**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

**FORM 10-Q**

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**Forthe quarterly period ended June 30, 2006**

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**CommissionFile No. 000-50886**

**NTL INCORPORATED**

(Exact name of registrantas specified in its charter)

| **Delaware**                                   |   | **59-3778247**       |
|------------------------------------------------|--------|----------------------|
| (State or other  jurisdiction of incorporation |   | (I.R.S. Employer     |
| or organization)                               |   | Identification  No.) |
| **909 Third Avenue, Suite 2863**          |   | ** **           |
| **New  York, New York**                        |   | **10022**            |
| (Address of  principal executive offices)      |   | (Zip Code)           |

 

**(212) 906-8440**

(Registrant’s telephonenumber, including area code)

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and(2) has been subject to such filing requirements for the past90 days. Yes x  No o

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2of the Exchange Act. (Check one):
| Large accelerated filer x | Accelerated filer  o | Non-accelerated  filer o |
|---------------------------|----------------------|--------------------------|

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Act). Yes oNo x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCYPROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant hasfiled all documents and reports required to be filed by Sections 12, 13 or15(d) of the Securities Exchange Act of 1934 subsequent to thedistribution of securities under a plan confirmed by a court. Yes x  No o

Thenumber of shares outstanding of the registrant’s common stock as of August 7,2006 was 325,025,872.

 

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**NTL INCORPORATEDFORM 10-QQUARTER ENDED JUNE 30, 2006INDEX**
|                                                                                                                         | ** ** | **Page** |
|-------------------------------------------------------------------------------------------------------------------------|------------|----------|
| PART I. FINANCIAL INFORMATION                                                                                      |       | 4        |   |
| Item 1. Financial Statements                                                                                            |       | 4        |   |
| Condensed Consolidated  Balance Sheets—June 30, 2006 and December 31, 2005                               |       | 4        |   |
| Condensed Consolidated  Statements of Operations—Three and Six Months ended  June 30, 2006 and 2005 |       | 5        |   |
| Condensed Consolidated  Statements of Cash Flows—Six Months ended June 30, 2006 and 2005                      |       | 6        |   |
| Notes to Condensed Consolidated  Financial Statements                                                                   |       | 7        |   |
| Item 2. Management’s  Discussion and Analysis of Financial Condition and Results of Operations                     |       | 21       |   |
| Item 3. Quantitative and  Qualitative Disclosures about Market Risk                                                     |       | 41       |   |
| Item 4. Controls and Procedures                                                                                         |       | 42       |   |
| PART II. OTHER INFORMATION                                                                                         |       | 44       |   |
| Item 1. Legal Proceedings                                                                                               |       | 44       |   |
| Item 2. Unregistered Sales  of Equity Securities and Use of Proceeds                                                    |       | 44       |   |
| Item 3. Defaults Upon Senior  Securities                                                                                |       | 44       |   |
| Item 4. Submission of  Matters to a Vote of Security Holders                                                            |       | 44       |   |
| Item 5. Other Information                                                                                               |       | 45       |   |
| Item 6. Exhibits                                                                                                        |       | 45       |   |
| SIGNATURES                                                                                                              |       | 47       |   |

 

2

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**“Safe Harbor”Statement under the Private Securities Litigation Reform Act of 1995:**

Various statementscontained in this document constitute “forward-looking statements” asthat term is defined under the Private Securities Litigation Reform Act of1995. Words like “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,”“estimates,” “projects,” “positioned,” “strategy,” and similar expressionsidentify these forward-looking statements, which involve known andunknown risks, uncertainties and other factors that may cause our actualresults, performance or achievements or industry results to be materiallydifferent from those contemplated, projected, forecasted, estimated orbudgeted, whether expressed or implied, by these forward-looking statements.These factors include:

·       thefailure to obtain and retain expected synergies from the merger of the legacyNTL and Telewest businesses and the acquisition of Virgin Mobile;

·       ratesof success in executing, managing and integrating key acquisitions, includingthe merger with Telewest and the acquisition of Virgin Mobile;

·       theability to achieve business plans for the combined company;

·       theability to manage and maintain key customer relationships;

·       theability to fund debt service obligations through operating cash flow;

·       theability to obtain additional financing in the future and react to competitiveand technological changes;

·       theability to comply with covenants in NTL’s indebtedness agreements;

·       theability to control customer churn;

·       theability to compete with a range of other communications and content providers;

·       theeffect of technological changes on NTL’s businesses;

·       thefunctionality or market acceptance of new products that NTL may introduce;

·       possiblelosses in revenues due to systems failures;

·       theability to maintain and upgrade NTL’s networks in a cost-effective and timelymanner;

·       thereliance on single-source suppliers for some equipment and software;

·       theability to provide attractive programming at a reasonable cost; and

·       theextent to which NTL’s future earnings will be sufficient to cover its fixedcharges.

These and other factorsare discussed in more detail under “Risk Factors” and elsewhere in our Form 10-Kthat was filed with the SEC on February 28, 2006 and the Form 10-Kof NTL Holdings Inc. that was filed with the SEC on March 1, 2006. Weassume no obligation to update our forward-looking statements to reflectactual results, changes in assumptions or changes in factors affecting thesestatements.

**Note Concerning Effectof Merger**

On March 3, 2006, NTL Holdings Inc. (formerlyknown as NTL Incorporated) merged with a subsidiary of NTL Incorporated(formerly known as Telewest Global, Inc.). Because this transaction isaccounted for as a reverse acquisition, the financial statements included inthis Form 10-Q for the period through March 3, 2006 are thoseof the corporation now known as NTL Holdings Inc. For the period since March 3,2006 these financial statements reflect the acquisition of Telewest Global, Inc.(“Telewest”). See note 1 to the financial statements.

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**PART I—FINANCIAL INFORMATION**

**ITEM 1.**                FINANCIALSTATEMENTS

**NTL INCORPORATEDCONDENSED CONSOLIDATED BALANCE SHEETS (in millions)**

| ** **                                                                                                         | ** ** | **June 30,  2006**                 | ** ** | **December 31,  2005** | ** ** |
|--------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------|------------|-----------------------------|------------|
| ** **                                                                                                         | ** ** | **  (Unaudited)  ** | ** ** | **(See Note)**         | ** ** |
| **Assets**                                                                                                         |       |                                    |       |                        |       |   |   |   |   |
| Current assets                                                                                                     |       |                                    |       |                        |       |   |   |   |   |
| Cash and cash  equivalents                                                                                         |       |                                    | £     | 441.7                       |       |   |   | £ | 735.2 |   |   |
| Restricted  cash                                                                                                   |       |                                    | 7.5        |                        |       |   | 3.4 |   |   |
| Marketable  securities                                                                                             |       |                                    | —     |                        |       |   | 96.9 |   |   |
| Accounts  receivable—trade, less allowances for doubtful accounts of £44.1 (2006) and  £41.7 (2005) |       |                                    | 340.8      |                        |       |   | 191.8 |   |   |
| Inventory for  re-sale                                                                                             |       |                                    | 11.9       |                        |       |   | — |   |   |
| Programming  inventory                                                                                             |       |                                    | 42.6       |                        |       |   | — |   |   |
| Prepaid  expenses and other current assets                                                                         |       |                                    | 101.3      |                        |       |   | 112.4 |   |   |
| Total current  assets                                                                                              |       |                                    | 945.8      |                        |       |   | 1,139.7 |   |   |
| Fixed assets,  net                                                                                                 |       |                                    | 6,133.0    |                        |       |   | 3,294.9 |   |   |
| Goodwill                                                                                                           |       |                                    | 1,420.0    |                        |       |   | — |   |   |
| Reorganization  value in excess of amounts allocable to identifiable assets                                        |       |                                    | 193.0      |                        |       |   | 193.0 |   |   |
| Customer  lists, net                                                                                               |       |                                    | 919.9      |                        |       |   | 247.6 |   |   |
| Other  intangible assets, net                                                                                      |       |                                    | 64.0       |                        |       |   | 2.4 |   |   |
| Equity  investments                                                                                                |       |                                    | 363.4      |                        |       |   | — |   |   |
| Other assets,  net of accumulated amortization of £25.1 (2006) and £32.2 (2005)                          |       |                                    | 138.9      |                        |       |   | 110.9 |   |   |
| **Total assets**                                                                                                   |       |                                    | £     | 10,178.0                    |       |   |   | £ | 4,988.5 |   |   |
| **Liabilities and shareholders’  equity**                                                                     |       |                                    |       |                        |       |   |   |   |   |
| Current liabilities                                                                                                |       |                                    |       |                        |       |   |   |   |   |
| Accounts  payable                                                                                                  |       |                                    | £     | 287.4                       |       |   |   | £ | 176.9 |   |   |
| Accrued  expenses and other current liabilities                                                                    |       |                                    | 586.2      |                        |       |   | 291.1 |   |   |
| Interest  payable                                                                                                  |       |                                    | 27.8       |                        |       |   | 37.8 |   |   |
| Deferred  revenue                                                                                                  |       |                                    | 227.6      |                        |       |   | 103.2 |   |   |
| Current  portion of long-term debt                                                                                 |       |                                    | 49.8       |                        |       |   | 0.8 |   |   |
| Total current  liabilities                                                                                         |       |                                    | 1,178.8    |                        |       |   | 609.8 |   |   |
| Long-term  debt, net of current portion                                                                            |       |                                    | 5,788.1    |                        |       |   | 2,279.2 |   |   |
| Deferred revenue  and other long-term liabilities                                                                  |       |                                    | 168.5      |                        |       |   | 134.3 |   |   |
| Deferred  income taxes                                                                                             |       |                                    | 127.9      |                        |       |   | 9.2 |   |   |
| Total  liabilities                                                                                                 |       |                                    | 7,263.3    |                        |       |   | 3,032.5 |   |   |
| Commitments  and contingent liabilities                                                                            |       |                                    |       |                        |       |   |   |   |   |
| Minority  interest                                                                                                 |       |                                    | 0.3        |                        |       |   | 1.0 |   |   |
| Shareholders’  equity                                                                                         |       |                                    |       |                        |       |   |   |   |   |
| Common stock                                                                                                       |       |                                    | 1.6        |                        |       |   | 1.2 |   |   |
| Additional  paid-in capital                                                                                        |       |                                    | 3,758.2    |                        |       |   | 2,671.0 |   |   |
| Treasury stock                                                                                                     |       |                                    | —     |                        |       |   | (114.0 | ) |   |
| Accumulated  other comprehensive income                                                                            |       |                                    | 120.7      |                        |       |   | 45.5 |   |   |
| Accumulated  deficit                                                                                               |       |                                    | (966.1     | )                           |       |   | (648.7 | ) |   |
| Total  shareholders’ equity                                                                                   |       |                                    | 2,914.4    |                        |       |   | 1,955.0 |   |   |
| **Total liabilities and  shareholders’ equity**                                                               |       |                                    | £     | 10,178.0                    |       |   |   | £ | 4,988.5 |   |   |

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Note:         Thebalance sheet at December 31, 2005 has been derived from the auditedfinancial statements at that date.

See accompanying notes.

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**NTL INCORPORATEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited) (in millions, except per share data)**

| ** **                                                                                                                           | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                                                           | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| **Revenue**                                                                                                                          |       | £                                          | 884.3      |                                          | £     | 482.5 |   | £ | 1,495.7 |   | £ | 980.3 |   |
| **Costs and expenses**                                                                                                               | ** ** | ** **                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Operating costs (exclusive of depreciation shown  separately below)                                                                  |       | (367.5                                          | )          | (196.0                                        | )          | (622.4 | ) | (402.9 | ) |
| Selling, general and administrative expenses                                                                                         |       | (223.5                                          | )          | (122.3                                        | )          | (381.6 | ) | (242.1 | ) |
| Other charges                                                                                                                        |       | (12.1                                           | )          | (0.7                                          | )          | (20.5 | ) | (1.1 | ) |
| Depreciation                                                                                                                         |       | (219.3                                          | )          | (129.6                                        | )          | (368.6 | ) | (259.9 | ) |
| Amortization                                                                                                                         |       | (55.6                                           | )          | (27.5                                         | )          | (92.4 | ) | (54.9 | ) |
|                                                                                                                                 |       | (878.0                                          | )          | (476.1                                        | )          | (1,485.5 | ) | (960.9 | ) |
| **Operating  income**                                                                                                                |       | 6.3                                             |       | 6.4                                           |       | 10.2 |   | 19.4 |   |
| **Other income (expense)**                                                                                                           | ** ** | ** **                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest income and other, net                                                                                                       |       | 8.6                                             |       | 8.3                                           |       | 17.2 |   | 14.8 |   |
| Interest expense                                                                                                                     |       | (135.6                                          | )          | (58.4                                         | )          | (219.4 | ) | (128.5 | ) |
| Share of income from equity investments                                                                                              |       | 3.1                                             |       | 0.2                                           |       | 4.5 |   | 0.2 |   |
| Foreign currency transaction losses                                                                                                  |       | (94.1                                           | )          | (12.8                                         | )          | (104.1 | ) | (16.8 | ) |
| Loss on extinguishment of debt                                                                                                       |       | —                                          |       | —                                        |       | (32.4 | ) | — |   |
| Gains (losses) on derivative instruments                                                                                             |       | 5.7                                             |       | —                                        |       | (3.5 | ) | — |   |
| **Loss  from continuing operations before income taxes, minority interest and  cumulative effect of change in accounting principle** |       | (206.0                                          | )          | (56.3                                         | )          | (327.5 | ) | (110.9 | ) |
| Income tax  benefit (expense)                                                                                                        |       | 9.9                                             |       | (9.8                                          | )          | 9.9 |   | (21.1 | ) |
| Minority interest                                                                                                                    |       | 0.3                                             |       | —                                        |       | 0.7 |   | — |   |
| Cumulative effect  of change in accounting principle                                                                                 |       | —                                          |       | —                                        |       | 1.2 |   | — |   |
| Loss from continuing operations                                                                                                      |       | (195.8                                          | )          | (66.1                                         | )          | (315.7 | ) | (132.0 | ) |
| **Discontinued operations**                                                                                                          | ** ** | ** **                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Loss (income) from  discontinued operations before income taxes                                                                      |       | —                                          |       | (1.8                                          | )          | — |   | 5.5 |   |
| Gain on disposal  of assets                                                                                                          |       | —                                          |       | 141.4                                         |       | — |   | 656.0 |   |
| Income tax  expense                                                                                                                  |       | —                                          |       | —                                        |       | — |   | (0.2 | ) |
| **Income from discontinued operations**                                                                                              |       | —                                          |       | 139.6                                         |       | — |   | 661.3 |   |
| **Net  (loss) income**                                                                                                               |       | £                                          | (195.8     | )                                             | £     |   73.5 |   | £ | (315.7 | ) | £ | 529.3 |   |
| **Basic  and diluted (loss) from continuing operations per share**                                                                   |       | £                                          | (0.68      | )                                             | £     | (0.31 | ) | £ | (1.20 | ) | £ | (0.62 | ) |
| **Basic  and diluted income from discontinued operations per share**                                                                 |       | £                                          | —     |                                          | £     |  0.66 |   | £ | — |   | £ | 3.08 |   |
| **Basic  and diluted net (loss) income per share**                                                                                   |       | £                                          | (0.68      | )                                             | £     |  0.35 |   | £ | (1.20 | ) | £ | 2.47 |   |
| **Average number of shares  outstanding**                                                                                            |       | 287.9                                           |       | 212.8                                         |       | 262.4 |   | 214.5 |   |

 

See accompanying notes.

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**NTL INCORPORATEDCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited) (in millions)**

| ** **                                                    | ** ** | **Six months ended  June 30,** | ** ** |
|---------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                    | ** ** | **2006**                                      | ** ** | **2005** | ** ** |
| **Net  cash provided by operating activities**                |       | £                                        | 243.8      |   | £ | 122.6 |   |
| **Investing activities**                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| Purchase of fixed assets                                      |       | (263.4                                        | )          | (144.4 | ) |
| Income from equity investments                                |       | 13.6                                          |       | — |   |
| Acquisition of subsidiaries, net of cash acquired             |       | (2,013.7                                      | )          | — |   |
| Proceeds from the sale of fixed assets                        |       | 0.9                                           |       | 2.2 |   |
| Decrease (increase) in restricted cash                        |       | 4.2                                           |       | (22.6 | ) |
| Proceeds from sale of broadcast operations, net               |       | —                                        |       | 1,229.0 |   |
| Proceeds from sale of Ireland operations, net                 |       | —                                        |       | 216.2 |   |
| Net cash (used in) provided by investing activities           |       | (2,258.4                                      | )          | 1,280.4 |   |
| **Financing activities**                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| Proceeds from employee stock option exercises                 |       | 30.3                                          |       | 4.3 |   |
| Purchase of stock                                             |       | —                                        |       | (114.0 | ) |
| New borrowings                                                |       | 6,769.9                                       |       | — |   |
| Principal payments on long-term debt                          |       | (4,950.6                                      | )          | (700.0 | ) |
| Financing fees                                                |       | (104.1                                        | )          | — |   |
| Capital lease payments                                        |       | (12.9                                         | )          | (0.4 | ) |
| Dividends paid                                                |       | (1.6                                          | )          | — |   |
| Net cash provided by (used in) financing activities           |       | 1,731.0                                       |       | (810.1 | ) |
| **Cash flow from discontinued  operations**                   | ** ** | ** **                                    | ** ** | ** ** | ** ** |
| Net cash used by operating activities                         |       | —                                        |       | (14.3 | ) |
| Net cash used by investing activities                         |       | —                                        |       | (4.1 | ) |
| Net cash used in discontinued operations                      |       | —                                        |       | (18.4 | ) |
| Effect of  exchange rate changes on cash and cash equivalents |       | (9.9                                          | )          | 10.4 |   |
| (Decrease)  increase in cash and cash equivalents             |       | (293.5                                        | )          | 584.9 |   |
| Cash and cash  equivalents, beginning of period               |       | 735.2                                         |       | 125.2 |   |
| Cash and cash  equivalents, end of period                     |       | £                                        | 441.7      |   | £ | 710.1 |   |

 

See accompanying notes.

