenues in all segments were
derived from operations in the United Kingdom.

Three Months Ended September 30, 2001 and 2000

Consumer telecommunications and television revenues increased to $618.2 million
from $566.0 million as a result of price increases, upselling new services to
customers and from growth in the Companys customer base. 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 average
revenue per unit (ARPU) increases that contributed to the revenue increase.
Increase in ARPU in the future is also expected to be achieved by providing new
services such as digital television, cable modem and mobile telephone services
to consumer customers.

Business telecommunications revenues increased to $222.4 million from $185.7
million primarily as a result of the acquisition of the UK assets and contracts
of Viatel UK in the third quarter of 2001. In addition, the Company continues
to focus specific sales and marketing effort on winning business customers in
its franchise areas and increasing revenue from its existing customers.

Broadcast transmission and other revenues increased to $87.4 million from $79.0
million. The increase reflects increases in the number of broadcast television
and FM radio customers and accounts, which exceeded price cap reductions in the
Companys regulated services, and increases in satellite and media services
used by broadcast and media customers. The Company expects growth in broadcast
services to be driven primarily by contracts related to the increased demand
for tower infrastructure by wireless services operators expanding and upgrading
their networks for wireless broadband, the privatization of national broadcast
networks, the digitalization of analog television and radio signals and the
further development of programming for the European markets requiring satellite
and terrestrial distribution services.

Operating expenses (including network expenses) increased to $440.2 million
from $424.7 million as a result of increases in interconnection and programming
costs due to revenue growth. Operating expenses as a percentage of revenues
decreased to 47.4% in 2001 from 51.1% in 2000. The percentage decrease
reflects cost savings efforts such as fault reduction and increased field force
effectiveness.

Selling, general and administrative expenses decreased to $297.9 million from
$314.1 million. Selling, general and administrative expenses as a percentage
of revenues decreased to 32.1% in 2001 from 37.8% in 2000. The absolute and
percentage declines reflect cost savings efforts including the restructuring in
November 2000.

20



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NTL Incorporated and Subsidiaries

Other charges increased to $31.2 million from $6.0 million. Other charges
include costs 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 other charges 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.

Corporate expenses increased to $15.1 million from $9.5 million primarily due
to the write-down of certain investments of $4.0 million. The remainder of the
increase is due to an increase in payroll and overhead costs.

Depreciation and amortization expense increased to $748.8 million from $600.0
million due to an increase in amortization on acquisition related intangibles
and an increase in depreciation of telecommunications and cable television
equipment. The 2001 and 2000 expense includes $504.9 million and $357.2
million, respectively, from Cablecom and ConsumerCo (companies that were
acquired in 2000), including amortization of acquisition related intangibles.

Interest income and other, net increased to expense of $34.9 million from
expense of $1.2 million as a result of increases in the net losses of
affiliates accounted for by the equity method. Interest income and other, net
includes equity in net losses of affiliates of $52.0 million in 2001 and $14.1
million in 2000.

Interest expense increased to $355.7 million from $280.9 million due to the
issuance of additional debt, and the increase in the accretion of original
issue discount on the deferred coupon notes. Interest of $358.1 million and
$171.8 million was paid in cash in the three months ended September 30, 2001
and 2000, respectively.

Foreign currency transaction (losses) gains were losses of $20.0 million in
2001 and gains of $23.1 million in 2000 primarily due to the effect of changes
in exchange rates. The Company and certain of its subsidiaries have cash, cash
equivalents and debt denominated in non-U.S. dollar currencies that are
affected by changes in exchange rates. In addition, foreign subsidiaries of
the Company whose functional currency is not the U.S. dollar hold cash, cash
equivalents and debt denominated in U.S. dollars which are affected by changes
in exchange rates.

Nine Months Ended September 30, 2001 and 2000

As a result of the completion of the acquisitions of the cable assets of the
Cablecom Group (Cablecom) in March 2000 and the consumer cable telephone,
Internet and television operations of Cable & Wireless Communications plc
(ConsumerCo) in May 2000, the Company consolidated the results of operations
of these businesses from the dates of acquisition. The results of operations
of Cablecom from the date of acquisition to March 31, 2000 were not
significant.

Consumer telecommunications and television revenues increased to $1,847.5
million from $1,238.8 million as a result of the Cablecom and ConsumerCo
acquisitions, price increases, upselling new services to customers and from
growth in the Companys customer base. The 2001 and 2000 revenue includes
$997.7 million and $489.2 million, respectively, from acquired companies.
Upselling to existing customers, new digital and cable modem customers and the
price increases implemented in the first and second quarters of 2001 resulted
in ARPU increases that contributed to the revenue increase. Increase in ARPU in
the future is also expected to be achieved by providing new services such as
digital television, cable modem and mobile telephone services to consumer
customers.

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NTL Incorporated and Subsidiaries

Business telecommunications revenues increased to $621.2 million from $511.9
million as a result of acquisitions, growth in the Companys customer base and
increases in carrier services revenues. The 2001 and 2000 revenue includes
$74.5 million and $36.5 million, respectively, from ConsumerCo. The Company
continues to focus specific sales and marketing effort on winning business
customers in its franchise areas and increasing revenue from its existing
customers. Carrier services revenues increased due to growth in services
provided by the Companys wholesale operation to other telephone companies,
including wireless services operators. Revenue growth in carrier services is
primarily dependent upon the Companys ability to continue to attract new
customers and expand services to existing customers.

Broadcast transmission and other revenues increased to $253.3 million from
$237.2 million. The increase reflects increases in the number of broadcast
television and FM radio customers and accounts, which exceeded price cap
reductions in the Companys regulated services, and increases in satellite and
media services used by broadcast and media customers. The Company expects
growth in broadcast services to be driven primarily by contracts related to the
increased demand for tower infrastructure by wireless services operators
expanding and upgrading their networks for wireless broadband, the
privatization of national broadcast networks, the digitalization of analog
television and radio signals and the further development of programming for the
European markets requiring satellite and terrestrial distribution services.

Operating expenses (including network expenses) increased to $1,330.0 million
from $967.8 million as a result of acquisitions and increases in
interconnection and programming costs due to revenue growth. The 2001 and 2000
expense includes $495.7 million and $234.8 million, respectively, from Cablecom
and ConsumerCo.

Selling, general and administrative expenses increased to $913.4 million from
$769.3 million as a result of acquisitions. The 2001 and 2000 expense includes
$316.4 million and $167.2 million, respectively, from Cablecom and ConsumerCo .
Selling, general and administrative expenses as a percentage of revenues
decreased to 33.6% in 2001 from 38.7% in 2000. The percentage decrease
reflects cost savings efforts including the restructuring in November 2000.

Other charges increased to $56.5 million from $19.7 million. Other charges
include costs 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 other charges 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.

Corporate expenses increased to $46.9 million from $30.7 million primarily due
to the write-down of certain investments of $9.9 million. The remainder of the
increase is due to an increase in payroll and overhead costs.

