##### Table of Contents



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

FORM 10-Q

|                                                               
|---------------------------------------------------------------
|[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|SECURITIES EXCHANGE ACT OF 1934                                
|For the quarterly period ended March 31, 2002                  
|                                                               
|OR                                                             

|                                                                 
|-----------------------------------------------------------------
|[  ]     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 X                   No

The number of shares outstanding of the issuers common stock as of March 31,
2002 was 276,626,476.





---

TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS                                   
|ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|Risk Factors                                                                                 
|ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                      
|ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                                                                                   



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Index



|                                                                   |                                                                 |      |    |    | 
|------------------------------------------------------------------ | --------------------------------------------------------------- | ---- | -- | -- | 
|PART I. FINANCIAL INFORMATION                                      |                                                                 | Page
|                                                                  
|Item 1. Financial Statements                                       |                                                                 |      |    |   
|                                                                  
|                                                                   | Condensed Consolidated Balance Sheets-                          |      |    |    | 
|                                                                   | March 31, 2002 and December 31, 2001                            |      |    | 2  | 
|                                                                  
|                                                                   | Condensed Consolidated Statements of Operations-                |      |    |    | 
|                                                                   | Three months ended March 31, 2002 and 2001                      |      |    | 4  | 
|                                                                  
|                                                                   | Condensed Consolidated Statement of Shareholders (Deficiency)- |      |    |    | 
|                                                                   | Three months ended March 31, 2002                               |      |    | 5  | 
|                                                                  
|                                                                   | Condensed Consolidated Statements of Cash Flows-                |      |    |    | 
|                                                                   | Three months ended March 31, 2002 and 2001                      |      |    | 7  | 
|                                                                  
|                                                                   | Notes to Condensed Consolidated Financial Statements            |      |    | 8  | 
|                                                                  
|Item 2. Managements Discussion and Analysis of Results of         |                                                                 |      |    |   
|                                                                   | Operations and Financial Condition                              |      |    | 25 | 
|                                                                  
|Item 3. Quantitative and Qualitative Disclosures about Market Risk |                                                                 |      | 42 |   
|                                                                  
|Risk Factors                                                       |                                                                 |      | 45 |   
|                                                                  
|PART II. OTHER INFORMATION                                         |                                                                 |      |    |   
|                                                                  
|Item 3. Defaults Upon Senior Securities                            |                                                                 |      | 51 |   
|                                                                  
|Item 6. Exhibits and Reports on Form 8-K                           |                                                                 |      | 54 |   
|                                                                  
|SIGNATURES                                                         |                                                                 |      | 55 |   





---



##### Table of Contents






PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

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

|                                                                                 |                                                                                                    |   |             |       |              |   |          |       | 
|-------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | - | ----------- | ----- | ------------ | - | -------- | ----- | 
|                                                                                 |                                                                                                    |   | March 31,   |       | December 31,
|                                                                                 |                                                                                                    |   | 2002        |       | 2001        
|                                                                                 |                                                                                                    |   |             |       |             
|                                                                                 |                                                                                                    |   | (unaudited) |       | (see note)  
|                                                                                 |                                                                                                    |   |             |       |             
|Assets                                                                           |                                                                                                    |   |             |       |              |   |          |      
|Current assets:                                                                  |                                                                                                    |   |             |       |              |   |          |      
|                                                                                 | Cash and cash equivalents                                                                          |   | $           | 608.6 |              |   | $        | 481.8 | 
|                                                                                 | Marketable securities                                                                              |   |             | 14.1  |              |   |          |      | 
|                                                                                 | Accounts receivable-trade, less allowance for
doubtful accounts of $122.5 (2002) and $133.8
(2001) |   |             | 531.4 |              |   |          | 713.6 | 
|                                                                                 | Other                                                                                              |   |             | 337.6 |              |   |          | 329.9 | 
|                                                                                 | NTL Australia assets                                                                               |   |             | 405.7 |              |   |          | 405.0 | 
|                                                                                 |                                                                                                    |   |             |       |              |   |          |      
|Total current assets                                                             |                                                                                                    |   | 1,897.4     |       |              |   | 1,930.3  |      
|                                                                                
|Fixed assets, net                                                                |                                                                                                    |   | 11,912.9    |       |              |   | 12,338.1 |      
|Intangible assets, net                                                           |                                                                                                    |   | 1,806.8     |       |              |   | 1,849.8  |      
|Investments in and loans to affiliates, net                                      |                                                                                                    |   | 234.5       |       |              |   | 272.4    |      
|Other assets, net of accumulated amortization of
$165.4 (2002) and $150.0 (2001) |                                                                                                    |   | 442.8       |       |              |   | 447.9    |      
|                                                                                 |                                                                                                    |   |             |       |              |   |          |      
|Total assets                                                                     |                                                                                                    | $ | 16,294.4    |       |              | $ | 16,838.5 |      
|                                                                                 |                                                                                                    |   |             |       |              |   |          |      

2



---



##### Table of Contents



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

|                                                                                                                                                                                                                         |                                                                                                                                                          |   |             |           |              |   |          |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | --------- | ------------ | - | -------- | --------- | -
|                                                                                                                                                                                                                         |                                                                                                                                                          |   | March 31,   |           | December 31,
|                                                                                                                                                                                                                         |                                                                                                                                                          |   | 2002        |           | 2001        
|                                                                                                                                                                                                                         |                                                                                                                                                          |   |             |           |             
|                                                                                                                                                                                                                         |                                                                                                                                                          |   | (unaudited) |           | (see note)  
|                                                                                                                                                                                                                         |                                                                                                                                                          |   |             |           |             
|Liabilities and shareholders (deficiency)                                                                                                                                                                               |                                                                                                                                                          |   |             |           |              |   |          |          
|Current liabilities:                                                                                                                                                                                                     |                                                                                                                                                          |   |             |           |              |   |          |          
|                                                                                                                                                                                                                         | Accounts payable                                                                                                                                         |   | $           | 444.9     |              |   | $        | 431.1     |  
|                                                                                                                                                                                                                         | Accrued expenses and other                                                                                                                               |   |             | 889.5     |              |   |          | 1,007.9   |  
|                                                                                                                                                                                                                         | Accrued construction costs                                                                                                                               |   |             | 82.4      |              |   |          | 107.8     |  
|                                                                                                                                                                                                                         | Interest payable                                                                                                                                         |   |             | 365.9     |              |   |          | 302.5     |  
|                                                                                                                                                                                                                         | Deferred revenue                                                                                                                                         |   |             | 434.9     |              |   |          | 481.6     |  
|                                                                                                                                                                                                                         | Current portion of long-term debt                                                                                                                        |   |             | 18,017.1  |              |   |          | 17,666.1  |  
|                                                                                                                                                                                                                         | NTL Australia liabilities                                                                                                                                |   |             | 193.1     |              |   |          | 182.9     |  
|                                                                                                                                                                                                                         |                                                                                                                                                          |   |             |           |              |   |          |          
|Total current liabilities                                                                                                                                                                                                |                                                                                                                                                          |   | 20,427.8    |           |              |   | 20,179.9 |          
|                                                                                                                                                                                                                        
|Long-term debt                                                                                                                                                                                                           |                                                                                                                                                          |   |            |           |              |   |         |          
|Other                                                                                                                                                                                                                    |                                                                                                                                                          |   | 125.6       |           |              |   | 168.1    |          
|Commitment and contingent liabilities                                                                                                                                                                                    |                                                                                                                                                          |   |             |           |              |   |          |          
|Deferred income taxes                                                                                                                                                                                                    |                                                                                                                                                          |   | 231.5       |           |              |   | 259.2    |          
|Redeemable preferred stock-$.01 par value, plus
accreted dividends; liquidation preference $2,884.2; less
unamortized discount of $42.9 (2002) and $53.4 (2001);
issued and outstanding 2.1 (2002) and 2.1 (2001) shares |                                                                                                                                                          |   | 2,826.2     |           |              |   | 2,773.7  |          
|                                                                                                                                                                                                                        
|Shareholders (deficiency):                                                                                                                                                                                              |                                                                                                                                                          |   |             |           |              |   |          |          
|                                                                                                                                                                                                                         | Series preferred stock -$.01 par value; authorized
10.0 shares; liquidation preference $3,038.2; issued
and outstanding 3.0 (2002) and 3.0 (2001) shares |   |             |          |              |   |          |          |  
|                                                                                                                                                                                                                         | Common stock  $.01 par value; authorized 800.0 shares;
issued and outstanding 276.6 (2002) and 276.6 (2001)
shares                                      |   |             | 2.8       |              |   |          | 2.8       |  
|                                                                                                                                                                                                                         | Additional paid-in capital                                                                                                                               |   |             | 13,621.6  |              |   |          | 13,720.0  |  
|                                                                                                                                                                                                                         | Accumulated other comprehensive (loss)                                                                                                                   |   |             | (1,148.5  | )            |   |          | (1,072.8  | )
|                                                                                                                                                                                                                         | (Deficit)                                                                                                                                                |   |             | (19,792.6 | )            |   |          | (19,192.4 | )
|                                                                                                                                                                                                                         |                                                                                                                                                          |   |             |           |              |   |          |          
|                                                                                                                                                                                                                         |                                                                                                                                                          |   | (7,316.7    | )         |              |   | (6,542.4 | )        
|                                                                                                                                                                                                                         |                                                                                                                                                          |   |             |           |              |   |          |          
|Total liabilities and shareholders (deficiency)                                                                                                                                                                         |                                                                                                                                                          | $ | 16,294.4    |           |              | $ | 16,838.5 |          
|                                                                                                                                                                                                                         |                                                                                                                                                          |   |             |           |              |   |          |          

Note: The balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date.

See accompanying notes.

3



---



##### Table of Contents



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

|                                                       |                                            |                                       |         |                    |      |      |          |       |      |  
|------------------------------------------------------ | ------------------------------------------ | ------------------------------------- | ------- | ------------------ | ---- | ---- | -------- | ----- | ---- | -
|                                                       |                                            |                                       |         | Three Months Ended
|                                                       |                                            |                                       |         | March 31,         
|                                                       |                                            |                                       |         |                   
|                                                       |                                            |                                       |         | 2002               |      | 2001
|                                                       |                                            |                                       |         |                    |      |     
|Revenues                                               |                                            |                                       |         |                    |      |      |          |      
|Consumer telecommunications and television             |                                            | $                                     | 608.4   |                    |      | $    | 610.9    |      
|Business telecommunications                            |                                            |                                       | 215.6   |                    |      |      | 201.2    |      
|Broadcast transmission and other                       |                                            |                                       | 70.0    |                    |      |      | 68.1     |      
|                                                       |                                            |                                       |         |                    |      |      |          |      
|                                                       |                                            |                                       | 894.0   |                    |      |      | 880.2    |      
|Costs and expenses                                     |                                            |                                       |         |                    |      |      |          |      
|Operating expenses                                     |                                            |                                       | 435.8   |                    |      |      | 438.7    |      
|Selling, general and administrative expenses           |                                            |                                       | 212.3   |                    |      |      | 322.2    |      
|Recapitalization expense                               |                                            |                                       | 45.8    |                    |      |      |         |      
|Other charges                                          |                                            |                                       | 2.6     |                    |      |      | 7.4      |      
|Corporate expenses                                     |                                            |                                       | 13.6    |                    |      |      | 12.5     |      
|Depreciation and amortization                          |                                            |                                       | 395.6   |                    |      |      | 755.2    |      
|                                                       |                                            |                                       |         |                    |      |      |          |      
|                                                       |                                            |                                       | 1,105.7 |                    |      |      | 1,536.0  |      
|                                                       |                                            |                                       |         |                    |      |      |          |      
|Operating (loss)                                       |                                            |                                       | (211.7  | )                  |      |      | (655.8   | )    
|                                                      
|Other income (expense)                                 |                                            |                                       |         |                    |      |      |          |      
|Interest income and other, net                         |                                            |                                       | 15.1    |                    |      |      | 9.0      |      
|Interest expense                                       |                                            |                                       | (371.9  | )                  |      |      | (355.1   | )    
|Share of (losses) from equity investments              |                                            |                                       | (48.9   | )                  |      |      | (42.9    | )    
|Foreign currency transaction (losses)                  |                                            |                                       | (5.0    | )                  |      |      | (13.7    | )    
|                                                       |                                            |                                       |         |                    |      |      |          |      
|(Loss) before income taxes and discontinued operations |                                            |                                       | (622.4  | )                  |      |      | (1,058.5 | )    
|Income tax benefit                                     |                                            |                                       | 22.0    |                    |      |      | 16.1     |      
|                                                       |                                            |                                       |         |                    |      |      |          |      
|(Loss) from continuing operations                      |                                            |                                       | (600.4  | )                  |      |      | (1,042.4 | )    
|Discontinued operations:                               |                                            |                                       |         |                    |      |      |          |      
|                                                       |                                            | Loss from operations of NTL Australia |         |                    | (1.0 | )    |          |       | (1.9 | )
|                                                       |                                            | Income tax benefit                    |         |                    | 1.2  |      |          |       | 1.4  |  
|                                                       |                                            |                                       |         |                    |      |      |          |      
|Income (loss) from discontinued operations             |                                            |                                       | 0.2     |                    |      |      | (0.5     | )    
|                                                       |                                            |                                       |         |                    |      |      |          |      
|Net (loss)                                             |                                            |                                       | (600.2  | )                  |      |      | (1,042.9 | )    
|Preferred stock dividends                              |                                            |                                       | (98.4   | )                  |      |      | (65.1    | )    
|                                                       |                                            |                                       |         |                    |      |      |          |      
|Net (loss) available to common shareholders            |                                            | $                                     | (698.6  | )                  |      | $    | (1,108.0 | )    
|                                                       |                                            |                                       |         |                    |      |      |          |      
|Basic and diluted net (loss) per common share:         |                                            |                                       |         |                    |      |      |          |      
|                                                       | (Loss) from continuing operations          |                                       | $       | (2.53              | )    |      | $        | (4.04 | )   
|                                                       | Income (loss) from discontinued operations |                                       |         |                   |      |      |          |      |     
|                                                       |                                            |                                       |         |                    |      |      |          |      
|                                                       | Net (loss) per common share                |                                       | $       | (2.53              | )    |      | $        | (4.04 | )   
|                                                       |                                            |                                       |         |                    |      |      |          |      
|                                                       | Weighted average shares                    |                                       |         | 276.0              |      |      |          | 274.5 |     
|                                                       |                                            |                                       |         |                    |      |      |          |      

See accompanying notes.

4



---



##### Table of Contents



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

|                                                   |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|-------------------------------------------------- |  | ---------------- | --- | -------------- |  | ------ | - | --- |  |  | ----- |  |  | - | --- | 
|                                                   |  | Series Preferred |     |                |  |        |   |     |  | 
|                                                   |  | Stock $.01 Par   |     | Common Stock  
|                                                   |  | Value            |     | $.01 Par Value
|                                                   |  |                  |     |               
|                                                   |  | Shares           |     | Par            |  | Shares |   | Par
|                                                   |  |                  |     |                |  |        |   |    
|Balance, December 31, 2001                         |  |                  | 3.0 |                |  | $      |  |     |  |  | 276.6 |  |  | $ | 2.8 | 
|Accreted dividends on preferred stock              |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|Accretion of discount on preferred stock           |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|Comprehensive loss:                                |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|Net loss for the three months ended
March 31, 2002 |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|Currency translation adjustment                    |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|Unrealized net losses on investments               |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|Unrealized net losses on derivatives               |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|Total                                              |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|                                                   |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 
|Balance, March 31, 2002                            |  |                  | 3.0 |                |  | $      |  |     |  |  | 276.6 |  |  | $ | 2.8 | 
|                                                   |  |                  |     |                |  |        |   |     |  |  |       |  |  |   |     | 

5



---



##### Table of Contents



NTL Incorporated and Subsidiaries
Condensed Consolidated Statement of Shareholders (Deficiency)
(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, 2001                         |       | $ | 13,720.0   |   |               |   |             |        |             | $ | (1,042.5           | ) |           | $ | (15.3      | ) |            | $ | (15.0 | ) |  | $ | (19,192.4 | )
|Accreted dividends on preferred stock              |       |   | (87.9      | ) |               |   |             |        |             |   |                    |   |           |   |            |   |            |   |       |   |  |   |           |  
|Accretion of discount on preferred stock           |       |   | (10.5      | ) |               |   |             |        |             |   |                    |   |           |   |            |   |            |   |       |   |  |   |           |  
|Comprehensive loss:                                |       |   |            |   |               |   |             |        |             |   |                    |   |           |   |            |   |            |   |       |   |  |   |           |  
|Net loss for the three months ended
March 31, 2002 |       |   |            |   |               | $ | (600.2      | )      |             |   |                    |   |           |   |            |   |            |   |       |   |  |   | (600.2    | )
|Currency translation adjustment                    |       |   |            |   |               |   | (74.9       | )      |             |   | (74.9              | ) |           |   |            |   |            |   |       |   |  |   |           |  
|Unrealized net losses on investments               |       |   |            |   |               |   | 0.3         |        |             |   |                    |   |           |   | 0.3        |   |            |   |       |   |  |   |           |  
|Unrealized net losses on derivatives               |       |   |            |   |               |   | (1.1        | )      |             |   |                    |   |           |   |            |   |            |   | (1.1  | ) |  |   |           |  
|                                                   |       |   |            |   |               |   |             |        |             |   |                    |   |           |   |            |   |            |   |       |   |  |   |           |  
|                                                   | Total |   |            |   |               |   | $           | (675.9 | )           |   |                    |   |           |   |            |   |            |   |       |   |  |   |           |   | 
|                                                   |       |   |            |   |               |   |             |        |             |   |                    |   |           |   |            |   |            |   |       |   |  |   |           |  
|Balance, March 31, 2002                            |       | $ | 13,621.6   |   |               |   |             |        |             | $ | (1,117.4           | ) |           | $ | (15.0      | ) |            | $ | (16.1 | ) |  | $ | (19,792.6 | )
|                                                   |       |   |            |   |               |   |             |        |             |   |                    |   |           |   |            |   |            |   |       |   |  |   |           |  

See accompanying notes.

6



---



##### Table of Contents



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

|                                                                        |  |                    |        |      |  |   |        |  
|----------------------------------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                                                        |  | Three Months Ended
|                                                                        |  | March 31,         
|                                                                        |  |                   
|                                                                        |  | 2002               |        | 2001
|                                                                        |  |                    |        |     
|Net cash (used in) operating activities                                 |  | $                  | (43.2  | )    |  | $ | (78.7  | )
|Investing activities                                                    |  |                    |        |      |  |   |        |  
|Purchase of fixed assets                                                |  |                    | (231.2 | )    |  |   | (600.7 | )
|Investment in and loans to affiliates                                   |  |                    | (11.2  | )    |  |   | (75.0  | )
|Increase in other assets                                                |  |                    | (6.7   | )    |  |   | (47.0  | )
|Proceeds from sales of assets                                           |  |                    | 8.9    |      |  |   |       |  
|Purchase of marketable securities                                       |  |                    | (14.1  | )    |  |   |       |  
|Proceeds from sales of marketable securities                            |  |                    |       |      |  |   | 60.3   |  
|                                                                        |  |                    |        |      |  |   |        |  
|Net cash (used in) investing activities                                 |  |                    | (254.3 | )    |  |   | (662.4 | )
|Financing activities                                                    |  |                    |        |      |  |   |        |  
|Proceeds from borrowings, net of financing costs                        |  |                    | 430.4  |      |  |   | 618.1  |  
|Principal payments                                                      |  |                    | (0.9   | )    |  |   | (82.2  | )
|Proceeds from exercise of stock options and warrants                    |  |                    |       |      |  |   | 10.1   |  
|                                                                        |  |                    |        |      |  |   |        |  
|Net cash provided by financing activities                               |  |                    | 429.5  |      |  |   | 546.0  |  
|Effect of exchange rate changes on cash                                 |  |                    | (5.2   | )    |  |   | (16.3  | )
|                                                                        |  |                    |        |      |  |   |        |  
|Increase (decrease) in cash and cash equivalents                        |  |                    | 126.8  |      |  |   | (211.4 | )
|Cash and cash equivalents at beginning of period                        |  |                    | 481.8  |      |  |   | 579.4  |  
|                                                                        |  |                    |        |      |  |   |        |  
|Cash and cash equivalents at end of period                              |  | $                  | 608.6  |      |  | $ | 368.0  |  
|                                                                        |  |                    |        |      |  |   |        |  
|Supplemental disclosure of cash flow information                        |  |                    |        |      |  |   |        |  
|Cash paid during the year for interest exclusive of amounts capitalized |  | $                  | 231.7  |      |  | $ | 203.6  |  
|Income taxes paid                                                       |  |                    |       |      |  |   | 2.2    |  
|Supplemental schedule of noncash financing activities                   |  |                    |        |      |  |   |        |  
|Accretion of dividends and discount on preferred stock                  |  | $                  | 98.4   |      |  | $ | 31.2   |  
|Conversion of Convertible Notes                                         |  |                    |       |      |  |   | 128.3  |  

See accompanying notes.