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**NTL INCORPORATED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**

**Note 1—Basisof Presentation**

The accompanying unaudited condensedconsolidated financial statements have been prepared in accordance with USGenerally Accepted Accounting Principles for interim financial information andwith the rules and regulations of the Securities and Exchange Commission.Accordingly, they do not include all of the information and footnotes requiredby accounting principles generally accepted in the United States for completefinancial statements. In the opinion of management, all adjustments (consistingof normal recurring accruals) considered necessary for a fair presentation havebeen included. Operating results for the six months ended June 30, 2006are not necessarily indicative of the results that may be expected for the yearending December 31, 2006. For further information, refer to theconsolidated financial statements and footnotes thereto included in the AnnualReport on Form 10-K for NTL Holdings Inc. for the year ended December 31,2005.

On March 3, 2006, NTL Holdings Inc. (“NTLHoldings”), formerly known as NTL Incorporated, merged with a subsidiary of NTLIncorporated (formerly known as Telewest Global, Inc, or “Telewest”). Themerger has been accounted for as a reverse acquisition in which NTL Holdings istreated as the accounting acquirer, primarily because NTL Holdings shareholdersowned approximately 75% of the common stock upon completion of the merger.Following the merger, Telewest changed its name to NTL Incorporated. As aresult, the historical financial statements of NTL Holdings became thehistorical financial statements of NTL Incorporated as of the completion of themerger. Therefore, the results for the quarter ended June 30, 2005 reflectthe operations and cash flows of NTL Holdings only and the balance sheet at December 31,2005 reflects the financial position of NTL Holdings only. The results ofoperations and cash flows for Telewest, the acquired company for accountingpurposes, are included in the consolidated financial statements from March 3,2006, the date on which the merger was completed.

Certain priorperiod balances have been reclassified to conform to the current periodpresentation.

**Note 2—Acquisitionsand Disposals**

*Acquisitionof Virgin Mobile*

On July 4, 2006, we acquired 100% ofthe outstanding shares and options of Virgin Mobile through a U.K. Scheme ofArrangement. Virgin Mobile is the largest mobile virtual network operator inthe United Kingdom, with approximately 4.3 million customers.

The total purchase price of approximately£952.1 million included cash of approximately £418.2 million, commonstock valued at £518.8 million and estimated direct transaction costs of£15.1 million. The average market price per share of common stock utilizedin determining the value of new common stock issued of £15.07 ($26.59) is basedon an average of the closing prices of NTL common stock divided by the Telewestacquisition conversion ratio of 2.5 times for a range of trading days (January 12,January 13, January 17, January 18, January 19) around theannouncement date of the proposed merger (January 16, 2006).

We financed the cash portion of the Offerand transactional expenses through £475 million of additional borrowings underour senior credit facility and cash on hand.

On May 24,2006 we received approval by a majority of the shareholders of Virgin Mobile,other than those associated with affiliates of the Virgin Group, to enter intoa trade mark license agreement with Virgin Enterprises Limited under which weare entitled to use certain Virgin trade marks within the United Kingdom andIreland. The agreement was entered into on the same date and is an exclusivelicense 

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)**

coveringa number of aspects of our consumer business, including the provision ofcommunications services (such as internet, television, fixed line telephony,and upon the acquisition of Virgin Mobile, mobile telephony), the acquisitionand branding of sports, movie and other premium television content, and thebranding and sale of certain communications equipment related to our consumerbusinesses, such as set top boxes and cable modems. The agreement provides fora royalty of 0.25% per annum of our revenue from the relevant businesses,subject to a minimum annual royalty of £8.5 million (the royalty wouldhave been approximately £9 million based on combined historical NTL andTelewest 2005 revenues including revenue from Virgin Mobile and our subsidiaryVirgin.Net). The agreement replaces the existing license agreement under whichour subsidiary Virgin.net was entitled to use the Virgin brand in relation toits internet business. The agreement has a term of 30 years, although we canterminate it after 10 years on one year’s notice, and it is subject to earliertermination by us in certain other circumstances, including (subject tospecified payments) a change of control. The agreement also entitles us to usea corporate name that includes the Virgin name. We expect to commence theproposed re-branding of our consumer operations early in 2007.

*ReverseAcquisition of Telewest*

On March 3, 2006 NTL Holdings mergedwith a subsidiary of NTL Incorporated and the merger has been accounted for asa reverse acquisition of Telewest using the purchase method. This mergercreated the UK’s largest provider of residential broadband and the UK’s leadingprovider of triple play services. In connection with this transaction, Telewestchanged its name to NTL Incorporated.

The total purchase price of approximately£3.5 billion includes cash of approximately £2.3 billion, commonstock valued at £1.1 billion, stock options with a fair value of£33.3 million and estimated direct transaction costs of£25.1 million. The average market price per share of common stock utilizedin determining the value of new common stock issued of £13.00 ($22.90) is basedon an average of the closing prices of Telewest common stock for a range oftrading days (September 29, September 30, October 3, October 4and October 5, 2005) around the announcement date of the proposed merger (October 3,2005). The cash payment of £2.3 billion was based on the redemption valueof $16.25 (£9.30) per share of Telewest redeemable common stock issued inexchange for Telewest common stock in the transaction and 246.0 millionshares of Telewest redeemable common stock so issued.

The outstanding options to purchase sharesof NTL Holdings Inc. common stock were exchanged for options to purchase sharesof NTL Incorporated new common stock with the same terms and conditions.

The outstanding options to purchase sharesof Telewest common stock were converted into options to purchase shares of NTLIncorporated new common stock at an option price calculated in accordance withthe formula in the merger agreement. In accordance with the terms of Telewest’sequity-based plans, a significant proportion of Telewest’s outstanding optionsthat were granted prior to March 3, 2006 vested upon completion of themerger. All vested and unvested options of Telewest have been recorded at theirfair value by using the Black-Scholes option pricing model.

8

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)**

The total purchase price of approximately £3.5 billion has beenallocated as follows (in millions) (unaudited):

| ** **                                            | ** ** | **Acquisition  Date** | ** ** |
|-------------------------------------------------------|------------|-----------------------|------------|
| Cash  and cash equivalents, including restricted cash |       |                  | £     | 303.2 |   |   |
| Accounts  receivable                                  |       |                  | 156.5      |   |   |
| Prepaid  expenses and other current assets            |       |                  | 47.8       |   |   |
| Fixed  assets                                         |       |                  | 2,957.2    |   |   |
| Programming  inventory                                |       |                  | 24.2       |   |   |
| Investments  in and loans to affiliates               |       |                  | 374.9      |   |   |
| Amortizable  intangible assets:                       |       |                  |       |   |   |
| Customer lists                                        |       |                  | 760.8      |   |   |
| Trade names                                           |       |                  | 10.7       |   |   |
| Licences                                              |       |                  | 37.0       |   |   |
| Intangible  assets with indefinite lives:             |       |                  |       |   |   |
| Goodwill                                              |       |                  | 1,420.0    |   |   |
| Trade names                                           |       |                  | 17.9       |   |   |
| Accounts  payable                                     |       |                  | (144.7     | ) |   |
| Long  term debt, including current portion            |       |                  | (1,873.6   | ) |   |
| Other  current liabilities                            |       |                  | (464.3     | ) |   |
| Other  long-term liabilities                          |       |                  | (39.3      | ) |   |
| Deferred  income taxes                                |       |                  | (129.5     | ) |   |
| Total  purchase price                                 |       |                  | £     | 3,458.8 |   |   |

 

The allocationof the purchase price to assets acquired and liabilities assumed ispreliminary, pending finalization of valuations performed by third partyexperts, finalization of management’s integration plan pertaining to theacquired business, completion of analysis of deferred tax balances andcompletion of a review of certain other historical matters. During the quarter,we revised the preliminary allocation to reflect amendments to the fair valueof certain amounts, principally intangible assets, programming inventory, fixedassets and restructuring provisions. The total impact of these adjustmentsresulted in an increase in goodwill of £69.5 million.

*Amortizableintangible assets*

Of the total purchase price, approximately£808.5 million has been allocated to amortizable intangible assets includingcustomer lists, trade names and licenses. Customer lists represent existingcontracts that relate primarily to underlying customer relationships pertainingto the services provided by Telewest. The fair value of these assets wasdetermined utilizing the income approach. NTL expects to amortize the fairvalue of these assets on a straight-line basis over weighted average estimateduseful lives of between five and eight years.

Trade names represent the Telewest andBlueyonder brand names and the names of the Content segment’s TV channels. Thefair value of these assets was determined utilizing a relief from royaltymethod. We expect to amortize the fair value of these assets on a straight-linebasis over weighted average estimated useful lives of between 1 and 9 years.

9

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)**

Licencesrepresent contracts to broadcast television content over a digital broadcastingsystem in the United Kingdom. The fair value of these contracts was determinedutilizing the income approach. NTL expects to amortize the fair value of theseassets on a straight-line basis over a weighted average estimated useful lifeof approximately 4 years.

*Pro forma results*

The pro forma results for the six monthperiod ended June 30, 2006 include the results of Telewest from January 1,2006 through March 3, 2006 (the acquisition date). The unaudited pro formafinancial information is not intended to represent or be indicative of theconsolidated results of operations or financial condition of NTL that wouldhave been reported had the acquisition been completed as of the datespresented, and should not be taken as representative of the future consolidatedresults of operations or financial condition of NTL.

The following pro forma financial information presents the combinedresults of operations of NTL and Telewest as if the acquisition had occurred asof the beginning of the periods presented (in millions, except per share data)(unaudited):

| ** **                                                                                                                       | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                                                       | ** ** | **2006  Actual**                                | ** ** | **2005  Pro forma**                      | ** ** | **2006  Pro forma** | ** ** | **2005  Pro forma** | ** ** |
| Revenue                                                                                                                          |       | £                                          | 884.3      |                                          |       | £ | 859.9 |   |   | £ | 1,773.1 |   | £ | 1,693.1 |   |
| Costs and  expenses                                                                                                              |       |                                            |       |                                          |       |   |   |   |   |   |   |
| Operating  costs (exclusive of depreciation shown separately below)                                                         |       | (367.5                                          | )          |                                          | (331.4     | ) |   | (736.5 | ) | (658.9 | ) |
| Selling,  general and administrative expenses                                                                                    |       | (223.5                                          | )          |                                          | (210.1     | ) |   | (466.3 | ) | (415.1 | ) |
| Other  charges                                                                                                                   |       | (12.1                                           | )          |                                          | (0.7       | ) |   | (21.0 | ) | (1.1 | ) |
| Depreciation                                                                                                                     |       | (219.3                                          | )          |                                          | (219.3     | ) |   | (429.7 | ) | (439.3 | ) |
| Amortization                                                                                                                     |       | (55.6                                           | )          |                                          | (60.1      | ) |   | (114.2 | ) | (120.1 | ) |
|                                                                                                                             |       | (878.0                                          | )          |                                          | (821.6     | ) |   | (1,767.7 | ) | (1,634.5 | ) |
| Operating income                                                                                                                 |       | 6.3                                             |       |                                          | 38.3       |   |   | 5.4 |   | 58.6 |   |
| Loss  from continuing operations before income taxes, minority interest and  cumulative effect of change in accounting principle |       | (206.0                                          | )          |                                          | (82.0      | ) |   | (355.8 | ) | (228.2 | ) |
| Loss from continuing operations                                                                                                  |       | (195.8                                          | )          |                                          | (91.5      | ) |   | (343.2 | ) | (249.0 | ) |
| Discontinued  operations:                                                                                                        |       |                                            |       |                                          |       |   |   |   |   |   |   |
| Income from discontinued operations                                                                                              |       | —                                          |       |                                          | 139.6      |   |   | — |   | 661.3 |   |
| Net (loss) income                                                                                                                |       | £                                          | (195.8     | )                                             |       | £ | 48.1 |   |   | £ | (343.2 | ) | £ | 412.3 |   |
| (Loss) income from continuing operations                                                                                         |       | £                                          | (0.68      | )                                             |       | £ | (0.43 | ) |   | £ | (1.31 | ) | £ | (1.16 | ) |
| Net  (loss) income per share                                                                                                     |       | £                                          | (0.68      | )                                             |       | £ | 0.23 |   |   | £ | (1.31 | ) | £ | 1.92 | ) |

 

10

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)**

The pro formafinancial information above includes the following material, non-recurringcharges: write-offs of historical deferred finance charges of £32.4 million inthe six months ended June 30, 2006 and £57.8 million in the six monthsended June 30, 2005; acquisition-related charges of £16.3 million in thesix months ended June 30, 2006; other charges including restructuringcharges, of £21.0 million in the six months ended June 30, 2006 and £1.1million in the six months ended June 30, 2005.

*Disposalof Broadcast and Ireland operations*

On December 1, 2004, we reached anagreement for the sale of our broadcast operations. The sale completed on January 31,2005. The broadcast operations are accounted for as a discontinued operationand therefore, Broadcast’s results of operations have been removed from ourresults of continuing operations for the six months ended June 30, 2005.The results of operations of Broadcast have been excluded from the componentsof “Loss from continuing operations” and shown under the caption “Income fromdiscontinued operations before income taxes” in the Statements of Operations.Upon the sale, we recorded a gain on disposal of £514.6 million.

On May 9, 2005, we sold our operationsin the Republic of Ireland, comprising all of the ordinary shares of ntlCommunications (Ireland) Limited and ntl Irish Networks Limited and certainadditional assets, to MS Irish Cable Holdings B.V., an affiliate of MorganStanley & Co. International Limited, for an aggregate purchase priceof €333.4 million,or £225.5 million. The Ireland operations are accounted for as adiscontinued operation and therefore, Ireland’s results of operations have beenremoved from our results of continuing operations for the six months ended June 30,2005. The results of operations of Ireland have been excluded from thecomponents of “Loss from continuing operations” and shown under the caption “Incomefrom discontinued operations before income taxes” in the Statements ofOperations.

As a result ofthe sale of our broadcast and Ireland operations, we have accounted for thebroadcast and Ireland operations as discontinued operations in 2005. Theresults of operations for the broadcast and Ireland operations have beenexcluded from the components of loss from continuing operations and shown in aseparate caption, titled income from discontinued operations, and the assetsand liabilities of the broadcast and Ireland operations are reported as assetsheld for sale and liabilities of discontinued operations, respectively. Revenuefrom the broadcast operations reported in discontinued operations for the threeand six months ended June 30, 2005 was £nil and £21.4 million,respectively. Pre-tax (loss) income from broadcast operations, reported aspre-tax (loss) income from discontinued operations, for the three and sixmonths ended June 30, 2005, was £(1.1) million and £3 million,respectively. Revenue from the Ireland operations reported in discontinuedoperations for the three and six months ended June 30, 2005 was £6.4 millionand £25.6 million, respectively. Pre-tax (loss) income from Ireland operations,reported as pre-tax (loss) income from discontinued operations, for thethree and six months ended June 30, 2005 was £(0.7) million and £2.5million, respectively.

11

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)**

**Note 3—Goodwilland Intangible Assets**

Goodwill and intangible assets consist of (in millions):

| ** **                                                                  | ** ** | **Estimated  Useful Life** | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|-----------------------------------------------------------------------------|------------|---------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                                                  | ** ** | ** **                      | ** ** | **(Unaudited)**         | ** ** | ** **                  | ** ** |
| Goodwill  and intangible assets not subject to amortization:                |       |                            |       |                    |       |                        |       |   |   |   |   |
| Goodwill                                                                    |       |                            |       |                    | £     | 1,420.0                     |       |   |   | £ | — |   |   |
| Reorganization value in excess of amounts allocable  to identifiable assets |       |                            |       |                    | 193.0      |                        |       |   | 193.0 |   |   |
| Trade names                                                                 |       |                            |       |                    | 17.9       |                        |       |   | — |   |   |
|                                                                        |       |                            |       |                    | £     | 210.9                       |       |   |   | £ | 193.0 |   |   |
| Intangible assets subject to amortization:                                  |       |                            |       |                    |       |                        |       |   |   |   |   |
| Costs                                                                       |       |                            |       |                    |       |                        |       |   |   |   |   |
| Trade names and licenses                                                    |       | 1 – 9 years                |       |                    | £     | 50.7                        |       |   |   | £ | 3.2 |   |   |
| Customer lists                                                              |       | 5 – 8 years                |       |                    | 1,321.4    |                        |       |   | 560.6 |   |   |
|                                                                        |       |                            |       |                    | 1,372.1    |                        |       |   | 563.8 |   |   |
| Accumulated amortization                                                    |       |                            |       |                    |       |                        |       |   |   |   |   |
| Trade names and licenses                                                    |       |                            |       |                    | 4.6        |                        |       |   | 0.8 |   |   |
| Customer lists                                                              |       |                            |       |                    | 401.5      |                        |       |   | 313.0 |   |   |
|                                                                        |       |                            |       |                    | 406.1      |                        |       |   | 313.8 |   |   |
|                                                                        |       |                            |       |                    | £     | 966.0                       |       |   |   | £ | 250.0 |   |   |

 

Estimatedaggregate amortization expense for each of the five succeeding fiscal yearsfrom December 31, 2005 is as follows: £214.5 million in 2006, £234.0million in 2007, £162.8 million in 2008, £131.6 million in 2009 and £124.3 in2010.