Depreciation and amortization expense increased to $2,321.5 million from
$1,245.5 million due to an increase in amortization on acquisition related
intangibles and an increase in depreciation of telecommunications and cable
television equipment. The 2001 and 2000 expense includes $1,566.2 million and
$513.5 million, respectively, from Cablecom and ConsumerCo, including
amortization of acquisition related intangibles.

Interest income and other, net decreased to expense of $120.2 million from
income of $48.1 million as a result of increases in the net losses of
affiliates accounted for by the equity method. Interest income and other, net
includes equity in net losses of affiliates of $152.5 million in 2001 and $20.1
million in 2000.

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NTL Incorporated and Subsidiaries

Interest expense increased to $1,042.0 million from $729.1 million due to the
issuance of additional debt, and the increase in the accretion of original
issue discount on the deferred coupon notes. The 2001 and 2000 expense
includes $270.2 million and $134.2 million in interest expense related to
Cablecom and ConsumerCo. Interest of $827.0 million and $395.8 million was paid
in cash in the nine months ended September 30, 2001 and 2000, respectively.

Foreign currency transaction losses were $11.1 million in 2001 and $89.3
million in 2000 primarily due to the effect of changes in exchange rates. The
Company and certain of its subsidiaries have cash, cash equivalents and debt
denominated in non-U.S. dollar currencies that are affected by changes in
exchange rates. In addition, foreign subsidiaries of the Company whose
functional currency is not the U.S. dollar hold cash, cash equivalents and debt
denominated in U.S. dollars which are affected by changes in exchange rates.

Other Results of Operations Matters

The Company expects to record a restructuring charge in the fourth quarter of
2001 of approximately $30.0 million primarily for employee severance and
related costs.

The Company recorded restructuring costs in November 2000 as a result of the
completion of a consolidation review. This charge consisted of employee
severance and related costs of $47.9 million for approximately 2,300 employees
to be terminated and lease exit costs of $18.0 million. As of September 30,
2001, $42.1 million of the provision had been used, including $36.1 million for
employee severance and related costs and $6.0 million for lease exit costs. As
of September 30, 2001, approximately 1,600 employees had been terminated. The
remaining restructuring reserve of $23.8 includes $11.8 million for employee
severance and related costs and $12.0 million for lease exit costs.

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

23



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NTL Incorporated and Subsidiaries

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

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

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards (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 amortization of goodwill included in
our investments in equity investees will no longer be recorded upon adoption of
the new rules. Intangible assets that do not have indefinite lives will
continue to be amortized over their useful lives and reviewed for impairment in
accordance with SFAS No. 121. The Company is required to adopt SFAS No. 142 as
of January 1, 2002. The Company has not yet completed an analysis of whether
goodwill may be impaired under SFAS No. 142; this analysis will be completed
during the first six months of 2002 in accordance with the transition
provisions of SFAS No. 142. The Company expects to complete an
analysis for
the fourth quarter of 2001 to determine whether goodwill is impaired under SFAS
No. 121. The magnitude of an impairment charge, if any, under either
accounting standard cannot be determined at this time.

24



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NTL Incorporated and Subsidiaries

LIQUIDITY AND CAPITAL RESOURCES

The Company will continue to require significant amounts of capital to finance
construction of its local and national networks, for connection of telephone,
telecommunications, Internet and cable television customers to the networks,
for other capital expenditures and for debt service. The Company estimates that
these requirements, net of cash from operations, will aggregate up to
approximately £890.0 million ($1,307.5 million) from October 1,
2001 to September 30, 2002. The redemption of approximately $500.0 million of Variable Coupon
Redeemable Preferred Stock in May 2002 is not included in this
estimate. The Companys commitments at September 30, 2001
for equipment and services are included in the anticipated requirements. The
Company had approximately $520.1 million in cash on hand at September 30, 2001.
The Company expects to utilize the proceeds from the additional financing in
October 2001 and a portion of its bank facilities to fund the balance of these
requirements.

In October 2001, the Company completed £169.6 million ($249.2 million) of
vendor financing plus £200.0 million ($293.8 million) of GE Capital senior
secured financing. The vendor financing was an addition to NTLCLs £2,500.0
million credit agreement with the same terms and conditions. The Company
borrowed £84.8 million ($124.6 million) of the vendor financing in October
2001. The remaining £84.8 million is committed to the
Company by the vendors, who will increase their commitment to the
bank facility at the Company's request, provided that certain
purchase commitments are met. Interest on the GE Capital senior secured financing is payable at least
every six months at LIBOR plus a margin rate of 3.5% per annum. The senior
secured financing is repayable in eight quarterly installments beginning on
June 30, 2006.

On March 30, 2001, NTL Australia, a wholly-owned indirect subsidiary of the
Company, entered into a A$350.0 million ($173.1 million) credit agreement with
a group of banks. As of September 30, 2001, NTL Australia had borrowed A$200.0
million ($98.9 million) under the credit agreement with an effective interest
rate of 6.69%. NTL Australia may use the proceeds under this credit agreement
to repay NTL (Delaware), Inc. (NTL Delaware) for part of its original
investment in NTL Australia as well as funding general capital expenditures,
working capital and corporate purposes. As of September 30, 2001, NTL
Australia repaid A$200.0 million ($98.9 million) to NTL Delaware. Interest is
payable at least every six months at the A$ Bank Bill Bid Rate plus a margin of
1.85% per annum, which is subject to adjustment based on the ratio of senior
debt to EBITDA of NTL Australia. The unused portion of the commitment is
subject to a commitment fee of 0.6%, which is subject to adjustment based on
the ratio of senior debt to EBITDA of NTL Australia. Principal is due in four
semiannual installments beginning on June 30, 2004 of a maximum of A$7.5
million, A$7.5 million, A$12.5 million and A$12.5 million. The balance is due
in full on March 30, 2006. The credit agreement contains various financial and
other covenants with respect to NTL Australia and restrictions on dividends and
distributions by NTL Australia.

In June 2001, the Company issued $100.0 million aggregate principal amount of
5-3/4% Convertible Subordinated Notes due June 22, 2011 to GE Capital.

NTLCL entered into a £1,300.0 million ($1,909.8 million) credit agreement with
a group of banks dated May 30, 2000. Pursuant to the credit agreement, in
connection with the issuance of new debt beginning in October 2000, the
commitment has been reduced by £882.5 million ($1,296.5 million). As of
September 30, 2001, £100.0 million ($146.9 million) was outstanding under this
agreement with an effective interest rate of 10.01%. NTLCL and other members
of the U.K. Group may utilize the proceeds under this credit agreement to
finance the working capital requirements of the U.K. Group, provided that in no
event shall the proceeds be used for a purpose other than to finance the
construction, capital expenditure and working capital needs of a cable
television or telephone or telecommunications business, or a related business,
in the United Kingdom or Ireland. For purposes of this credit agreement,
Diamond Cable Communications Limited and subsidiaries, NTL (Triangle) LLC and
subsidiaries and certain other entities are excluded from the U.K. Group.
Interest is

25



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NTL Incorporated and Subsidiaries

payable at least every six months at LIBOR plus a margin rate of 4.5% per
annum. The margin rate shall increase by 0.5% on the three month anniversary
of the initial advance and by an additional 0.5% on each subsequent three month
anniversary, up to a maximum total interest rate of 16% per annum. The unused
portion of the commitment is subject to a commitment fee of 0.75% payable
quarterly. Principal is due in full on March 31, 2006.