7



---



##### Table of Contents



NTL Incorporated and Subsidiaries
Notes to Condensed Financial Statements

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 months
ended March 31, 2002 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2002. 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, 2001.

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

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 March 31, 2002 and 2001, the Company had 173.2 million and 124.8 million
shares, respectively, issuable upon the exercise of stock options and warrants
and the conversion of debt and preferred stock.

Note B  Recapitalization Process and Ability to Continue Operations

On May 8, 2002, NTL Incorporated, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. filed an arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code (referred to as the
proposed recapitalization plan). NTLs operating subsidiaries were not
included in the Chapter 11 filing. Toward the end of 2001, while the Company
continued to have sufficient liquidity to meet its near term obligations, it
recognized the negative impact of the collapsing European and U.S.
telecommunications markets on its ability to service its debt. Accordingly,
the Company began to implement a strategy to preserve and maximize its
enterprise value. This strategy included the implementation of cost-cutting
measures and the commencement of discussions with certain third parties
regarding strategic alternatives for NTLs business.

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

In addition, the Companys UK credit
facilities are fully drawn. The revolving
tranche of the Cablecom credit facility has been capped at its utilized amount
of CHF 1,055.0 million although the availability may be increased with the
consent of the requisite majority of the lenders under that facility. The term
tranche of the Cablecom credit facility is fully drawn. NTL Communications
Corp., a wholly-owned indirect subsidiary of the Company, did not pay cash
interest on certain series of its notes that was due on April 1, 2002, April
15, 2002 and May 15, 2002. NTL Incorporated and NTL (Delaware), Inc. also did
not pay cash interest and related fees on a series of their notes that was due
on April 15, 2002. In accordance with the proposed recapitalization plan, NTL
does not plan to make future interest payments on its outstanding publicly
traded notes except notes issued by NTL Triangle and Diamond Holdings Limited.

8



---



##### Table of Contents



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

Note B  Recapitalization Process and Ability to Continue Operations
(continued)

As of March 31, 2002, the Company had approximately $622.7 million in cash,
cash equivalents and marketable securities on hand and, in April 2002,
received approximately $306 million net cash proceeds from the sale of its
Australian business. The Company may require additional cash in the twelve months from
April 1, 2002 to March 31, 2003. The Company expects to obtain a DIP Facility
(as described below) to meet the potential cash requirements of the Company and
its subsidiaries, excluding Cablecom. The Company also expects that the DIP
Facility will be replaced with an exit facility for NTL Communications Corp.
and its subsidiaries upon the completion of the recapitalization process. The
Company believes that cash, cash equivalents and marketable securities on hand
at March 31, 2002, the cash received from the sale of NTL Australia and the
cash expected to be available from the DIP Facility and the exit facility will
be sufficient for its and its subsidiaries cash requirements during the twelve
months from April 1, 2002 to March 31, 2003.

Beginning in January 2002, NTL was contacted by an unofficial committee of bondholders regarding the commencement of a comprehensive and
consensual restructuring process. NTL has been informed that the members of
the unofficial steering committee of bondholders currently own, in the
aggregate, more than 50% of the outstanding principal amount of NTLs notes.
In connection with the restructuring process, the steering committee
of the unofficial committee
of bondholders retained advisors to facilitate the negotiations.

On January 31, 2002, NTL announced that it had appointed Credit Suisse First
Boston, JP Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen its balance sheet and reduce debt
and put an appropriate capital structure in place for its business.
Subsequently, NTL evaluated various recapitalization alternatives, and met with
a number of strategic investors, to effect a comprehensive consensual
reorganization in a timely manner to minimize negative effects on its business
operations. Discussions with such strategic investors did not result in a
proposal which NTLs board of directors believed was comparable or superior to
the value provided to its stakeholders by the proposed plan of reorganization.

Liberty Media Corporation, one of such potential strategic investors, which is
also a significant shareholder in Telewest plc, another British cable and
telephone company, has discussed various transactions with NTL from time to
time over the past several years. In March 2002, Liberty and NTL amended a
previously existing confidentiality agreement between them to cover the
restructuring process and to include a standstill agreement which prohibited
various acquisitions of, or offers, for NTL debt or equity securities by
Liberty and its subsidiaries until June 30, 2002.

On April 17, 2002, Liberty sent a proposal to NTLs board of directors, which
proposed a cash tender offer for 30% of the outstanding bonds of NTL
Communications Corp. at a small premium to the prevailing market price and an
agreement to vote such acquired bonds in favor of the proposed plan of
reorganization, as well as a participation with NTL in a cash infusion of up
to $500 million into Cablecom. After consultation with NTLs board of
directors and the steering committee of bondholders on April 18,
2002, NTL indicated to Liberty that it did not consider the Liberty proposal to
be in the best interests of NTL and that the best course of action for NTL to
maximize its enterprise value was to promptly consummate the proposed plan of
reorganization. Subsequent to April 18, 2002, Liberty has continued
discussions with NTL with respect to Cablecom.

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities, in March 2002, NTL commenced negotiations with the
steering committee of the unofficial
committee of bondholders and its legal and financial advisors. The
negotiations continued during the latter part of March and throughout April
2002, and also included France Telecom. On April 16, 2002, the Company
announced that it had reached a comprehensive agreement in principle
with the committee (holding over 50% of the face
value of NTL and its subsidiaries public bonds) and France Telecom, a
significant holder of the Companys preferred stock, on implementing a
recapitalization plan. On May 2, 2002, a steering committee of the lending
banks under the Companys credit facilities gave their approval in principle
(on a non-legally binding basis) to the Companys proposed plan of
reorganization.

The recapitalization plan, if implemented, would result in the cancellation of
all of NTL Incorporateds outstanding shares of common stock, preferred stock and redeemable
preferred stock, and the cancellation of all of the publicly held notes of NTL
Incorporated, NTL (Delaware), Inc. and NTL Communications Corp. and
the transfer of the publicly held notes of Diamond Cable
Communications Limited to NTL UK and Ireland. In addition, the
Company would be discharged from its
obligation to pay dividends accruing on the canceled preferred stock
and interest accruing on the canceled notes.

9



---



##### Table of Contents



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

Note B  Recapitalization Process and Ability to Continue Operations
(continued)

To implement the proposed recapitalization, on
May 8, 2002, NTL Incorporated,
NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp. filed
cases and a pre-arranged joint reorganization plan under Chapter 11 of the United States
Bankruptcy Code. NTLs operating subsidiaries were not included in the Chapter
11 filing. The reorganization plan contemplates that the bank debt will
remain in place as part of the recapitalization. On May 24, 2002, NTL and its
debtor subsidiaries filed an amended joint reorganization plan and disclosure
statement. The bankruptcy court has scheduled July 12, 2002 for a hearing to
consider approval of the amended joint reorganization plan and disclosure
statement. A copy of the Amended Joint Reorganization Plan of NTL Incorported
and Certain Subsidiaries and the related Disclosure Statement are included as
exhibits to NTL Incorporateds Current Report on Form 8-K filed on May 28,
2002.

The filing of the petitions seeking relief filed under Chapter 11 constituted an event of
default under the indentures of each of the entities which filed such Chapter
11 petitions and amounts outstanding under these indentures became immediately
due and payable. The Companys Chapter 11 petitions also constituted an event
of default under the Companys UK credit facilities and the Cablecom credit
facility, allowing the lenders thereunder to declare amounts outstanding to be
immediately payable.

In connection with the proposed joint reorganization plan, certain members of
the unofficial committee of bondholders have committed to provide up to $500
million of new debt financing to the Company and certain of its subsidiaries
during the Chapter 11 process and for the post-recapitalized Company, subject
to bankruptcy court approval. The new financing will ensure that the Companys
business operations have access to sufficient liquidity to continue ordinary
operations. The bankruptcy court has set June 19, 2002 as the date to consider
approval of the DIP Facility, which has been agreed in principle with the
Company and the prospective lenders under the facility.

Recapitalization expense of $45.8 million in 2002 includes $8.8 million for
employee retention related to substantially all of our UK employees and $37.0
million for financial advisor, legal, accounting and consulting costs. We
expect to incur approximately $50.0 million in additional recapitalization
costs until we complete the process.

Proposed Recapitalization Plan

Under the proposed recapitalization plan, NTL would be split into two
companies, one tentatively called NTL UK and Ireland and holding substantially
all of NTLs UK and Ireland assets, and one tentatively called NTL Euroco and
holding substantially all of NTLs continental European and other assets.

Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), NTL Communications Corp. and
Diamond Cable Communications Limited would in the aggregate receive 100% of the
initial common stock of NTL UK and Ireland (excluding shares issuable in the
rights offerings and upon the exercise of warrants (discussed below) and upon
the exercise of options which will be granted to certain employees of NTL UK
and Ireland). Holders of notes of NTL Incorporated (other than France
Telecom), NTL (Delaware), Inc. (other than France Telecom) and NTL
Communications Corp. would in the aggregate receive (i) 100% of the preferred
stock of NTL Euroco and (ii) a certain amount of cash as specified in the
amended joint reorganization plan. Holders of the subordinated notes of NTL
Incorporated (other than France Telecom), NTL (Delaware), Inc. (other than
France Telecom) and NTL Communications Corp. would in the aggregate receive
86.5% of the initial common stock of NTL Euroco (excluding shares issuable upon
the exercise of options which will be granted to certain employees of NTL
Euroco). Holders of senior notes of NTL Communications Corp. would receive the
value of a specified number of shares of common stock of NTL Euroco pursuant to
the amended joint reorganization plan. Notes of the Companys subsidiaries
Diamond Holdings Limited and NTL (Triangle) LLC would remain outstanding and
interest payments will be made.

10



---



##### Table of Contents



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

Note B  Recapitalization Process and Ability to Continue Operations
(continued)

Current preferred and common stockholders of NTL Incorporated, including France
Telecom, would receive warrants to purchase common stock of NTL UK and Ireland
and rights (to be priced at a $10.5 billion enterprise value of NTL UK and
Ireland) entitling them to purchase common stock of NTL UK and Ireland. For
each share of common stock purchase upon exercise of rights, the person
exercising such rights will receive a warrant to purchase one share of common
stock of NTL UK and Ireland. The rights will be exercisable, on an
oversubscription basis, for the 20-business day period after the entry of the
confirmation order, as such period may be extended, and the warrants will be
exercisable for a period of eight years at an exercise price of $77.47 per
share, subject to anti-dilution adjustments. If fully exercised, the rights
and warrants would entitle the current preferred stockholders of NTL
Incorporated to acquire approximately 23.6% and the current common stockholders
of NTL Incorporated to acquire approximately 8.9% of NTL UK and Irelands
primary common stock on the effective date of the recapitalization. Holders of
the subordinated notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), and NTL Communications Corp.
would have the right to purchase any shares of NTL UK and Ireland common stock
and warrants not subscribed for in the rights offering by the preferred and
common stockholders of NTL Incorporated.

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

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

Section 1129 of the United States Bankruptcy Code requires, among other things, a
showing that confirmation of the proposed recapitalization plan will not be
followed by liquidation or the need for further financial reorganization of NTL
Incorporated, NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications Limited or Diamond Holdings Limited, and that the value of
distributions to dissenting holders of claims and interests may not be less
than the value such holders would receive in a liquidation under Chapter 7 of
the United States Bankruptcy Code. Although the Company believes that the proposed
recapitalization plan will meet these tests, there can be no assurance that the
Bankruptcy Court will reach the same conclusion.

The United States Bankruptcy Code also requires that a plan must provide the same
treatment for each claim or interest in a particular class, unless a holder
agrees to a less favorable treatment of its particular claim or interest. The
Company believes that the proposed recapitalization plan complies with this
requirement of the United States Bankruptcy Code. However, if a member of a class
objects to its treatment, or if the Bankruptcy Court finds that the proposed
recapitalization plan does not comply with the requirements of the United States
Bankruptcy Code, confirmation of the plan could be delayed or prevented. In
addition, each class of impaired claims and interests that will (or may) be
entitled to receive property under the plan will have the opportunity to vote
to accept or reject the plan. If an impaired class of claims or interests
rejects the plan, the Company may request confirmation of the plan pursuant to
the cramdown provisions of the United States Bankruptcy Code. Even if the
requirements for cramdown are met, the Bankruptcy Court, which, as a court of
equity may exercise substantial discretion, may choose not to confirm the plan.

Bank Waivers

Before the Company could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under the
Companys credit facilities. Effective March 8, 2002, these lenders granted
waivers which, until March 29, 2002, provided that the commencement of
negotiations with bondholders with a view to rescheduling its debt would not
constitute an event of default under the credit facilities. Such initial
waivers did not permit NTL to make to any of its noteholders an exchange or
similar offer for NTLs outstanding public notes or to enter into a legally
binding agreement with the unofficial steering committee of bondholders,
subject to some exceptions, without the consent of the lenders under the credit
facilities. But for the initial waivers, the commencement of negotiations with
bondholders would have been an event of default under the credit facilities.

11



---



##### Table of Contents



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

Note B  Recapitalization Process and Ability to Continue Operations
(continued)

Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14, 2002 in the case of the Cablecom credit facility, unless
the interest payments missed by NTL Communications Corp. on April 1, 2002 were
remedied or a sufficient number of bondholders agreed to forbear in respect of
such non-payment, in which case, the UK credit facilities waivers were to be
extended to May 14, 2002. As a condition to the amendment to the initial
waivers, the UK lenders required NTL Delaware to loan £90 million to NTL (UK)
Group, Inc. following receipt of the proceeds from the sale of NTL Australia.
Such loan was actually made (with the approval of the lenders under the UK
credit facilities) to NTL (UK) Group, Inc. and then on-lent to certain
subsidiaries of NTL (UK) Group, Inc. This loan, which was made on April 5,
2002, is structurally senior to the outstanding public notes issued by NTL
Communications Corp. and contractually senior to intra-group debt owed by NTL
(UK) Group, Inc. to NTL Communications Corp. but contractually subordinated to
the UK credit facilities. In connection with the amendments to the waivers, NTL
affirmed the provisions of the initial waivers and agreed, among other things,
not to commence voluntary dissolution proceedings, including proceedings under
Chapter 11 of the United States Bankruptcy Code, without the consent of these
lenders.

As of the date of this Form 10-Q, there are no current waivers from the
Companys secured lenders and NTL is therefore in default under its UK credit
facilities and the Cablecom credit facility. In connection with the proposed
recapitalization plan, it is intended that the existing events of default under
the credit facilities will be cured by amendment with effect from the effective
date of the recapitalization, if it is approved by creditors and the bankruptcy
court. On May 2, 2002, a memorandum was executed by the Company, a steering
committee of its lending banks and the unofficial committee of its public
bondholders indicating the parties agreement in principle (on a non-legally
binding basis) to the terms of the proposed recapitalization and the terms on
which the Companys UK credit facilities should be amended and restated and
with respect to certain matters relating to the sale of, or investment in,
Cablecom.

Cablecom GmbH is the principal trading company of our Swiss group. There were a
number of technical defaults under the Swiss credit facility made available to
Cablecom and various of its subsidiaries. In addition, as of December 31, 2001,
Cablecoms and various of its subsidiaries liabilities exceeded their
respective assets. As a consequence, under Swiss law, those entities were
deemed to be overindebted. This also constituted an event of default under
the Cablecom credit facility which entitled the lenders to accelerate
repayment. Such an acceleration would have resulted in an event of default
under NTL Incorporateds and NTL Delawares 5.75% convertible subordinated
notes due 2011 and 5.75% convertible subordinated notes due 2009. Under Swiss
law, unless the overindebtedness was rectified those entities would have been
required to commence an insolvency proceeding in Switzerland.

On April 30, 2002, Cablecom reached an agreement with the lenders under the
Cablecom credit facility which, together with the implementation of an
intra-group transaction, resolved its overindebtedness. The agreement included
a waiver by the lenders of various additional covenant breaches under the
credit facility. Temporary measures have also been put in place which mean that
Cablecoms overindebted subsidiaries do not have to institute insolvency
proceedings. It is intended to permanently resolve the problem of
overindebtedness in certain of the subsidiaries by merging them into Cablecom
or another member of the Cablecom group. Other overindebted subsidiaries will
remain unmerged and it is planned to obviate any requirement to institute
insolvency proceedings in respect of these companies in another way. If these
solutions are not implemented by June 30, 2002, there will be an additional
event of default under the Cablecom credit facility. The Company expects to
complete these actions within this time-frame.

12



---



##### Table of Contents



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

Note B  Recapitalization Process and Ability to Continue Operations
(continued)

Interest Payments on Public Notes

The Company and its subsidiaries have substantial interest payment obligations
under their existing indebtedness. NTL Communications Corp. did not make
scheduled interest payments due April 1, 2002, in the aggregate amount of $74.2
million, in respect of its 9 1/2% notes due 2008, 11 1/2% notes due 2008 and 11
7/8% notes due 2010. NTL Communications Corp. also did not make interest payments
falling due on April 15, 2002, totaling $17.7 million, in respect of the 12
3/4% Senior Deferred Coupon Notes due 2005 and NTL Incorporated and NTL
Delaware did not make interest payments and payment of related fees falling due
on April 15, 2002, totaling $2.5 million, in respect of their 5 3/4%
Convertible Subordinated Notes due 2011. In addition, NTL Communications Corp.
did not make the scheduled interest payments due May 15, 2002 in the aggregate
amount of $65.0 million, in respect of its 9 1/4% notes due 2006, 6 3/4% notes
due 2008 and 9 7/8% notes due 2009. Interest payments of $18.9 million were
made, when due, on April 2, 2002 in respect of Diamond Cable Communications
13.25% senior discount notes due 2004. In accordance with the proposed
recapitalization plan, NTL does not plan to make future interest payments on
its outstanding publicly traded notes except notes issued by NTL Triangle and
Diamond Holdings Limited.

If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. An event of
default entitles the trustee under the indenture or the holders of 25% of the
outstanding notes to declare the principal amount of those notes to be
immediately due and payable. Even if the maturity of those notes is not
accelerated after the 30 day grace period, such an event of default would also
result in an event of default in respect of other debt (commonly called cross
defaults) under most of our other notes. Therefore, there was an event of
default for failure to pay interest on May 1, 2002 under the indentures
relating to the missed interest payments due April 1, 2002 and on May 16, 2002,
under the indentures relating to the missed interest payments due April 15,
2002. As a result, cross defaults occurred under the Companys other
indentures at NTL Communications, NTL Delaware, NTL Incorporated and under our
UK credit facilities and under the Cablecom credit facility. This gave holders
of the outstanding series of debt at these entities the right to accelerate
repayment of those debts by declaring the principal amount of the debts to be
immediately due and payable. As a result of the payment defaults as well as
the Companys voluntary filing under Chapter 11 of the United States Bankruptcy
Code on May 8, 2002, there is an event of default under all of our credit
facilities and the indentures governing all of our publicly traded debt, other
than debt of NTL Triangle. As a result of the Chapter 11 filings, all of our
publicly traded debts, other than the debt of NTL Triangle, became immediately
due and payable, pursuant to the terms of the indentures governing such debt.
The automatic stay of Section 362 of the United States Bankruptcy Code prevents
the holders of such debt from seeking to enforce their collection rights under
the indentures, except within the context of the Chapter 11 cases, and even
then only with the prior approval of the bankruptcy court. However, NTL has
received letters from the agents for the lenders under the UK credit facilities
reserving such lenders rights to accelerate repayment of the facilities and to
enforce the security granted in respect of the facilities on account of the
defaults thereunder, actions which would not be prohibited by the automatic
stay.