**Note 4—Long-TermDebt**

Long-term debt consists of (in millions):

| ** **                             | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|----------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                             | ** ** | **(Unaudited)**         | ** ** | ** **                  | ** ** |
| 8.75%  US Dollar Senior Notes due 2014 |       |                    | £     | 229.8                       |       |   |   | £ | 247.3 |   |   |
| 9.75%  Sterling Senior Notes due 2014  |       |                    | 375.0      |                        |       |   | 375.0 |   |   |
| 8.75%  Euro Senior Notes due 2014      |       |                    | 155.5      |                        |       |   | 155.0 |   |   |
| Senior  credit facility                |       |                    | 4,400.0    |                        |       |   | 1,463.0 |   |   |
| Senior  bridge facility                |       |                    | 567.2      |                        |       |   | — |   |   |
| Capital  leases                        |       |                    | 104.2      |                        |       |   | 38.2 |   |   |
| Other                                  |       |                    | 6.2        |                        |       |   | 1.5 |   |   |
|                                   |       |                    | 5,837.9    |                        |       |   | 2,280.0 |   |   |
| Less:  current portion                 |       |                    | (49.8      | )                           |       |   | (0.8 | ) |   |
|                                   |       |                    | £     | 5,788.1                     |       |   |   | £ | 2,279.2 |   |   |

 

12

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)**

The effective interest rates on the variable interest rate debt were asfollows:

| ** **              | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|-------------------------|------------|-------------------------|------------|-----------------------------|------------|
| Senior  credit facility |       |                    | 6.6        | %                           |       |   | 6.9 | % |   |
| Senior bridge  facility |       |                    | 10.3       | %                           |       |   | — |   |   |

 

*SeniorNotes*

All of our outstanding senior notes due2014 were issued by NTL Cable PLC, on April 13, 2004. On July 25,2006, our subsidiary NTL Cable PLC, issued $550 million U.S. dollar-denominated9.125% senior notes due 2016. The note proceeds were used to repay ouralternative senior bridge facility.

*SeniorCredit Facility*

On March 3, 2006 we repaid£1,358.1 million in respect of NTL Holding’s senior credit facility,£1,686.9 million in respect of Telewest’s existing senior credit facilities and£102.0 million in respect of Flextech’s senior credit facility. All of thesefacilities were repaid in full utilizing borrowings under our new senior creditfacilities.

Our new senior secured credit facilitiescomprise a term facility denominated in a combination of pounds sterling, eurosand U.S. dollars in an aggregate principal amount of £4.476 billion, $650million and €500million and a revolving facility of £100 million. As at June 30, 2006, thesterling equivalent of £4.4 billion of the term facility had been drawn and £12million of the revolving credit facility had been utilized for bank guaranteesand standby letters of credit. The facilities bear interest at LIBOR, USLIBORor EURIBOR plus a current margin ranging from 1.875% to 2.75% and the applicablecost of complying with any reserve requirement. The margins on £3.525 billionof the term loan facilities and on the revolving credit facility ratchet from1.25% to 2.25% based on leverage ratios. Interest is payable at leastsemi-annually. Principal repayments in respect of £3.525 billion of the termloan facilities are due semi-annually beginning in 2007 and ending on March 3,2011, and the remaining term loan facilities are repayable in full on theirmaturity dates, which range from September 3, 2012 through March 3,2013. We are also required to make principal payments when available cashflowsexceed certain thresholds.

The facilitiesare secured through a guarantee from NTL Cable PLC. In addition, the bulk ofthe facilities are secured through guarantees and first priority pledges of theshares and assets of substantially all of the operating subsidiaries of NTLInvestment Holdings Limited (“NTLIH”) and of receivables arising under anyintercompany loans to those subsidiaries. We are subject to financialmaintenance tests under the facilities, including a test of liquidity, coverageand leverage ratios applied to us and certain of our subsidiaries.

*SeniorBridge Facilities*

On June 19,2006 our £1.8 billion bridge facility drawn by one of our subsidiaries, NeptuneBridge Borrower LLC, was repaid in full utilizing drawings on our senior creditfacilities totaling £1.2 billion and an alternative bridge facility of $1,048.8million. The alternative senior bridge facility was repaid in two stagesutilizing the proceeds from our $550 million 9.125% senior notes due 2016 on July 25,2006, and additional drawing from our senior credit facility on August 1,2006.

13

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)**

**Note 5—EmployeeBenefit Plans**

The components of net periodic pension cost in the three and six monthsended June 30, 2006 and 2005 were as follows (in millions) (unaudited):

| ** **                      | ** ** | **Three months ended**             | ** ** | **Six months ended**                     | ** ** |
|---------------------------------|------------|----------------------------------------------|------------|----------------------------------------------------|------------|
| ** **                      | ** ** | **June 30,**                            | ** ** | **June 30,**                                  | ** ** |
| ** **                      | ** ** | **   2006   ** | ** ** | **    2005   ** | ** ** | **   2006   ** | ** ** | **   2005   ** | ** ** |
| Service  costs                  |       |                                         | £     | 0.7                                                |       |   |   | £ | 0.6 |   |   |   | £ | 1.4 |   |   |   | £ | 1.7 |   |   |
| Interest  costs                 |       |                                         | 3.9        |                                               |       |   | 3.6 |   |   |   | 7.8 |   |   |   | 7.3 |   |   |
| Expected  return on plan assets |       |                                         | (4.2       | )                                                  |       |   | (3.9 | ) |   |   | (8.4 | ) |   |   | (7.3 | ) |   |
| Settlements  and curtailments   |       |                                         | 0.3        |                                               |       |   | — |   |   |   | 0.6 |   |   |   | (0.1 | ) |   |
| Net periodic  benefit costs     |       |                                         | £     | 0.7                                                |       |   |   | £ | 0.3 |   |   |   | £ | 1.4 |   |   |   | £ | 1.6 |   |   |

 

***Employer Contributions***

We previouslydisclosed in our financial statements for the year ended December 31,2005, that we expected to contribute £2.2 million to our pension plans in2006. For the three and six months ended June 30, 2006 we contributed £0.5million and £1.0 million respectively, to our pension plans. We anticipatecontributing an additional £1.2 million to fund our pension plans in 2006 for atotal of £2.2 million.

**Note 6—OtherCharges Including Restructuring Charges**

Other charges of £12.1 million for thethree months ended June 30, 2006, relate to our historical restructuringprograms and restructuring programs initiated in respect of the reverseacquisition of Telewest. Liabilities with respect to Telewest property leaseexit costs and Telewest involuntary employee termination costs were recognizedon the balance sheet of the acquired entity in accordance with EITF 95-3 *“Recognition of Liabilities in Connection with Purchase Combinations”*.Liabilities with respect to NTL property exit costs and involutary employeetermination costs under the restructuring program are recorded in the periodthe liability is incurred or the plan is communicated to employees. As of June 30,2006, we have incurred £22.5 million, and we expect to incur a total ofapproximately £133 million, of costs to fully execute this program.

The following tables summarize our historical restructuring provisionsand the restructuring provisions resulting from the reverse acquisition ofTelewest at June 30, 2006 (in millions) (unaudited):

| **Historical Restructuring Provisions** | ** ** | ** ** | ** ** | **Involuntary  Employee  Termination  and Related  Costs** | ** ** | **Lease  Exit  Costs** | ** ** | **Total** | ** ** |
|---------------------------------------------------|------------|------------|------------|-----------------------------------------------------------------|------------|------------------------|------------|-----------|------------|
| Balance,  December 31, 2005                  |       |       | £     | —                                                          |       |                   | £     | 45.3      |       | £ | 45.3 |   |
| Charged  to expense                               |       |       | —     |                                                            |       | 2.2                    |       | 2.2       |       |
| Utilized                                          |       |       | —     |                                                            |       | (2.9                   | )          | (2.9      | )          |
| Balance,  June 30, 2006                      |       |       | £     | —                                                          |       |                   | £     | 44.6      |       | £ | 44.6 |   |

 

14

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)**

 

| **Acquisition Restructuring Provisions**                              | ** ** | ** ** | ** ** | **Involuntary  Employee  Termination  and Related  Costs** | ** ** | **Lease  Exit  Costs** | ** ** | **Total** | ** ** |
|---------------------------------------------------------------------------------|------------|------------|------------|-----------------------------------------------------------------|------------|------------------------|------------|-----------|------------|
| Balance,  December 31, 2005                                                |       |       | £     | —                                                          |       |                   | £     | —    |       | £ | — |   |
| Provisions  resulting from business acquisition recognized under EITF 95-3 |       |       | 34.8       |                                                            |       | 33.2                   |       | 68.0      |       |
| Amendments  to business acquisition related provision                           |       |       | —     |                                                            |       | 8.7                    |       | 8.7       |       |
| Charged  to expense                                                             |       |       | 11.8       |                                                            |       | 6.5                    |       | 18.3      |       |
| Utilized                                                                        |       |       | (21.7      | )                                                               |       | (0.8                   | )          | (22.5     | )          |
| Balance,  June 30, 2006                                                    |       |       | £     | 24.9                                                            |       |                   | £     | 47.6      |       | £ | 72.5 |   |

 

**Note 7—Stockholders’Equity and Share Based Compensation**

In connection with the reverse acquisition,each share of NTL Holdings Inc (formerly known as NTL Incorporated) commonstock issued and outstanding immediately prior to the effective time of theacquisition was converted into the right to receive 2.5 shares of NTLIncorporated new common stock. On March 3, 2006, we issued 212,931,048 ofcommon stock for this purpose. For accounting purposes, the acquisition of NTLHoldings Inc. has been treated as a reverse acquisition. Accordingly, the212,931,048 shares issued to acquire NTL Holdings, Inc. have been treatedas outstanding from January 1, 2004 (as adjusted for historical issuancesand repurchases during the period from January 1, 2004 to March 3,2006). In addition, on March 3, 2006, each share of Telewest Global Inc’scommon stock issued and outstanding immediately prior to the acquisition wasconverted into 0.2875 shares of NTL Incorporated new common stock, (andredeemable stock that was redeemed). These 70,728,375 shares of NTLIncorporated new common stock have been treated as issued on the acquisitiondate.

In accordance with the preceding paragraph,the outstanding shares as of December 31, 2005 and weighted average sharesoutstanding for the six months ended June 30, 2005 were restated asfollows (in millions):

*Outstandingshares:*

| ** **                                                                                                               | ** ** | **Number  of shares** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------|------------|----------------------------|------------|
| December 31,  2005 outstanding shares as previously reported by NTL Holdings, (formerly  known as NTL Incorporated) |       |                       | 85.2       |   |   |
| Multiplied by  share exchange ratio in reverse acquisition                                                               |       |                       | 2.5        |   |   |
| Shares at December 31,  2005 (after giving effect to reverse acquisition)                                           |       |                       | 212.9      |   |   |
| Effect of the  reverse acquisition—conversion of NTL Incorporated (formerly known as  Telewest Global Inc) shares   |       |                       | 70.7       |   |   |
| Issuances and  purchases during the period                                                                               |       |                       | 5.8        |   |   |
| June 30,  2006 outstanding shares                                                                                   |       |                       | 289.4      |   |   |

 

 

 

15

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**

**(Continued)**

*For three and six months endedJune 30, 2005;*

| ** **                                                  | ** ** | **Three  months** | ** ** | **Six  months** | ** ** |
|-------------------------------------------------------------|------------|-------------------|------------|-----------------|------------|
| Weighted  average shares outstanding as previously reported |       |              | 85.1       |            |       |   | 85.8 |   |   |
| Share  exchange ratio in reverse acquisition                |       |              | 2.5        |            |       |   | 2.5 |   |   |
| Weighted  average shares outstanding, as restated           |       |              | 212.8      |            |       |   | 214.5 |   |   |

 

As at June 30, 2006, we had authorizedshares totaling one billion and issued and outstanding shares totaling 289.4million.

On May 18, 2006 we approved anddeclared the payment of a regular quarterly cash dividend of $0.01 per share onJune 20, 2006 to stockholders of record as of June 12, 2006 totaling£1.6 million. Future payments of regular quarterly dividends by the Company areat the Board’s discretion and will be subject to the Company’s future needs anduses of free cash flow, which could include investments in operations, therepayment of debt, and share repurchase programs.

Basic and diluted earnings per share is computed by respectivelydividing the loss from continuing operations, income from discontinuedoperations and the net (loss) income by the weighted average number of sharesoutstanding during the six months ended June 30, 2006 and 2005.Outstanding warrants, options to purchase 37.4 million shares and 1.1 millionshares of restricted stock at June 30, 2006 are excluded from thecalculation of diluted earnings per share, since the inclusion of suchwarrants, options and shares is anti-dilutive. The average number of sharesoutstanding for the six months ended June 30, 2006 is computed as follows(in millions):

| ** **                                       | ** ** | **Number of  Shares** | ** ** |
|--------------------------------------------------|------------|----------------------------|------------|
| Number  of shares outstanding at start of period |       |                       | 212.9      |   |   |
| Issues  of common stock                          |       |                       | 49.5       |   |   |
| Repurchase  of stock                             |       |                       | —     |   |   |
| Weighted  average shares outstanding             |       |                       | 262.4      |   |   |

 

The following table summarizes the activity of NTL Incorporated optionplans for the 2006 interim period. All values are adjusted for the 2.5conversion of shares on the reverse acquisition of Telewest.

| ** **                                  | ** ** | **Options to  purchase  common stock** | ** ** | **Weighted average  exercise price** | ** ** |
|---------------------------------------------|------------|--------------------------------------------------|------------|------------------------------------------------|------------|
| Outstanding  at the beginning of the period |       |                                             | 7,756,241  |                                           |       |   | $ | 14.89 |   |   |
| Granted:                                    |       |                                             |       |                                           |       |   |   |   |   |
| As part of the purchase transaction         |       |                                             | 5,193,645  |                                           |       |   | $ | 14.17 |   |   |
| Other                                       |       |                                             | 4,674,394  |                                           |       |   | $ | 19.84 |   |   |
| Exercised                                   |       |                                             | (4,826,734 | )                                              |       |   | $ | 12.64 |   |   |
| Forfeited,  expired or cancelled            |       |                                             | (1,197,139 | )                                              |       |   | $ | 19.78 |   |   |
| Outstanding  at the end of the period       |       |                                             | 11,600,407 |                                           |       |   | $ | 16.99 |   |   |
| Exercisable  at the end of the period       |       |                                             | 4,214,373  |                                           |       |   | $ | 12.73 |   |   |

 

16

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**

**(Continued)**

The following table summarizes the activity of NTL Incorporatedrestricted stock plans for the 2006 interim period. All values are adjusted forthe share exchange ratio of 2.5 on the reverse acquisition of Telewest.

| ** **                                  | ** ** | **Common stock** | ** ** |
|---------------------------------------------|------------|-----------------------|------------|
| Outstanding  at the beginning of the period |       |                  | 75,330     |   |   |
| Granted                                     |       |                  | 1,090,650  |   |   |
| Awards  vested and shares issued            |       |                  | (69,223    | ) |   |
| Forfeited,  expired or cancelled            |       |                  | (8,027     | ) |   |
| Outstanding  at the end of the period       |       |                  | 1,088,730  |   |   |

 

As disclosed in the 2005 Annual Report on Form 10-Kfor NTL Holdings, we adopted Statement of Financial Accounting Standards (SFAS)No. 123 (revised 2004), *Share-Based Payment*effective January 1, 2006. As a result, we have recorded a cumulativeeffect of a change in accounting principle of £1.2 million to reducecompensation expense recognized in previous periods.

Total sharebased compensation expense included in selling, general and administrativeexpenses in the statement of operations was £20.0 million and £6.8 million forthe six months ended June 30, 2006 and 2005, respectively.