Cablecom has the option to draw on a revolving loan facility of up to CHF
1,400.0 million ($864.8 million). The revolving facility is intended to finance
operating expenses, working capital and other capital expenditures of Cablecom
and subsidiaries and for their general corporate financing requirements. As of
September 30, 2001, Cablecom had borrowed CHF 775.0 million ($478.7 million)
under the revolving loan facility with an effective interest rate of 5.65%.
The revolving facility is available until May 2003. The interest rate,
interest payment requirements and principal payments for the revolving facility
are the same as for the term loan facility (see below). The revolving facility
includes a commitment fee of 0.75% payable quarterly on the unused portion of
the revolving facility commitment, which is reduced to 0.50% when over 50% of
the commitment is utilized.

Regarding the Company estimated cash requirements described above, there can be
no assurance that: (a) actual construction costs will not exceed the amounts
estimated or that additional funding substantially in excess of the amounts
estimated will not be required, (b) conditions precedent to advances under
credit facilities will be satisfied when funds are required, (c) the Company
and its subsidiaries will be able to generate sufficient cash from operations
to meet capital requirements, debt service and other obligations when required,
(d) the Company will be able to access such cash flow or (e) the Company will
not incur losses from its exposure to exchange rate fluctuations or be
adversely affected by interest rate fluctuations.

A wholly-owned indirect subsidiary of the Company, Premium TV Limited, has
entered into media partnerships with U.K. football clubs whereby Premium TV
Limited will receive certain marketing and sponsorship rights. Premium TV
Limited will provide loan facilities to the clubs, repayable through the issue
of shares in the football clubs, as well as provide funding to joint ventures
with the clubs. At September 30, 2001, the aggregate commitment was £14.3
million ($21.0 million). In addition, Premium TV Limited expects to pay fees
of up to £40.0 million ($58.8 million) over five years for the right to enter
into a joint venture with the Football League to set-up an Internet portal for
all 72 Football League clubs who wish to participate. In June 2001, Premium TV
Limited entered into an agreement for rights to broadcast the Premiere Football
League on a pay-per-view basis. Premium TV Limited expects to pay fees of
approximately £11.2 million ($16.5 million) per year over the next three years
in accordance with this agreement.

The accreted value at September 30, 2001 of the Companys consolidated
long-term indebtedness, including the redeemable preferred stock, is $20,062.5
million, representing approximately 79.6% of total capitalization. The
following summarizes the terms of the significant notes, credit facilities and
redeemable preferred stock issued by the Company and its subsidiaries as of
September 30, 2001.

NTL Incorporated:



|(1) |  | Senior Redeemable Exchangeable Preferred Stock due February 15, 2009,
liquidation preference of $180.9 million, dividends accrue at 13% per
annum payable quarterly in arrears, at the Companys option until February
15, 2004, dividends may be paid in cash, by the issuance of additional
shares or in any combination of the foregoing, redeemable at the Companys
option on or after February 15, 2002, and on any dividend payment date the
Company may exchange all of the outstanding shares for 13% debentures due
2009;
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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NTL Incorporated and Subsidiaries



|(2) |  | Convertible Preferred Stock due March 27, 2009, liquidation preference of
$1,995.7 million, dividends are payable quarterly in arrears in
additional shares, 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; once the
Convertibility Date is set, the quarterly dividend rate resets to $16.12
per share and the Convertible Preferred Stock becomes eligible for
conversion into shares of the Companys common stock beginning on a
Convertibility Date, at which time the conversion price is set at 125%
of the immediately preceding 25 trading day volume-weighted average price
of the Companys common stock, subject to the Companys election to delay
convertibility or redeem all issued and outstanding shares of Convertible
Preferred Stock; the Convertibility Date may be March 27, 2002, March 27,
2003 or March 29, 2004;
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(3) |  | 5-3/4% Convertible Subordinated Notes due June 22, 2011, principal amount
at maturity of $100.0 million, interest of 5-3/4% per annum is payable
quarterly beginning on October 15, 2001, redeemable at the option of the
Company on or after December 22, 2007, convertible into shares of the
Companys common stock at a conversion price of $35.00 per share;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(4) |  | Variable Coupon Redeemable Preferred Stock, liquidation preference of
$484.2 million, dividends are payable quarterly at the Companys option in
cash or additional shares of Variable Coupon Redeemable Preferred Stock,
quarterly dividend rate based on the EURIBOR Rate plus 2.5%, mandatory
redemption in cash on May 18, 2002;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(5) |  | 6.5% Fixed Coupon Redeemable Preferred Stock, liquidation preference of
$124.9 million, dividends are cumulative and are payable in cash upon
redemption, mandatory redemption in cash on May 18, 2007;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

NTL Delaware:



|(6) |  | 5-3/4% Convertible Subordinated Notes due December 15, 2009, principal
amount at maturity of $1,200.0 million, interest payable semiannually from
June 15, 2000, redeemable at the Companys option on or after December 18,
2002, convertible into shares of the Companys stock at a conversion price
of $108.18 per share;
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NTLCL:



|(7) |  | Credit Agreement of £1,300.0 million ($1,909.8 million), of which £100.0
million ($146.9 million) was outstanding as of September 30, 2001,
interest payable at least every six months at LIBOR plus a margin rate of
5.0% per annum, which is subject to adjustment, effective interest rate of
10.01% at September 30, 2001, the unused portion of the commitment is
subject to a commitment fee of 0.75% payable quarterly, principal is due
in full on March 31, 2006, pursuant to the credit agreement, following the
issuance of new debt beginning in October 2000, the commitment has been
reduced by £882.5 million ($1,296.5 million);
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(8) |  | Credit Agreement of £2,500.0 million ($3,672.8 million), of which
£2,500.0 million ($3,672.8 million) was outstanding as of September 30,
2001, interest payable at least every six months at LIBOR plus a margin
rate of 2.00% per annum, which is subject to adjustment, effective
interest rate of 6.79% at September 30, 2001, the unused portion of the
commitment is subject to a commitment fee of 0.75% payable quarterly,
which is reduced to 0.50% when over 50% of the commitment is utilized,
principal is due in six quarterly installments beginning on June 30, 2004;                                                            

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NTL Incorporated and Subsidiaries

Cablecom:



|(9)  |  | Term Loan Facility of CHF 2,700.0 million ($1,667.8 million), interest
payable at least every six months at Swiss LIBOR plus a margin rate of
2.5% per annum, which is subject to adjustment after March 2001, effective
interest rate of 5.27% at September 30, 2001, principal is due over six
years in quarterly installments beginning on March 31, 2004;                                                                                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(10) |  | Revolving Facility of CHF 1,400.0 million ($864.8 million), of which CHF
775.0 million ($478.7 million) was outstanding as of September 30, 2001,
interest payable at least every six months at Swiss LIBOR plus a margin
rate of 2.5% per annum, which is subject to adjustment, effective interest
rate of 5.65% at September 30, 2001, the unused portion of the commitment
is subject to a commitment fee of 0.75% payable quarterly, which is
reduced to 0.50% when over 50% of the commitment is utilized, principal is
due over six years in quarterly installments beginning on March 31, 2004;