Inability to Pay Dividends On or Redeem Preferred Stock

The Company failed to declare or pay dividends due
February 15, 2002 on its 13%
Senior Redeemable Exchangeable Preferred Stock in the amount of $6.0 million. In
addition, on May 15, 2002, the Company failed to declare or pay dividends on
its 13% Senior Redeemable Exchangeable Preferred Stock in the amount of $6.2
million. The Company did not pay dividends on its 5% cumulative participating
convertible preferred stock held by France Telecom on December 31, 2001 of
$37.0 million and March 31, 2002 of $37.5 million, or on its cumulative
convertible preferred stock held by France Telecom and a group of commercial
banks on December 31, 2001 of $24.9 million and March 26, 2002 of $24.1
million. Historically, payment of dividends has been made in additional shares
of preferred stock in the case of the 13% preferred stock, the 5% cumulative
participating preferred stock and the cumulative convertible preferred stock.
The Company did not pay these dividends due to a lack of available surplus
under Delaware law. Under Delaware law, the Company cannot declare or pay
dividends on or redeem its capital stock, including its preferred stock, unless
it has available surplus.

Pursuant to the terms of the 13% preferred stock, the unpaid dividends will
continue to accrue without interest until declared and paid. Pursuant to the
terms of the 5% cumulative convertible preferred stock and the cumulative
convertible preferred stock, the unpaid dividends will continue to accrue
without interest until declared and paid, together with an additional cash
dividend on the amount so unpaid at a rate of 2% per quarter for as long as the
dividends remain unpaid. The failure to declare these dividends is not a
default under any of the Companys existing agreements. With respect to the 13%
preferred stock and 5% cumulative convertible preferred stock, if dividends
remain unpaid for six quarters, the holders of each such series shall have the
right to vote separately as a class on all matters voted on by NTL Incorporated
shareholders and shall have the right, along with other holders of

13



---



##### Table of Contents



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

Note B  Recapitalization Process and Ability
to Continue Operations (continued)

preferred stock with similar default voting rights, to elect two additional
directors to the Companys board.

In addition, the lack of surplus meant that the Company was not able to redeem
its Variable Coupon Redeemable Preferred Stock, Series A, which is referred to
as the Noos One Year Preferred, held by France Telecom, when it became
mandatorily redeemable on May 18, 2002. Because the Company failed to redeem
the Noos One Year Preferred on May 18, 2002, pursuant to the certificate of
designation governing the Noos One Year Preferred, the holders of such
preferred stock have the right, along with other holders of preferred stock
with similar default voting rights, to elect two additional directors to the
Companys board and shall have the right to vote separately as a class, on all
matters brought to NTL Incorporated shareholders.

At the time of issuance of the Noos One Year Preferred, the Company pledged its
shares of Noos to France Telecom to secure the mandatory redemption obligation
under the Noos One Year Preferred and the 6.5% Redeemable Preferred Stock. As
part of the amended joint reorganization plan and pursuant to this pledge, the
Company will transfer its 27% interest in Noos to France Telecom.

Credit Rating Downgrades

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

Delisting of NTL Incorporated Common Stock

On March 28, 2002, the New York Stock Exchange (NYSE) announced that it was
suspending NTLs common stock from trading on the NYSE. This determination was
based upon, among other things, the selling price of NTLs common stock, which
closed at $0.20 on March 26, 2002. The continued listing standards of the
NYSE, which were applicable to NTL, required maintenance of a minimum share
price of $1.00 over a 30 trading day period and average global market
capitalization of $100 million over a 30 trading day period. NTLs common
stock fell below both of these continued listing standards. In addition, on
May 9, 2002, Nasdaq Europe halted trading of the NTLs common stock pending
receipt of information relating to the restructuring process because of the
filing of NTLs Chapter 11 cases. NTL has complied with this information
request, although there can be no assurance that Nasdaq Europe will (1) not
make additional information requests, (2) remove the trading halt on shares of
NTLs common stock or (3) not delist shares of NTLs common stock. NTLs
common stock is currently quoted on the Over the Counter Bulletin Board under
the symbol NTLDE. The E on the symbol
NTLDE was appended for failure to
timely file this quarterly report. NTL expects that this designation will be
dropped shortly after filing this report and the symbol will return to NTLD.

Sale of NTL Australia

On April 2, 2002, the Company announced that it had completed the previously
announced sale of its Australian broadcast business to Macquarie Communications
Infrastructure Holding Pty Limited for A$850 million (US$448 million) in an all
cash transaction. The net proceeds from the sale were approximately A$581
million (US$306 million). At that time, the business bank debt outstanding
totaled A$227 million (US$120 million).

On April 5, 2002, NTL Delaware loaned
£90 million to NTL (UK) Group Inc.,
which loan was funded by the proceeds of the sale of NTL Australia. This loan
is subordinated to the Companys UK credit facilities. The remaining proceeds
of the sale of NTL Australia remain at NTL Delaware, and the proposed plan of
reorganization anticipates that such proceeds will form a portion of the
consideration to be offered to bondholders of NTL Delaware and NTL Incorporated
in satisfaction of their claims against those companies.

Potential Sale of, or Outside Investment in, Cablecom

It has been agreed to engage UBS
Warburg LLC by August 31, 2002 to advise in connection with an outside
investment in, or sale of all or part of, Cablecom. As part of this process,
NTL (Delaware), Inc. and certain of its subsidiaries have agreed to approve any
such outside investment or sale, which is acceptable to the lenders under the
Cablecom credit facility.

It has also been agreed that if such a sale of all or part of Cablecom is
consummated on or before August 31, 2003, the lenders under the Cablecom credit
facility will be entitled to receive additional interest equal to 20% of the
net proceeds of such a sale after repayment of the amounts outstanding under
the Cablecom credit facility and other expenses and taxes of the sale. There
can be no assurance that any outside investment in, or sale of all or part of,
Cablecom pursuant to the Cablecom credit facility will be on terms that are
favorable to NTL and such investment or sale could have a material adverse
effect on NTLs finances and business.

14



---



##### Table of Contents



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

Note B - Recapitalization
Process and Ability to Continue Operations (continued)

In particular, in the current environment, NTLs shareholding in Cablecom may
have little or no value, which may result in NTL receiving little or no
consideration for its equity interest in Cablecom.

Further, if a third party makes an investment in Cablecom there can be no
assurance that NTL will be able to maintain its ability to direct the
management of Cablecom.

Uncertainty Related to Suppliers

The uncertainty over the Companys financial condition may adversely affect its
relationships with its suppliers. If the Companys suppliers become
increasingly concerned about its financial condition, they may demand quicker
payment terms or not extend normal trade credit, both of which could further
adversely affect its results of operations, financial condition and cash flows.

Note C  Sale of Australia

On April 2, 2002, the Company announced that it had completed the previously
announced sale of its Australian broadcast business to Macquarie Communications
Infrastructure Holding Pty Limited for A$850 million (US$448 million) in an all
cash transaction. The net proceeds from the sale after the repayment of the
outstanding bank credit facility and transaction related costs were
approximately A$581 million (US$306 million). The Company recognized a gain on
the sale of approximately US$15 million in April 2002. NTL Australia is
accounted for as a discontinued operation, and accordingly, NTL Australia is
excluded from assets and liabilities of continuing operations at March 31, 2002
and December 31, 2001 and from results of continuing operations for the three
months ended March 31, 2002 and 2001.

15



---



##### Table of Contents



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

Note C  Sale of Australia (continued)

The following is the condensed assets, liabilities and results of operations of
NTL Australia (unaudited except at December 31, 2001):

|                        |                           |   |               |       |              |   |       |       | 
|----------------------- | ------------------------- | - | ------------- | ----- | ------------ | - | ----- | ----- | 
|                        |                           |   | March 31,     |       | December 31,
|                        |                           |   | 2002          |       | 2001        
|                        |                           |   |               |       |             
|                        |                           |   | (in millions)
|Current assets          |                           | $ | 20.0          |       |              | $ | 32.0  |      
|Fixed assets, net       |                           |   | 243.2         |       |              |   | 235.2 |      
|Other assets            |                           |   | 142.5         |       |              |   | 137.8 |      
|                        |                           |   |               |       |              |   |       |      
|                        | NTL Australia assets      |   | $             | 405.7 |              |   | $     | 405.0 | 
|                        |                           |   |               |       |              |   |       |      
|Current liabilities     |                           | $ | 57.8          |       |              | $ | 71.0  |      
|Non current liabilities |                           |   | 135.3         |       |              |   | 111.9 |      
|                        |                           |   |               |       |             
|                        | NTL Australia liabilities |   | $             | 193.1 |              |   | $     | 182.9 | 
|                        |                           |   |               |       |              |   |       |      

|                        |  |                              |      |      |  |   |      |  
|----------------------- |  | ---------------------------- | ---- | ---- |  | - | ---- | -
|                        |  | Three Months Ended March 31,
|                        |  |                             
|                        |  | 2002                         |      | 2001
|                        |  |                              |      |     
|                        |  | (in millions)               
|Revenues                |  | $                            | 17.4 |      |  | $ | 14.6 |  
|Operating income (loss) |  |                              | 0.3  |      |  |   | (2.5 | )
|Net income (loss)       |  |                              | 0.2  |      |  |   | (0.5 | )

Note D  Recent Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, effective for the Company on
January 1, 2002. This Statement superceded SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
and other related accounting guidance. The adoption of this new standard had no
significant effect on the results of operations, financial condition or cash
flows of the Company, except that it required the Company to treat NTL
Australia as a discontinued operation beginning in the first quarter of 2002.

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

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

16



---



##### Table of Contents



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

Note D  Recent Accounting Pronouncements (continued)

The following table shows the Companys loss from continuing operations and its
basic and diluted loss from continuing operations per share as adjusted for the
adoption of SFAS No. 142, had SFAS No. 142 been in effect on January 1, 2001
(unaudited) (in millions, except per share data).

|                                                                   |                                |   |                              |       |      |   |          |       |  
|------------------------------------------------------------------ | ------------------------------ | - | ---------------------------- | ----- | ---- | - | -------- | ----- | -
|                                                                   |                                |   | Three Months Ended March 31,
|                                                                   |                                |   |                             
|                                                                   |                                |   | 2002                         |       | 2001
|                                                                   |                                |   |                              |       |     
|(Loss) from continuing operations  as reported                    |                                | $ | (600.4                       | )     |      | $ | (1,042.4 | )    
|Amortization of:                                                   |                                |   |                              |       |      |   |          |      
|                                                                   | Goodwill                       |   |                              |      |      |   |          | 366.4 |  
|                                                                   | License acquisition costs      |   |                              |      |      |   |          | 18.8  |  
|                                                                   | Other                          |   |                              |      |      |   |          | 2.7   |  
|                                                                   |                                |   |                              |       |      |   |          |      
|                                                                   |                                |   |                             |       |      |   | 387.9    |      
|                                                                   |                                |   |                              |       |      |   |          |      
|(Loss) from continuing operations  as adjusted                    |                                | $ | (600.4                       | )     |      | $ | (654.5   | )    
|                                                                   |                                |   |                              |       |      |   |          |      
|Basic and diluted net (loss) from continuing
operations per share: |                                |   |                              |       |      |   |          |      
|                                                                   | As reported                    |   | $                            | (2.53 | )    |   | $        | (4.04 | )
|                                                                   | Amortization expense reduction |   |                              |      |      |   |          | 1.42  |  
|                                                                   |                                |   |                              |       |      |   |          |      
|                                                                   | As adjusted                    |   | $                            | (2.53 | )    |   | $        | (2.62 | )
|                                                                   |                                |   |                              |       |      |   |          |      

Note E  Fixed Assets

Fixed assets consist of:

|                         |  |               |          |              |  |   |          |  
|------------------------ |  | ------------- | -------- | ------------ |  | - | -------- | -
|                         |  | March 31,     |          | December 31,
|                         |  | 2002          |          | 2001        
|                         |  |               |          |             
|                         |  | (unaudited)   |          |              |  |  
|                         |  | (in millions)
|Operating equipment      |  | $             | 13,060.7 |              |  | $ | 13,312.2 |  
|Other equipment          |  |               | 975.1    |              |  |   | 997.6    |  
|Construction-in-progress |  |               | 1,412.3  |              |  |   | 1,270.4  |  
|                         |  |               |          |              |  |   |          |  
|                         |  |               | 15,448.1 |              |  |   | 15,580.2 |  
|Accumulated depreciation |  |               | (3,535.2 | )            |  |   | (3,242.1 | )
|                         |  |               |          |              |  |   |          |  
|                         |  | $             | 11,912.9 |              |  | $ | 12,338.1 |  
|                         |  |               |          |              |  |   |          |  

Depreciation expense (including amortization of assets held under capital
leases) for the three months ended March 31, 2002 and 2001 was $362.9 million
and $331.3 million, respectively.

17



---



##### Table of Contents



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

Note F  Intangible Assets

Intangible assets consist of:

|                                                                                              |  |               |         |              |  |   |         | 
|--------------------------------------------------------------------------------------------- |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                                                                              |  | March 31,     |         | December 31,
|                                                                                              |  | 2002          |         | 2001        
|                                                                                              |  |               |         |             
|                                                                                              |  | (unaudited)   |         |              |  |  
|                                                                                              |  | (in millions)
|Intangible assets not subject to amortization:                                                |  |               |         |              |  |   |         | 
|Goodwill, net of accumulated amortization of
$60.3 (2002) and $61.1 (2001)                    |  | $             | 1,598.8 |              |  | $ | 1,619.4 | 
|License acquisition costs, net of accumulated
amortization of $122.5 (2002) and $125.2 (2001) |  |               | 55.2    |              |  |   | 54.7    | 
|Intangible assets subject to amortization:                                                    |  |               |         |              |  |   |         | 
|Customer lists, net of accumulated amortization of
$186.5 (2002) and $169.3 (2001)            |  |               | 146.1   |              |  |   | 168.8   | 
|Other intangibles, net of accumulated
amortization of $4.4 (2002) and $4.5 (2001)             |  |               | 6.7     |              |  |   | 6.9     | 
|                                                                                              |  |               |         |              |  |   |         | 
|                                                                                              |  | $             | 1,806.8 |              |  | $ | 1,849.8 | 
|                                                                                              |  |               |         |              |  |   |         | 

Amortization of intangible and other assets charged to expense for the three
months ended March 31, 2002 and 2001 was
$32.7 million and $423.9 million, respectively.

Note G  Investments in and Loans to Affiliates

The Company has investments in various companies and joint ventures which are
accounted for under either the equity method or the cost method. The Companys
significant equity investments include its 27% interest in Noos S.A., the
market leading French broadband company, which offers analog and digital cable
television, high speed Internet and telephone services, its 34.01% interest in
Svenska Bredbandsbolaget (B2), a company based in Sweden, which provides
always on, low cost access to a high-capacity broadband network that provides
transmission, both to and from the customer, at the same speed and at the same
time, and its 50% interest in eKabel InvestCo, which owns 65% of iesy Hessen
GmbH (iesy), the largest cable television network in the German province of Hessen.

There can be no assurance that iesy will meet the conditions precedent to
access additional funds under its credit facility or that it will be in
compliance with the covenants under its debt agreements. The failure of iesy
to obtain required funding or a default entitling the lenders to accelerate
repayment of iesys borrowings would adversely affect the value of NTLs
investment in iesy.

In addition, on April 15, 2002, a funding request for $20 million was received
by NTL under the terms of the investment agreement relating to NTLs investment
in B2. NTL has informed B2 and the other principal investors that it is not in
a position to comply with this request at this time. The B2 investment
agreement provides that if NTL fails to provide such funding, it may be sued
for non-payment and arguably could lose certain rights under the B2
shareholders arrangements. Pursuant to the applicable documents, if this
occurs the majority remaining shareholders may also elect to terminate the
shareholder arrangements with respect to NTL and exercise a contractual right
to acquire on a pro rata basis NTLs interest in B2 at 25% of fair market
value. If the remaining shareholders elected to exercise these rights, NTL
could be forced to sell its stake in B2 at a loss.

The Company believes, however, that it has certain defenses and protections of
and for NTLs rights under the B2 investment agreement and in respect of its
equity interest in B2 and intends to vigorously enforce such rights and
protections.

Premium TV Limited, a wholly-owned subsidiary of NTL (Delaware), Inc., is
obliged to provide funding of up to approximately £73.1 million ($104.2
million) to fund certain of its joint venture interests. Of this amount, the
payment of approximately £53.5 million ($76.2 million) has been guaranteed by
NTL (Delaware), Inc. If Premium TV Limited fails to provide its committed
funding under the relevant shareholder arrangements relating to these joint
ventures, Premium TV Limited and, in respect of the guaranteed amounts, NTL
(Delaware), Inc., may be sued for non-payment. As a result of the
recapitalization process, the relevant joint venture partners may assert that
they can compulsorily acquire Premium TV Limiteds interest in the relevant
joint venture at a third party appraisal valuation. The Company believes,
however, that it has various defenses and protections under the U.S.

18



---



##### Table of Contents



Note G  Investments in and Loans to
Affiliates

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

Bankruptcy Code against such actions and intends to enforce vigorously its
rights and protections.

NTL Incorporated has also guaranteed the obligations of one of its subsidiaries
to provide funding of up to approximately £9.2 million ($13.1 million) to two
joint ventures whose businesses are the provision of programming content. If
the relevant subsidiary fails to provide such funding, under the shareholder
arrangements relating to these joint ventures, such subsidiary may be sued for
damages. In addition, under the shareholder arrangements relating to one of
those joint ventures, the relevant joint venture partner may have the option to
compulsorily acquire the Companys indirect interest in the relevant joint
venture at 70% of fair market value, resulting in the Company selling its
indirect interest at a potential loss. The Company believes that it has various
defenses and protections under the U.S. Bankruptcy Code against such actions
and intends to enforce vigorously its rights and protections.

The Company intends to negotiate with these joint venture partners to address
these issues. There can be no guaranty that these negotiations will be
successful and that the Company will be able to retain its current interest in
these joint venture companies.