**Note 8—Comprehensive(Loss) Income**

Comprehensive (loss) income comprises (in millions) (unaudited):

| ** **                                    | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                    | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| Net  (loss) income for period                 |       | £                                          | (195.8     | )                                             | £     | 73.5 |   | £ | (315.7 | ) | £ | 529.3 |   |
| Currency  translation adjustments             |       | 99.4                                            |       | 28.6                                          |       | 82.4 |   | 23.9 |   |
| Net  unrealized (losses) gains on derivatives |       | (6.0                                            | )          | (2.0                                          | )          | (7.2 | ) | 5.6 |   |
| Pension  liability adjustment                 |       | —                                          |       | 2.1                                           |       | — |   | 2.1 |   |
| Comprehensive  (loss) income                  |       | £                                          | (102.4     | )                                             | £     | 102.2 |   | £ | (240.5 | ) | £ | 560.9 |   |

 

The components of accumulated other comprehensive income, net of taxes,were as follows (in millions);

| ** **                            | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|---------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                            | ** ** | **(unaudited)**         | ** ** | ** **                  | ** ** |
| Foreign  currency translation         |       |                    | £     | 146.9                       |       |   |   | £ | 64.5 |   |   |
| Pension  liability adjustments        |       |                    | (18.2      | )                           |       |   | (18.2 | ) |   |
| Net  unrealized losses on derivatives |       |                    | (8.0       | )                           |       |   | (0.8 | ) |   |
|                                  |       |                    | £     | 120.7                       |       |   |   | £ | 45.5 |   |   |

 

**Note 9—Incometaxes**

At each periodend, it is necessary for us to make certain estimates and assumptions tocompute the provision for income taxes including, but not limited to theexpected operating income (or loss) for the 

17

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**

**(Continued)**

year,projections of the proportion of income (or loss) earned and taxed in theUnited Kingdom and the extent to which this income (or loss) may also be taxedin the United States, permanent and temporary differences, the likelihood ofdeferred tax assets being recovered and the outcome of contingent tax risks. Ateach interim period, management uses the best information available to developthese estimates and assumptions, which are used to compute the forecasteffective tax rate for the full year which is applied in computing the incometax expense or benefit for the interim period. In accordance with generallyaccepted accounting principles, the impact of revisions to these estimates arerecorded as income tax expense or benefit in the period in which they becomeknown. Accordingly, the accounting estimates used to compute the provision forincome taxes have and will change as new events occur, as more experience isacquired, as additional information is obtained and our tax environmentchanges. To the extent that the estimate changes during a subsequent quarterthe effect of the change on prior quarters as well as on the current quarter isincluded in income tax expense for the current quarter.

**Note 10—Commitmentsand Contingent Liabilities**

At June 30, 2006, we were committed to pay approximately £383.6million for equipment, services and licenses. This amount includesapproximately £77.2 million for operations and maintenance contracts and othercommitments from July 1, 2007 to 2016. The aggregate amount of the fixedand determinable portion of these obligations for the succeeding fivefiscal years is as follows (in millions) (unaudited):

| Year ended June 30 |   |   |   |
|-----------------------------------|--------|--------|--------|
| 2007                              |   | £ | 306.4  |   |
| 2008                              |   | 9.2    |   |
| 2009                              |   | 8.5    |   |
| 2010                              |   | 8.5    |   |
| 2011                              |   | 8.5    |   |
| Thereafter                        |   | 42.5   |   |
|                              |   | £ | 383.6  |   |

 

We are involved in certain disputes andlitigation arising in the ordinary course of our business. None of thesematters are expected to have a material adverse effect on our financialposition, results of operations or cash flows.

18

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**

**(Continued)**

Our banks have provided guarantees in the form of performance bonds onour behalf as part of our contractual obligations. The fair value of theguarantees has been calculated by reference to the monetary value for eachperformance bond. The amount of commitment expires over the following periods(in millions) (unaudited):

| Year ended June 30 |   |   |   |
|-----------------------------------|--------|--------|--------|
| 2007                              |   | £ | 4.9    |   |
| 2008                              |   | 2.2    |   |
| 2009                              |   | 9.8    |   |
| 2010                              |   | — |   |
| 2011                              |   | — |   |
| Thereafter                        |   | 8.6    |   |
|                              |   | £ | 25.5   |   |

 

**Note 11—RecentAccounting Pronouncements**

In May 2005, the Financial AccountingStandards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 154,*Accounting Changes and Error Corrections—areplacement of APB Opinion No. 20 and FASB Statement No. 3*.SFAS 154 replaces Accounting Principles Board (“APB”) Opinion No. 20,*Accounting Changes*, and SFAS 3,*Reporting Accounting Changes in Interim FinancialStatements*, and changes the requirements for the accounting for, andreporting of, a change in accounting principle. This statement carries forwardwithout change the guidance contained in Opinion 20 for reporting thecorrection of an error in previously issued financial statements and a changein accounting estimate. SFAS 154 is effective for accounting changes andcorrections of errors in fiscal years beginning after December 31, 2005.Early adoption is permitted for accounting changes and corrections of errorsmade in fiscal years beginning after the date SFAS 154 is issued. The adoptionof SFAS 154 did not have a material impact on our consolidated financialstatements.

In July 2006,the FASB issued FASB Interpretation (“FIN”) No. 48 Accounting forUncertainty in Income Taxes—an interpretation of FASB Statement 109. FIN 48prescribes a comprehensive model for recognizing, measuring, presenting anddisclosing in the financial statements tax positions taken or expected to betaken on a tax return, including a decision whether to file or not to file in aparticular jurisdiction. FIN 48 is effective for fiscal years beginning after December 15,2006. If there are changes in net assets as a result of application of FIN 48these will be accounted for as an adjustment to retained earnings. The Companyis currently assessing the impact of FIN 48 on its consolidated financialposition and results of operations.

**Note 12—SegmentInformation**

Our reportable segments are based on ourmethod of internal reporting. Our primary business segment is our Cablesegment, which consists of our television, broadband and telephony business. Wealso operate a Content segment through our wholly owned subsidiaries FlextechLimited (“Flextech’’) and sit-up Limited (“sit-up”), which supply TVprogramming to the UK pay-television broadcasting market including ourtelevised shopping unit sit-up TV, which markets and retails a wide variety ofconsumer products using an auction-based format. Our segments operate entirelyin the United Kingdom and no one customer represents more than 5% of ouroverall revenue.

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**NTL INCORPORATED**

**NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**

**(Continued)**

Segment operating income beforedepreciation, amortization and other charges, which we refer to as Segment OCF,is management’s measure of segment profit as permitted under SFAS 131, *“Disclosures about Segments of an Enterprise and Related Information”.*Our management, including our chief executive officer who is our chief operatingdecision maker, considers Segment OCF as an important indicator of theoperational strength and performance of our segments. Segment OCF excludes theimpact of costs and expenses that do not directly affect our cash flows. Othercharges, including restructuring charges, are also excluded from Segment OCF asmanagement believes they are not characteristic of our underlying businessoperations.

Segment information for the three and sixmonth periods ended June 30, 2006 is as follows (in millions) (unaudited):

| ** **                                    | ** ** | **Three months ended June 30, 2006** | ** ** |
|-----------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                    | ** ** | **Cable**                                                     | ** ** | **Content** | ** ** | **Elims.** | ** ** | **Total** | ** ** |
| Revenue                                       |       | £                                                        | 804.8      |   |   | £ | 79.5 |   |   |   | £ | — |   |   | £ | 884.3 |   |
| Inter  segment revenue                        |       | 0.4                                                           |       |   | 5.7 |   |   |   | (6.1 | ) |   | — |   |
| Operating  costs                              |       | (319.0                                                        | )          |   | (54.2 | ) |   |   | 5.7 |   |   | (367.5 | ) |
| Selling,  general and administrative expenses |       | (201.7                                                        | )          |   | (22.2 | ) |   |   | 0.4 |   |   | (223.5 | ) |
| Segment  OCF                                  |       | 284.5                                                         |       |   | 8.8 |   |   |   | — |   |   | 293.3 |   |
| Depreciation,  amortization and other charges |       | (280.2                                                        | )          |   | (6.8 | ) |   |   | — |   |   | (287.0 | ) |
| Operating  income                             |       | £                                                        | 4.3        |   |   | £ | 2.0 |   |   |   | £ | — |   |   | £ | 6.3 |   |
| Identifiable  assets                          |       | £                                                        | 9,391.1    |   |   | £ | 786.9 |   |   |   | £ | — |   |   | £ | 10,178.0 |   |

 

| ** **                                    | ** ** | **Six months ended June 30, 2006** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------------------------|------------|
| ** **                                    | ** ** | **Cable**                                                   | ** ** | **Content** | ** ** | **Elims.** | ** ** | **Total** | ** ** |
| Revenue                                       |       | £                                                      | 1,389.0    |   |   | £ | 106.7 |   |   |   | £ | — |   |   | £ | 1,495.7 |   |
| Inter  segment revenue                        |       | 0.7                                                         |       |   | 7.5 |   |   |   | (8.2 | ) |   | — |   |
| Operating  costs                              |       | (556.6                                                      | )          |   | (73.3 | ) |   |   | 7.5 |   |   | (622.4 | ) |
| Selling,  general and administrative expenses |       | (353.2                                                      | )          |   | (29.1 | ) |   |   | 0.7 |   |   | (381.6 | ) |
| Segment  OCF                                  |       | 479.9                                                       |       |   | 11.8 |   |   |   | — |   |   | 491.7 |   |
| Depreciation,  amortization and other charges |       | (473.3                                                      | )          |   | (8.2 | ) |   |   | — |   |   | (481.5 | ) |
| Operating  income                             |       | £                                                      | 6.6        |   |   | £ | 3.6 |   |   |   | £ | — |   |   | £ | 10.2 |   |
| Identifiable  assets                          |       | £                                                      | 9,391.1    |   |   | £ | 786.9 |   |   |   | £ | — |   |   | £ | 10,178.0 |   |

 

In 2005, the Company did not have anyoperations in the Content segment and all of its operations related to theCable segment. Included in identifiable assets is £1,310.2 million and £109.8million of goodwill from the acquisition of Telewest that has beenpreliminarily allocated to the Cable and Content segments, respectively. Weexpect to finalize this allocation upon completion of our purchase priceallocation.

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**ITEM 2.**                MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

*The following discussion should be read inconjunction with the Condensed Consolidated Financial Statements and relatednotes that appear elsewhere in this document.*

**OVERVIEW**

We are one ofthe leading communications and content distribution companies in theUnited Kingdom (U.K.), providing internet access, telephone and televisionservices to approximately 5 million residential on-net customers. We alsoprovide internet and telephone services to our residential customers who arenot connected to our cable network via access to other companies’telecommunications networks and via an internet service provider operated byour subsidiary, Virgin Net Limited. We offer what we refer to as a “triple play”bundle of internet, telephone and television services through competitivelypriced bundled packages. We also provide a range of voice services tobusinesses and public sector organizations, as well as a variety of data communicationssolutions from high speed internet access to fully managed businesscommunications networks and communication transport services. These servicesare delivered through our wholly owned local access communications networkpassing more than 12.5 million homes in the U.K. The design and capabilityof our network provides us with the ability to offer “triple play” bundledservices to residential customers and a broad portfolio of reliable,competitive communications solutions to business customers.

Through ourwholly owned subsidiaries, Flextech Limited (“Flextech”) and sit-up Limited (“sit-up”),we provide basic television channels and related services to the U.K.multi-channel broadcasting market and a wide variety of consumer products bymeans of sit-up’s auction based shopping channels.

***Acquisitionsand Disposals***

*Acquisition of Virgin Mobile*

On July 4,2006, we acquired 100% of the outstanding shares and options of Virgin Mobilethrough a U.K. Scheme of Arrangement. Virgin Mobile is the largest mobilevirtual network operator in the United Kingdom, with approximately 4.3 millioncustomers.

The totalpurchase price of approximately £952.1 million includes cash ofapproximately £418.2 million, common stock valued at £518.8 millionand estimated direct transaction costs of £15.1 million. The averagemarket price per share of common stock utilized in determining the value of newcommon stock issued of £15.07 ($26.59) is based on an average of the closingprices of NTL common stock divided by the Telewest acquisition conversion ratioof 2.5 times for a range of trading days (January 12, January 13, January 17,January 18, January 19) around the announcement date of the proposedmerger (January 16, 2006).

We financed thecash portion of the Offer and transactional expenses through £475 million ofadditional bank borrowings committed under our existing senior credit facilityand cash on hand.

On May 24,2005 we received approval by a majority of the shareholders of Virgin Mobile,other than those associated with affiliates of the Virgin Group, to enter intoa trade mark license agreement with Virgin Enterprises Limited under which weare entitled to use certain Virgin trade marks within the United Kingdom andIreland. The agreement was entered into on the same date and is an exclusivelicense covering a number of aspects of our consumer business, including theprovision of communications services (such as internet, television, fixed linetelephony, and upon the acquisition of Virgin Mobile, mobile telephony), theacquisition and branding of sports, movie and other premium television content,and the branding and sale of certain communications equipment related to ourconsumer businesses, such as set top boxes and cable modems. The agreementprovides for a royalty of 0.25% per annum of our 

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revenuefrom the relevant businesses, subject to a minimum annual royalty of£8.5 million (the royalty would have been approximately £9 million basedon combined historical NTL and Telewest 2005 revenues including revenue fromVirgin Mobile and our subsidiary Virgin.Net). The agreement replaces theexisting license agreement under which our subsidiary Virgin.net was entitledto use the Virgin brand in relation to its internet business. The agreement hasa term of 30 years, although we can terminate it after 10 years on one year’snotice, and it is subject to earlier termination by us in certain othercircumstances, including (subject to specified payments) a change of control.The agreement also entitles us to use a corporate name that includes the Virginname. We expect to commence the proposed re-branding of our consumer operationsin early 2007.

*Reverse Acquisition of Telewest*

On March 3,2006 NTL Holdings Inc. (formerly known as NTL Incorporated) merged with asubsidiary of NTL Incorporated (formerly known as Telewest Global, Inc. orTelewest) and the merger has been accounted for as a reverse acquisition ofTelewest using the purchase method. This merger created the U.K.’s largestprovider of residential broadband and triple play services. In connection withthis transaction, Telewest changed its name to NTL Incorporated.

The totalpurchase price of approximately £3.5 billion includes cash ofapproximately £2.3 billion, common stock valued at £1.1 billion,stock options with a fair value of £33.3 million and estimated directtransaction costs of £25.1 million. The average market price per share ofcommon stock utilized in determining the value of new common stock issued of£13.00 ($22.90) is based on an average of the closing prices of Telewest commonstock for a range of trading days (September 29, September 30, October 3,October 4 and October 5, 2005) around the announcement date of theproposed merger (October 3, 2005). The cash payment of £2.3 billion wasbased on the redemption value of $16.25 (£9.30) per share of Telewestredeemable common stock issued in exchange for Telewest common stock in thetransaction and 246.0 million shares of Telewest redeemable common stockso issued.

The outstandingoptions to purchase shares of NTL Holdings Inc. common stock were exchanged foroptions to purchase shares of NTL Incorporated new common stock with the sameterms and conditions. The outstanding options to purchase shares of Telewestcommon stock were converted into options to purchase shares of NTL Incorporatednew common stock at an option price calculated in accordance with the formulain the merger agreement. In accordance with the terms of Telewest’sequity-based plans, a significant proportion of Telewest’s outstanding optionsthat were granted prior to March 3, 2006 vested upon completion of themerger. All vested and unvested options of Telewest have been recorded at theirfair value by using the Black-Scholes option pricing model.

*Sale of Broadcast and Irish Operations*

On January 31,2005, we sold our broadcast operations, a provider of commercial television andradio transmission services, to a consortium led by Macquarie CommunicationsInfrastructure Group. The cash proceeds from the sale were approximately£1.3 billion. Our broadcast operations provided site leasing, broadcasttransmission, satellite, media, public safety communications and other networkservices, utilizing broadcast transmission infrastructure, wirelesscommunications and other facilities.

On May 9,2005, we sold our telecommunications operations in the Republic of Ireland toMS Irish Cable Holdings B.V., an affiliate of Morgan Stanley, for an aggregatepurchase price of €333.4 million,or £225.5 million.

As a result ofthe sale of our broadcast and Ireland operations, we have accounted for thebroadcast and Ireland operations as discontinued operations in 2005. Financialinformation for prior periods presented in this report is restated accordingly.The results of operations for the broadcast and Ireland operations have beenexcluded from the components of loss from continuing operations and shown in a 

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separatecaption, titled income from discontinued operations, and the assets andliabilities of the broadcast and Ireland operations are reported as assets heldfor sale and liabilities of discontinued operations, respectively. Revenue fromthe broadcast operations reported in discontinued operations for the three andsix months ended June 30, 2005 was £nil and £21.4 million, respectively.Pre-tax (loss) income from broadcast operations, reported as pre-tax (loss)income from discontinued operations, for the three and six months ended June 30,2005, was £(1.1) million and £3 million, respectively. Revenue from theIreland operations reported in discontinued operations for the three and sixmonths ended June 30, 2005 was £6.4 million and £25.6 million,respectively. Pre-tax (loss) income from Ireland operations, reported as pre-tax(loss) income from discontinued operations, for the three and six months ended June 30,2005 was £(0.7) million and £2.5 million, respectively.

***CriticalAccounting Policies***

*Business Combinations*

We are requiredto allocate the purchase price of acquired companies to the tangible andintangible assets acquired and liabilities assumed based on their fair values.We engage third party appraisal firms to assist us in determining the fairvalues of assets acquired and liabilities assumed. Such a valuation requiresmanagement to make significant estimates and assumptions, especially withrespect to intangible assets.