NTL Australia:



|(11) |  | Credit Agreement of A$350.0 million ($173.1 million), of which A$200.0
million ($98.9 million) was outstanding as of September 30, 2001, interest
is payable at least every six months at the A$ Bank Bill Bid Rate plus a
margin of 1.85% per annum, which is subject to adjustment, effective
interest rate of 6.69% at September 30, 2001, the unused portion of the
commitment is subject to a commitment fee of 0.6%, which is subject to
adjustment, principal is due in four semiannual installments beginning on
June 30, 2004, the balance is due in full on March 30, 2006;
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NTL Communications:



|(12) |  | 12-3/4% Senior Deferred Coupon Notes due April 15, 2005, principal amount
at maturity of $277.8 million, interest payable semiannually from October
15, 2000, redeemable at the Companys option on or after April 15, 2000;                               
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(13) |  | 11-1/2% Senior Deferred Coupon Notes due February 1, 2006, principal
amount at maturity of $1,050.0 million, interest payable semiannually from
August 1, 2001, redeemable at the Companys option on or after February 1,
2001;                           
|    
|(14) |  | 10% Senior Notes due February 15, 2007, principal amount at maturity of
$400.0 million, interest payable semiannually from August 15, 1997,
redeemable at the Companys option on or after February 15, 2002;                                              
|    
|(15) |  | 9-1/2% Senior Sterling Notes due April 1, 2008, principal amount at
maturity of £125.0 million ($183.6 million), interest payable semiannually
from October 1, 1998, redeemable at the Companys option on or after April
1, 2003;                         
|    
|(16) |  | 10-3/4% Senior Deferred Coupon Sterling Notes due April 1, 2008,
principal amount at maturity of £300.0 million ($440.7 million), interest
payable semiannually beginning on October 1, 2003, redeemable at the
Companys option on or after April 1, 2003;
|    
|(17) |  | 9-3/4% Senior Deferred Coupon Notes due April 1, 2008, principal amount
at maturity of $1,300.0 million, interest payable semiannually beginning
on October 1, 2003, redeemable at the Companys option on or after April
1, 2003;                         

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NTL Incorporated and Subsidiaries



|(18) |  | 9-3/4% Senior Deferred Coupon Sterling Notes due April 15, 2009,
principal amount at maturity of £330.0 million ($484.8 million), interest
payable semiannually beginning on October 15, 2004, redeemable at the
Companys option on or after April 15, 2004;                                                                   
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(19) |  | 11-1/2% Senior Notes due October 1, 2008, principal amount at maturity of
$625.0 million, interest payable semiannually from April 1, 1999,
redeemable at the Companys option on or after October 1, 2003;                                                                                                                     
|    
|(20) |  | 12-3/8% Senior Deferred Coupon Notes due October 1, 2008, principal
amount at maturity of $450.0 million, interest payable semiannually
beginning on April 1, 2004, redeemable at the Companys option on or after
October 1, 2003;                                                                                             
|    
|(21) |  | 7% Convertible Subordinated Notes due December 15, 2008, principal amount
at maturity of $489.8 million, interest payable semiannually from June 15,
1999, convertible into shares of the Companys common stock at a
conversion price of $39.20 per share, redeemable at the Companys option
on or after December 15, 2001;   
|    
|(22) |  | 9-1/4% Senior Euro Notes due November 15, 2006, principal amount at
maturity of 250.0 million ($227.5 million), interest payable semiannually
from May 15, 2000;                                                                                                                                                               
|    
|(23) |  | 9-7/8% Senior Euro Notes due November 15, 2009, principal amount at
maturity of 350.0 million ($318.5 million), interest payable semiannually
from May 15, 2000, redeemable at the Companys option on or after November
15, 2004;                                                                                             
|    
|(24) |  | 11-1/2% Senior Deferred Coupon Euro Notes due November 15, 2009,
principal amount at maturity of 210.0 million ($191.1 million), interest
payable semiannually beginning on May 15, 2005, redeemable at the
Companys option on or after November 15, 2004;                                                                    
|    
|(25) |  | 11-7/8% Senior Notes due October 1, 2010, principal amount at maturity of
$500.0 million, interest payable semiannually from April 1, 2001,
redeemable at the Companys option on or after October 1, 2005;                                                                                                                     
|    
|(26) |  | 12-3/8% Senior Euro Notes due February 1, 2008; principal amount at
maturity of 300.0 million ($273.0 million), interest payable semiannually
from August 1, 2001;                                                                                                                                                             
|    
|(27) |  | 6-3/4% Convertible Senior Notes due May 15, 2008, principal amount at
maturity of $1,150.0 million, interest payable semiannually beginning on
November 15, 2001, convertible into shares of the Companys common stock
at a conversion price of $32.728 per share, redeemable at the Companys
option on or after May 21, 2004;

NTL Triangle:



|(28) |  | 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;
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

29



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##### 



NTL Incorporated and Subsidiaries

Diamond:



|(29) |  | 13-1/4% Senior Discount Notes due September 30, 2004, principal amount at
maturity of $285.1 million, interest payable semiannually from March 31,
2000, redeemable at Diamonds option after September 30, 1999;                                                                                         
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(30) |  | 11-3/4% Senior Discount Notes due December 15, 2005, principal amount at
maturity of $531.0 million, interest payable semiannually from June 15,
2001, redeemable at Diamonds option on or after December 15, 2000;                                                                                      
|    
|(31) |  | 10-3/4% Senior Discount Notes due February 15, 2007, principal amount at
maturity of $420.5 million, interest payable semiannually beginning on
August 15, 2002, redeemable at Diamonds option on or after December 15,
2002;                                                                            
|    
|(32) |  | 10% Senior Sterling Notes due February 1, 2008, issued by Diamond
Holdings plc, a wholly-owned subsidiary of Diamond, principal amount at
maturity of £135.0 million ($198.3 million), interest payable semiannually
from August 1, 1998, redeemable at Diamonds option on or after February
1, 2003; and
|    
|(33) |  | 9-1/8% Senior Notes due February 1, 2008, issued by Diamond Holdings plc,
principal amount at maturity of $110.0 million, interest payable
semiannually from August 1, 1998, redeemable at Diamonds option on or
after February 1, 2003.                                                                 

Management does not anticipate that the Company and its subsidiaries will
generate sufficient cash flow from operations to repay at maturity the entire
principal amount of the outstanding indebtedness of the Company and its
subsidiaries. Accordingly, the Company may be required to consider a number of
measures, including: (a) refinancing all or a portion of such indebtedness, (b)
seeking modifications to the terms of such indebtedness, (c) seeking additional
debt financing, which may be subject to obtaining necessary lender consents,
(d) seeking additional equity financing, or (e) a combination of the foregoing.
There can be no assurance that financing will be available on acceptable terms
or at all.