19



---



##### Table of Contents



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

Note G  Investments in and Loans to Affiliates (continued)

The Companys investments in and loans to affiliates are as follows:

|                         |  |                |       |                   |  |                       |       |         |  |  |       |   |  |   |       | 
|------------------------ |  | -------------- | ----- | ----------------- |  | --------------------- | ----- | ------- |  |  | ----- | - |  | - | ----- | 
|                         |  | March 31, 2002 |       | December 31, 2001
|                         |  |                |       |                  
|                         |  | Ownership      |       | Balance           |  | Ownership             |       | Balance
|                         |  |                |       | (unaudited)       |  |                       |       |        
|                         |  |                |       |                   |  | (dollars in millions) |       |         |  | 
|Noos                     |  |                | 27.00 | %                 |  | $                     | 32.6  |         |  |  | 27.00 | % |  | $ | 47.0  | 
|B2                       |  |                | 34.01 | %                 |  |                       | 78.5  |         |  |  | 34.01 | % |  |   | 92.5  | 
|iesy                     |  |                | 32.50 | %                 |  |                       | 61.3  |         |  |  | 32.50 | % |  |   | 73.0  | 
|Others                   |  |                |       |                   |  |                       | 55.2  |         |  |  |       |   |  |   | 52.8  | 
|                         |  |                |       |                   |  |                       |       |         |  |  |       |   |  |   |       | 
|Total equity investments |  |                |       |                   |  |                       | 227.6 |         |  |  |       |   |  |   | 265.3 | 
|Total cost investments   |  |                |       |                   |  |                       | 6.9   |         |  |  |       |   |  |   | 7.1   | 
|                         |  |                |       |                   |  |                       |       |         |  |  |       |   |  |   |       | 
|Total                    |  |                |       |                   |  | $                     | 234.5 |         |  |  |       |   |  | $ | 272.4 | 
|                         |  |                |       |                   |  |                       |       |         |  |  |       |   |  |   |       | 

A summary of combined financial information as reported by the Companys equity
investees is set forth below:

|                                           |  |               |         |              |  |   |         | 
|------------------------------------------ |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                           |  | March 31,     |         | December 31,
|                                           |  | 2002          |         | 2001        
|                                           |  |               |         |             
|                                           |  | (unaudited)   |         |              |  |  
|                                           |  | (in millions)
|Current assets                             |  | $             | 427.2   |              |  | $ | 495.5   | 
|Fixed assets, net                          |  |               | 885.4   |              |  |   | 910.9   | 
|Other assets                               |  |               | 2,398.4 |              |  |   | 2,690.0 | 
|                                           |  |               |         |              |  |   |         | 
|Total assets                               |  | $             | 3,711.0 |              |  | $ | 4,096.4 | 
|                                           |  |               |         |              |  |   |         | 
|Current liabilities                        |  | $             | 325.6   |              |  | $ | 366.3   | 
|Non current liabilities                    |  |               | 1,418.7 |              |  |   | 1,445.4 | 
|Total shareholders equity                 |  |               | 1,966.7 |              |  |   | 2,284.7 | 
|                                           |  |               |         |              |  |   |         | 
|Total liabilities and shareholders equity |  | $             | 3,711.0 |              |  | $ | 4,096.4 | 
|                                           |  |               |         |              |  |   |         | 

|                 |  |                              |        |      |  |   |        |  
|---------------- |  | ---------------------------- | ------ | ---- |  | - | ------ | -
|                 |  | Three Months Ended March 31,
|                 |  |                             
|                 |  | 2002                         |        | 2001
|                 |  |                              |        |     
|                 |  | (unaudited)                  |        |      |  |  
|                 |  | (in millions)               
|Revenues         |  | $                            | 121.0  |      |  | $ | 58.9   |  
|Operating (loss) |  |                              | (91.6  | )    |  |   | (87.5  | )
|Net (loss)       |  |                              | (122.5 | )    |  |   | (117.8 | )

20



---



##### Table of Contents



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

Note H  Long-Term Debt

Long-term debt consists of:

|                            |                                                         |   |               |         |              |   |          |         | 
|--------------------------- | ------------------------------------------------------- | - | ------------- | ------- | ------------ | - | -------- | ------- | 
|                            |                                                         |   | March 31,     |         | December 31,
|                            |                                                         |   | 2001          |         | 2001        
|                            |                                                         |   |               |         |             
|                            |                                                         |   | (unaudited)   |         |              |   |         
|                            |                                                         |   | (in millions)
|NTL Incorporated:           |                                                         |   |               |         |              |   |          |        
|                            | 5 3/4% Convertible Subordinated Notes                   |   | $             | 100.0   |              |   | $        | 100.0   | 
|NTL Delaware:               |                                                         |   |               |         |              |   |          |        
|                            | 5 3/4% Convertible Subordinated Notes                   |   |               | 1,200.0 |              |   |          | 1,200.0 | 
|Cablecom:                   |                                                         |   |               |         |              |   |          |        
|                            | Term Loan Facility                                      |   |               | 1,605.2 |              |   |          | 1,626.8 | 
|                            | Revolving Facility                                      |   |               | 520.2   |              |   |          | 527.2   | 
|                            | Other                                                   |   |               | 6.1     |              |   |          | 6.2     | 
|NTL Communications:         |                                                         |   |               |         |              |   |          |        
|                            | 12 3/4% Senior Deferred Coupon Notes                    |   |               | 277.8   |              |   |          | 277.8   | 
|                            | 11 1/2% Senior Deferred Coupon Notes                    |   |               | 1,050.0 |              |   |          | 1,050.0 | 
|                            | 10% Senior Notes                                        |   |               | 400.0   |              |   |          | 400.0   | 
|                            | 9 1/2% Senior Sterling Notes, less unamortized discount |   |               | 177.7   |              |   |          | 181.4   | 
|                            | 10 3/4% Senior Deferred Coupon Sterling Notes           |   |               | 384.5   |              |   |          | 382.3   | 
|                            | 9 3/4% Senior Deferred Coupon Notes                     |   |               | 1,181.4 |              |   |          | 1,153.8 | 
|                            | 9 3/4% Senior Deferred Coupon Sterling Notes            |   |               | 387.2   |              |   |          | 385.9   | 
|                            | 11 1/2% Senior Notes                                    |   |               | 625.0   |              |   |          | 625.0   | 
|                            | 12 3/8% Senior Deferred Coupon Notes                    |   |               | 375.8   |              |   |          | 364.9   | 
|                            | 7% Convertible Subordinated Notes                       |   |               | 489.8   |              |   |          | 489.8   | 
|                            | 9 1/4% Senior Euro Notes                                |   |               | 217.9   |              |   |          | 222.5   | 
|                            | 9 7/8% Senior Euro Notes                                |   |               | 305.1   |              |   |          | 311.5   | 
|                            | 11 1/2% Senior Deferred Coupon Euro Notes               |   |               | 136.5   |              |   |          | 135.6   | 
|                            | 11 7/8% Senior Notes, less unamortized discount         |   |               | 491.0   |              |   |          | 490.7   | 
|                            | 12 3/8% Senior Euro Notes, plus unamortized premium     |   |               | 262.2   |              |   |          | 267.8   | 
|                            | 6 3/4% Convertible Senior Notes                         |   |               | 1,150.0 |              |   |          | 1,150.0 | 
|NTL Communications Limited: |                                                         |   |               |         |              |   |          |        
|                            | Senior Credit Facility                                  |   |               | 3,968.4 |              |   |          | 4,050.0 | 
|                            | Working Capital Facility                                |   |               | 581.8   |              |   |          | 145.4   | 
|                            | Other                                                   |   |               | 57.4    |              |   |          | 58.6    | 
|NTL Triangle:               |                                                         |   |               |         |              |   |          |        
|                            | 11.2% Senior Discount Debentures                        |   |               | 517.3   |              |   |          | 517.3   | 
|                            | Other                                                   |   |               | 3.8     |              |   |          | 4.5     | 
|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                           |   |               | 420.5   |              |   |          | 415.1   | 
|                            | 10% Senior Sterling Notes                               |   |               | 192.4   |              |   |          | 196.3   | 
|                            | 9 1/8% Senior Notes                                     |   |               | 110.0   |              |   |          | 110.0   | 
|                            | Other                                                   |   |               | 6.0     |              |   |          | 3.6     | 
|                            |                                                         |   |               |         |              |   |          |        
|                            |                                                         |   | 18,017.1      |         |              |   | 17,666.1 |        
|Less current portion        |                                                         |   | 18,017.1      |         |              |   | 17,666.1 |        
|                            |                                                         |   |               |         |              |   |          |        
|                            |                                                         | $ |              |         |              | $ |         |        
|                            |                                                         |   |               |         |              |   |          |        

21



---



##### Table of Contents



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

Note H  Long-Term Debt (continued)

See Note B for discussion of the events of default and uncertainties about
compliance with the terms and conditions of the Companys debt. The holders of
the debt have the right to accelerate repayment, or may have such right, which
has caused all of the Companys long-term debt to be classified as current.
The automatic stay of Section 362 of the United States Bankruptcy Code prevents the
holders of such debt from seeking to enforce their collection rights under the
indentures, except within the context of the Chapter 11 cases, and even then
only with the prior approval of the bankruptcy court. However, NTL
has received letters from the agents for the lenders under the UK
credit facilities reserving such lenders rights to accelerate
repayment of the facilities and to enforce the security granted in
respect of the facilities on account of the defaults thereunder,
actions which would not be prohibited by the automatic stay.

The effective interest rates on the Companys variable interest rate debt were
as follows:

|                            |                          |               |  |           |              |      |  |      |      |  
|--------------------------- | ------------------------ | ------------- |  | --------- | ------------ | ---- |  | ---- | ---- | -
|                            |                          |               |  | March 31, | December 31,
|                            |                          |               |  | 2002      |              | 2001
|                            |                          |               |  |           |              |     
|Cablecom:                   |                          |               |  |           |              |      |  |     
|                            | Term Loan Facility       |               |  | 4.30      | %            |      |  | 5.27 | %   
|                            | Revolving Facility       |               |  | 4.25      | %            |      |  | 5.49 | %   
|NTL Communications Limited: |                          |               |  |           |              |      |  |     
|                            | Senior Credit Facility   |               |  | 6.16      | %            |      |  | 6.73 | %   
|                            |                          | Term Facility |  |           | 7.66         | %    |  |      | 8.06 | %
|                            | Working Capital Facility |               |  | 10.15     | %            |      |  | 9.57 | %   

On April 30, 2002, the Cablecom Term Loan Facility and Revolving Facility were
restated. In May 2002, Cablecom borrowed an additional CHF 180.0 million
($107.0 million) under the Revolving Facility. The maturity date for both facilities was
changed to April 30, 2003 in the restatement. The interest and commitment fee
provisions were not changed. The Revolving Facility has been capped
at its utilized amount of CHF 1,055.0 million, although the
availability may be increased with the consent of the requisite
majority of the lenders under that facility.

Note I  Redeemable Preferred Stock

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

|                                                       |  |     |         |          |  |      |        |             |  |   |        |  |  |   |           | 
|------------------------------------------------------ |  | --- | ------- | -------- |  | ---- | ------ | ----------- |  | - | ------ |  |  | - | --------- | 
|                                                       |  | 13% |         | Variable |  | 6.5% |        | Convertible
|                                                       |  |     |         |          |  |      |        |            
|Shares at December 31, 2001                            |  |     | 184,000 |          |  |      | 48,000 |             |  |   | 12,000 |  |  |   | 1,850,000 | 
|Issued for dividends                                   |  |     |        |          |  |      |       |             |  |   |       |  |  |   |          | 
|                                                       |  |     |         |          |  |      |        |             |  |   |        |  |  |   |           | 
|Shares at March 31, 2002                               |  |     | 184,000 |          |  |      | 48,000 |             |  |   | 12,000 |  |  |   | 1,850,000 | 
|                                                       |  |     |         |          |  |      |        |             |  |   |        |  |  |   |           | 
|Liquidation preference at March 31, 2002 (in millions) |  | $   | 192.9   |          |  | $    | 498.8  |             |  | $ | 129.0  |  |  | $ | 2,063.5   | 
|                                                       |  |     |         |          |  |      |        |             |  |   |        |  |  |   |           | 

Note J  Other Charges including Restructuring Charges

Other charges of $2.6 million in 2002 include restructuring charges of $1.6
million and costs incurred for information technology integration and for
business rationalization consulting of $1.0 million. Other charges of $7.4
million in 2001 were for information technology integration and for business
rationalization consulting.

The Company recorded restructuring charges in the fourth quarter of 2001 as a
result of actions to reorganize, re-size and reduce operating costs and create
greater efficiency in various areas of the Company. These charges included
employee severance and related costs for approximately 5,400 employees to be
terminated, of which approximately 600 employees were still employed by the
Company as of March 31, 2002.

22



---



##### Table of Contents



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

Note J  Other Charges including Restructuring Charges (continued)

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

|                           |  |             |       |       |  |               |      |       |  |   |      |   |  |   |       |  
|-------------------------- |  | ----------- | ----- | ----- |  | ------------- | ---- | ----- |  | - | ---- | - |  | - | ----- | -
|                           |  | Employee    |       |       |  |               |      |       |  |   |      |   |  |  
|                           |  | Severance   |       | Lease |  |               |      |       |  |   |      |  
|                           |  | And Related |       | Exit  |  | Agreement     |      |       |  |  
|                           |  | Costs       |       | Costs |  | Modifications |      | Total
|                           |  |             |       |       |  |               |      |      
|                           |  |             |       |       |  | (in millions) |      |       |  |  
|Balance, December 31, 2001 |  | $           | 79.3  |       |  | $             | 33.5 |       |  | $ | 27.7 |   |  | $ | 140.5 |  
|Charged to expense         |  |             | 1.6   |       |  |               |     |       |  |   |     |   |  |   | 1.6   |  
|Utilized                   |  |             | (68.5 | )     |  |               | (5.3 | )     |  |   | (5.6 | ) |  |   | (79.4 | )
|                           |  |             |       |       |  |               |      |       |  |   |      |   |  |   |       |  
|Balance, March 31, 2002    |  | $           | 12.4  |       |  | $             | 28.2 |       |  | $ | 22.1 |   |  | $ | 62.7  |  
|                           |  |             |       |       |  |               |      |       |  |   |      |   |  |   |       |  

Note K  Comprehensive Loss

The Companys comprehensive loss for the three months ended March 31, 2002 and
2001 was $675.9 million and $1,330.2 million, respectively.

Note L  Commitments and Contingent Liabilities

At March 31, 2002, the Company was committed to pay approximately $1,518.2
million for equipment and services and for investments in and loans to
affiliates. This amount includes approximately $1,158.3 million for operations
and maintenance contracts and other commitments from April 1, 2003 to 2013.

The Company has agreed to provide funds to its unconsolidated affiliates
generally if and when requested to do so and only upon the satisfaction of
certain conditions. The estimated aggregate amount as of March 31, 2002 was
$72.4 million. These unconsolidated affiliates include the media partnerships
with the Football League and with various UK football clubs for Internet
marketing and sponsorships. The Companys wholly-owned indirect subsidiary,
Premium TV Limited, has entered into these football related partnerships.

NTL Incorporated and certain of its officers have been named as defendants in a
number of purported securities class action lawsuits. The complaints in those
cases generally allege that NTL failed to accurately disclose its financial
condition, finances and future prospects in press releases and other
communications with investors prior to filing its Chapter 11 case in federal
court. NTL does not know of any facts that would support these allegations,
and intends to defend the lawsuits vigorously.

The Company is involved in certain other 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.

23



---



##### Table of Contents



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

Note M  Segment Data

|                                  |  |           |         |          |  |          |          |        |  |               |         |  |  |   |        |   |  |   |          | 
|--------------------------------- |  | --------- | ------- | -------- |  | -------- | -------- | ------ |  | ------------- | ------- |  |  | - | ------ | - |  | - | -------- | 
|                                  |  | Broadcast |         | Consumer |  | Business |          | Shared |  | Total        
|                                  |  |           |         |          |  |          |          |        |  |              
|                                  |  |           |         |          |  |          |          |        |  | (in millions) |         |  |  |   |        |   |  |  
|Three Months Ended March 31, 2002 |  |           |         |          |  |          |          |        |  |               |         |  |  |   |        |   |  |   |          | 
|Revenues                          |  | $         | 70.0    |          |  | $        | 608.4    |        |  | $             | 215.6   |  |  | $ |       |   |  | $ | 894.0    | 
|EBITDA(1)                         |  |           | 35.8    |          |  |          | 217.2    |        |  |               | 80.7    |  |  |   | (87.8  | ) |  |   | 245.9    | 
|Three Months Ended March 31, 2001 |  |           |         |          |  |          |          |        |  |               |         |  |  |   |        |   |  |   |          | 
|Revenues                          |  | $         | 68.1    |          |  | $        | 610.9    |        |  | $             | 201.2   |  |  | $ |       |   |  | $ | 880.2    | 
|EBITDA(1)                         |  |           | 32.4    |          |  |          | 135.0    |        |  |               | 59.8    |  |  |   | (107.9 | ) |  |   | 119.3    | 
|Total assets                      |  |           |         |          |  |          |          |        |  |               |         |  |  |   |        |   |  |   |          | 
|March 31, 2002(2)                 |  | $         | 1,199.3 |          |  | $        | 10,941.7 |        |  | $             | 3,247.4 |  |  | $ | 906.0  |   |  | $ | 16,294.4 | 
|December 31, 2001(3)              |  |           | 1,206.8 |          |  |          | 11,400.2 |        |  |               | 3,289.7 |  |  |   | 941.8  |   |  |   | 16,838.5 | 



|(1) |  | Represents earnings before interest, taxes, depreciation and
amortization, recapitalization expense, other charges, corporate expenses,
share of (losses) from equity investments, foreign currency transaction
(losses) and income (loss) from discontinued operations. Segment EBITDA
in 2001 has been reclassified to conform to the current year presentation.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | At March 31, 2002, shared assets included $427.0 million of cash, cash
equivalents and marketable securities, $0.1 million of goodwill and $478.9
million of other assets.                                                                                                                                                                                        
|   
|(3) |  | At December 31, 2001, shared assets included $318.0 million of cash and
cash equivalents, $0.1 million of goodwill and $623.7 million of other
assets.                                                                                                                                                                                                            

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

|                                                     |                                         |   |                              |       |      |   |          |       |  
|---------------------------------------------------- | --------------------------------------- | - | ---------------------------- | ----- | ---- | - | -------- | ----- | -
|                                                     |                                         |   | Three Months Ended March 31,
|                                                     |                                         |   |                             
|                                                     |                                         |   | 2002                         |       | 2001
|                                                     |                                         |   |                              |       |     
|                                                     |                                         |   | (in millions)               
|Segment combined EBITDA                              |                                         | $ | 245.9                        |       |      | $ | 119.3    |      
|(Add) deduct:                                        |                                         |   |                              |       |      |   |          |      
|                                                     | Recapitalization expense                |   |                              | 45.8  |      |   |          |      |  
|                                                     | Other charges                           |   |                              | 2.6   |      |   |          | 7.4   |  
|                                                     | Corporate expenses                      |   |                              | 13.6  |      |   |          | 12.5  |  
|                                                     | Depreciation and amortization           |   |                              | 395.6 |      |   |          | 755.2 |  
|                                                     | Interest income and other, net          |   |                              | (15.1 | )    |   |          | (9.0  | )
|                                                     | Interest expense                        |   |                              | 371.9 |      |   |          | 355.1 |  
|                                                     | Share of losses from equity investments |   |                              | 48.9  |      |   |          | 42.9  |  
|                                                     | Foreign currency transaction losses     |   |                              | 5.0   |      |   |          | 13.7  |  
|                                                     |                                         |   |                              |       |      |   |          |      
|                                                     |                                         |   | 868.3                        |       |      |   | 1,177.8  |      
|                                                     |                                         |   |                              |       |      |   |          |      
|Loss before income taxes and
discontinued operations |                                         | $ | (622.4                       | )     |      | $ | (1,058.5 | )    
|                                                     |                                         |   |                              |       |      |   |          |      

24



---



##### Table of Contents



NTL Incorporated and Subsidiaries






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

Liquidity and Capital Resources

Recapitalization Process and Ability to Continue Operations

On May 8, 2002, NTL Incorporated, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. filed an arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code (referred to as the
proposed recapitalization plan). NTLs operating subsidiaries were not
included in the Chapter 11 filing. Toward the end of 2001, while the Company
continued to have sufficient liquidity to meet its near term obligations, it
recognized the negative impact of the collapsing European and U.S.
telecommunications markets on its ability to service its debt. Accordingly,
the Company began to implement a strategy to preserve and maximize its
enterprise value. This strategy included the implementation of cost-cutting
measures and the commencement of discussions with certain third parties
regarding strategic alternatives for NTLs business.

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

In addition, the Companys UK credit facilities are fully drawn. The revolving
tranche of the Cablecom credit facility has been capped at its utilized amount
of CHF 1,055.0 million although the availability may be increased with the
consent of the requisite majority of the lenders under that facility. The term
tranche of the Cablecom credit facility is fully drawn. NTL Communications
Corp., a wholly-owned indirect subsidiary of the Company, did not pay cash
interest on certain series of its notes that was due on April 1, 2002, April
15, 2002 and May 15, 2002. NTL Incorporated and NTL (Delaware), Inc. also did
not pay cash interest and related fees on a series of their notes that was due
on April 15, 2002. In accordance with the proposed recapitalization plan, NTL
does not plan to make future interest payments on its outstanding publicly
traded notes except notes issued by NTL Triangle and Diamond Holdings Limited.

As of March 31, 2002, the Company had approximately $622.7 million in
cash, cash equivalents and marketable securities on hand and, in April 2002,
received approximately $306 million net cash proceeds from the sale of its
Australian business. The Company may require additional cash in the twelve months from
April 1, 2002 to March 31, 2003. The Company expects to obtain a DIP Facility
(as described below) to meet the potential cash requirements of the Company and
its subsidiaries, excluding Cablecom. The Company also expects that the DIP
Facility will be replaced with an exit facility for NTL Communications Corp.
and its subsidiaries upon the completion of the recapitalization process. The
Company believes that cash, cash equivalents and marketable securities on hand
at March 31, 2002, the cash received from the sale of NTL Australia and the
cash expected to be available from the DIP Facility and the exit facility will
be sufficient for its and its subsidiaries cash requirements during the twelve
months from April 1, 2002 to March 31, 2003.