Criticalestimates in valuing certain of the intangible assets include but are notlimited to: future expected cash flows from customer contracts, customer lists;the trademark’s brand awareness and market position, as well as assumptionsabout the period of time the brand will continue to be used in the combinedcompany’s product portfolio; and discount rates. Management’s assumptions aboutfair value are based upon assumptions believed to be reasonable, but which areinherently uncertain and unpredictable. Assumptions may be incomplete orinaccurate, and unanticipated events and circumstances may occur, which mayaffect management’s estimates.

Other estimatesassociated with the accounting for these acquisitions may change as additionalinformation becomes available regarding the assets acquired and liabilitiesassumed. In particular, liabilities in relation to tax exposures or liabilitiesto restructure the pre-acquisition business, including the exit of propertiesand termination of employees, are subject to change as management completes itsassessment of pre-merger operations and begins to execute the approved plan.

***FactorsAffecting Our Business***

Our Cablesegment residential customers account for the majority of our total revenue.The number of residential customers, the number and types of services that eachcustomer uses and the prices we charge for these services drive our revenue.Our profit is driven by the relative margins on the types of services weprovide to these customers. For example, broadband internet is more profitablethan analogue television services. Our packaging of services and our pricingare designed to encourage our customers to use multiple services like dualtelephone and broadband. Factors affecting our profitability include customerchurn, average revenue per user, or ARPU, and competition.

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*Summary Statistics*

Selected statistics for residential customers of NTL, excludingcustomers off our network and virgin.net customers for the three months ended June 30,2006 as well as the four prior quarters, are set forth in the table below.

| ** **                                             | ** ** | **For the three months ended** | ** ** |
|--------------------------------------------------------|------------|----------------------------------------------------|------------|
| ** **                                             | ** ** | **June 30,  2006**                            | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** | **September 30,  2005** | ** ** | **June 30,  2005** | ** ** |
| Opening customers                                      |       | 4,983,800                                          |       | 3,089,800 |   |   | 3,097,300 |   |   |   | 3,055,900 |   |   | 3,008,100 |   |
| Data cleanse(1)                                        |       | (36,200                                            | )          | — |   |   | (18,100 | ) |   |   | — |   |   | — |   |
| Adjusted opening customers                             |       | 4,947,600                                          |       | 3,089,800 |   |   | 3,079,200 |   |   |   | 3,055,900 |   |   | 3,008,100 |   |
| Increase in customers on acquisition of  Telewest |       | —                                             |       | 1,880,400 |   |   | — |   |   |   | — |   |   | — |   |
| Customer additions                                     |       | 192,300                                            |       | 167,100 |   |   | 162,800 |   |   |   | 182,400 |   |   | 171,400 |   |
| Customer disconnects                                   |       | (211,200                                           | )          | (153,500 | ) |   | (142,200 | ) |   |   | (141,000 | ) |   | (123,600 | ) |
| Net customer movement                                  |       | (18,900                                            | )          | 13,600 |   |   | 20,600 |   |   |   | 41,400 |   |   | 47,800 |   |
| Reduction in customer count(2)                         |       | —                                             |       | — |   |   | (10,000 | ) |   |   | — |   |   | — |   |
| Closing customers                                      |       | 4,928,700                                          |       | 4,983,800 |   |   | 3,089,800 |   |   |   | 3,097,300 |   |   | 3,055,900 |   |
| Churn(3)                                               |       | 1.5                                                | %          | 1.4 | % |   | 1.6 | % |   |   | 1.6 | % |   | 1.5 | % |
| Revenue  generating units(4)                           |       |                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Television                                             |       | 3,293,100                                          |       | 3,315,900 |   |   | 1,942,700 |   |   |   | 1,940,100 |   |   | 1,961,900 |   |
| DTV (included in Television)                           |       | 2,836,200                                          |       | 2,786,500 |   |   | 1,445,100 |   |   |   | 1,409,300 |   |   | 1,405,100 |   |
| Telephone                                              |       | 4,233,000                                          |       | 4,268,100 |   |   | 2,573,100 |   |   |   | 2,598,600 |   |   | 2,593,200 |   |
| Broadband                                              |       | 2,902,300                                          |       | 2,821,700 |   |   | 1,625,200 |   |   |   | 1,546,300 |   |   | 1,408,600 |   |
| Total Revenue Generating Units                         |       | 10,428,400                                         |       | 10,405,700 |   |   | 6,141,000 |   |   |   | 6,085,000 |   |   | 5,963,700 |   |
| RGU/Customers                                          |       | 2.12                                               | x          | 2.09 | x |   | 1.99 | x |   |   | 1.96 | x |   | 1.95 | x |
| Internet dial-up and DTV   access(5)                   |       | 113,300                                            |       | 140,400 |   |   | 123,700 |   |   |   | 145,900 |   |   | 182,500 |   |
| Average  revenue per user(6)                           |       | £                                             | 42.21      |   | £ | 40.92 |   |   | £ | 38.96 |   |   |   | £ | 38.99 |   |   | £ | 39.69 |   |
|                                                        |            |                                                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)          Datacleanse activity in Q2-06 resulted in a decrease of 36,200 customers and 69,000RGUs, a decrease of approximately 13,500 Telco, 24,400 Broadband and 31,100 TVRGUs. Data cleanse activity in Q2-06 is a result of more closely aligningcustomer definitions between old NTL and old Telewest together with the removalof approximately 20,000 inactive backlog customers in old NTL.

                           Data cleanse activity in Q4-05 resulted in a decrease in old NTL of18,100 customers and 43,100 RGUs, a decrease of approximately 17,700 Telco,26,600 Broadband and an increase of 1,300 net TV RGUs.

(2)          Reviewof inactive backlog customers in the three months ended December 31, 2005resulted in an adjustment to remove an additional 10,000 customers.

(3)          Customerchurn is calculated by taking the total disconnects during the month anddividing them by the average number of customers during the month. Averagemonthly churn during a quarter is the average of the three monthly churncalculations within the quarter.

(4)          Eachtelephone, television and broadband internet subscriber directly connected toour network counts as one RGU. Accordingly, a subscriber who receives bothtelephone and television service counts as two RGUs. RGUs may includesubscribers receiving some services for free or at a reduced rate in connectionwith incentive offers.

(5)          Dial-upinternet customers exclude metered customers who have not used the servicewithin the last 30 days and include virgin.net customers.

(6)          Themonthly average revenue per user, or ARPU, is calculated on a quarterly basisby dividing total revenue generated from the provision of telephone, televisionand internet services to customers who 

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aredirectly connected to our network in that period, exclusive of VAT, by the averagenumber of customers directly connected to our network in that period divided bythree. For the three months ended June 30, 2006, we had average on-net revenuesof £628.4 million and average customers of 4,962,000.

***Customer Churn.******  ***Customer churn is a measure of the number of customers who stopusing our services. An increase in our customer churn can lead to increasedcosts and reduced revenue. We continue to focus on improving our customerservice and enhancing and expanding our service offerings to existing customersin an effort to manage our customer churn rate. Although our ability to reduceour customer churn rate beyond a base level is limited by factors likecustomers moving outside our network service area, in particular during thesummer season, managing our customer churn rate is a significant component ofour business plan. Our customer churn rate may increase if we are unable todeliver our services over our network without interruption or if we fail tomatch offerings by our competitors.

***ARPU.******  ***Average Revenue Per User, or ARPU, is a measure we use to evaluatehow effectively we are realizing potential revenue from customers. We believethat our “triple play” offering of telephone service, broadband access to theinternet and television services is attractive to our existing customer baseand allows us to increase our ARPU by facilitating the sale of multipleservices to each customer.

***Competition.******  ***Our ability to acquire and retain customers and increase revenuedepends on our competitive strength. There is significant competition in ourmarkets, including through other broadband service providers, telephoneservices offered by British Telecom (“BT”), alternative internet accessservices like DSL, which is offered by BT, satellite television servicesoffered by BSkyB and digital terrestrial television offered through Freeview.If competitive forces prevent us from charging the prices for these servicesthat we plan to charge, or if our competition is able to attract our customersor potential customers we are targeting, our results of operations will beadversely affected.

***Capital Expenditures.******  ***Our business requires substantial capital expenditures on acontinuing basis for various purposes, including expanding, maintaining andupgrading our network, investing in new customer acquisitions, and offering newservices. If we do not continue to invest in our network, our ability to retainand acquire customers may be hindered. Therefore, our liquidity and theavailability of cash to fund capital projects are important drivers of ourrevenue. When our liquidity is restricted, so is our ability to meet ourcapital expenditure requirements. We believe that our cash on hand, together withcash from operations, and if required, drawdowns under our revolving creditfacility, will be sufficient for our cash requirements through June 30,2007.

***Currency Movements.******  ***We encounter currency exchange rate risks because all of our revenueand substantially all of our operating costs are earned and paid primarily inU.K. pounds sterling, but we pay interest and principal obligations withrespect to a portion of our existing indebtedness in U.S. dollars andeuros. To the extent that the pound sterling declines in value against the U.S.dollar or the euro, the effective cost of servicing our U.S. dollar debt oreuro debt will be higher. As of June 30, 2006, £797.0 million, or 13.7% ofour long-term debt, was denominated in U.S. dollars and £155.5 million, or2.7%, of our long-term debt was denominated in euros. To mitigate the risk fromthese exposures, we have implemented a cash flow hedging program. The objectiveof this program is to reduce the volatility of our cash flows and earningscaused by changes in underlying rates.

Currently theprincipal element of all U.S. dollar and euro denominated debt is hedged inorder to fully mitigate against the risks that are presented by moving exchangerates. In addition to this (and with the exception of the alternative bridge)all payments of interest in U.S. dollar and euro are also hedged until at leastthe first call date of the underlying instrument. The alternative bridge waspartially re-financed by a $550 million Senior Note on July 25, 2006, andthe principal and interest obligations incumbent upon the Company as a resultof this have been hedged to maturity.

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***Seasonality.******  ***Some revenue streams are subject to seasonal factors. For example,telephone usage revenue by customers and businesses tends to be slightly lowerduring summer holiday months. Our customer churn rates include persons whodisconnect service because of moves, resulting in a seasonal increase in ourchurn rates during the summer months when higher levels of U.K. house movesoccur and students leave their accommodations between school years. Inaddition, our Content segment includes home shopping channels operated bysit-up that are affected by seasonal changes that are common in the retailindustry.

**RESULTS OF OPERATIONS**

***Threemonths ended June 30, 2006 and 2005***

**Historical Results from ContinuingOperations**

*Revenue*

For the threemonths ended June 30, 2006, consolidated revenue increased by 83.3% to£884.3 million from £482.5 million for the three months ended June 30,2005. This increase is primarily due to the reverse acquisition of Telewest andthe inclusion of its revenues from March 3, 2006.

*Expenses*

*OperatingCosts.**  *For the three months ended June 30, 2006 and 2005, operatingcosts, including network expenses, increased by 87.5% to £367.5 million from£196.0 million. This increase is primarily attributable to the reverseacquisition of Telewest. Operating costs as a percentage of revenue ,increased to41.6% for the three months ended June 30, 2006, from 40.6% for the sameperiod in 2005, in part due to the inclusion of the Telewest content segmentsubsequent to the acquisition which has lower margins than our cable segment.

*Selling,general and administrative expenses.**  *For thethree months ended June 30, 2006, selling, general and administrativeexpenses increased by 82.7% to £223.5 million from £122.3 million for thethree months ended June 30, 2005. This increase is primarily attributableto the reverse acquisition of Telewest. Selling, general and administrativeexpenses as a percentage of revenue remained broadly constant, remaining at25.3% for the three months ended June 30, 2006 as they were for the sameperiod in 2005.

*Other charges*

Other chargesof £12.1 million in the three months ended June 30, 2006 relate to ourhistorical restructuring programs and restructuring programs initiated inrespect of the reverse acquisition of Telewest.

The following tables summarize our historical restructuring provisionsand the restructuring provisions resulting from the reverse acquisition ofTelewest at June 30, 2006 (in millions):

| **Historical Restructuring Provisions** | ** ** | ** ** | ** ** | **Involuntary  Employee  Termination  and Related  Costs** | ** ** | **Lease  Exit  Costs** | ** ** | **Total** | ** ** |
|---------------------------------------------------|------------|------------|------------|-----------------------------------------------------------------|------------|------------------------|------------|-----------|------------|
| Balance,  March 31, 2006                     |       |       | £     |                                                            |       |                   | £     | 45.4      |       | £ | 45.4 |   |
| Charged  to expense                               |       |       | —     |                                                            |       | 1.1                    |       | 1.1       |       |
| Utilized                                          |       |       | —     |                                                            |       | (1.9                   | )          | (1.9      | )          |
| Balance,  June 30, 2006                      |       |       | £     | —                                                          |       |                   | £     | 44.6      |       | £ | 44.6 |   |

 

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| **Acquisition Restructuring Provisions**    | ** ** | ** ** | ** ** | **Involuntary  Employee  Termination  and Related  Costs** | ** ** | **Lease  Exit  Costs** | ** ** | **Total** | ** ** |
|-------------------------------------------------------|------------|------------|------------|-----------------------------------------------------------------|------------|------------------------|------------|-----------|------------|
| Balance,  March 31, 2006                         |       |       | £     | 25.4                                                            |       |                   | £     | 37.1      |       | £ | 62.5 |   |
| Amendments  to business acquisition related provision |       |       | —     |                                                            |       | 8.7                    |       | 8.7       |       |
| Charged  to expense                                   |       |       | 8.4        |                                                            |       | 2.6                    |       | 11.0      |       |
| Utilized                                              |       |       | (8.9       | )                                                               |       | (0.8                   | )          | (9.7      | )          |
| Balance,  June 30, 2006                          |       |       | £     | 24.9                                                            |       |                   | £     | 47.6      |       | £ | 72.5 |   |

 

*Depreciationexpense*

For the threemonths ended June 30, 2006, depreciation expense increased to £219.3million from £129.6 million for the three months ended June 30, 2005.This increase is primarily attributable to the reverse acquisition of Telewestand related fair value adjustment to the property and equipment acquired.Excluding the impact of the reverse acquisition of Telewest, depreciationexpense has decreased due to the absence of depreciation on some assets thatbecame fully depreciated in 2005.

*Amortizationexpense*

For the threemonths ended June 30, 2006, amortization expense increased to£55.6 million from £27.5 million for the three months ended June 30,2005. The increase in amortization expense relates to additional intangibleassets arising from the reverse acquisition of Telewest.

*Interestexpense*

For the three months ended June 30,2006, interest expense increased to £135.6 million from £58.4 million forthe three months ended June 30, 2005, primarily as a result of theadditional borrowing as a result of the reverse acquisition of Telewest.

We paidinterest in cash of £152.7 million for the three months ended June 30,2006, and £104.9 million for the three months ended June 30, 2005. Theincrease in cash interest payments resulted from the effects of the new seniorcredit facility and senior bridge facility in respect of the reverseacquisition of Telewest and changes in timing of interest payments.

*Foreigncurrency losses*

The foreigncurrency losses of £94.1 million in the three months ended June 30, 2006were largely comprised of foreign exchange losses of £75.4 million on U.S.dollar forward purchase contracts that were entered into to hedge the repaymentamount of the U.S. dollar denominated bridge facility. The repayment ofapproximately $3.1 billion of this facility on June 19, 2006 resulted inan offsetting gain during the period of £99.1 million that has been recorded asa component of equity. For the three months ended June 30, 2005, foreigncurrency transaction losses were £12.8 million. These losses for the threemonths ended June 30, 2005 were primarily because of the effect of changesin the exchange rate on our U.S. dollar and euro denominated debt partiallyoffset by unrealized gains of £14.5 million arising from changes in the fairvalue of our foreign currency forward contracts.

*Gainfrom derivative instruments*

The gain fromderivative instruments of £5.7 million in the three months ended June 30,2006, mainly relates to favourable movements in the mark-to-market values ofsterling interest rate swaps.

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*Incometax benefit*

For the three months ended June 30,2006, income tax benefit was £9.9 million as compared with £9.8 millionexpense for the same period in 2005.

For the threemonths ended June 30, 2006, the tax benefit of £9.9 million was comprisedof federal taxes of £8.8 million, and UK taxes of £1.0 million. The federal taxbenefit is attributable to a current year US tax loss which is mainly derivedfrom tax deductions related to the senior bridge facility repaid on June 19,2006. The tax benefit related to the release of a deferred tax liability set upin 2005. The UK tax benefit related to amounts receivable in respect of thesurrender of UK tax losses arising in the current period to our equity investments.

**ProForma Combined Company Results**

The following discussion describes the proforma combined results of operations as if the reverse acquisition of Telewesthad occurred on January 1, 2005 in respect of the three months ended June 30, 2005.Adjustments have been made to the combined results of operations primarily toreflect amortization of purchased intangibles as if the acquisition hadoccurred at the beginning of the period. This unaudited pro forma financialinformation is not intended to represent or be indicative of the consolidatedresults of operations or financial condition of NTL that would have beenreported had the acquisition been completed as of the dates presented, andshould not be taken as representative of the future consolidated results ofoperations or financial condition of NTL.