The Companys operations are conducted through its direct and indirect
wholly-owned subsidiaries. As a holding company, the Company holds no
significant assets other than cash, securities and its investments in and
advances to its subsidiaries. The Companys ability to pay cash dividends to
its stockholders may be dependent upon the receipt of sufficient funds from its
subsidiaries. In addition, NTL Delaware and NTL Communications are also
holding companies that conduct their operations through their respective
subsidiaries. Accordingly, the ability of NTL Delaware or NTL Communications
to make scheduled interest and principal payments when due to holders of their
indebtedness may be dependent upon the receipt of sufficient funds from their
subsidiaries. Such subsidiaries are subject to restrictions under agreements
governing their indebtedness that may prohibit them from providing such funds.

Condensed Consolidated Statements of Cash Flows

Cash used in operating activities was $556.6 million and $199.1 million in the
nine months ended September 30, 2001 and 2000, respectively. Cash paid for
interest exclusive of amounts capitalized in the nine months ended September
30, 2001 and 2000 was $771.6 million and $330.4 million, respectively. The
remainder of this change is primarily due to the increase in the net loss and
changes in working capital as a result of the

30



---



##### 



NTL Incorporated and Subsidiaries

timing of receipts and disbursements. A significant component of the working
capital change in the nine
months ended September 30, 2001 was the collection of annual amounts billed by
Cablecom in December 2000. The $143.6 million reduction in Cablecoms accounts
receivable since December 31, 2000 was principally due to these collections.

Purchases of fixed assets were $1,568.6 million in 2001 and $1,541.9 million in
2000 as a result of the continuing fixed asset purchases and construction,
including purchases and construction by acquired companies.

The cash used for other assets of $146.2 million in 2001 and $527.1 million in
2000 was primarily for investments in and loans to unconsolidated entities.

Proceeds from borrowings, net of financing costs of $2,652.2 million in 2001
include $428.3 million borrowed under the £2,500.0 million NTLCL credit
agreement, $431.5 million borrowed under the £1,300.0 million NTLCL credit
agreement, $1,150.0 million from the issuance of NTL Communications 6-3/4%
Convertible Senior Notes, $277.9 million from the issuance of NTL
Communications 12-3/8% Senior Euro Notes, $208.7 million borrowed under the
Cablecom revolving facility, $103.8 million borrowed under the NTL Australia
credit agreement, and $100.0 million from the issuance of NTL Incorporated
5-3/4% Convertible Subordinated Notes, net of aggregate financing costs of
$48.0 million.

Principal payments of $485.8 million in 2001 include optional repayments of
$454.3 million under the NTLCL credit agreements and Cablecom revolving
facility and repayments of an aggregate of $31.5 million of other debt.

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

Certain statements contained herein constitute forward-looking statements as
that term is defined under the Private Securities Litigation Reform Act of
1995. When used herein, the words, believe, anticipate, should,
intend, plan, will, expects, estimates, projects, positioned,
strategy, and similar expressions identify such forward-looking statements.
Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company, or industry results, to be
materially different from those contemplated, projected, forecasted, estimated
or budgeted, whether expressed or implied, by such forward-looking statements.
Such factors include the following: general economic and business conditions,
technological developments, the Companys ability to continue to design
networks, install facilities, obtain and maintain any required governmental
licenses or approvals and finance construction and development, all in a timely
manner at reasonable costs and on satisfactory terms and conditions, as well as
assumptions about customer acceptance, churn rates, overall market penetration
and competition from providers of alternative services, the impact of
restructuring and integration actions, the impact of new business opportunities
requiring significant up-front investment, interest rate and currency exchange
rate fluctuations and availability, terms and deployment of capital. 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.

31



---



##### 



NTL Incorporated and Subsidiaries

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

FOREIGN EXCHANGE CONTRACTS

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

The Company has entered into cross currency swaps to hedge exposure to
movements in the Euro to British pound exchange rate with a notional amount of
105.1 million at September 30, 2001.

INTEREST RATES

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

The Company has entered into zero cost collars to hedge exposure to the
floating interest rate indebtedness incurred under the Cablecom term loan
facility and revolving loan facility. The notional amount of the zero cost
collars was CHF 1,200.0 million at September 30, 2001.

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

32



---



##### 



NTL Incorporated and Subsidiaries



|                                                                         |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |        |  
|------------------------------------------------------------------------ | ----------------------------- |  | --------------- | ----- | ----------- |  | ----------- | ----- | ----------- |  |  | ---- | - | --------- | --------------------- | ------ | -
|                                                                         |                               |  | Three Months    |       | Year Ending |  | Year Ending |       | Year Ending
|                                                                         |                               |  | Ending 12/31/01 |       | 12/31/02    |  | 12/31/03    |       | 12/31/04   
|                                                                         |                               |  |                 |       |             |  |             |       |            
|Long-term
Debt Including Current Portion                                 |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|U.S. Dollar                                                              |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Fixed Rate                    |  |                 |      |             |  |             |      |             |  |  |     |   |           | $                     | 285.1  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       | 13.25  | %
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|U.K. Pound                                                               |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Fixed Rate                    |  |                 |      |             |  |             |      |             |  |  |     |   |           |                       |       |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |        |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Forward Exchange Rate |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |        |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Euro                                                                     |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Fixed Rate                    |  |                 |      |             |  |             |      |             |  |  |     |   |           |                       |       |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |        |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Forward Exchange Rate |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |        |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|U.K. Pound                                                               |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Variable Rate                 |  |                 |      |             |  |             |      |             |  |  |     |   |           |                       | £90.0  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |  |                 |       |             |  |             |       |             |  |  |      |   |           | LIBOR plus 2.0%      
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Forward Exchange Rate |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       | 1.4986 |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|CHF                                                                      |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Variable Rate                 |  |                 |      |             |  |             |      |             |  |  |     |   |           | CHF139.0             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |  |                 |       |             |  |             |       |             |  |  |      |   |           | Swiss LIBOR          
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                               |  |                 |       |             |  |             |       |             |  |  |      |   | plus 2.5%
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Forward Exchange Rate |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       | .6555  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Australian Dollar                                                        |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Variable Rate                 |  |                 |      |             |  |             |      |             |  |  |     |   |           |                       | A$15.0 |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |  |                 |       |             |  |             |       |             |  |  |      |   |           | A$ Bank Bid Rate plus
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           | 1.85                  | %     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Forward Exchange Rate |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       | .5139  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Interest Rate Derivative Financial
Instruments Related to Long-Term Debt |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Interest Rate Swaps                                                      |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Notional CHF Amount           |  | CHF1,200.0      |       | CHF1,200.0  |  | CHF1,200.0  |       | CHF1,200.0 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Floor Strike Rate     |  |                 | 3.27  | %           |  |             | 3.27  | %           |  |  | 3.27 | % |           |                       | 3.27   | %
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Cap Strike Rate       |  |                 | 5.15  | %           |  |             | 5.15  | %           |  |  | 5.15 | % |           |                       | 5.15   | %
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Currency Swap Agreements Related to
Long-Term Debt                       |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Receipt of U.K. Pounds                                                   |                               |  |                 |       |             |  |             |       |             |  |  |      |   |           |                       |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Notional Euro Amount          |  |                 | 28.9 |             |  |             | 76.2 |             |  |  |     |   |           |                       |       |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Contract Rate         |  |                 | .6361 |             |  |             | .6457 |             |  |  |      |   |           |                       |        |  