Beginning in January 2002, NTL was contacted by an unofficial committee of bondholders regarding the commencement of a comprehensive and
consensual restructuring process. NTL has been informed that the members of
the unofficial steering committee of bondholders currently own, in the
aggregate, more than 50% of the outstanding principal amount of NTLs notes.
In connection with the restructuring process, the steering committee
of the unofficial committee
of bondholders retained advisors to facilitate the negotiations.

On January 31, 2002, NTL announced that it had appointed Credit Suisse First
Boston, JP Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen its balance sheet and reduce debt
and put an appropriate capital structure in place for its business.
Subsequently, NTL evaluated various recapitalization alternatives, and met with
a number of strategic

25



---



##### Table of Contents



NTL Incorporated and Subsidiaries

investors, to effect a comprehensive consensual reorganization in a timely
manner to minimize negative effects on its business operations. Discussions
with such strategic investors did not result in a proposal which NTLs board of
directors believed was comparable or superior to the value provided to its
stakeholders by the proposed plan of reorganization.

Liberty Media Corporation, one of such potential strategic investors, which is
also a significant shareholder in Telewest plc, another British cable and
telephone company, has discussed various transactions with NTL from time to
time over the past several years. In March 2002, Liberty and NTL amended a
previously existing confidentiality agreement between them to cover the
restructuring process and to include a standstill agreement which prohibited
various acquisitions of, or offers, for NTL debt or equity securities by
Liberty and its subsidiaries until June 30, 2002.

26



---



##### Table of Contents



NTL Incorporated and Subsidiaries

On April 17, 2002, Liberty sent a proposal to NTLs board of directors, which
proposed a cash tender offer for 30% of the outstanding bonds of NTL
Communications Corp. at a small premium to the prevailing market price and an
agreement to vote such acquired bonds in favor of the proposed plan of
reorganization, as well as a participation with NTL in a cash infusion of up
to $500 million into Cablecom. After consultation with NTLs board of
directors and the steering committee of bondholders on April 18,
2002, NTL indicated to Liberty that it did not consider the Liberty proposal to
be in the best interests of NTL and that the best course of action for NTL to
maximize its enterprise value was to promptly consummate the proposed plan of
reorganization. Subsequent to April 18, 2002, Liberty has continued
discussions with NTL with respect to Cablecom.

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities, in March 2002, NTL commenced negotiations with the
steering committee of the unofficial
committee of bondholders and its legal and financial advisors. The
negotiations continued during the latter part of March and throughout April
2002, and also included France Telecom. On April 16, 2002, the Company
announced that it had reached a comprehensive agreement in principle
with the committee (holding over 50% of the face
value of NTL and its subsidiaries public bonds) and France Telecom, a
significant holder of the Companys preferred stock, on implementing a
recapitalization plan. On May 2, 2002, a steering committee of the lending
banks under the Companys credit facilities gave their approval in principle
(on a non-legally binding basis) to the Companys proposed plan of
reorganization.

The recapitalization plan, if implemented, would result in the cancellation of
all of NTL Incorporateds outstanding shares of common stock, preferred stock and redeemable
preferred stock, and the cancellation of all of the publicly held notes of NTL
Incorporated, NTL (Delaware), Inc. and NTL Communications Corp. and
the transfer of the publicly held notes of Diamond Cable
Communications Limited to NTL UK and Ireland. In addition, the
Company would be discharged from its
obligation to pay dividends accruing on the canceled preferred stock
and interest accruing on the canceled notes.

During the recapitalization process, it is anticipated that NTLs operations
will continue uninterrupted, customer service will be unaffected, suppliers
will be paid in the ordinary course and NTLs management will remain in place.

To implement the proposed recapitalization, on
May 8, 2002, NTL Incorporated,
NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding
Corp. filed cases and a pre-arranged joint reorganization plan under
Chapter 11 of the United States
Bankruptcy Code. NTLs operating subsidiaries were not included in the Chapter
11 filing. The reorganization plan contemplates that the bank debt will
remain in place as part of the recapitalization. On May 24, 2002, NTL and its
debtor subsidiaries filed an amended joint reorganization plan and disclosure
statement. The bankruptcy court has scheduled July 12, 2002 for a hearing to
consider approval of the amended joint reorganization plan and disclosure
statement. A copy of the Amended Joint Reorganization Plan of NTL Incorporated
and Certain Subsidiaries and the related Disclosure Statement are included as
exhibits to NTL Incorporateds Current Report on Form 8-K filed on May 28,
2002.

The filing of the petitions seeking relief filed under Chapter 11 constituted an event of
default under the indentures of each of the entities which filed such Chapter
11 petitions and amounts outstanding under these indentures became immediately
due and payable. The Companys Chapter 11 petitions also constituted an event
of default under the Companys UK credit facilities and the Cablecom credit
facility, allowing the lenders thereunder to declare amounts outstanding to be
immediately payable.

In connection with the proposed joint reorganization plan, certain members of
the unofficial committee of bondholders have committed to provide up to $500
million of new debt financing to the Company and certain of its subsidiaries
during the Chapter 11 process and for the post-recapitalized Company, subject
to bankruptcy court approval. The new financing will ensure that the Companys
business operations have access to sufficient liquidity to continue ordinary
operations. The bankruptcy court has set June 19, 2002 as the date to consider
approval of the DIP Facility, which has been agreed in principle with the
Company and the prospective lenders under the facility.

Proposed Recapitalization Plan

Under the proposed recapitalization plan, NTL would be split into two
companies, one tentatively called NTL UK and Ireland and holding substantially
all of NTLs UK and Ireland assets, and one tentatively called NTL Euroco and
holding substantially all of NTLs continental European and other assets.

Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), NTL Communications Corp. and
Diamond Cable Communications Limited would in the aggregate receive 100% of the
initial common stock of NTL UK and Ireland (excluding shares issuable in the
rights offerings and upon the exercise of warrants (discussed below) and upon
the exercise of options which will be granted to certain employees of NTL UK
and Ireland). Holders of notes of NTL

27



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Incorporated (other than France Telecom), NTL (Delaware), Inc. (other than
France Telecom) and NTL Communications Corp. would in the aggregate receive (i)
100% of the preferred stock of NTL Euroco and (ii) a certain amount of cash as
specified in the amended joint reorganization plan. Holders of the
subordinated notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom) and NTL Communications Corp. would
in the aggregate receive 86.5% of the initial common stock of NTL Euroco
(excluding shares issuable upon the exercise of options which will be granted
to certain employees of NTL Euroco). Holders of senior notes of NTL
Communications Corp. would receive the value of a specified number of shares of
common stock of NTL Euroco pursuant to the amended joint reorganization plan.
Notes of the Companys subsidiaries Diamond Holdings Limited and NTL (Triangle)
LLC would remain outstanding and interest payments will be made.

Current preferred and common stockholders of NTL Incorporated, including France
Telecom, would receive warrants to purchase common stock of NTL UK and Ireland
and rights (to be priced at a $10.5 billion enterprise value of NTL UK and
Ireland) entitling them to purchase common stock of NTL UK and Ireland. For
each share of common stock purchase upon exercise of rights, the person
exercising such rights will receive a warrant to purchase one share of common
stock of NTL UK and Ireland. The rights will be exercisable, on an
oversubscription basis, for the 20-business day period after the entry of the
confirmation order, as such period may be extended, and the warrants will be
exercisable for a period of eight years at an exercise price of $77.47 per
share, subject to anti-dilution adjustments. If fully exercised, the rights
and warrants would entitle the current preferred stockholders of NTL
Incorporated to acquire approximately 23.6% and the current common stockholders
of NTL Incorporated to acquire approximately 8.9% of NTL UK and Irelands
primary common stock on the effective date of the recapitalization. Holders of
the subordinated notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), and NTL Communications Corp.
would have the right to purchase any shares of NTL UK and Ireland common stock
and warrants not subscribed for in the rights offering by the preferred and
common stockholders of NTL Incorporated.

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

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

Section 1129 of the United States Bankruptcy Code requires, among other things, a
showing that confirmation of the proposed recapitalization plan will not be
followed by liquidation or the need for further financial reorganization of NTL
Incorporated, NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications Limited or Diamond Holdings Limited, and that the value of
distributions to dissenting holders of claims and interests may not be less
than the value such holders would receive in a liquidation under Chapter 7 of
the United States Bankruptcy Code. Although the Company believes that the proposed
recapitalization plan will meet these tests, there can be no assurance that the
Bankruptcy Court will reach the same conclusion.

The United States Bankruptcy Code also requires that a plan must provide the same
treatment for each claim or interest in a particular class, unless a holder
agrees to a less favorable treatment of its particular claim or interest. The
Company believes that the proposed recapitalization plan complies with this
requirement of the United States Bankruptcy Code. However, if a member of a class
objects to its treatment, or if the Bankruptcy Court finds that the proposed
recapitalization plan does not comply with the requirements of the United States
Bankruptcy Code, confirmation of the plan could be delayed or prevented. In
addition, each class of impaired claims and interests that will (or may) be
entitled to receive property under the plan will have the opportunity to vote
to accept or reject the plan. If an impaired class of claims or interests
rejects the plan, the Company may request confirmation of the plan pursuant to
the cramdown provisions of the United States Bankruptcy Code. Even if the
requirements for cramdown are met, the Bankruptcy Court, which, as a court of
equity may exercise substantial discretion, may choose not to confirm the plan.

There can be no assurance that we will successfully complete the proposed
recapitalization plan in a timely manner in order to sustain our operations.

Bank Waivers

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

28



---



##### Table of Contents



NTL Incorporated and Subsidiaries

constitute an event of default under the credit facilities. Such initial
waivers did not permit NTL to make to any of its noteholders an exchange or
similar offer for NTLs outstanding public notes or to enter into a legally
binding agreement with the unofficial steering committee of bondholders,
subject to some exceptions, without the consent of the lenders under the credit
facilities. But for the initial waivers, the commencement of negotiations with
bondholders would have been an event of default under the credit facilities.

Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14, 2002 in the case of the Cablecom credit facility, unless
the interest payments missed by NTL Communications Corp. on April 1, 2002 were
remedied or a sufficient number of bondholders agreed to forbear in respect of
such non- payment, in which case, the UK credit facilities waivers were to be
extended to May 14, 2002. As a condition to the amendment to the initial
waivers, the UK lenders required NTL Delaware to loan £90 million to NTL (UK)
Group, Inc. following receipt of the proceeds from the sale of NTL Australia.
Such loan was actually made (with the approval of the lenders under the UK
credit facilities) to NTL (UK) Group, Inc. and then on-lent to certain
subsidiaries of NTL (UK) Group, Inc. This loan, which was made on April 5,
2002, is structurally senior to the outstanding public notes issued by NTL
Communications Corp. and contractually senior to intra-group debt owed by NTL
(UK) Group, Inc. to NTL Communications Corp. but contractually subordinated to
the UK credit facilities. In connection with the amendments to the waivers, NTL
affirmed the provisions of the initial waivers and agreed, among other things,
not to commence voluntary dissolution proceedings, including proceedings under
Chapter 11 of the United States Bankruptcy Code, without the consent of these
lenders.

As of the date of this Form 10-Q, there are no current waivers from the
Companys secured lenders and NTL is therefore in default under its UK credit
facilities and the Cablecom credit facility. In connection with the proposed
recapitalization plan, it is intended that the existing events of default under
the credit facilities will be cured by amendment with effect from the effective
date of the recapitalization, if it is approved by creditors and the bankruptcy
court. On May 2, 2002, a memorandum was executed by the Company, a steering
committee of its lending banks and the unofficial committee of its public
bondholders indicating the parties agreement in principle (on a non-legally
binding basis) to the terms of the proposed recapitalization and the terms on
which the Companys UK credit facilities should be amended and restated and
with respect to certain matters relating to the sale of, or investment in,
Cablecom.

29



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Cablecom GmbH is the principal trading company of our Swiss group. There were a
number of technical defaults under the Swiss credit facility made available to
Cablecom and various of its subsidiaries. In addition, as of December 31, 2001,
Cablecoms and various of its subsidiaries liabilities exceeded their
respective assets. As a consequence, under Swiss law, those entities were
deemed to be overindebted. This also constituted an event of default under
the Cablecom credit facility which entitled the lenders to accelerate
repayment. Such an acceleration would have resulted in an event of default
under NTL Incorporateds and NTL Delawares 5.75% convertible subordinated
notes due 2011 and 5.75% convertible subordinated notes due 2009. Under Swiss
law, unless the overindebtedness was rectified those entities would have been
required to commence an insolvency proceeding in Switzerland.

On April 30, 2002, Cablecom reached an agreement with the lenders under the
Cablecom credit facility which, together with the implementation of an
intra-group transaction, resolved its overindebtedness. The agreement included
a waiver by the lenders of various additional covenant breaches under the
credit facility. Temporary measures have also been put in place which mean that
Cablecoms overindebted subsidiaries do not have to institute insolvency
proceedings. It is intended to permanently resolve the problem of
overindebtedness in certain of the subsidiaries by merging them into Cablecom
or another member of the Cablecom group. Other overindebted subsidiaries will
remain unmerged and it is planned to obviate any requirement to institute
insolvency proceedings in respect of these companies in another way. If these
solutions are not implemented by June 30, 2002, there will be an additional
event of default under the Cablecom credit facility. The Company expects to
complete these actions within this time-frame.

Interest Payments on Public Notes

The Company and its subsidiaries have substantial interest payment obligations
under their existing indebtedness. NTL Communications Corp. did not make
scheduled interest payments due April 1, 2002, in the aggregate amount of $74.2
million, in respect of its 9 1/2% notes due 2008, 11 1/2% notes due 2008 and 11
7/8% notes due 2010. NTL Communications also did not make interest payments
falling due on April 15, 2002, totaling $17.7 million, in respect of the 12
3/4% Senior Deferred Coupon Notes due 2005 and NTL Incorporated and NTL
Delaware did not make interest payments and payment of related fees falling due
on April 15, 2002, totaling $2.5 million, in respect of their 5 3/4%
Convertible Subordinated Notes due 2011. In addition, NTL Communications Corp.
did not make the scheduled interest payments due May 15, 2002 in the aggregate
amount of $65.0 million, in respect of its 9 1/4% notes due 2006, 6 3/4% notes
due 2008 and 9 7/8% notes due 2009. Interest payments of $18.9 million were
made, when due, on April 2, 2002 in respect of Diamond Cable Communications
13.25% senior discount notes due 2004. In accordance with the proposed
recapitalization plan, NTL does not plan to make future interest payments on
its outstanding publicly traded notes except notes issued by NTL Triangle and
Diamond Holdings Limited.

If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. An event of
default entitles the trustee under the indenture or the holders of 25% of the
outstanding notes to declare the principal amount of those notes to be
immediately due and payable. Even if the maturity of those notes is not
accelerated after the 30 day grace period, such an event of default would also
result in an event of default in respect of other debt (commonly called cross
defaults) under most of our other notes. Therefore, there was an event of
default for failure to pay interest on May 1, 2002 under the indentures
relating to the missed interest payments due April 1, 2002 and on May 16, 2002,
under the indentures relating to the missed interest payments due April 15,
2002. As a result, cross defaults occurred under the Companys other
indentures at NTL Communications, NTL Delaware, NTL Incorporated and under our
UK credit facilities and under the Cablecom credit facility. This gave holders
of the outstanding series of debt at these entities the right to accelerate
repayment of those debts by declaring the principal amount of the debts to be
immediately due and payable. As a result of the payment defaults as well as
the Companys voluntary filing under Chapter 11 of the United States Bankruptcy
Code on May 8, 2002, there is an event of default under all of our credit
facilities and the indentures governing all of our publicly traded debt, other
than debt of NTL Triangle. As a result of the Chapter 11 filings, all of our
publicly traded debts, other than the debt of NTL Triangle, became immediately
due and payable, pursuant to the terms of the indentures governing such debt.
The automatic stay of Section 362 of the United States Bankruptcy Code prevents
the holders of such debt from seeking to enforce their collection rights under
the indentures, except within the context of the Chapter 11 cases, and even
then only with the prior approval of the bankruptcy court. However, NTL has
received letters from the agents for the lenders under the UK credit facilities
reserving such lenders rights to accelerate repayment of the facilities and to
enforce the security granted in respect of the facilities on account of the
defaults thereunder, actions which would not be prohibited by the automatic
stay.

Inability to Pay Dividends On or Redeem Preferred Stock

The Company failed to declare or pay dividends due
February 15, 2002 on its 13%
Senior Redeemable Exchangeable Preferred Stock in the amount of $6.0 million. In
addition, on May 15, 2002, the Company failed to declare or pay dividends on
its 13%

30



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Senior Redeemable Exchangeable Preferred Stock in the amount of $6.2 million.
The Company did not pay dividends on its 5% cumulative participating
convertible preferred stock held by France Telecom on December 31, 2001 of
$37.0 million and March 31, 2002 of $37.5 million, or on its cumulative
convertible preferred stock held by France Telecom and a group of commercial
banks on December 31, 2001 of $24.9 million and March 26, 2002 of $24.1
million. Historically, payment of dividends has been made in additional shares
of preferred stock in the case of the 13% preferred stock, the 5% cumulative
participating preferred stock and the cumulative convertible preferred stock.
The Company did not pay these dividends due to a lack of available surplus
under Delaware law. Under Delaware law, the Company cannot declare or pay
dividends on or redeem its capital stock, including its preferred stock, unless
it has available surplus.

31



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Pursuant to the terms of the 13% preferred stock, the unpaid dividends will
continue to accrue without interest until declared and paid. Pursuant to the
terms of the 5% cumulative convertible preferred stock and the cumulative
convertible preferred stock, the unpaid dividends will continue to accrue
without interest until declared and paid, together with an additional cash
dividend on the amount so unpaid at a rate of 2% per quarter for as long as the
dividends remain unpaid. The failure to declare these dividends is not a
default under any of the Companys existing agreements. With respect to the 13%
preferred stock and 5% cumulative convertible preferred stock, if dividends
remain unpaid for six quarters, the holders of each such series shall have the
right to vote separately as a class on all matters voted on by NTL Incorporated
shareholders and shall have the right, along with other holders of preferred
stock with similar default voting rights, to elect two additional directors to
the Companys board.

In addition, the lack of surplus meant that the Company was not able to redeem
its Variable Coupon Redeemable Preferred Stock, Series A, which is referred to
as the Noos One Year Preferred, held by France Telecom, when it became
mandatorily redeemable on May 18, 2002. Because the Company failed to redeem
the Noos One Year Preferred on May 18, 2002, pursuant to the certificate of
designation governing the Noos One Year Preferred, the holders of such
preferred stock have the right, along with other holders of preferred stock
with similar default voting rights, to elect two additional directors to the
Companys board and shall have the right to vote separately as a class, on all
matters brought to NTL Incorporated shareholders.

At the time of issuance of the Noos One Year Preferred, the Company pledged its
shares of Noos to France Telecom to secure the mandatory redemption obligation
under the Noos One Year Preferred and the 6.5% Redeemable Preferred Stock. As
part of the amended joint reorganization plan and pursuant to this pledge, the
Company will transfer its 27% interest in Noos to France Telecom.

Credit Rating Downgrades

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

Delisting of NTL Incorporated Common Stock

On March 28, 2002, the New York Stock Exchange (NYSE) announced that it was
suspending NTLs common stock from trading on the NYSE. This determination was
based upon, among other things, the selling price of NTLs common stock, which
closed at $0.20 on March 26, 2002. The continued listing standards of the
NYSE, which were applicable to NTL, required maintenance of a minimum share
price of $1.00 over a 30 trading day period and average global market
capitalization of $100 million over a 30 trading day period. NTLs common
stock fell below both of these continued listing standards. In addition, on
May 9, 2002, Nasdaq Europe halted trading of NTLs common stock pending
receipt of information relating to the restructuring process because of the
filing of NTLs Chapter 11 cases. NTL has complied with this information
request, although there can be no assurance that Nasdaq Europe will (1) not
make additional information requests, (2) remove the trading halt on shares of
NTLs common stock or (3) not delist shares of NTLs common stock. NTLs
common stock is currently quoted on the Over the Counter Bulletin Board under
the symbol NTLDE. The E on the symbol
NTLDE was appended for failure to
timely file this quarterly report. NTL expects that this designation will be
dropped shortly after filing this report and the symbol will return to NTLD.