The pro forma results of operations of the combined company were asfollows (in millions);

| ** **          | ** ** | **Three months ended June 30** | ** ** |
|---------------------|------------|----------------------------------------------------|------------|
| ** **          | ** ** | **2006**                                           | ** ** | **2005** | ** ** | **% change** | ** ** |
| Revenue             |       | £                                             | 884.3      |   | £ | 859.9 |   |   | 2.8 |   |   |
| Costs  and expenses |       |                                               |       |   |   |   |   |   |   |
| Operating costs     |       | (367.5                                             | )          | (331.4 | ) |   | (10.9 | ) |   |
| SG&A            |       | (223.5                                             | )          | (210.1 | ) |   | (6.4 | ) |   |
| Other charges       |       | (12.1                                              | )          | (0.7 | ) |   | — |   |   |
| Depreciation        |       | (219.3                                             | )          | (219.3 | ) |   | — |   |   |
| Amortization        |       | (55.6                                              | )          | (60.1 | ) |   | 7.5 |   |   |
| Operating  income   |       | £                                             | 6.3        |   | £ | 38.3 |   |   | (83.6 | ) |   |

 

*Revenue*

On a pro formacombined basis, revenue increased by 2.8% from the three month period ended June 30,2005. The revenue increase from the comparative quarter in the prior year isprincipally due to the acquisition of Sit-Up Ltd by Telewest in May 2005,together with the favorable impact of increased revenues from our efforts atdriving “triple play” bundles and selected price increases.

*OperatingCosts*

On a pro formacombined basis our operating costs increased by 10.9% from the three monthperiod ended June 30, 2005 primarily due to the inclusion of operatingcosts from sit-up, which was acquired by Telewest in May 2005. Operatingcosts have increased in line with revenue.

*Selling,general and administrative expenses*

On a pro formacombined basis our selling, general and administrative expenses increased by6.4% from the three month period ended June 30, 2005. The 6.4% increasefrom June 30, 2005 is principally due to costs incurred in connection withthe integration of Telewest, additional share based compensation and the inclusionof selling, general and administrative expenses in respect of sit-up, which wasacquired by 

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Telewestin May 2005. These cost increases have been offset in part by cost savingsmade as a result of beginning to integrate the Telewest and NTL operations,mainly through employee headcount reduction.

*Othercharges*

On a pro formacombined basis, other charges increased by £11.4 million from the three monthperiod ended June 30, 2005. The £12.1 million charge in the three monthsended June 30, 2006 primarily represents employee termination costs andproperty exit costs in connection with a restructuring program with respect tothe integration of the NTL and Telewest operations.

*Depreciationand Amortization*

On a pro formacombined basis, depreciation was relatively unchanged and amortizationdecreased by 7.5% from the three month period ended June 30, 2005. Thedecreased amortization is principally the result of the absence of amortizationfor intangible assets fully depreciated in 2005.

**Pro FormaSegment Information**

A description of the products and services,as well as year-to-date financial data, for each segment can be found above inNote 12 to the Consolidated Condensed Financial Statements. The segment resultsfor the three-month period ended June 30, 2006 include the results ofTelewest from April 1, 2006. The following discussion relates to theresults of operations of each of our segments on a pro forma combined basis asif the reverse acquisition of Telewest had occurred at the beginning of theperiods presented and combine Telewest’s historical Content and sit-upsegments into the combined company’s Content segment. We believe that a proforma comparison is more relevant than a historic comparison as we were asingle segment business in prior periods. The reportable segments disclosed inthis Form 10-Q are based on our management organizational structureas of June 30, 2006. Future changes to this organizational structure mayresult in changes to the reportable segments disclosed.

Segmentoperating income before depreciation, amortization and other charges, which werefer to as Segment OCF, is management’s measure of segment profit as permittedunder SFAS 131, *“Disclosures about Segments of an Enterpriseand Related Information”.* Our management, including our chiefexecutive officer who is our chief operating decision maker, considers SegmentOCF as an important indicator of the operational strength and performance ofour segments. Segment OCF excludes the impact of costs and expenses that do notdirectly affect our cash flows. Other charges, including restructuring charges,are also excluded from Segment OCF as management believes they are notcharacteristic of our underlying business operations.

*CableSegment*

The summary pro forma combined results of operations of our Cablesegment were as follows (in millions):

| ** **                                    | ** ** | **Three months ended June 30**                                           | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|
| ** **                                    | ** ** | **       2006       ** | ** ** | **       2005       ** | ** ** |
| Revenue                                       |       |                                                                                         | £     | 804.8 |   |   |   | £ | 806.6 |   |   |
| Inter  segment revenue                        |       |                                                                                         | 0.4        |   |   |   | 0.8 |   |   |
| Segment  OCF                                  |       |                                                                                         | 284.5      |   |   |   | 312.3 |   |   |
| Depreciation,  amortization and other charges |       |                                                                                         | (280.2     | ) |   |   | (273.8 | ) |   |
| Operating  income                             |       |                                                                                         | £     | 4.3 |   |   |   | £ | 38.5 |   |   |

 

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*Revenue*

Our pro forma Cable segment revenue by customer type for the threemonths ended June 30, 2006 and 2005 was as follows (in millions):

| ** **    | ** ** | **2006** | ** ** | **2005** | ** ** | **Increase/  (Decrease)** | ** ** |
|---------------|------------|----------|------------|----------|------------|---------------------------|------------|
| Revenue:      |       |     |       |     |       |                      |       |   |   |
| Consumer      |       | £   | 644.7      |     | £     | 640.4                     |       |   | 0.7 | % |   |
| Business      |       | 160.1    |       | 166.2    |       |                      | (3.7       | )% |   |
| Total revenue |       | £   | 804.8      |     | £     | 806.6                     |       |   | (0.2 | )% |   |

 

*Consumer:*   For the threemonths ended June 30, 2006, pro forma revenue from residential customersincreased by 0.7% to £644.7 million from £640.4 million for the three monthsended June 30, 2005. This increase is driven largely by our efforts atdriving “triple play” bundles together with television and telephony pricerises offset by lower telephony usage.

*Business:*   For the three months ended June 30, 2006, pro formarevenue from business customers decreased by 3.7% to £160.1 million from £166.2million for the three months ended June 30, 2005. This decrease isattributable to declines in telephony voice revenue and lower wholesale andother contract revenue, partially offset by greater data installation andrental revenue.

*SegmentOCF*

For the threemonths ended June 30, 2006, pro forma Cable segment OCF decreased by 8.9%to £284.5 million from £312.3 million for the three months ended June 30,2005. The decrease in OCF is primarily due to costs incurred in connection withthe integration of Telewest, additional share based compensation expense andhigher bad debt expense increased compared with the three months ended June 30,2005.

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*Pro forma Summary Statistics*

Selected proforma combined statistics for residential customers of NTL and Telewestexcluding customers off our network and virgin.net customers for the threemonths ended June 30, 2006 as well as the four prior quarters are setforth in the table below. Amounts shown assume the merger of NTL and Telewesthad occurred on January 1, 2005.

| ** **                          | ** ** | **For the three months ended** | ** ** |
|-------------------------------------|------------|----------------------------------------------------|------------|
| ** **                          | ** ** | **June 30,  2006**                            | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** | **September 30,  2005** | ** ** | **June 30,  2005** | ** ** |
| Opening  customers                  |       | 4,983,800                                          |       | 4,958,000 |   |   | 4,945,400 |   |   |   | 4,893,100 |   |   | 4,830,600 |   |
| Data  cleanse(1)                    |       | (36,200                                            | )          | — |   |   | (18,100 | ) |   |   | — |   |   | — |   |
| Adjusted  opening customers         |       | 4,947,600                                          |       | 4,958,000 |   |   | 4,927,300 |   |   |   | 4,893,100 |   |   | 4,830,600 |   |
| Customer  additions                 |       | 192,300                                            |       | 218,100 |   |   | 248,900 |   |   |   | 271,900 |   |   | 250,800 |   |
| Customer  disconnects               |       | (211,200                                           | )          | (192,300 | ) |   | (208,200 | ) |   |   | (219,600 | ) |   | (188,300 | ) |
| Net customer movement               |       | (18,900                                            | )          | 25,800 |   |   | 40,700 |   |   |   | 52,300 |   |   | 62,500 |   |
| Reduction  in customer count(2)     |       | —                                             |       | — |   |   | (10,000 | ) |   |   | — |   |   | — |   |
| Closing  customers                  |       | 4,928,700                                          |       | 4,983,800 |   |   | 4,958,000 |   |   |   | 4,945,400 |   |   | 4,893,100 |   |
| Churn(3)                            |       | 1.5                                                | %          | 1.3 | % |   | 1.4 | % |   |   | 1.5 | % |   | 1.4 | % |
| Revenue  generating units(4)        |       |                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Television                          |       | 3,293,100                                          |       | 3,315,900 |   |   | 3,310,300 |   |   |   | 3,288,700 |   |   | 3,293,600 |   |
| DTV(included in Television)         |       | 2,836,200                                          |       | 2,786,500 |   |   | 2,715,900 |   |   |   | 2,637,500 |   |   | 2,594,600 |   |
| Telephone                           |       | 4,233,000                                          |       | 4,268,100 |   |   | 4,260,000 |   |   |   | 4,285,000 |   |   | 4,282,400 |   |
| Broadband                           |       | 2,902,300                                          |       | 2,821,700 |   |   | 2,630,300 |   |   |   | 2,466,500 |   |   | 2,261,400 |   |
| Total  Revenue Generating Units     |       | 10,428,400                                         |       | 10,405,700 |   |   | 10,200,600 |   |   |   | 10,040,200 |   |   | 9,837,500 |   |
| RGU/Customers                       |       | 2.12                                               | x          | 2.09 | x |   | 2.06 | x |   |   | 2.03 | x |   | 2.01 | x |
| Internet  dial-up and DTV access(5) |       | 113,300                                            |       | 140,400 |   |   | 181,600 |   |   |   | 219,000 |   |   | 273,000 |   |
| Average  revenue per user(6)        |       | £                                             | 42.21      |   | £ | 41.50 |   |   | £ | 41.27 |   |   |   | £ | 41.28 |   |   | £ | 41.63 |   |
|                                     |            |                                                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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       (1) Data cleanse activity in Q2-06 resulted in adecrease of 36,200 customers and 69,000 RGUs, a decrease ofapproximately 13,500 Telco, 24,400 Broadband and 31,100 TV RGUs. Datacleanse activity in Q2-06 is a result of more closely aligning customerdefinitions between old NTL and old Telewest together with the removal ofapproximately 20,000 inactive backlog customers in old NTL. Data cleanseactivity in Q4-05 resulted in a decrease in old NTL of 18,100 customers and43,100 RGUs, a decrease of approximately 17,700 Telco,26,600 Broadband and an increase of 1,300 net TV RGUs.

       (2) Review of inactive backlog customers in thethree months ended December 31, 2005 resulted in an adjustment to removean additional 10,000 customers.

       (3) Customer churn is calculated by taking thetotal disconnects during the month and dividing them by the average number ofcustomers during the month. Average monthly churn during a quarter is theaverage of the three monthly churn calculations within the quarter.

       (4) Each telephone, television and broadbandinternet subscriber directly connected to our network counts as one RGU.Accordingly, a subscriber who receives both telephone and television servicecounts as two RGUs. RGUs may include subscribers receiving some services forfree or at a reduced rate in connection with incentive offers.

       (5) Dial-up internet customers exclude meteredcustomers who have not used the service within the last 30 days andinclude virgin.net customers.

       (6) The monthly average revenue per user, or ARPU,is calculated on a quarterly basis by dividing total revenue generated from theprovision of telephone, television and internet services to customers who aredirectly connected to our network in that period, exclusive of VAT, by theaverage number of customers directly connected to our network in that period,divided by three. For the three months ended June 30, 2006, we had averageon-net revenues of £628.4 million and average customers of 4,962,000.

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*Content Segment*

The summary pro forma combined results of operations of our Contentsegment were as follows (in millions):

| ** **                                    | ** ** | **Three months  ended June 30** | ** ** |
|-----------------------------------------------|------------|------------------------------------------------|------------|
| ** **                                    | ** ** | **2006**                                       | ** ** | **2005** | ** ** |
| Revenue                                       |       | £                                         | 79.5       |   | £ | 53.3 |   |
| Inter  segment revenue                        |       | 5.7                                            |       | 5.2 |   |
| Segment  OCF                                  |       | 8.8                                            |       | 6.1 |   |
| Depreciation,  amortization and other charges |       | (6.8                                           | )          | (6.3 | ) |
| Operating  income (loss)                      |       | £                                         | 2.0        |   | £ | (0.2 | ) |

 

*Revenue*

For the threemonths ended June 30, 2006, pro forma revenue in the Content segmentincreased by 49.2% to £79.5 million from £53.3 million for the three monthsended June 30, 2005. This increase is driven largely by the inclusion inthe three months ended June 30, 2006 of sit-up which was acquired byTelewest in May 2005, and contributed revenue of £45.1 million in thesecond quarter of 2006. Increased revenue from Flextech of £5.7 million wasprincipally due to increased share of the advertising revenue market, acumulative effect of the relative strength of the viewing performance of theFlextech TV channels, and a seasonal increase (the Easter period being in thesecond quarter of 2006 as compared to the first quarter in 2005.)

*SegmentOCF*

For the threemonths ended June 30, 2006, pro forma Content segment OCF increased by44.3% to £8.8 million from £6.1 million for the three months ended June 30,2005. The increase in Content pro forma segment OCF is primarily due to theincrease in revenue in Flextech partially offset by increased marketing costs,together with the inclusion of sit-up.

***Sixmonths ended June 30, 2006 and 2005***

**HistoricalResults from Continuing Operations**

*Revenue*

For the sixmonths ended June 30, 2006, consolidated revenue increased by 52.6% to£1,495.7 million from £980.3 million for the six months endedJune 30, 2005. This increase is primarily due to the reverse acquisitionof Telewest and the inclusion of its revenues from March 3, 2006.

*Expenses*

*OperatingCosts.**  *For the six months ended June 30, 2006 and 2005, operatingcosts, including network expenses, increased by 54.5% to £622.4 million from£402.9 million. This increase is primarily attributable to the reverseacquisition of Telewest. Operating costs as a percentage of revenue increasedslightly to 41.6% for the six months ended June 30, 2006, from 41.1% forthe same period in 2005, in part due to the inclusion of the Telewest contentsegment subsequent to the acquisition which has lower margins than our cablesegment.

*Selling,general and administrative expenses.**  *For thesix months ended June 30, 2006, selling, general and administrativeexpenses increased by 57.6% to £381.6 million from £242.1 million for thesix months ended June 30, 2005. This increase is primarily attributable tothe reverse acquisition of Telewest. Selling, general and administrativeexpenses as a percentage of revenue remained broadly constant at 25.5% for thesix months ended June 30, 2006, from 24.7% for the same period in 2005.

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*Othercharges*

Other charges of £20.5 million in the sixmonths ended June 30, 2006 relate to our historical restructuring programsand restructuring programs initiated in respect of the reverse acquisition ofTelewest.

The following tables summarize our historical restructuring provisionsand the restructuring provisions resulting from the reverse acquisition ofTelewest at June 30, 2006 (in millions): 

| **Historical Restructuring Provisions** | ** ** | ** ** | ** ** | **Involuntary  Employee  Termination  and Related  Costs** | ** ** | **Lease  Exit  Costs** | ** ** | **Total** | ** ** |
|---------------------------------------------------|------------|------------|------------|-----------------------------------------------------------------|------------|------------------------|------------|-----------|------------|
| Balance,  December 31, 2005                  |       |       | £     | —                                                          |       |                   | £     | 45.3      |       | £ | 45.3 |   |
| Charged  to expense                               |       |       | —     |                                                            |       | 2.2                    |       | 2.2       |       |
| Utilized                                          |       |       | —     |                                                            |       | (2.9                   | )          | (2.9      | )          |
| Balance,  June 30, 2006                      |       |       | £     | —                                                          |       |                   | £     | 44.6      |       | £ | 44.6 |   |

 

| **Acquisition Restructuring Provisions**                         | ** ** | ** ** | ** ** | **Involuntary  Employee  Termination  and Related  Costs** | ** ** | **Lease  Exit  Costs** | ** ** | **Total** | ** ** |
|----------------------------------------------------------------------------|------------|------------|------------|-----------------------------------------------------------------|------------|------------------------|------------|-----------|------------|
| Balance,  December 31, 2005                                           |       |       | £     | —                                                          |       |                   | £     | —    |       | £ | — |   |
| Provisions  resulting from business acquisition recognized under EITF 95-3 |       |       | 34.8       |                                                            |       | 33.2                   |       | 68.0      |       |
| Amendments  to business acquisition related  provision                     |       |       | —     |                                                            |       | 8.7                    |       | 8.7       |       |
| Charged  to expense                                                        |       |       | 11.8       |                                                            |       | 6.5                    |       | 18.3      |       |
| Utilized                                                                   |       |       | (21.7      | )                                                               |       | (0.8                   | )          | (22.5     | )          |
| Balance,  June 30, 2006                                               |       |       | £     | 24.9                                                            |       |                   | £     | 47.6      |       | £ | 72.5 |   |

 

*Depreciationexpense*

For the sixmonths ended June 30, 2006, depreciation expense increased to £368.6million from £259.9 million for the six months ended June 30, 2005.This increase is primarily attributable to the reverse acquisition of Telewestand related fair value adjustment to the property and equipment acquired.Excluding the impact of the reverse acquisition of Telewest, depreciationexpense has decreased due to the absence of depreciation on some assets thatbecame fully depreciated in 2005.