[Additional columns below]

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

|                                                                         |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |          |  
|------------------------------------------------------------------------ | ----------------------------- | --------- | --------------------- | --------- | --------------------- | --------- | ----------- | ------- | ---------- |  | ---------- | ------- | - |  | ---------- | -------- | --------- |  | - | -------- | -
|                                                                         |                               |           | Year Ending           |           | Year Ending           |           |             |         |            |  |            |         |   |  | Fair Value
|                                                                         |                               |           | 12/31/05              |           | 12/31/06              |           | Thereafter  |         | Total      |  | 09/30/01  
|                                                                         |                               |           |                       |           |                       |           |             |         |            |  |           
|Long-term
Debt Including Current Portion                                 |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|U.S. Dollar                                                              |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Fixed Rate                    |           | $                     | 808.8     |                       |           | $           | 1,050.0 |            |  | $          | 7,262.6 |   |  | $          | 9,406.5  |           |  | $ | 3,783.0  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |           |                       | 12.09     | %                     |           |             | 11.50   | %          |  |            | 9.00    | % |  |            |          |           |  |   |          |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|U.K. Pound                                                               |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Fixed Rate                    |           |                       |          |                       |           |             |        |            |  |            | £890.0  |   |  |            | £890.0   |           |  |   | £323.9   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |           |                       |           |                       |           |             |         |            |  |            | 10.09   | % |  |            |          |           |  |   |          |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Forward Exchange Rate |           |                       |           |                       |           |             |         |            |  |            | 1.5033  |   |  |            |          |           |  |   |          |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Euro                                                                     |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Fixed Rate                    |           |                       |          |                       |           |             | 250.0  |            |  |            | 860.0  |   |  |            | 1,110.0 |           |  |   | 475.9   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |           |                       |           |                       |           |             | 9.25    | %          |  |            | 11.14   | % |  |            |          |           |  |   |          |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Forward Exchange Rate |           |                       |           |                       |           |             | .9667   |            |  |            | .9732   |   |  |            |          |           |  |   |          |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|U.K. Pound                                                               |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Variable Rate                 |           |                       | £2,410.0  |                       |           |             | £100.0  |            |  |            |        |   |  |            | £2,600.0 |           |  |   | £2,600.0 |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |           | LIBOR plus 2.0%       |           | LIBOR plus 5.0%       |           |             |         |            |  |            |         |   |  |            |          |          
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Forward Exchange Rate |           |                       | 1.4997    |                       |           |             | 1.5015  |            |  |            |         |   |  |            |          |           |  |   |          |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|CHF                                                                      |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Variable Rate                 |           | CHF243.3              |           | CHF521.3              |           | CHF2,571.4  |         | CHF3,475.0 |  | CHF3,475.0
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |           | Swiss LIBOR           |           | Swiss LIBOR           |           | Swiss LIBOR |         |            |  |            |         |   |  |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                               | plus 2.5% |                       | plus 2.5% |                       | plus 2.5% |             |         |            |  |            |         |   | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Forward Exchange Rate |           |                       | .6637     |                       |           |             | .6717   |            |  |            | .7013   |   |  |            |          |           |  |   |          |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Australian Dollar                                                        |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Variable Rate                 |           |                       | A$25.0    |                       |           |             | A$160.0 |            |  |            |        |   |  |            | A$200.0  |           |  |   | A$200.0  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Interest Rate         |           | A$ Bank Bid Rate plus |           | A$ Bank Bid Rate plus |           |             |         |            |  |            |         |   |  |            |          |          
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                               |           | 1.85                  | %         |                       |           | 1.85        | %       |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Forward Exchange Rate |           |                       | .5145     |                       |           |             | .5149   |            |  |            |         |   |  |            |          |           |  |   |          |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Interest Rate Derivative Financial
Instruments Related to Long-Term Debt |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Interest Rate Swaps                                                      |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Notional CHF Amount           |           |                       |          |                       |           |             |        |            |  |            |        |   |  | CHF1,200.0 |          | CHF(30.0)
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Floor Strike Rate     |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |          |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Cap Strike Rate       |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |          |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Currency Swap Agreements Related to
Long-Term Debt                       |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Receipt of U.K. Pounds                                                   |                               |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Notional Euro Amount          |           |                       |          |                       |           |             |        |            |  |            |        |   |  |            | 105.1   |           |  |   | (3.6    | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Average Contract Rate         |           |                       |           |                       |           |             |         |            |  |            |         |   |  |            |          |           |  |   |          |  

33



---



##### 



NTL Incorporated and Subsidiaries

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. This agreement and the
underlying contracts do not qualify for hedge accounting under SFAS No. 133 (as
amended). Instead, it will be accounted for as a financial instrument under
SFAS No. 107, with any change in fair value recorded in results of operations.
As of September 30, 2001, the fair value of this instrument was a liability of
$0.1 million.

Related Forward Contracts to Sell Foreign Currencies for US $

U. K. Pound

|                      |  |                 |  |             |  |            |      |  
|--------------------- |  | --------------- |  | ----------- |  | ---------- | ---- | -
|                      |  | Three Months    |  | Year Ending |  | Fair Value
|                      |  | Ending 12/31/01 |  | 12/31/02*   |  | 9/30/01   
|                      |  |                 |  |             |  |           
|                      |  | (in millions)  
|Notional amount       |  | Up to $16.0     |  | Up to $32.0 |  | $          | (0.1 | )
|                     
|                     
|                     
|                     
|Average contract rate |  | 1.48            |  | 1.48        |  |            |      |  



---

|* |  | The last contract ends on March 21, 2002.
|- |  | -----------------------------------------

PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On September 12, 2001, the Company issued to France Telecom S.A. and certain
commercial banks 1,850,000 shares of its newly created Cumulative Convertible
Preferred Stock, Series A, par value $0.01 per share (the New Cumulative
Convertible Preferred Stock) in exchange for 1,850,000 shares of its
outstanding 5% Cumulative Preferred Stock, Series A, par value $0.01 per share
(the Old Cumulative Preferred Stock), held by such persons pursuant to the
terms of an Exchange Agreement, dated September 12, 2001. As result of the
exchange, no shares of Old Cumulative Preferred Stock remain
outstanding. The Company will shortly file a Certificate of
Elimination with the Secretary of State of the State of Delaware with
respect to the Certificate of Designation for the Old Cumulative
Preferred Stock, which will result in the shares of Old Cumulative
Preferred Stock once again being classified as "blank check"
preferred stock.

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NTL Incorporated and Subsidiaries

The Company did not receive any proceeds from the issuance and sale of the
New Cumulative Convertible Preferred Stock. The shares of New Cumulative
Convertible Preferred Stock were issued by the Company to France Telecom S.A.
and certain commercial banks pursuant to Section 3(a)(9) of the Securities Act
in a transaction exempt from the registration requirements under the Securities
Act.