Sale of NTL Australia

On April 2, 2002, the Company announced that it had completed the previously
announced sale of its Australian broadcast business to Macquarie Communications
Infrastructure Holding Pty Limited for A$850 million (US$448 million) in an all
cash transaction. The net proceeds from the sale were approximately A$581
million (US$306 million). At that time, the business bank debt outstanding
totaled A$227 million (US$120 million).

On April 5, 2002, NTL Delaware loaned
£90 million to NTL (UK) Group, Inc.,
which loan was funded by the proceeds of the sale of NTL Australia. This loan
is subordinated to the Companys UK credit facilities. The remaining proceeds
of the sale of NTL Australia remain at NTL Delaware and the proposed plan of
reorganization anticipates that such proceeds will form a portion of the
consideration to be offered to bondholders of NTL Delaware and NTL Incorporated
in satisfaction of their claims against those companies.

Potential Sale of, or Outside Investment in, Cablecom

It has been agreed to engage UBS
Warburg LLC by August 31, 2002 to advise in connection with an outside
investment in, or sale of all or part of, Cablecom. As part of this process,
NTL (Delaware), Inc. and certain of its subsidiaries have agreed to approve any
such outside investment or sale, which is acceptable to the lenders under the

32



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Cablecom credit facility.

33



---



##### Table of Contents



NTL Incorporated and Subsidiaries

It has also been agreed that if such a sale of all or part of Cablecom is
consummated on or before August 31, 2003, the lenders under the Cablecom credit
facility will be entitled to receive additional interest equal to 20% of the
net proceeds of such a sale after repayment of the amounts outstanding under
the Cablecom credit facility and other expenses and taxes of the sale. There
can be no assurance that any outside investment in, or sale of all or part of,
Cablecom pursuant to the Cablecom credit facility will be on terms that are
favorable to NTL and such investment or sale could have a material adverse
effect on NTLs finances and business. In particular, in the current
environment, NTLs shareholding in Cablecom may have little or no value, which
may result in NTL receiving little or no consideration for its equity interest
in Cablecom.

Further, if a third party makes an investment in Cablecom there can be no
assurance that NTL will be able to maintain its ability to direct the
management of Cablecom.

Description of Outstanding Notes, Credit Facilities and Redeemable Preferred
Stock

The following summarizes the terms of the significant notes, credit facilities
and redeemable preferred stock issued by the Company and its subsidiaries as of
March 31, 2002, excluding the NTL Australia bank credit facility due to the
sale of NTL Australia on April 2, 2002. The holders of the debt have the right
to accelerate repayment, or may have such right, which has caused all of the
Companys long-term debt to be classified as current. The automatic stay of
Section 362 of the U.S. Bankruptcy Code prevents the holders of such debt from
seeking to enforce their collection rights under the indentures, except within
the context of the Chapter 11 cases, and even then only with the prior approval
of the bankruptcy court. However, NTL has received letters from the
agents for the lenders under the UK credit facilities reserving such
lenders rights to accelerate repayment of the facilities and to
enforce the security granted in respect of the facilities on account
of the defaults thereunder, actions which would not be prohibited by
the automatic stay.

NTL Incorporated:



|(1) |  | Senior Redeemable Exchangeable Preferred Stock due February 15, 2009,
liquidation preference of $192.9 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;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Convertible Preferred Stock due March 27, 2009, liquidation preference of
$2,063.5 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
(which may be March 27, 2003 or March 27, 2004) 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 such 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. Holders of Convertible
Preferred Stock other than any commercial bank or their affiliates may at
any time elect, subject to some conditions, to exchange their Convertible
Preferred Stock for up to a 50% interest in an entity holding our Swiss
operations;
|   
|(3) |  | Variable Coupon Redeemable Preferred Stock, liquidation preference of
$498.8 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%, quarterly
dividend rate of 5.78% at March 31, 2002, mandatory redemption in cash on
May 18, 2002. The Companys 27% interest in Noos is pledged to France
Telecom to secure the mandatory redemption obligation under its Variable
Coupon Redeemable Preferred Stock and its 6.5% Fixed Coupon Redeemable
Preferred Stock;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(4) |  | 6.5% Fixed Coupon Redeemable Preferred Stock, liquidation preference of
$129.0 million, dividends are cumulative and are payable in cash upon
redemption, mandatory redemption in cash on May 18, 2007;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(5) |  | 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 from 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, subject to
adjustment based on the Companys stock price and adjustment to the
conversion price of some series of our preferred stock;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

NTL Delaware:



|(6) |  | 5 3/4% Convertible Subordinated Notes due December 15, 2009, principal
amount at maturity of $1,200.0 million, interest
|--- |  | -----------------------------------------------------------------------------------------------------------------------

34



---



##### Table of Contents



NTL Incorporated and Subsidiaries

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;

35



---



##### Table of Contents



NTL Incorporated and Subsidiaries

NTLCL:



|(7) |  | Working Capital Facility, originally for £1,300.0 million ($1,852.5
million); following the issuance of new debt beginning in October 2000,
the commitment has been reduced by £882.5 million ($1,257.6 million), of
which £408.3 million ($581.8 million) was outstanding as of March 31,
2002. Interest payable at least every six months at LIBOR plus a margin
rate of 6.00% per annum, which is subject to adjustment; effective
interest rate of 10.15% at March 31, 2002; 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; no undrawn amounts are
available under this agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(8) |  | Senior Credit Facility, of which £2,784.8 million ($3,968.4 million) was
outstanding as of March 31, 2002; originally for £2,500.0 million
($3,562.5 million), dated May 30, 2000; interest payable at least every
six months at LIBOR plus a margin rate of 2.00% per annum, which is
subject to adjustment; effective interest rate of 6.16% at March 31, 2002;
the unused portion of the commitment is subject to a commitment fee of
0.75% payable quarterly, which is reduced to 0.50% when over 50% of the
commitment is utilized; principal is due in six quarterly installments
beginning on June 30, 2004; as amended and restated pursuant to a
Restatement Amendment Agreement dated September 26, 2001 which, inter
alia, amended such Senior Credit Facility to make available a £200.0
million ($285.0 million) Term Facility (interest payable on such Term
Facility at least every six months at LIBOR plus a margin rate of 3.50%
per annum, effective interest rate of 7.66% at March 31, 2002, principal
is due in eight quarterly installments beginning on June 30, 2006) and
increase the availability of funds under the Senior Credit Facility by
£84.8 million ($120.9 million);

Cablecom:



|(9)  |  | Term Loan Facility, of which CHF 2,700.0 million ($1,605.2 million) was
outstanding as of March 31, 2002, 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 4.30% at March 31, 2002,
principal is due on April 30, 2003 ;                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(10) |  | Revolving Facility of CHF 1,400.0 million ($832.2 million), of which CHF
875.0 million ($520.2 million) was outstanding as of March 31, 2002, an
additional CHF 180.0 million ($107.0 million) was borrowed in May 2002,
interest payable at least every six months at Swiss LIBOR plus a margin
rate of 2.50% per annum, which is subject to adjustment, effective
interest rate of 4.25% at March 31, 2002, 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 on April 30, 2003 ; the amount available has been capped
at the CHF 1,055.0 million outstanding although the availability may be
increased with the consent of the requisite majority of the lenders ;

NTL Communications:



|(11) |  | 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;                               
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(12) |  | 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;                           
|    
|(13) |  | 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;                                              
|    
|(14) |  | 9 1/2% Senior Sterling Notes due April 1, 2008, principal amount at
maturity of £125.0 million ($178.1 million), interest payable semiannually
from October 1, 1998, redeemable at the Companys option on or after April
1, 2003;                         
|    
|(15) |  | 10 3/4% Senior Deferred Coupon Sterling Notes due April 1, 2008,
principal amount at maturity of £300.0 million ($427.5 million), interest
payable semiannually beginning on October 1, 2003, redeemable at the
Companys option on or after April 1, 2003;
|    
|(16) |  | 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;                         

36



---



##### Table of Contents



NTL Incorporated and Subsidiaries



|(17) |  | 9 3/4% Senior Deferred Coupon Sterling Notes due April 15, 2009,
principal amount at maturity of £330.0 million ($470.3 million), interest
payable semiannually beginning on October 15, 2004, redeemable at the
Companys option on or after April 15, 2004;                                                                
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(18) |  | 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;                                                                                                                  
|    
|(19) |  | 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;                                                                                          
|    
|(20) |  | 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;
|    
|(21) |  | 9 1/4% Senior Euro Notes due November 15, 2006, principal amount at
maturity of 250.0 million ($217.9 million), interest payable semiannually
from May 15, 2000;                                                                                                                                                            
|    
|(22) |  | 9 7/8% Senior Euro Notes due November 15, 2009, principal amount at
maturity of 350.0 million ($305.1 million), interest payable semiannually
from May 15, 2000, redeemable at the Companys option on or after November
15, 2004;                                                                                          
|    
|(23) |  | 11 1/2% Senior Deferred Coupon Euro Notes due November 15, 2009,
principal amount at maturity of 210.0 million ($183.1 million), interest
payable semiannually beginning on May 15, 2005, redeemable at the
Companys option on or after November 15, 2004;                                                                 
|    
|(24) |  | 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;                                                                                                                  
|    
|(25) |  | 12 3/8% Senior Euro Notes due February 1, 2008; principal amount at
maturity of 300.0 million ($261.5 million), interest payable semiannually
from August 1, 2001;                                                                                                                                                          
|    
|(26) |  | 6 3/4% Convertible Senior Notes due May 15, 2008, principal amount at
maturity of $1,150.0 million, interest payable semiannually from November
15, 2001, convertible into shares of the Companys common stock at a
conversion price of $32.728 per share, redeemable at the Companys option
on or after May 21, 2004;     

NTL Triangle:



|(27) |  | 11.2% Senior Discount Debentures due November 15, 2007, principal amount
at maturity of $517.3 million, interest payable semiannually from May 15,
2001, redeemable at NTL Triangles option after November 15, 2000;
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Diamond:



|(28) |  | 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;                                                                                         
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(29) |  | 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;                                                                                      
|    
|(30) |  | 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;                                                                            
|    
|(31) |  | 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 ($192.4 million), interest payable semiannually
from August 1, 1998, redeemable at Diamonds option on or after February
1, 2003; and
|    
|(32) |  | 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.                                                                 

37



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Contractual Obligations and Commercial Commitments

The following table includes aggregate information about the Companys
contractual obligations as of March 31, 2002 and the periods in which payments
are due. The holders of the long-term debt have the right to accelerate
repayment, or may have such right, which has caused all of the Companys
long-term debt to be classified as current. The automatic stay of Section 362
of the United States Bankruptcy Code prevents the holders of such debt from seeking to
enforce their collection rights under the indentures, except within the context
of the Chapter 11 cases, and even then only with the prior approval of the
bankruptcy court. However, NTL has received letters from the agents
for the lenders under the UK credit facilities reserving such
lenders rights to accelerate repayment of the facilities and to
enforce the security granted in respect of the facilities on account
of the defaults thereunder, actions which would not be prohibited by
the automatic stay.

|                                   |  |                        |          |        |  |               |       |       |  |         |         |       |  |   |         |  |  |   |          | 
|---------------------------------- |  | ---------------------- | -------- | ------ |  | ------------- | ----- | ----- |  | ------- | ------- | ----- |  | - | ------- |  |  | - | -------- | 
|                                   |  | Payments Due by Period |          |        |  |               |       |       |  |        
|                                   |  |                        |          |        |  |               |       |       |  |        
|Contractual                        |  |                        |          |        |  | Less than     |       | 1-3   |  | 4-5     |         | After
|Obligations                        |  | Total                  |          | 1 Year |  | Years         |       | Years |  | 5 Years
|                                   |  |                        |          |        |  |               |       |       |  |        
|                                   |  |                        |          |        |  | (in millions) |       |       |  |         |         |       |  |  
|Long-Term Debt                     |  | $                      | 18,445.9 |        |  | $             | 7.3   |       |  | $       | 503.6   |       |  | $ | 6,714.1 |  |  | $ | 11,220.9 | 
|Capital Lease Obligations (1)      |  |                        | 190.9    |        |  |               | 9.2   |       |  |         | 15.4    |       |  |   | 12.6    |  |  |   | 153.7    | 
|Operating Leases (1)               |  |                        | 517.3    |        |  |               | 96.0  |       |  |         | 114.7   |       |  |   | 72.0    |  |  |   | 234.6    | 
|Unconditional Purchase Obligations |  |                        | 1,518.2  |        |  |               | 359.9 |       |  |         | 385.2   |       |  |   | 205.6   |  |  |   | 567.5    | 
|Other Long-Term Obligations        |  | None                   |          |        |  |               |       |       |  |         |         |       |  |   |         |  |  |  
|Total Contractual Cash Obligations |  | $                      | 20,672.3 |        |  | $             | 472.4 |       |  | $       | 1,018.9 |       |  | $ | 7,004.3 |  |  | $ | 12,176.7 | 



|(1) |  | These amounts are as of December 31, 2001 which are not significantly
different from March 31, 2002.
|--- |  | ----------------------------------------------------------------------------------------------------

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

|                               |  |                                            |       |           |  |               |      |       |  |         |      |  |  |   |      |  |  |   |      | 
|------------------------------ |  | ------------------------------------------ | ----- | --------- |  | ------------- | ---- | ----- |  | ------- | ---- |  |  | - | ---- |  |  | - | ---- | 
|                               |  | Amount of Commitment Expiration Per Period |       |           |  |               |      |       |  |        
|                               |  |                                            |       |           |  |               |      |       |  |        
|Other Commercial               |  | Total Amounts                              |       | Less than |  | 1-3           |      | 4-5   |  | Over   
|Commitments                    |  | Committed                                  |       | 1 year    |  | years         |      | years |  | 5 Years
|                               |  |                                            |       |           |  |               |      |       |  |        
|                               |  |                                            |       |           |  | (in millions) |      |       |  |         |      |  |  |  
|Guarantees                     |  | $                                          | 28.1  |           |  | $             | 1.0  |       |  | $       | 12.9 |  |  | $ | 0.1  |  |  | $ | 14.1 | 
|Lines of Credit                |  | None                                       |       |           |  |               |      |       |  |         |      |  |  |   |      |  |  |  
|Standby Letters of Credit      |  | None                                       |       |           |  |               |      |       |  |         |      |  |  |   |      |  |  |  
|Standby Repurchase Obligations |  | None                                       |       |           |  |               |      |       |  |         |      |  |  |   |      |  |  |  
|Other Commercial Commitments   |  |                                            | 72.4  |           |  |               | 28.2 |       |  |         | 25.7 |  |  |   | 18.5 |  |  |   |     | 
|Total Commercial Commitments   |  | $                                          | 100.5 |           |  | $             | 29.2 |       |  | $       | 38.6 |  |  | $ | 18.6 |  |  | $ | 14.1 | 

Consolidated Statements of Cash Flows

Cash used in operating activities was $43.2 million and $78.7 million in the
three months ended March 31, 2002 and 2001, respectively. Cash paid for
interest exclusive of amounts capitalized in the three months ended March 31,
2002 and 2001 was $231.7 million and $203.6 million, respectively. In addition,
the change in cash used in operating activities is also due to changes in
working capital as a result of the timing of receipts and disbursements.

Purchases of fixed assets were $231.2 million in 2002 and $600.7 million in
2001 as a result of the continuing fixed asset purchases and construction. The
Company expects to further reduce purchases of fixed assets in 2002 in an
effort to conserve cash.

Proceeds from borrowings, net of financing costs, of $430.4 million in 2002
includes $439.6 million borrowed under the NTLCL working capital facility.

Results of Operations

Three Months Ended March 31, 2002 and 2001

We expect our growth in 2002 to be curtailed by funding constraints. Although
our current business plan includes a reduction in the number of new customers
and an increase in revenue from existing customers, our cash constraints
present many challenges to the successful execution of the plan. We are
conserving cash through a reduction in capital expenditures including
expenditures to

38



---



##### Table of Contents



NTL Incorporated and Subsidiaries

connect new customers to our network. In order to maintain revenues and cash
from operations while reducing the number of new customers, we must reduce and
limit customer churn. We intend to continue to improve our customer service
and increase our service offering to customers in an effort to curtail and
reduce churn. We are in the process of integrating our various billing systems
and customer databases in an effort to improve one of the main tools we use to
provide customer service.

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

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

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

There can be no assurance that we will successfully complete the proposed
recapitalization plan in a timely manner in order to sustain our operations.

On April 2, 2002, we announced the completion of the sale of our Australian
broadcast business to Macquarie Communications Infrastructure Holding Pty
Limited for A$850.0 million (US$448.0 million) in an all cash transaction. The
net proceeds from the sale after the repayment of the outstanding bank credit
facility and transaction related costs were approximately A$581.0 million
(approximately US$306.0 million). We recognized a gain on the sale of
approximately US$15.0 million in April 2002. NTL Australia is accounted for as
a discontinued operation, and accordingly, NTL Australia is excluded from the
results of continuing operations for the three months ended March 31, 2002 and
2001.

Consumer telecommunications and television revenues decreased to $608.4 million
from $610.9 million as a result of changes in foreign currency exchange rates.
These revenues in UK pounds increased to £426.7 million from £419.0 million.
The increase in revenues was due to price increases and upselling new services
to customers. The increase was partially offset by customer reductions due to
the sale of part of our indirect access telephony business in October 2001, a
reduction in the customer base due to disconnects and a reduction in sales
activity.

Business telecommunications revenues increased to $215.6 million from $201.2
million. In the three months ended March 31, 2002, we recognized approximately
$10.0 million of deferred revenue due to the termination of a long-term
contract. The acquisition of the assets and contracts of Viatel UK in the third
quarter of 2001 accounted for $31.1 million of the revenue in the three months
ended March 31, 2002.

Broadcast transmission and other revenues increased to $70.0 million from $68.1
million. The increase reflects increases in the number of broadcast television
and FM radio customers and accounts, which exceeded price cap reductions in our
regulated services, and increases in satellite and media services used by
broadcast and media customers. We expect growth in broadcast services to be
driven primarily by contracts related to the increased demand for tower
infrastructure by wireless services operators expanding and upgrading their
networks for wireless broadband, the digitalization of analog television and
radio signals and the further development of programming for the European
markets requiring satellite and terrestrial distribution services.

In 2002 and 2001, the substantial majority of revenues in all segments were
derived from operations in the UK.

39



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Operating expenses (including network expenses) decreased to $435.8 million
from $438.7 million as a result of decreases in telephony interconnection and
television programming costs. The acquisition of the assets and contracts of
Viatel UK in the third quarter of 2001 accounted for $25.5 million of the
operating expenses in 2002. Operating expenses as a percentage of revenues
declined to 48.7% in 2002 from 49.8% in 2001.

Selling, general and administrative expenses decreased to $212.3 million from
$322.2 million, which reflects various cost savings efforts including
restructurings announced in the fourth quarter of 2001. Selling, general and
administrative expenses as a percentage of revenues decreased to 23.7% in 2002
from 36.6% in 2001.

Recapitalization expense of $45.8 million in 2002 includes $8.8 million for
employee retention related to substantially all of our UK employees and $37.0
million for financial advisor, legal, accounting and consulting costs. We
expect to incur approximately $50.0 million in additional recapitalization
costs until we complete the process.

Other charges of $2.6 million in 2002 include restructuring charges of $1.6
million and costs incurred for information technology integration and for
business rationalization consulting of $1.0 million. Other charges of $7.4
million in 2001 were for information technology integration and for business
rationalization consulting. NTL Ireland incurred the restructuring charges in
2002 for severance and related expenses for 55 employees. The other costs were
incurred by Cablecom in 2002 and by NTL UK in 2001.

Corporate expenses increased to $13.6 million from $12.5 million primarily due
to an increase in legal, accounting, other professional and employee related
costs.