*Amortizationexpense*

For the sixmonths ended June 30, 2006, amortization expense increased to£92.4 million from £54.9 million for the six months ended June 30,2005. The increase in amortization expense relates to additional intangibleassets arising from the reverse acquisition of Telewest.

*Interestexpense*

For the six months ended June 30,2006, interest expense increased to £219.4 million from £128.5 million forthe six months ended June 30, 2005, primarily as a result of theadditional borrowing as a result of the reverse acquisition of Telewest.

We paidinterest in cash of £219.5 million for the six months ended June 30, 2006,and £118.9 million for the six months ended June 30, 2005. The increase incash interest payments resulted from the effects of 

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thenew senior credit facility and senior bridge facility in respect of the reverseacquisition of Telewest and changes in timing of interest payments.

*Loss onextinguishment of debt*

The loss onextinguishment of debt of £32.4 million in the six months ended June 30,2006, relates to the write off of deferred financing costs on the senior creditfacility that was repaid upon completion of the refinancing for the reverseacquisition of Telewest.

*Lossfrom derivative instruments*

The loss fromderivative instruments of £3.5 million in the six months ended June 30,2006, mainly relates to the termination of derivative instruments in respect ofthe foreign currency tranche of the senior credit facility that was repaid uponcompletion of the refinancing for the reverse acquisition of Telewest.

*Foreigncurrency losses*

The foreigncurrency losses of £104.1 million in the six months ended June 30, 2006were largely comprised of foreign exchange losses of £75.4 million on U.S.dollar forward purchase contracts that were entered into to hedge the repaymentof the U.S. dollar denominated bridge facility. The repayment of approximately$3.1 billion of this facility on June 19, 2006 resulted in an offsettinggain during the period of £120.7 million that has been recorded as a componentof equity. For the six months ended June 30, 2005, foreign currencytransaction losses were £16.8 million. These losses for the six months ended June 30,2005 were primarily because of the effect of changes in the exchange rate onour U.S. dollar and euro denominated debt partially offset by unrealized gainsof £11.6 million arising from changes in the fair value of our foreign currencyforward contracts.

*Incometax benefit*

For the six months ended June 30,2006, income tax benefit was £9.9 million as compared with £21.1 millionexpense for the same period in 2005.

For the sixmonths ended June 30, 2006, the tax benefit of £9.9 million was comprisedof federal taxes of £8.8 million, and UK taxes of £1.0 million. The federal taxbenefit is attributable to a current year US tax loss which is mainly derivedfrom tax deductions related to the senior bridge facility repaid on June 19,2006. The tax benefit related to the release of a deferred tax liability set upin 2005. The UK tax benefit related to amounts receivable in respect of thesurrender of UK tax losses arising in the current period to equity investments.

**ProForma Combined Company Results**

The following discussion describes the proforma combined results of operations as if the reverse acquisition of Telewesthad occurred on January 1, 2006 in respect of the six months ended June 30,2006 and on January 1, 2005 in respect of the six months ended June 30,2005. The results of operations for the six months ended June 30, 2006include the results of operations of Telewest from March 3, 2006 (theacquisition date). Adjustments have been made to the combined results ofoperations primarily to reflect amortization of purchased intangibles as if theacquisition had occurred at the beginning of the periods presented. Thisunaudited pro forma financial information is not intended to represent or beindicative of the consolidated results of operations or financial condition ofNTL that would have been reported had the acquisition been completed as of thedates presented, and should not be taken as representative of the future consolidatedresults of operations or financial condition of NTL.

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The pro forma results of operations of the combined company were asfollows (in millions);

| ** **          | ** ** | **Six  months ended June 30** | ** ** |
|---------------------|------------|--------------------------------------------------------|------------|
| ** **          | ** ** | **2006**                                               | ** ** | **2005** | ** ** | **% change** | ** ** |
| Revenue             |       | £                                                 | 1,773.1    |   | £ | 1,693.1 |   |   | 4.7 |   |   |
| Costs  and expenses |       |                                                   |       |   |   |   |   |   |   |
| Operating costs     |       | (736.5                                                 | )          | (658.9 | ) |   | 11.8 |   |   |
| SG&A            |       | (466.3                                                 | )          | (415.1 | ) |   | 12.3 |   |   |
| Other charges       |       | (21.0                                                  | )          | (1.1 | ) |   | — |   |   |
| Depreciation        |       | (429.7                                                 | )          | (439.3 | ) |   | (2.2 | ) |   |
| Amortization        |       | (114.2                                                 | )          | (120.1 | ) |   | (4.9 | ) |   |
| Operating  income   |       | £                                                 | 5.4        |   | £ | 58.6 |   |   | (90.8 | ) |   |

 

*Revenue*

On a pro formacombined basis, revenue increased by 4.7% from the six month period ended June 30,2005. The revenue increase from the comparative quarter in the prior year isprincipally due to the acquisition of sit-up by Telewest in May 2005 together with an increased number ofbroadband subscribers.

*OperatingCosts*

On a pro formacombined basis our operating costs increased by 11.8% from the six month periodended June 30, 2005 primarily due to the inclusion of operating costs fromsit-up, which was acquired by Telewest in May 2005.

*Selling,general and administrative expenses*

On a pro formacombined basis our selling, general and administrative expenses increased by12.3% from the six period ended June 30, 2005. The 12.3% increase from June 30,2005 is principally due to costs incurred in connection with the reverseacquisition of Telewest, including investment banking, legal and accountingfees and insurance costs and the inclusion of selling, general andadministrative expenses in respect of sit-up, which was acquired by Telewest inMay 2005.

*Othercharges*

On a pro formacombined basis, other charges increased by £19.9 million from the six monthperiod ended June 30, 2005. The £21.0 million charge in the six monthsended June 30, 2006 primarily represents employee termination costs andproperty exit costs in connection with a restructuring program with respect tothe integration of the NTL and Telewest operations.

*Depreciationand Amortization*

On a pro formacombined basis, depreciation decreased by 2.2% and amortization decreased by4.9% from the six month period ended June 30, 2005. The decreases areprincipally the result of the absence of depreciation for tangible andintangible assets fully depreciated in 2005.

**ProForma Segment Information**

A description of the products and services,as well as year-to-date financial data, for each segment can be found above inNote 12 to the Consolidated Condensed Financial Statements. The segment resultsfor the six month period ended June 30, 2006 include the results ofTelewest from March 3, 2006 (the acquisition date). The followingdiscussion relates to the results of operations of each of our segments on a 

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pro formacombined basis as if the reverse acquisition of Telewest had occurred at thebeginning of the periods presented and combine Telewest’s historical Contentand sit-up segments into the combined company’s Content segment. Webelieve that a pro forma comparison is more relevant than a historic comparisonas we were a single segment business in prior periods. The reportable segmentsdisclosed in this Form 10-Q are based on our managementorganizational structure as of June 30, 2006. Future changes to thisorganizational structure may result in changes to the reportable segments disclosed.

Segmentoperating income before depreciation, amortization and other charges, which werefer to as Segment OCF is management’s measure of segment profit as permittedunder SFAS 131, *“Disclosures about Segments of an Enterpriseand Related Information”.* Our management, including our chiefexecutive officer who is our chief operating decision maker, considers SegmentOCF as an important indicator of the operational strength and performance ofour segments. Segment OCF excludes the impact of costs and expenses that do notdirectly affect our cash flows. Other charges, including restructuring charges,are also excluded from Segment OCF as management believes they are notcharacteristic of our underlying business operations.

*CableSegment*

The summary pro forma combined results of operations of our Cablesegment were as follows (in millions):

| ** **                                    | ** ** | **Six months ended June 30**                     | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------------------------|------------|
| ** **                                    | ** ** | **     2006     ** | ** ** | **     2005     ** | ** ** |
| Revenue                                       |       |                                                                 | £     | 1,607.1 |   |   |   | £ | 1,610.7 |   |   |
| Inter  segment revenue                        |       |                                                                 | 0.9        |   |   |   | 1.5 |   |   |
| Segment  OCF                                  |       |                                                                 | 552.1      |   |   |   | 609.0 |   |   |
| Depreciation,  amortization and other charges |       |                                                                 | (551.4     | ) |   |   | (548.2 | ) |   |
| Operating  income                             |       |                                                                 | £     | 0.7 |   |   |   | £ | 60.8 |   |   |

 

*Revenue*

Our pro forma Cable segment revenue by customer type for the six monthsended June 30, 2006 and 2005 was as follows (in millions):

| ** **    | ** ** | **2006**   | ** ** | **2005**   | ** ** | **Increase/  (Decrease)** | ** ** |
|---------------|------------|------------|------------|------------|------------|---------------------------|------------|
| Revenue:      | ** ** | ** ** | ** ** | ** ** | ** ** |                      | ** ** | ** ** |   |
| Consumer      |       | £     | 1,281.4    |       | £     | 1,270.2                   |       |   | 0.9 | % |   |
| Business      |       | 325.7      |       | 340.5      |       |                      | (4.3       | )% |   |
| Total revenue |       | £     | 1,607.1    |       | £     | 1,610.7                   |       |   | (0.2 | )% |   |

 

*Consumer:*   For the sixmonths ended June 30, 2006, pro forma revenue from residential customersincreased by 0.9% to £1,281.4 million from £1,270.2 for the six months ended June 30,2005. This increase is driven largely by growth in the number of broadbandinternet subscribers together with television and telephony price rises offsetby lower telephony usage.

*Business:*   For the six months ended June 30, 2006, pro formarevenue from business customers decreased by 4.3% to £325.7 million from £340.5million for the six months ended June 30, 2005. This decrease isattributable to declines in telephony voice revenue and lower wholesale andother contract revenue, partially offset by greater data installation andrental revenue.

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*SegmentOCF*

For the sixmonths ended June 30, 2006, pro forma Cable segment OCF decreased by 9.3%to £552.1 million from £609.0 million for the six months ended June 30,2005. The decrease in OCF is primarily due to increased selling, general andadministrative expenses, which included charges of £20.9 million relating tothe reverse acquisition of Telewest, consisting of legal and professionalcharges of £11.7 million and executive compensation costs and insuranceexpenses of £9.2 million. In addition, share based compensation expense and baddebt expense increased compared with the six months ended June 30, 2005.

*ContentSegment*

The summary pro forma combined results of operations of our Contentsegment were as follows (in millions):

| ** **                                    | ** ** | **Six months  ended June 30** | ** ** |
|-----------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                    | ** ** | **2006**                                     | ** ** | **2005** | ** ** |
| Revenue                                       |       | £                                       | 166.0      |   | £ | 82.4 |   |
| Inter  segment revenue                        |       | 11.0                                         |       | 10.1 |   |
| Segment  OCF                                  |       | 18.2                                         |       | 10.1 |   |
| Depreciation,  amortization and other charges |       | (13.5                                        | )          | (12.3 | ) |
| Operating  income (loss)                      |       | £                                       | 4.7        |   | £ | (2.2 | ) |

 

*Revenue*

For the sixmonths ended June 30, 2006, pro forma revenue in the Content segmentincreased by 101.5% to £166.0 million from £82.4 million for the six monthsended June 30, 2005. This increase is driven largely by the inclusion inthe six months ended June 30, 2006 of sit-up which was acquired by Telewestin May 2005, and contributed revenue of £97.0 million in the first half of2006. Increased revenue from Flextech of £10.7 million was principally due toan increased share of the advertising revenue market together with thecumulative effect of the relative strength of the viewing performance of theFlextech TV channels.

*SegmentOCF*

For the sixmonths ended June 30, 2006, pro forma Content segment OCF increased by80.2% to £18.2 million from £10.1 million for the six months ended June 30,2005. The increase in Content pro forma segment OCF is primarily due to theincrease in revenue in Flextech partially offset by increased marketing costs,together with the inclusion of sit-up.

**Statementof Cash Flows**

Cash flowinformation provided below is for our continuing operations.

*Six Months ended June 30, 2006 and2005*

For the six months ended June 30,2006, cash provided by operating activities increased to £243.8 million from£122.6 million for the six months ended June 30, 2005. This increase isprimarily attributable to the reverse acquisition of Telewest and animprovement in working capital offset by an increase in cash paid for interest.For the six months ended June 30, 2006, cash paid for interest, exclusiveof amounts capitalized, increased to £219.5 million from £118.9 million duringthe same period in 2005. This increase resulted from the higher levels ofborrowings and repayment of existing facilities following the reverseacquisition of Telewest.

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For the sixmonths ended June 30, 2006, cash used in investing activities was £2,258.4million compared with cash provided by investing activities of £1,280.4 millionfor the six months ended June 30, 2005. The cash used in investingactivities in the six months ended June 30, 2006 includes £2,013.7 millionfor the reverse acquisition of Telewest, net of cash acquired of £294.9million. The cash provided by investing activities in the six months ended June 30,2005 includes £1.2 billion from the sale of our broadcast operations.Purchases of fixed assets increased to £263.4 million for the six months ended June 30,2006 from £144.4 million for the same period in 2005 primarily because of thetiming of cash payments and the reverse acquisition of Telewest.

Cash providedby financing activities for the six months ended June 30, 2006 was £1,731.0million compared to cash used in financing activities of £810.1 million in thesix months ended June 30, 2005. The principal sources of cash provided byfinancing activities for the six months ended June 30, 2006 were the new £5.3billion senior credit facilities and the £0.6 billion alternative bridgefacility by the repayment of our previous senior credit and bridge facilities.For the six months ended June 30, 2005, cash used in financing activitiesrelated to the repurchases of our common stock in the open market for£114.0 million and the prepayment of £700.0 million on our senior creditfacility.

**LIQUIDITY AND CAPITAL RESOURCES**

*New SeniorCredit Facilities*

On March 3,2006 we prepaid £1,358.1 million in respect of NTL Holdings’ senior creditfacility, £1,689.9 million in respect of Telewest’s existing senior creditfacilities and £102.0 in respect of Flextech’s senior credit facility. All ofthese facilities were repaid in full utilizing borrowings under our new seniorcredit facilities.

Our new seniorsecured credit facilities provide for a senior secured credit facility in anaggregate principal sterling equivalent amount of £5.275 billion, comprising a£3.35 billion 5 year amortizing tranche A term loan facility, a £175 million 5year amortizing tranche A1 term loan facility, a £300 million 61⁄2 year bullettranche B1 term loan facility, a £351 million 61⁄2 year bullet tranche B2 termloan facility, a €500million 61⁄2 year bullet tranche B3 term loan facility, a $650 million 61⁄2 yearbullet tranche B4 term loan facility, a £300 million 7 year bullet tranche Cterm credit facility and a £100 million 5 year multicurrency revolving creditfacility (the “Revolving Facility”). Our new senior secured credit facilities(other than for tranche C) have the benefit of a full and unconditional seniorsecured guarantee from NTL Cable PLC as well as first priority pledges of theshares and assets of substantially all of the operating subsidiaries of NTLInvestment Holdings Limited (“NTLIH”) and of receivables arising under anyintercompany loans to those subsidiaries. The senior secured guarantee of NTLCable PLC is secured by a first priority pledge of the entire capital stock ofNTLIH and the receivables under any intercompany loans from NTL Cable PLC toNTLIH. The guarantee of the C tranche of our new senior secured creditfacilities will share in the security of NTL Cable PLC granted to the seniorsecured credit facilities, but will receive proceeds only after the othertranches and will not benefit from guarantees or security granted by othermembers of the group.

Principal underTranches A and A1 is subject to repayment each six months as follows:

| **Date**               | ** ** | ** ** | ** **  | **Amount** | ** ** |
|------------------------|------------|------------|-------------|------------|------------|
| 30 September 2007 |       | £     | 237 million |       |
| 31 March 2008     |       | £     | 237 million |       |
| 30 September 2008 |       | £     | 237 million |       |
| 31 March 2009     |       | £     | 265 million |       |
| 30 September 2009 |       | £     | 475 million |       |
| 31 March 2010     |       | £     | 527 million |       |
| 30 September 2010 |       | £     | 580 million |       |
| Final maturity date    |       | £     | 967 million |       |

 

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The annual rate of interest payable underour new senior facilities is the sum of (i) the London Interbank Rate(LIBOR) or European Interbank Rate (EURIBOR), as applicable, plus (ii) theapplicable interest margin and the applicable cost of complying with anyreserve requirement.