Ranking of New Cumulative Convertible Preferred Stock:

The New Cumulative Convertible Preferred Stock ranks:



| |  |  | junior to the 13% Senior Redeemable Exchangeable
Preferred Stock;                                                                                                                                                                                                                                                                                                                                
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | equal to the 5% Cumulative Participating
Convertible Preferred Stock, Series A and the dividend shares
payable thereon; 5% Cumulative Participating Convertible
Preferred Stock, Series B and the dividend shares payable
thereon; 6.5% Fixed Coupon Redeemable Preferred Stock, Series
A; and Variable Coupon Redeemable Preferred Stock, Series, A
and the dividend shares payable thereon; and
|
| |  |  | senior to the Common Stock,                                                                                                                                                                                                                                                                                                                                                                      

in each case either as to the payment of dividends or as to the distribution of
assets upon liquidation, dissolution or winding up, or both.

Dividends on the New Cumulative Convertible Preferred Stock:

The holders of shares of New Cumulative Convertible Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors, out
of funds legally available for the payment of dividends, dividends, from and
after September 12, 2001 and through and including March 26, 2002, at the
quarterly rate of $13.44 per share (assuming a $1,075.17 liquidation
preference) payable in additional shares of New Cumulative Convertible
Preferred Stock, (y) from and after March 27, 2002 through and including March
26, 2003, at the quarterly rate of $21.23 per share (assuming a $1,075.17
liquidation preference) payable in additional shares of New Cumulative
Convertible Preferred Stock and (z) from and after March 27, 2003, at the
quarterly rate of $26.61 per share (assuming a $1,075.17 liquidation
preference) payable in additional shares of New Cumulative Convertible
Preferred Stock; provided that from and after the Convertibility Date (as
described below), dividends accrue at the quarterly rate of $16.12 per share
(assuming a $1,075.17 liquidation preference).

Dividends accrue on the New Cumulative Convertible Preferred Stock from
September 12, 2001 and are payable in arrears on the applicable dividend
payment date, which is any date upon which a redemption or conversion occurs.
So long as any shares of New Cumulative Convertible Preferred Stock are
outstanding, no dividends may be paid be paid on, nor may the Company redeem or
repurchase (except for certain purposes or in exchange for

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NTL Incorporated and Subsidiaries

junior securities), parity securities and/or junior securities, unless (1) full
cumulative dividends are paid on the shares of New Cumulative Convertible
Preferred Stock and other parity securities, (2) sufficient funds have been set
aside for the current dividend period with respect to the New Cumulative
Convertible Preferred Stock and other parity securities and (3) the Company is
not in default with respect to the mandatory redemption obligation of the
shares of New Cumulative Convertible Preferred Stock.

Liquidation Right of the New Cumulative Convertible Preferred Stock:

The liquidation right for each share of New Cumulative Convertible
Preferred Stock is equal to $1,075.17 per share, plus an amount equal to all
dividends accrued and unpaid thereon to the date of final distribution to the
holders. The difference between the base $1,000.00 per share liquidation right
of the Old Cumulative Preferred Stock and the base $1,075.17 per share
liquidation right of the New Cumulative Convertible Preferred Stock reflects
the accrued and unpaid dividends from March 28, 2000 (the original issue date
of the Old Cumulative Preferred Stock) through September 11, 2001 (the date on
which dividends ceased to accrue on the Old Cumulative Preferred Stock).

Redemption of the New Cumulative Convertible Preferred Stock:

The New Cumulative Convertible Preferred Stock is redeemable by the
Company on March 27, 2002, March 27, 2003, or March 27, 2004, from France
Telecom S.A. at $1,075.17 per share, together with accrued and unpaid dividends
thereon, to, but excluding, the date fixed for redemption, without interest,
payable in cash. If any shares of New Cumulative Convertible Preferred Stock
remain outstanding on March 27, 2009, to the extent the Company shall have
funds legally available for the redemption, the Company shall redeem all of the
outstanding shares of New Cumulative Convertible Preferred Stock at $1,075.17
per share, together with accrued and unpaid dividends thereon, to, but
excluding, the date fixed for redemption, without interest, payable in cash.

Restrictions for Failure to Pay Dividends or Redeem:

If the Company shall have failed to declare or pay dividends on the New
Cumulative Convertible Preferred Stock or shall have failed to discharge the
mandatory redemption obligation of the shares of New Cumulative Convertible
Preferred Stock, the holders of shares of New Cumulative Convertible Preferred
Stock shall be entitled to receive, in addition to all other amounts required
to be paid with respect to the shares of New Cumulative Convertible Preferred
Stock, when, as and if declared by the Board of Directors, out of funds legally
available for the payment of dividends, cash dividends on the aggregate (1)
dividends which the Company shall have failed to declare or pay or (2)
redemption price, in each case at a

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NTL Incorporated and Subsidiaries

rate of 2% per quarter, compounded quarterly, for the period during which the
failure to declare or pay dividends or failure to discharge the mandatory
redemption obligation of the shares of New Cumulative Convertible Preferred
Stock shall continue.

Exchange Right of Holders of New Cumulative Convertible Preferred Stock:

The New Cumulative Convertible Preferred Stock is exchangeable by France
Telecom S.A., in whole or in part upon 30 days written notice to the Company,
for shares of Eurotel Stock (as described below) having a value equal to the
redemption price of the New Cumulative Convertible Preferred Stock shares being
exchanged, plus accrued and unpaid dividends thereon, subject to the
satisfaction of certain conditions, including necessary regulatory approvals.
In no event will the aggregate maximum amount of Eurotel Stock that may be
acquired by France Telecom S.A. in the exchange exceed 50% of Eurotel Stock.
Any shares of New Cumulative Convertible Preferred Stock remaining outstanding
after the acquisition of the maximum amount of Eurotel Stock would be subject
to redemption or conversion pursuant to the terms of the Certificate of
Designation for the shares of New Cumulative Convertible Preferred Stock. For
purposes of the exchange, (1) Eurotel shall mean NTL Cablecom Holding GmbH, a
wholly owned subsidiary of the Company, or any other holding entity which is
wholly owned by the Company and holds the entire issued and outstanding capital
stock of the group of companies comprising the Cablecom group, (2) Cablecom
group shall mean NTL Cablecom Holding GmbH and its subsidiaries (including any
minority interests owned by such entities), and (3) Eurotel Stock shall mean
capital stock of Eurotel with the greatest voting power and the power to
control or direct the management of Eurotel of the type and class held directly
by, or through any direct or indirect subsidiaries of, the Company.