Depreciation and amortization expense decreased to $395.6 million from $755.2
million due to the adoption of SFAS No. 142 on January 1, 2002 which ended the
amortization of goodwill and other indefinite lived intangible assets.
Depreciation and amortization expense in the three months ended March 31, 2001,
after deducting the amortization of goodwill and other indefinite lived
intangible assets of $387.9 million, would have been $367.3 million. The
increase in 2002 as compared to 2001 as adjusted is primarily due to an
increase in depreciation of telecommunications and cable television equipment.

Interest income and other, net increased to $15.1 million from $9.0 million
primarily as a result of an increase in cash available for investment.

Interest expense increased to $371.9 million from $355.1 million due to
additional borrowings under credit facilities and the issuance of additional
debt subsequent to March 31, 2001. Interest of $244.3 million and $225.2
million was paid in cash in the three months ended March 31, 2002 and 2001,
respectively.

Share of losses from equity investments increased to $48.9 million from $42.9
million primarily due to the acquisition of the interest in Noos in May 2001.

Foreign currency transaction losses decreased to $5.0 million from $13.7
million primarily due to the effect of changes in exchange rates. We and
certain of our subsidiaries have cash, cash equivalents and debt denominated in
non-U.S. dollar currencies that are affected by changes in exchange rates. In
addition, certain of our foreign subsidiaries whose functional currency is not
the U.S. dollar have cash, cash equivalents and debt denominated in U.S.
dollars which are affected by changes in exchange rates.

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, among others, those set forth under the caption Risk Factors in this
Form 10-Q as well as: the ability of the Company to continue as a going
concern, the ability of the Company to obtain trade credit and shipments and
terms with vendors and service providers for current orders; the Companys
ability to maintain contracts that are critical to its operations; potential
adverse developments with respect to the Companys liquidity or results of
operations; the ability to fund and execute its business plan; the ability to
attract, retain and compensate key executives and associates; the ability of
the Company to attract and retain customers; general economic and business
conditions, technological developments, the Companys ability to continue to
design networks, install facilities, obtain and maintain any required
governmental licenses or approvals and
40Table of ContentsNTL Incorporated and Subsidiariesfinance 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 and interest rate and currency exchange rate
fluctuations. We assume no obligation to update the forward-looking statements
contained herein to reflect actual results, changes in assumptions or changes
in factors affecting such statements.Recent Accounting PronouncementsIn August 2001, the Financial Accounting Standards Board (referred to as the
FASB) issued Statement of Financial Accounting Standards (referred to as SFAS)
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
effective for the Company on January 1, 2002. This Statement superceded SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of and other related accounting guidance. The adoption
of this new standard had no significant effect on the results of operations,
financial condition or cash flows of the Company, except that it required the
Company to treat NTL Australia as a discontinued operation beginning in the
first quarter of 2002.In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, effective for the Company on January 1, 2003. This Statement
addresses financial accounting and reporting for obligations associated with
the retirement of tangible fixed assets and the associated asset retirement
costs. The Company is in the process of evaluating the financial statement
impact of the adoption of SFAS No. 143.In June 2001, the FASB issued SFAS No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also includes guidance on the initial recognition and
measurement of goodwill and other intangible assets acquired in a business
combination that is completed after June 30, 2001. SFAS No. 142 ends the
amortization of goodwill and indefinite-lived intangible assets. Instead, these
assets must be reviewed annually (or more frequently under certain conditions)
for impairment in accordance with this statement. This impairment test uses a
fair value approach rather than the undiscounted cash flow approach previously
required by SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of. The Company adopted SFAS No. 142
on January 1, 2002. Primarily due to the significant impairment charge that the
Company recorded in 2001, the adoption of this new standard did not have a
significant effect on the results of operations, financial condition or cash
flows of the Company.The following table shows the Companys loss from continuing operations and its
basic and diluted loss from continuing operations per share as adjusted for the
adoption of SFAS No. 142, had SFAS No. 142 been in effect on January 1, 2001
(unaudited) (in millions, except per share data).

|                                                                   |                                |   |                              |       |      |   |          |       |  
|------------------------------------------------------------------ | ------------------------------ | - | ---------------------------- | ----- | ---- | - | -------- | ----- | -
|                                                                   |                                |   | Three Months Ended March 31,
|                                                                   |                                |   |                             
|                                                                   |                                |   | 2002                         |       | 2001
|                                                                   |                                |   |                              |       |     
|(Loss) from continuing operations  as reported                    |                                | $ | (600.4                       | )     |      | $ | (1,042.4 | )    
|Amortization of:                                                   |                                |   |                              |       |      |   |          |      
|                                                                   | Goodwill                       |   |                              |      |      |   |          | 366.4 |  
|                                                                   | License acquisition costs      |   |                              |      |      |   |          | 18.8  |  
|                                                                   | Other                          |   |                              |      |      |   |          | 2.7   |  
|                                                                   |                                |   |                              |       |      |   |          |      
|                                                                   |                                |   |                             |       |      |   | 387.9    |      
|                                                                   |                                |   |                              |       |      |   |          |      
|(Loss) from continuing operations  as adjusted                    |                                | $ | (600.4                       | )     |      | $ | (654.5   | )    
|                                                                   |                                |   |                              |       |      |   |          |      
|Basic and diluted net (loss) from continuing
operations per share: |                                |   |                              |       |      |   |          |      
|                                                                   | As reported                    |   | $                            | (2.53 | )    |   | $        | (4.04 | )
|                                                                   | Amortization expense reduction |   |                              |      |      |   |          | 1.42  |  
|                                                                   |                                |   |                              |       |      |   |          |      
|                                                                   | As adjusted                    |   | $                            | (2.53 | )    |   | $        | (2.62 | )
|                                                                   |                                |   |                              |       |      |   |          |      

41



---



##### Table of Contents



NTL Incorporated and Subsidiaries




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

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

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.

In 2001, the Company entered into a British pound forward 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. In March 2002, this agreement was closed out, and
the Company received cash of £0.5 million.

At March 31, 2002, the Company had cross currency swaps to hedge exposure to
movements in the Euro to British pound exchange rate. In May 2002, the
Company closed out its cross currency swaps for a cash payment of $2.0 million,
and recognized a loss of $2.0 million.

Interest Rates

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

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

At March 31, 2002, the Company had zero cost collars, with a notional amount
of CHF 1,200.0 million, to hedge exposure to the floating interest rate
indebtedness incurred under the Cablecom term loan facility and revolving loan
facility.

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.

42



---



##### Table of Contents



NTL Incorporated and
Subsidiaries

|                                         |                       |                               |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |   |         |  
|---------------------------------------- | --------------------- | ----------------------------- |  | -------- | - | -------- |  | -------- | ---- | -------- | ---- | -------- | ---- | ----------- | --------- | ----------- | --------- | ----------- | --------- | -------- | -------- | --------- |  | - | ------- | -
|                                         |                       |                               |  | Nine     |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |  
|                                         |                       |                               |  | Months   |   | Year     |  |          | Year |          | Year |          | Year
|                                         |                       |                               |  | Ending   |   | Ending   |  | Ending   |      | Ending   |      | Ending  
|                                         |                       |                               |  | 12/31/02 |   | 12/31/03 |  | 12/31/04 |      | 12/31/05 |      | 12/31/06
|                                         |                       |                               |  |          |   |          |  |          |      |          |      |         
|Long-term Debt Including Current Portion |                       |                               |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |  
|U.S. Dollars                             |                       |                               |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |  
|                                         |                       | Fixed Rate                    |  |          |  |          |  |          |      |          |      |          |     |             |           | $           | 285.1     |             |           | $        | 808.8    |           |  | $ | 1,050.0 |  
|                                         |                       | Average Interest Rate         |  |          |   |          |  |          |      |          |      |          |      |             |           |             | 13.25     | %           |           |          | 12.09    | %         |  |   | 11.50   | %
|U.K. Pound                               |                       |                               |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |  
|                                         |                       | Fixed Rate                    |  |          |  |          |  |          |      |          |      |          |     |             |           |             |          |             |           |          |         |           |  |   |        |  
|                                         |                       | Average Interest Rate         |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |   |         |  
|                                         |                       | Average Forward Exchange Rate |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |   |         |  
|Euro                                     |                       |                               |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |  
|                                         |                       | Fixed Rate                    |  |          |  |          |  |          |      |          |      |          |     |             |           |             |          |             |           |          |         |           |  |   | 250.0  |  
|                                         |                       | Average Interest Rate         |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |   | 9.25    | %
|                                         |                       | Average Forward Exchange Rate |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |   | .8986   |  
|U.K. Pound                               |                       |                               |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |  
|                                         |                       | Variable Rate                 |  |          |  |          |  |          |      |          |      |          |     |             |           |             | £90.0     |             |           |          | £2,494.8 |           |  |   | £408.3  |  
|                                         |                       |                               |  |          |   |          |  |          |      |          |      |          |      | LIBOR       |           | LIBOR       |           | LIBOR      
|                                         | Average Interest Rate |                               |  |          |   |          |  |          |      |          |      |          |      |             | Plus 2.0% |             | plus 2.0% |             | plus 6.0%
|                                         |                       | Average Forward Exchange Rate |  |          |   |          |  |          |      |          |      |          |      |             |           |             | 1.4133    |             |           |          | 1.4152   |           |  |   | 1.4189  |  
|U.K. Pound                               |                       |                               |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |  
|                                         |                       | Variable Rate                 |  |          |  |          |  |          |      |          |      |          |     |             |           |             |          |             |           |          |         |           |  |   | £20.0   |  
|                                         |                       |                               |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          | LIBOR    
|Average Interest Rate                    |                       |                               |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          | plus 3.5%
|                                         |                       | Average Forward Exchange Rate |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |   | 1.4189  |  
|CHF                                      |                       |                               |  |          |   |          |  |          |      |          |      |          |      |             |           |             |           |             |           |          |          |           |  |  
|                                         |                       | Variable Rate                 |  |          |  |          |  |          |      |          |      |          |     |             |           | CHF143.0    |           | CHF250.3    |           | CHF536.3
|                                         |                       |                               |  |          |   |          |  |          |      |          |      |          |      | Swiss LIBOR |           | Swiss LIBOR |           | Swiss LIBOR
|Average Interest Rate                    |                       |                               |  |          |   |          |  |          |      |          |      |          |      | Plus 2.5%   |           | plus 2.5%   |           | plus 2.5%  
|                                         |                       | Average Forward Exchange Rate |  |          |   |          |  |          |      |          |      |          |      |             |           |             | .6109     |             |           |          | .6184    |           |  |   | .6261   |  





---



##### Table of Contents



NTL Incorporated and Subsidiaries

|                                         |                       |                               |  |             |        |            |  |            |         |          |            |   |          |       |  |   |          | 
|---------------------------------------- | --------------------- | ----------------------------- |  | ----------- | ------ | ---------- |  | ---------- | ------- | -------- | ---------- | - | -------- | ----- |  | - | -------- | 
|                                         |                       |                               |  | Year        |        |            |  |            |         |          |            |   |          | Fair 
|                                         |                       |                               |  | Ending      |        |            |  |            |         |          |            |   |          | Value
|                                         |                       |                               |  | 12/31/07    |        | Thereafter |  | Total      |         | 03/31/02
|                                         |                       |                               |  |             |        |            |  |            |         |         
|Long-term Debt Including Current Portion |                       |                               |  |             |        |            |  |            |         |          |            |   |          |       |  |  
|U.S. Dollars                             |                       |                               |  |             |        |            |  |            |         |          |            |   |          |       |  |  
|                                         |                       | Fixed Rate                    |  | $           | 820.5  |            |  | $          | 6,442.1 |          |            | $ | 9,406.5  |       |  | $ | 3,090.4  | 
|                                         |                       | Average Interest Rate         |  |             | 10.38  | %          |  |            | 8.82    | %        |            |   |          |       |  |   |          | 
|U.K. Pound                               |                       |                               |  |             |        |            |  |            |         |          |            |   |          |       |  |  
|                                         |                       | Fixed Rate                    |  |             |       |            |  |            | £890.0  |          |            |   | £890.0   |       |  |   | £319.3   | 
|                                         |                       | Average Interest Rate         |  |             |        |            |  |            | 10.09   | %        |            |   |          |       |  |   |          | 
|                                         |                       | Average Forward Exchange Rate |  |             |        |            |  |            | 1.4381  |          |            |   |          |       |  |   |          | 
|Euro                                     |                       |                               |  |             |        |            |  |            |         |          |            |   |          |       |  |  
|                                         |                       | Fixed Rate                    |  |             |       |            |  |            | 860.0  |          |            |   | 1,110.0 |       |  |   | 340.6   | 
|                                         |                       | Average Interest Rate         |  |             |        |            |  |            | 11.14   | %        |            |   |          |       |  |   |          | 
|                                         |                       | Average Forward Exchange Rate |  |             |        |            |  |            | .9118   |          |            |   |          |       |  |   |          | 
|U.K. Pound                               |                       |                               |  |             |        |            |  |            |         |          |            |   |          |       |  |  
|                                         |                       | Variable Rate                 |  |             |       |            |  |            |        |          |            |   | £2,993.1 |       |  |   | £2,993.1 | 
|                                         | Average Interest Rate |                               |  |             |        |            |  |            |         |          |            |   |          |       |  |   |         
|                                         |                       | Average Forward Exchange Rate |  |             |        |            |  |            |         |          |            |   |          |       |  |   |          | 
|U.K. Pound                               |                       |                               |  |             |        |            |  |            |         |          |            |   |          |       |  |  
|                                         |                       | Variable Rate                 |  |             | £40.0  |            |  |            | £140.0  |          |            |   | £200.0   |       |  |   | £200.0   | 
|                                         |                       | LIBOR                         |  | LIBOR       |        |            |  |            |         |          |            |  
|Average Interest Rate                    |                       | plus 3.5%                     |  | plus 3.5%   |        |            |  |            |         |          |            |  
|                                         |                       | Average Forward Exchange Rate |  |             | 1.4242 |            |  |            | 1.4301  |          |            |   |          |       |  |   |          | 
|CHF                                      |                       |                               |  |             |        |            |  |            |         |          |            |   |          |       |  |  
|                                         |                       | Variable Rate                 |  | CHF643.5    |        | CHF2,001.9 |  | CHF3,575.0 |         |          | CHF3,575.0 |  
|                                         |                       | Swiss LIBOR                   |  | Swiss LIBOR |        |            |  |            |         |          |            |  
|Average Interest Rate                    |                       | plus 2.5%                     |  | plus 2.5%   |        |            |  |            |         |          |            |  
|                                         |                       | Average Forward Exchange Rate |  |             | .6340  |            |  |            | .6583   |          |            |   |          |       |  |   |          | 

43



---



##### Table of Contents



NTL Incorporated and Subsidiaries

NTL INCORPORATED AND SUBSIDIARIES

|                                                                         |                           |  |            |       |            |  |            |      |          |  |          |      |   |   |  |  |  |      |  |   |  |   |  |  |  |  |  |   | 
|------------------------------------------------------------------------ | ------------------------- |  | ---------- | ----- | ---------- |  | ---------- | ---- | -------- |  | -------- | ---- | - | - |  |  |  | ---- |  | - |  | - |  |  |  |  |  | - | 
|                                                                         |                           |  | Nine       |       |            |  |            |      |          |  |          |      |   |   |  |  |  |      |  |   |  |   |  |  |  |  | 
|                                                                         |                           |  | Months     |       | Year       |  | Year       |      |          |  |          | Year |   |   |  |  |  | Year |  |   |  |  
|                                                                         |                           |  | Ending     |       | Ending     |  | Ending     |      | Ending   |  | Ending  
|                                                                         |                           |  | 12/31/02   |       | 12/31/03   |  | 12/31/04   |      | 12/31/05 |  | 12/31/06
|                                                                         |                           |  |            |       |            |  |            |      |          |  |         
|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 |      |          |  |          |      |   |  |  |  |  |      |  |   |  |  | 
|                                                                         | Average Floor Strike Rate |  |            | 3.27  | %          |  |            | 3.27 | %        |  |          | 3.27 | % |   |  |  |  |      |  |   |  |   |  |  |  |  |  |   | 
|                                                                         | Average Cap Strike Rate   |  |            | 5.15  | %          |  |            | 5.15 | %        |  |          | 5.15 | % |   |  |  |  |      |  |   |  |   |  |  |  |  |  |   | 
|Receipt of UK Pounds                                                     |                           |  |            |       |            |  |            |      |          |  |          |      |   |   |  |  |  |      |  |   |  |   |  |  |  |  |  |  
|                                                                         | Notional Euro Amount      |  |            | 67.0 |            |  |            |     |          |  |          |     |   |   |  |  |  |      |  |  |  |   |  |  |  |  |  |  | 
|                                                                         | Average Contract Rate     |  |            | .6465 |            |  |            |      |          |  |          |      |   |   |  |  |  |      |  |   |  |   |  |  |  |  |  |   | 





---



##### Table of Contents



NTL Incorporated and Subsidiaries

|                                                                         |                           |  |          |   |            |  |       |   |          |  |            |       |           |  |  |       |  
|------------------------------------------------------------------------ | ------------------------- |  | -------- | - | ---------- |  | ----- | - | -------- |  | ---------- | ----- | --------- |  |  | ----- | -
|                                                                         |                           |  | Year     |   |            |  |       |   |          |  |            |       | Fair     
|                                                                         |                           |  | Ending   |   |            |  |       |   |          |  |            |       | Value    
|                                                                         |                           |  | 12/31/07 |   | Thereafter |  | Total |   | 03/31/02
|                                                                         |                           |  |          |   |            |  |       |   |         
|Interest
Rate Derivative Financial Instruments Related to
Long-Term Debt |                           |  |          |   |            |  |       |   |          |  |            |       |           |  |  |      
|Interest Rate Swaps                                                      |                           |  |          |   |            |  |       |   |          |  |            |       |           |  |  |      
|                                                                         | Notional CHF Amount       |  |          |  |            |  |       |  |          |  | CHF1,200.0 |       | CHF(21.7)
|                                                                         | Average Floor Strike Rate |  |          |   |            |  |       |   |          |  |            |       |           |  |  |       |  
|                                                                         | Average Cap Strike Rate   |  |          |   |            |  |       |   |          |  |            |       |           |  |  |       |  
|Receipt of UK Pounds                                                     |                           |  |          |   |            |  |       |   |          |  |            |       |           |  |  |      
|                                                                         | Notional Euro Amount      |  |          |  |            |  |       |  |          |  |            | 67.0 |           |  |  | (3.7 | )
|                                                                         | Average Contract Rate     |  |          |   |            |  |       |   |          |  |            |       |           |  |  |       |  

44



---



##### Table of Contents



NTL Incorporated and Subsidiaries




Risk Factors

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

We have limited liquidity. We do not currently have access to our historic
sources of liquidity in the capital markets and our credit facilities are
either fully drawn or we are currently unable to access remaining undrawn
amounts. As a consequence, we need to restructure our outstanding debt and/or
raise new funds. On May 8, 2002 we filed an arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code. On
May 24, 2002, we filed an amended plan, which sets forth the
joint reorganization plan, subject to court approval, to which the Company, an
unofficial committee of its public bondholders and France Telecom, a
significant holder of the our preferred stock, have agreed in principle. A
steering committee of the lending banks under our credit facilities has given
its agreement in principle (on a non-legally binding basis) to the terms of the
proposed plan of reorganization. However, the proposed plan of reorganization
remains subject to a favorable vote of our impaired creditors and bankruptcy
court approval. We may also face the possibility of insolvency proceedings in
the UK or elsewhere.

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

The completion of the proposed recapitalization contemplated by the agreement
in principle with the unofficial bondholder committee will require support from
our creditors and holders of our preferred stock, including France Telecom.
The proposed recapitalization plan will be implemented pursuant to a Chapter
11 bankruptcy proceeding. Consummation of the proposed recapitalization plan
will require a favorable vote by impaired classes of creditors, satisfaction of
bankruptcy law requirements and confirmation by the United States bankruptcy
court, which, as a court of equity, may exercise substantial discretion and
choose not to confirm the proposed recapitalization plan. Even if such a plan
receives the necessary support from many classes of our creditors, there can be
no assurance that it will be completed. If a protracted reorganization were to
occur, or a liquidation would be necessary, there is a risk that the value of
NTL would be eroded to the detriment of some or all NTL stakeholders.

We are in default under our credit facilities.

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

The UK credit facilities waivers terminated on April 29, 2002, as a result of
which, there was an event of default under each of our credit facilities with
respect to the missed interest payments on April 1, 2002. In addition, our
voluntary filing under Chapter 11 of the United States Bankruptcy Code
constituted an event of default under our UK credit facilities and the Cablecom
credit facility. These events of default entitle the lenders under our credit
facilities to accelerate repayment. We do not have sufficient cash resources to
repay our outstanding indebtedness if it is declared immediately due and
payable. In addition, the lenders could also seek to take control over the
assets over which they hold security.

We did not pay interest due on some of our outstanding notes on April 1, 2002,
April 15, 2002 and May 15, 2002, and we do not plan to make future interest
payments on most of our outstanding notes.

NTL Incorporated, NTL (Delaware), Inc. and NTL Communications did not make
scheduled interest payments and payments of related fees due on April 1, 2002,
April 15, 2002 and May 15, 2002. In accordance with the proposed
recapitalization plan, NTL does not plan to make future interest payments on
its outstanding publicly traded notes except notes issued by NTL Triangle and
Diamond Holdings Limited.

45



---



##### Table of Contents



NTL Incorporated and Subsidiaries

As a result of these payment defaults and as a result of NTLs Chapter 11
bankruptcy filings, there is currently an event of default in respect of all of
NTLs publicly traded notes other than the notes issued by NTL Triangle. As a
result of the Chapter 11 filing, this debt is immediately due and payable.

We have no current availability to borrow under our existing credit facilities.

We have no current ability to borrow under our existing UK credit facilities,
as we have borrowed the full amounts available. With respect to the Cablecom
credit facility, the term tranche is fully drawn and the revolving tranche has
been capped at its utilized amount of CHF 1,055.0 million although the
availability may be increased with the consent of the requisite percentage of
lenders under the facility. If that facility is not refinanced or Cablecom
cannot be sold, the Cablecom credit facility is due to be repaid on April 30,
2003. Without substantial investment from a third party or further borrowing,
Cablecom would be unable to repay the facility which would have a material
adverse effect on its business.

It is likely we will lose our net operating loss carryforwards for U.S. income
tax purposes in connection with the proposed recapitalization plan.

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

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

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

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

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

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

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

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

46



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Our growth has been curtailed by funding constraints.

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

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

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

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

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

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

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

We have granted substantial governance and economic rights in connection with
the France Telecom investment and have entered into transactions with France
Telecom that may impact us and a stockholders investment in us.

We have granted rights to France Telecom, including the right to appoint
directors, preemptive rights and the right to veto some significant corporate
transactions. Exercise by France Telecom of some or all of such rights may
impact us, including our ability to effect a consensual recapitalization, or
the value of our stock held by persons other than France Telecom. France
Telecom is a holder of our cumulative convertible preferred stock, Series A,
which allows the holders other than commercial banks and their affiliates to
exchange such stock for stock of an entity holding up to 50% of Cablecom.

The companies in which we hold minority investments in continental Europe may
require additional financing to complete their network rollouts  their ability
to obtain such financing will depend on their ability to access the capital
markets and the value of our investment could be reduced or diluted.

47



---



##### Table of Contents



NTL Incorporated and Subsidiaries

We have minority investments in broadband cable operations in Germany, France
and Sweden. Each of those companies may require substantial amounts of
additional capital to complete their network rollouts and upgrades and their
ability to obtain that financing will depend, in part, on their ability to
access the capital markets. The ability of those companies to access the
capital markets will be subject not only to the performance of their business
and prospects, but to conditions in the capital markets generally. If those
companies cannot complete their planned expansions and upgrades for any reason,
the value of our investments could be reduced. If those companies issue equity
securities, it is likely that we will not be able to participate which could
lead to substantial dilution of the value of these investments to us.

There can be no assurance that iesy will meet the conditions precedent to
access additional funds under its credit facility or that it will be in
compliance with the covenants under its debt agreements. The failure of iesy
to obtain required funding or a default entitling the lenders to accelerate
repayment of iesys borrowings would adversely affect the value of NTLs
investment in iesy.

In addition, on April 15, 2002, a funding request for $20 million was received
by NTL under the terms of the investment agreement relating to NTLs investment
in B2. NTL has informed B2 and the other principal investors that it is not in
a position to comply with this request at this time. The B2 investment
agreement provides that if NTL fails to provide such funding, it may be sued
for non-payment and arguably could lose certain rights under the B2
shareholders arrangements. Pursuant to the applicable documents, if this
occurs the majority remaining shareholders may also elect to terminate the
shareholder arrangements with respect to NTL and exercise a contractual right
to acquire on a pro rata basis NTLs interest in B2 at 25% of fair market
value. If the remaining shareholders elected to exercise these rights, NTL
could be forced to sell its stake in B2 at a loss. NTL believes, however, that
it has certain defenses and protections of and for NTLs rights under the B2
investment agreement and in respect of its equity interest in B2 and intends to
vigorously enforce such rights and protections.

We are dependent upon a small number of key personnel.

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

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

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

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

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

The telecommunications industry is subject to rapid and significant changes in
technology and the effect of technological changes on our businesses cannot be
predicted. Our core offerings may become outdated due to technological
breakthroughs rendering our products out of date. In addition, our business
plan contemplates the introduction of services using new technologies. Cablecom
and the operations in which we have an interest in France, Germany and Sweden
intend to introduce voice over Internet protocol, or VoIP, voice telephony
services across their networks. Customer demand for this service is uncertain
as customers may not readily switch from their current telephony service,
especially if the quality of the service is not or is perceived not to be
comparable to other telephony services. Similarly, our investments in other new
services such as those related to the 3G mobile network may prove
premature and we may

48



---



##### Table of Contents



NTL Incorporated and Subsidiaries

not realize anticipated returns on these
new products. The cost of implementation for emerging and future technologies
could be significant, and our ability to fund such implementation may depend on
our ability to obtain additional financing. We cannot be certain that we would
be successful in obtaining any additional financing required.

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

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

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

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

We currently do not have surplus available under Delaware law to pay dividends
on or to redeem our capital stock.

Under Delaware law, unless a corporation has available surplus it cannot
declare or pay dividends on or redeem its capital stock, including its
preferred stock. As of and for the year ended December 31, 2001, we have
written down the carrying value of some of our assets, particularly goodwill.
This write down has left us without available surplus under Delaware law and
means that we will be unable to declare or pay dividends on or redeem any of
our capital stock, including our preferred stock, until such time as we again
have available surplus. If dividends remain unpaid for six quarters on certain
series of our preferred stock, then the holders of each such series shall have
the right to vote separately as a class on all matters voted on by NTL
Incorporated shareholders and shall have the right, along with other holders of
preferred stock with similar default voting rights, to elect two additional
directors to our board. Similarly, because we failed to redeem the Noos
preferred stock on May 18, 2002, pursuant to the certificate of designation
governing the Noos preferred stock, the holders of such Noos preferred stock
have the right, along with other holders of preferred stock with similar
default voting rights, to elect two additional directors to our board and have
the right to vote separately as a class, on all matters brought to NTL
Incorporated shareholders.

We have never paid cash dividends on our common stock. In addition, the payment
of any dividends by us in the future will be at the discretion of our board of
directors and will depend upon, among other things, future earnings,
operations, capital requirements, our general financial condition and the
general financial condition of our subsidiaries.

Furthermore, the indentures governing NTL Communications Corp.s
non-convertible senior notes and the indentures governing the outstanding notes
issued by Diamond Cable Communications Limited, Diamond Holdings Limited and
NTL Triangle impose limitations on the payment of dividends to us and
consequently limit amounts available for us to pay dividends on our common
stock. Further, the terms of our subsidiaries senior credit facilities and
working capital facilities restrict, and the terms of other future indebtedness
of our subsidiaries may generally restrict the ability of some of our
subsidiaries to distribute earnings to NTL Incorporated or make other payments
to NTL Incorporated. The terms of Cablecoms credit facilities also restrict
the ability of Cablecom to distribute earnings and make other payments to NTL
Incorporated.

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

Provisions of the agreements governing our outstanding indebtedness and the
indebtedness of our subsidiaries, which either require such indebtedness to be
repaid or give the holder the option to require repayment, could have the
effect of delaying or preventing transactions involving a change of control of
NTL and its subsidiaries, including transactions in which stockholders might
otherwise receive a substantial premium for their shares over then current
market prices, and may limit the ability of stockholders of NTL Incorporated to
approve transactions that they may deem to be in their best interest.

49



---



##### Table of Contents



NTL Incorporated and Subsidiaries

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

Our stockholder rights plan has a significant anti-takeover effect. As a
result, no change of control of NTL Incorporated requiring stockholder approval
is possible without the consent of the owners of that preferred stock.

NTL Incorporated, NTL Delaware, NTL Communications Corp., Diamond and NTL
Triangle are holding companies that are dependent upon receipt of sufficient
funds from their subsidiaries or parent companies to meet their obligations 
their ability to access that cash flow may be limited in some circumstances.

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

Our common stock has been suspended from the New York Stock Exchange due to the
failure to meet the $1 average closing price requirement and the minimum market
capitalization requirements; there may not be a liquid market for our common
stock and our common stock could be a penny stock as that term is defined in
the Exchange Act

On March 28, 2002, our common stock was suspended from trading on the NYSE
pending delisting due to the low trading price and low market capitalization
relative to the NYSE requirements. The stock last traded on the NYSE on March
26, 2002 at a price of $0.20. Our common stock began trading on the
over-the-counter bulletin board effective April 1, 2002, and is currently
trading there under the symbol NTLDE. The E
on the symbol NTLDE was
appended for failure to timely file this quarterly report. NTL expects that
this designation will be dropped shortly after filing this report and the
symbol will return to NTLD. However, there can be no assurance that a liquid
market will develop for our common stock on the OTC bulletin board.

In addition, on May 9, 2002, Nasdaq Europe halted trading of NTLs common stock
pending receipt of information relating to the restructuring process because of
the filing of NTLs Chapter 11 cases. NTL has complied with this information
request, although there can be no assurance that Nasdaq Europe will (1) not
make additional information requests, (2) remove the trading halt on shares of
NTLs common stock or (3) not delist shares of NTLs common stock.

Furthermore, as a result of our suspension from the New York Stock Exchange,
our common stock could be a penny stock as that term is defined in the
Exchange Act. Brokers effecting transactions in a penny stock are subject to
additional customer disclosure and record keeping obligations including
disclosure of the risks associated with low price stocks, stock quote
information and broker compensation. In addition, brokers effecting
transactions in a penny stock are also subject to additional sales practice
requirements under Rule 15g-9 of the Exchange Act including making inquiries
into the suitability of penny stock investments for each customer or
obtaining a prior written agreement for the specific penny stock purchase.
Because of these additional obligations, some brokers will not effect
transactions in penny stocks, which could have an adverse effect on the
liquidity of the security and make buying or selling it more difficult.

Defense of putative class action suits filed against NTL Incorporated and
certain of its officers could have a negative impact on NTLs businesses.

The putative class action lawsuits filed against NTL Incorporated and certain
of its officers which were commenced by seven of its purported shareholders, on
behalf of certain purchasers of NTL Incorporateds securities may have a
negative impact on its results of operations and business. Two of these
lawsuits have been voluntarily dismissed with respect to NTL Incorporated
because they were filed subsequent to the commencement of NTLs Chapter 11
cases. The claims arising out of the remaining suits against NTL Incorporated
will be discharged if the proposed recapitalization plan is confirmed by the
bankruptcy court. The claims arising out of the suits against the individual
officers remain and will not be discharged under the recapitalization plan.
Defense of such suits may divert such officers time and resources from
managing the operations of NTLs business. If these officers spend significant
amounts of time defending these lawsuits, there may be a negative impact on
results of operations and business.

50



---



##### Table of Contents



NTL Incorporated and Subsidiaries

PART II. OTHER INFORMATION




ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Defaults under Credit Agreements

Negotiations with Bondholders

Before the Company could commence negotiations with the unofficial committee of
its bondholders, it was necessary to obtain waivers from the lenders under the
UK credit facilities and the Cablecom credit facility. Effective March 8,
2002, these lenders granted waivers which, until March 29, 2002, provided that
the commencement of negotiations with bondholders with a view to rescheduling
its debt would not constitute an event of default under the credit facilities.
But for the initial waivers, the commencement of negotiations with bondholders
would have been an event of default under the credit facilities. Effective
March 28, 2002, these lenders agreed to amend the initial waivers to extend the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14, 2002 in the case of the Cablecom credit facility.

In connection with the granting of these waivers, the Company agreed to various
affirmative obligations with respect to the lenders under the credit facilities
and significant restrictions on its conduct. The amended waivers prevented the
Company from making an exchange offer with respect to its outstanding notes or
from entering into an agreement with bondholders without the consent of the
lenders under each of the credit facilities. The amended waivers also
prohibited the Company from commencing voluntary dissolution proceedings,
including proceedings under Chapter 11 of the U.S. Bankruptcy Code, without the
consent of these lenders.

As of the date of this Form 10-Q, there are no current waivers from the lenders
under the credit facilities. As a consequence, the Chapter 11 filings resulted
in events of default under NTLs UK credit facilities and the Cablecom credit
facility.

Other Material Defaults in respect of the Cablecom Credit Facility

During the three months ended March 31, 2002, there were a number of technical
defaults under the Cablecom credit facility. In addition, as of December 31,
2001, Cablecoms and various of its subsidiaries liabilities exceeded their
respective assets. As a consequence, under Swiss law, those entities were
deemed to be overindebted. This also constituted an event of default under
the Cablecom credit facility which entitled the lenders to accelerate
repayment. Under Swiss law, unless the overindebtedness was rectified, those
entities would have been required to commence an insolvency proceeding in
Switzerland.

On April 30, 2002, the Company reached an agreement with the lenders under the
Swiss credit facility to resolve the overindebtedness issue. As a result of
the agreement and steps taken in connection therewith, those entities are not
currently required to commence insolvency proceedings. The agreement included
a waiver by the lenders of various additional covenant breaches under the
credit facility.

Missed Interest Payments on NTLs Public Bonds

As a result of the missed interest payments not cured within the 30 day grace
period with respect to certain of NTLs publicly traded bonds (described
below), as of May 1, 2002, there was an event of default under the UK credit
facilities and as of May 16, 2002, there was an event of default under the
Cablecom credit facility.

Chapter 11 Bankruptcy Filing

On May 8, 2002, NTL Incorporated, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. filed an arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code. NTLs operating
subsidiaries were not included in the Chapter 11 filing. The Chapter 11
filing constituted an event of default under the Companys UK credit facilities
and the Cablecom credit facility, allowing the lenders thereunder to declare
amounts outstanding to be immediately payable.

51



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Defaults on High Yield and Convertible Notes

Payment Defaults

NTL Incorporated and NTL Delaware did not make interest payments and payment of
related fees falling due on April 15, 2002, in the aggregate amount of $2.5
million, in respect of their 5 3/4% Convertible Subordinated Notes due 2011.
NTL Communications Corp. did not make scheduled interest payments due April 1,
2002, in the aggregate amount of $74.2 million, in respect of its 9 1/2% notes
due 2008, 11 1/2% notes due 2008 and 11 7/8% notes due 2010. NTL
Communications also did not make interest payments falling due on April 15,
2002, totaling $17.7 million, in respect of its 12 3/4% Senior Deferred Coupon
Notes due 2005. In accordance with the proposed recapitalization plan, NTL does
not plan to make future interest payments on its outstanding publicly traded
notes except notes issued by NTL Triangle and Diamond Holdings Limited.

If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. Therefore, there
was an event of default for failure to pay interest on May 1, 2002 under the
indentures relating to the missed interest payments due April 1, 2002 and on
May 16, 2002, under the indentures relating to the missed interest payments due
April 15, 2002. As a result, cross defaults occurred under the Companys other
indentures at NTL Communications, NTL Delaware, NTL Incorporated and under the
Companys UK credit facilities and the Cablecom credit facility.

Chapter 11 Bankruptcy Filing

The Chapter 11 bankruptcy filing constituted an event at default under the
indentures of each of the entities which made the Chapter 11 filing and amounts
outstanding under these indentures became immediately due and payable.

Aggregate Amount of Defaults

Interest

As a result of the events of default described above, as of June 13, 2002:



| |  |  | NTL Incorporated and NTL Delaware are in default in
respect of $2.5 million of interest payments in respect of their 5
3/4% notes due 2011, including interest accrued on such missed
interest payment up to May 8, 2002, and                                                                                                                                                                             
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | NTL Communications Corp. is in default in respect of an
aggregate of $157.9 million of interest payments in respect of its
9 1/2% notes due 2008, 11 1/2% notes due 2008, 11 7/8% notes due
2010, 12 3/4% notes due 2005, 9 1/4% notes due 2006, 6 3/4% notes
due 2008 and 9 7/8% notes due 2009, including interest accrued on
the April 1 and April 15, 2002 missed interest payments up to May
8, 2002.

Principal

As a consequence of the Chapter 11 filings on May 8, 2002, all amounts
outstanding under the indentures governing the high yield and convertible debt
of the entities having commenced Chapter 11 cases automatically became
immediately due and payable. However, the automatic stay of Section 362 of the
U.S. Bankruptcy Code serves to prevent the holders of such debt from seeking to
enforce their collection rights under the indentures, except within the context
of the Chapter 11 cases, and even then only with the prior approval of the
bankruptcy court. As a result of the default and acceleration resulting from
the Chapter 11 filing, as of March 31, 2002:



| |  |  | NTL Incorporated and NTL Delaware are in default in
respect of an aggregate of $100.0 million in principal amount of
debt;                  
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | NTL Delaware is in default in respect of an aggregate of
$1,200.0 million in principal amount of debt;                                      
|
| |  |  | NTL Communications Corp. is in default in respect of an
aggregate of $7,911.9 million in principal amount of debt; and                      
|
| |  |  | Diamond Cable Communications and Diamond Holdings are in
default in respect of an aggregate of $1,539.0 million in
principal amount of debt,

52



---



##### Table of Contents



NTL Incorporated and Subsidiaries

Failure to Pay Dividends on Preferred Stock

On February 4, 2002, NTL Incorporated announced that it would not declare or
pay dividends on its 13% Senior Redeemable Exchangeable Preferred Stock. NTL
Incorporated did not make the dividend payments due on February 15, 2002 of
$6.0 million and May 15, 2002 of $6.2 million in respect of the 13% preferred
stock. In addition, NTL Incorporated did not pay dividends on its 5%
cumulative participating convertible preferred stock held by France Telecom on
December 31, 2001 of $37.0 million and March 31, 2002 of $37.5 million, or on
its cumulative convertible preferred stock held by France Telecom and a group
of commercial banks on December 31, 2001 of $24.9 million and March 26, 2002 of
$24.1 million. Historically, payment of dividends has been made in additional
shares of preferred stock in the case of the 13% preferred stock, the 5%
cumulative participating preferred stock and the cumulative convertible
preferred stock. NTL Incorporated did not pay these dividends due to a lack of
available surplus under Delaware law. Under Delaware law, NTL Incorporated
cannot declare or pay dividends on or redeem its capital stock, including its
preferred stock, unless it has available surplus. As of June 12, 2002, the
aggregate amount of unpaid dividends of NTL Incorporated with respect to the
above mentioned series of preferred stock was $135.7 million.

53



---



##### Table of Contents



NTL Incorporated and Subsidiaries




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

|    |  |                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Exhibits.                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | None.                                                                                                                                                                                                                                                                                                                                                                       
|   
|(b) |  | Reports on Form 8-K.                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | During the quarter ended March 31, 2002, the Company filed a Current
Report on Form 8-K dated February 22, 2002 (filed February 22, 2002)
reporting under Item 5, Other Events, that NTL Incorporated announced
on February 21, 2002 that it signed an agreement with Macquarie Bank
to sell its Australian broadcast business for A$850 million in an all
cash transaction.
|   
|    |  | No financial statements were filed with this report.                                                                                                                                                                                                                                                                                                                        

54



---



##### Table of Contents



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:  June 13, 2002 |  | By: /s/ Barclay KnappBarclay Knapp
     President and Chief Executive Officer                                
|                    
|Date:  June 13, 2002 |  | By: /s/ Gregg N. GorelickGregg N. Gorelick
     Vice President-Controller
     (Principal Accounting Officer)

55