Conversion of the New Cumulative Convertible Preferred Stock:

France Telecom S.A., at any time and from time to time, shall have the
option beginning on the earlier of: (x) March 27, 2002,
unless the Company elects to delay convertibility of shares of New Cumulative
Convertible Preferred Stock until March 27, 2003 or redeems on March 27, 2002
all issued and outstanding shares of New Cumulative Convertible Preferred Stock
at the redemption price, together with accrued and unpaid dividends thereon
payable in cash; (y) March 27, 2003, unless the Company elects to delay
convertibility of shares of New Cumulative Convertible Preferred Stock until
March 29, 2004 or redeems on March 27, 2003 all issued and outstanding shares
of New Cumulative Convertible Preferred Stock at the redemption price, together
with accrued and unpaid dividends thereon payable in cash; provided that the
Company may not delay convertibility past March 27, 2003 if on March 27, 2003
the Convertibility Base Price (as described below) is greater than $65.00 (as
adjusted for any stock splits, combinations and the like occurring on and after
September 12, 2001), and in such case, unless the Company redeems all of the
issued and outstanding shares of New Cumulative Convertible Preferred Stock as
described above, March 27, 2003 shall be the Convertibility Date; and (z) March
29, 2004, unless the Company redeems on March 29, 2004 all issued and
outstanding shares of New Cumulative Convertible Preferred Stock at the
redemption price,
together with accrued and unpaid dividends payable in cash, to convert any or
all outstanding

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NTL Incorporated and Subsidiaries

shares of New Cumulative Convertible Preferred Stock held by France Telecom
S.A. into fully paid and non-assessable shares of Common Stock by surrendering
such shares to be converted. The earliest date on which France Telecom S.A.
shall be permitted to convert shares of New Cumulative Convertible Preferred
Stock into shares of Common Stock in accordance with subparagraph (x), (y) or
(z) above shall be referred to as the Convertibility Date.

The number of shares of Common Stock deliverable upon conversion of each
full share of New Convertible Cumulative Preferred Stock shall be equal to the
quotient of (1) $1,075.17 divided by (2) the product of (a) the 25-day average
market price of the Common Stock ending on the trading day immediately
preceding the Convertibility Date (the Convertibility Base Price), multiplied
by (b) 1.25 (the quotient is referred to as the Conversion Rate). The right
to convert shares of New Cumulative Convertible Preferred Stock called for
redemption shall terminate at the close of business on the date immediately
preceding the date fixed for such redemption, unless the Company shall default
in making payment of the amount payable upon such redemption, in which case
such right of conversion shall be reinstated until such time as the Company may
legally satisfy the redemption payment or the mandatory redemption obligation,
as the case may be. The Conversion Rate is subject to customary anti-dilution
adjustments contained in the Certificate of Designation for the shares of New
Cumulative Convertible Preferred Stock

Voting Rights of Holders of the New Cumulative Convertible Preferred Stock:

The holders of shares of New Cumulative Convertible Preferred Stock shall
not be entitled to any voting rights, except as provided in the Certificate of
Designation for the shares of New Cumulative Convertible Preferred Stock or as
otherwise provided by applicable law. The creation or issuance of senior
securities and/or parity securities requires the approval of 66 2/3% of the
aggregate liquidation rights of the outstanding shares of New Cumulative
Convertible Preferred Stock, subject to certain exceptions, which include the
refinancing of existing senior securities and/or parity securities.

See the Exhibits listed below.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| |     |  |           |  |                                                                                                                                                                                                                              
| | --- |  | --------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) |  | Exhibits. | 
|
| |     |  | (i)       |  | Exhibit 3.1,
Certificate of Designations, dated September 12, 2001, filed with the
Secretary of State of Delaware with respect
to the shares of
Cumulative Convertible Preferred Stock, Series A of the Company              
| |     |  | (ii)      |  | Exhibit 3.2,
Certificate of Correction, dated September 28, 2001, to the
Certificate of Designations, dated September 12,
2001, with respect
to the shares of Cumulative Convertible Preferred Stock, Series A of
the Company
| |     |  | (iii)     |  | Exhibit 4.1, Amendment
to Amendment No. 3 to the Rights Agreement, dated as of September 12,
2001, by and between theCompany and Continental Stock Transfer
&
Trust Company                                                  
| |     |  | (iv)      |  | Exhibit 4.2, Exchange
Agreement, dated as of September 12, 2001, by and among the Company
and France Telecom S.A. andthe other parties thereto                                                                               
| |     |  | (v)       |  | Exhibit 10.1,
Amendment, dated as of September 12, 2001, to the Investment
Agreement, dated July 26, 1999, as amended, byand between the
Company and France Telecom S.A.                                                     

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NTL Incorporated and Subsidiaries



| | (b) |  | Reports on Form 8-K.                                                                             
| | --- |  | -------------------------------------------------------------------------------------------------
|
| |     |  | During the quarter ended September 30, 2001, the Company filed the
following reports on Form 8-K:
|



| | (i)   |  | Report dated July 13, 2001 (filed July 13, 2001)
reporting under Item 5, Other Events, that NTL Incorporated
issued a press release reaffirming that it will meet or exceed
previously announced guidance for the second quarter and the
remainder of 2001.                                                                                                                                                                                                              
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | Report dated July 18, 2001 (filed July 19, 2001)
reporting under Item 5, Other Events, that NTL Incorporated
issued press releases (a) announcing a record EBITDA of £115
million during the second quarter of 2001 and an upward revision
of £100 million to £485 million in its guidance for the year
2001 and (b) inviting the general public to its 2nd Quarter 2001
financial results conference call.                                                              
|
| | (iii) |  | Report dated July 19, 2001 (filed July 19, 2001)
reporting under Item 5, Other Events, that NTL Communications
Corp. announced it had extended its exchange offer for its
12-3/8% Senior Notes due 2008 to June 23, 2001.                                                                                                                                                                                                                                                
|
| | (iv)  |  | Report dated July 26, 2001 (filed July 26, 2001)
reporting under Item 5, Other Events, that NTL Incorporated
announced results for three and six months ended June 30, 2001.
Record EBITDA of £115 million reflected strong operational
performance.                                                                                                                                                                                                                     
|
| | (v)   |  | Report dated September 19, 2001 (filed September 19,
2001) reporting under Item 5, Other Events, that NTL
Incorporated issued a press release reaffirming that (a) the
tragic events of the past week in the United States had no
discernable negative impact upon its business operations or
performance, (b) it will meet or exceed its EBITDA target of
£130 million for the third quarter of 2001 and (c) it is in
compliance with all bank agreements and covenants.

No financial statements were filed with these reports.

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NTL Incorporated and Subsidiaries

SIGNATURES

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

|      |  |                   |  |                                                                           
|----- |  | ----------------- |  | --------------------------------------------------------------------------
|      |  |                   |  | NTL INCORPORATED                                                          
|      |  |                   |  |                                                                           
|     
|     
|     
|     
|Date: |  | November 12, 2001 |  | By: /s/ Barclay Knapp                                                     
|      |  |                   |  |                                                                           
|      |  |                   |  | Barclay Knapp
President and Chief Executive Officer                       
|     
|     
|     
|     
|      |  |                   |  |                                                                           
|     
|     
|     
|     
|Date: |  | November 12, 2001 |  | By: /s/ Gregg N. Gorelick                                                 
|      |  |                   |  |                                                                           
|      |  |                   |  | Gregg N. Gorelick
Vice President-Controller
(Principal Accounting Officer)

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