The applicable interest margin for Tranche A, A1 and the RevolvingFacility depends upon the net leverage ratio then in effect as set forth below:

| **Leverage Ratio**                              | ** ** | ** ** | ** ** | **Margin** | ** ** |
|------------------------------------------------------|------------|------------|------------|------------|------------|
| Less  than 3.00:1                                    |       |       | 1.250      | %          |       |
| Greater than or equal to 3.00:1 but less than 3.40:1 |       |       | 1.375      | %          |       |
| Greater than or equal to 3.40:1 but less than 3.80:1 |       |       | 1.500      | %          |       |
| Greater than or equal to 3.80:1 but less than 4.20:1 |       |       | 1.625      | %          |       |
| Greater than or equal to 4.20:1 but less than 4.50:1 |       |       | 1.750      | %          |       |
| Greater than or equal to 4.50:1 but less than 4.80:1 |       |       | 1.875      | %          |       |
| Greater than or equal to 4.80:1 but less than 5.00:1 |       |       | 2.125      | %          |       |
| Greater  than or equal to 5.00:1                     |       |       | 2.250      | %          |       |

 

The applicable interest margin for TrancheB and Tranche C are as follows:

| **Facility** | ** ** | ** ** | ** ** | **Margin** | ** ** |
|--------------|------------|------------|------------|------------|------------|
| B1           |       |       | 2.125      | %          |       |
| B2           |       |       | 2.125      | %          |       |
| B3           |       |       | 2.000      | %          |       |
| B4           |       |       | 2.000      | %          |       |
| C            |       |       | 2.75       | %          |       |

 

*Senior Notes*

The U.S. dollar-denominated 8.75% seniornotes due 2014 were issued by NTL Cable PLC on April 13, 2004 and have aprincipal amount outstanding of $425 million. The sterling-denominated 9.75%senior notes due 2014 were issued by NTL Cable PLC on April 13, 2004 andhave a principal amount outstanding of £375 million. The euro-denominated 8.75%senior notes due 2014 were issued by NTL Cable PLC on April 13, 2004 andhave a principal amount outstanding of €225 million.

The U.S. dollardenominated 9.125% senior notes due 2016 were issued by NTL Cable PLC on July 25,2006, and have a principal amount outstanding of $550 million.

*Restrictionsunder our existing debt agreements*

Theagreements governing the senior notes and our senior credit facilitysignificantly and, in some cases absolutely, restrict our ability and theability of most of our subsidiaries to:

·       incur orguarantee additional indebtedness;

·       paydividends or make other distributions, or redeem or repurchase equity interestsor subordinated obligations;

·       makeinvestments;

·       sellassets, including the capital stock of subsidiaries;

·       enter intosale/leaseback transactions;

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·       createliens;

·       enter intoagreements that restrict the restricted subsidiaries’ ability to pay dividends,transfer assets or make intercompany loans;

·       merge orconsolidate or transfer all or substantially all of their assets; and

·       enter intotransactions with affiliates.

Our business is capital intensive, we arehighly leveraged, and we have historically incurred operating losses andnegative cash flow, partly as a result of our construction costs, operatingexpenditures and interest costs. We require significant amounts of capital toconnect customers to our network, expand and upgrade our network, offer newservices and integrate our billing systems and customer databases. We must alsoregularly service interest payments with cash flows from operations. Ourability to sustain operations, meet financial covenants under our indebtedness,and make required payments on our indebtedness could be impaired if we areunable to maintain or achieve various financial performance measures. Ourability to service our capital needs, to service our obligations under ourindebtedness and to fund our ongoing operations will depend upon our ability togenerate cash.

Although we expect to generate positivecash flow in the future, we cannot assure you that this will be the case. Webelieve that our cash on hand, together with cash from operations and unusedcredit facilities, will be sufficient for our cash requirements through atleast June 30, 2007. However, our cash requirements after June 30,2007 may exceed these sources of cash. This may require that we obtainadditional financing in excess of the financing incurred in the refinancingtransaction. We may not be able to obtain financing at all, or on favorableterms, or we may be contractually prevented by the terms of the senior notes orour senior credit facility from incurring additional indebtedness.

We are a holding company with noindependent operations or significant assets other than our investments in oursubsidiaries. As a result, we will depend upon the receipt of sufficient fundsfrom our subsidiaries to meet our obligations. In addition, the terms of ourand our subsidiaries’ existing and future indebtedness and the laws of thejurisdictions under which those subsidiaries are organized limit the payment ofdividends, loan repayments and other distributions to us under many circumstances.

Our debtagreements and the debt agreements of some of our subsidiaries containrestrictions on our ability to transfer cash between groups of oursubsidiaries. As a result of these restrictions, although our overall liquiditymay be sufficient to satisfy our obligations, we may be limited by covenants insome of our debt agreements from transferring cash to other subsidiaries thatmight require funds. In addition, cross-default provisions in our otherindebtedness may be triggered if we default on any of these debt agreements.

**CONTRACTUALOBLIGATIONS AND COMMERCIAL COMMITMENTS**

The following table includes aggregate information about ourcontractual obligations as of June 30, 2006, and the periods in whichpayments are due (in millions).

| ** **                       | ** ** | ** ** | ** ** | **Payments Due by Period** | ** ** |
|----------------------------------|------------|------------|------------|-------------------------------------------|------------|
| ** **                       | ** ** | ** ** | ** ** | **Less than**                        | ** ** | **1-3** | ** ** | **3-5** | ** ** | **More than** | ** ** |
| **Contractual Obligations** | ** ** | ** ** | ** ** | **Total**                                 | ** ** | **1 year** | ** ** | **years** | ** ** | **years** | ** ** | **5 years** | ** ** |
| Long-Term  Debt Obligations      |       | £     | 5,733.7    |                                      |       | £ | 3.3 |   |   | £ | 676.8 |   | £ | 1,600.8 |   |   | £ | 3,452.8 |   |   |
| Capital  Lease Obligations       |       | 184.8      |       |                                      | 51.5       |   |   | 30.9 |   | 8.8 |   |   | 93.6 |   |   |
| Operating  Lease Obligations     |       | 387.7      |       |                                      | 68.3       |   |   | 104.2 |   | 77.2 |   |   | 138.0 |   |   |
| Purchase  Obligations            |       | 383.6      |       |                                      | 306.4      |   |   | 17.7 |   | 17.0 |   |   | 42.5 |   |   |
| Total                            |       | £     | 6,689.8    |                                      |       | £ | 429.5 |   |   | £ | 829.6 |   | £ | 1,703.8 |   |   | £ | 3,726.9 |   |   |
|                                  |            |            |            |                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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Based on current LIBOR interest rates,margins and interest rate swaps the projected interest expense for the next 12months on our long term debt and capital lease obligations is approximately £470million.

The following table includes information about our commercialcommitments as of June 30, 2006. Commercial commitments are items that wecould be obligated to pay in the future. They are not required to be includedin the consolidated balance sheet (in millions).

| ** **                                 | ** ** | ** ** | ** ** | **Amount of Commitment Expiration per Period** | ** ** |
|--------------------------------------------|------------|------------|------------|-------------------------------------------------------------------------|------------|
| ** **                                 | ** ** | ** ** | ** ** | **Less than**                                                      | ** ** | **1-3** | ** ** | **3-5** | ** ** | **More than** | ** ** |
| **Other Commercial Commitments** | ** ** | ** ** | ** ** | **Total**                                                               | ** ** | **   1 year   ** | ** ** | **   years   ** | ** ** | **   years   ** | ** ** | **   5 years   ** | ** ** |
| Guarantees                                 |       | £     | 24.0       |                                                                    |       | £ | 4.9 |   |   |   | £ | 11.2 |   |   |   | £ | — |   |   |   | £ | 7.9 |   |   |
| Lines  of Credit                           |       | 1.5        |       |                                                                    | —     |   |   |   | 0.8 |   |   |   | — |   |   |   | 0.7 |   |   |
| Standby  Letters of Credit                 |       | —     |       |                                                                    | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Standby  Repurchase Obligations            |       | —     |       |                                                                    | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Other  Commercial Commitments              |       | —     |       |                                                                    | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Total  Commercial Commitments              |       | £     | 25.5       |                                                                    |       | £ | 4.9 |   |   |   | £ | 12.0 |   |   |   | — |   |   |   | £ | 8.6 |   |   |
|                                            |            |            |            |                                                                         |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Guaranteesrelate to performance bonds provided by banks on our behalf as part of ourcontractual obligations. The fair value of the guarantees has been calculatedby reference to the monetary value of each bond. Other Commercial Commitmentsrelate to brand license agreements.

**ITEM 3.**   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks,including changes in foreign currency exchange rates and interest rates. Marketrisk is the potential loss arising from adverse changes in market rates and prices,such as foreign currency exchange and interest rates. As some of ourindebtedness accrues interest at variable rates, we have exposure to volatilityin future cash flows and earnings associated with variable interest ratepayments.

Also, all of our revenues and a substantialportion of our operating costs are earned and paid in pounds sterling but wepay interest and principal obligations on some of our indebtedness inU.S. dollars and euros. As of June 30, 2006, £797.0 million, or 13.7%of our long-term debt, was denominated in U.S. dollars and£155.5 million, or 2.7%, of our long-term debt was denominated in euros.As a result, we have exposure to volatility in future cash flows and earningsassociated with changes in foreign exchange rates on payments of principal andinterest on a portion of our indebtedness.

To mitigate the risk from these exposures,we have implemented a cash flow hedging program. The objective of this programis to reduce the volatility of our cash flows and earnings caused by changes inunderlying rates. To achieve this objective we have entered into a number ofderivative instruments. The derivative instruments utilized comprise interestrate swaps, cross-currency interest rate swaps and foreign currencyforward contracts. We do not enter into derivative instruments for trading orspeculative purposes.

The fair market values of long-term fixedinterest rate debt and the amount of future interest payments on variableinterest rate debt are subject to interest rate risk.

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The following table provides information as of June 30, 2006 aboutour long-term fixed and variable interest rate debt that is sensitive tochanges in interest rates and foreign currency exchange rates(in millions).

| ** **                                    | ** ** | **Six months  ending  December 31,** | ** ** | **Year ending December 31,** | ** ** | ** **          | ** ** | ** **          | ** ** | **Fair Value  June 30,** | ** ** |
|-----------------------------------------------|------------|------------------------------------------------|------------|---------------------------------------------|------------|---------------------|------------|---------------------|------------|------------------------------------|------------|
| ** **                                    | ** ** | **2006**                                       | ** ** | **2007**                                    | ** ** | **2008**            | ** ** | **2009**            | ** ** | **2010**                           | ** ** | **Thereafter** | ** ** | **Total** | ** ** | **2006** | ** ** |
| **Long-term debt including  current portion** | ** ** |                                           | ** ** | ** **                                  |       | ** **          | ** ** | ** **          | ** ** | ** **                         | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| US Dollars                                    |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   |   |   |   |   |   |   |   | ** ** |   |
| Fixed rate                                    |       |                                           | —     | ** **                                  |       | —              |       | —              |       | —                             |       | — |   |   | $ | 425.0 |   |   | $ | 425.0 |   |   | $ | 414.9 | ** ** |   |
| Average interest rate                         |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   | 8.75 | % |   |   |   |   |   | ** ** |   |
| Average forward exchange rate                 |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   | 0.52 |   |   |   |   |   |   | ** ** |   |
| Pound Sterling                                |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   |   |   |   |   |   |   |   | ** ** |   |
| Fixed rate                                    |       |                                           | —     | ** **                                  |       | —              |       | —              |       | —                             |       | — |   |   | £ | 375.0 |   |   | £ | 375.0 |   |   | £ | 374.1 | ** ** |   |
| Average interest rate                         |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   | 9.75 | % |   |   |   |   |   | ** ** |   |
| Euro                                          |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   |   |   |   |   |   |   |   | ** ** |   |
| Fixed rate                                    |       |                                           | —     | ** **                                  |       | —              |       | —              |       | —                             |       | — |   |   | € | 225.0 |   |   | € | 225.0 |   |   | € | 227.8 | ** ** |   |
| Average interest rate                         |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   | 8.75 | % |   |   |   |   |   | ** ** |   |
| Average forward exchange rate                 |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   | 0.70 |   |   |   |   |   |   | ** ** |   |
| Pound Sterling                                |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   |   |   |   |   |   |   |   | ** ** |   |
| Variable Rate                                 |       |                                           | —     | ** **                                  |       | £              | 225.0      |                | £     | 450.0                              |       | £ | 700.0 |   | £ | 1,050.0 |   |   | £ | 775.0 |   |   | £ | 3,200.0 |   |   | £ | 3,200.0 | ** ** |   |
| Average interest rate                         |       |                                           |       | ** **                                  |       | Libor  plus  1.875% |       | Libor  plus  1.875% |       | Libor  plus  1.875%                |       | Libor  plus  1.875% |   |   | Libor  plus  1.875% |   |   |   |   |   |   | ** ** |   |
| US Dollars                                    |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   |   |   |   |   |   |   |   | ** ** |   |
| Variable Rate                                 |       |                                           | —     | ** **                                  |       | —              |       | —              |       | —                             |       | — |   |   | $ | 1,048.8 |   |   | $ | 1,048.8 |   |   | $ | 1,048.8 | ** ** |   |
| Average interest rate                         |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   | Libor  plus  6% |   |   |   |   |   |   | ** ** |   |
| Pound Sterling                                |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   |   |   |   |   |   |   |   | ** ** |   |
| Variable Rate                                 |       |                                           | —     | ** **                                  |       | —              |       | —              |       | —                             |       | — |   |   | £ | 1,200.0 |   |   | £ | 1,200.0 |   |   | £ | 1,200.0 | ** ** |   |
| Average  interest rate                        |       |                                           |       | ** **                                  |       |                |       |                |       |                               |       |   |   |   | Libor  plus  2.25% |   |   |   |   |   |   | ** ** |   |
|                                               |            |                                                |            |                                             |            |                     |            |                     |            |                                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**ITEM 4.**   CONTROLS AND PROCEDURES

*(a)*           Disclosure Controls and Procedures.

Our management,with the participation of our chief executive officer and chief financialofficer, has evaluated the effectiveness of our disclosure controls andprocedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) underthe Securities Exchange Act of 1934, as amended, which we refer to as theExchange Act) as of the end of the period covered by this report. Based on suchevaluation, our chief executive officer and chief financial officer haveconcluded that, as of the end of such period, these controls and procedures areeffective to ensure that information required to be disclosed by the registrantin the reports the registrant files or submits under the Exchange Act is recorded,processed, summarized, and reported within the time periods specified in theSecurities and Exchange Commission’s rules and forms. These disclosurecontrols and procedures include, without limitation, controls and proceduresdesigned to ensure that information required to be disclosed by the registrantin the reports that it files or submits is accumulated and communicated to theregistrant’s management, including our chief executive officer and chieffinancial officer, as appropriate to allow timely decisions regarding requireddisclosure.

42

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*(b)*          Changesin Internal Control Over Financial Reporting.

On March 3, 2006, we completed the reverseacquisition of Telewest. As a consequence of our integration of Telewest, weexpect to make material changes to our internal control over financialreporting and we will disclose all material changes resulting from thistransaction in our future quarterly and annual reports. Other than as statedabove, there were no changes in our internal control over financial reporting(as such term is defined in Rules 13a-15(f) and 15d-15(f) underthe Exchange Act) during the fiscal quarter to which this report relates thathave materially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.

43

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**PART II—OTHER INFORMATION**

**ITEM 1.**                LEGALPROCEEDINGS

We are involvedin disputes and litigation arising in the ordinary course of our business. Weare also involved in various disputes and legal proceedings, none of which is amaterial pending legal proceeding that exclusive of interest and costs, isanticipated to exceed 10% of our and our subsidiaries’ current assets on aconsolidated basis, or is otherwise reportable in response to this item.

**ITEM 1A.**        RISKFACTORS

Since December 31,2005, there have been no material changes in the risk factors discussed under “RiskFactors” and elsewhere in our Form 10-K that was filed with the SECon February 28, 2006 and the Form 10-K of NTL Holdings Inc.that was filed with the SEC on March 1, 2006.

**ITEM 2.**                UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

**ITEM 3.**                DEFAULTSUPON SENIOR SECURITIES

None.

**ITEM 4.**                SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS

Our annual meeting of stockholders was held on May 18, 2006. Thefollowing nominees were elected as directors, each to hold office for a periodof three years, by the votes set forth below:

| **Nominee**           | ** ** | ** **  | ** ** | **For**    | ** ** | **Withheld** | ** ** |
|-----------------------|------------|-------------|------------|------------|------------|--------------|------------|
| Edwin  M Banks        |       | 227,696,197 |       | 25,982,710 |       |
| Stephen  A. Burch     |       | 232,739,609 |       | 20,939,298 |       |
| Simon  P. Duffy       |       | 230,050,022 |       | 23,628,885 |       |
| Charles K.  Gallagher |       | 229,623,299 |       | 24,055,608 |       |

 

The following directors have termscontinuing after the annual meeting of stockholders: James F. Mooney, WilliamR. Huff, George R. Zoffinger, Jeffrey D. Benjamin, William J. Connors, DavidElstein and Anthony (Cob) Stenham.

The appointment of Ernst & Young LLP as our independentauditor for the year ended December 31, 2006 was ratified by the votes setforth below:

| For       |   | 250,868,683 |   |
|-----------|--------|-------------|--------|
| Against   |   | 2,809,378   |   |
| Abstained |   | 846         |   |

 

The adoption of share issuance feature of the NTL Group 2006 BonusScheme was ratified by the votes set forth below:

| For               |   | 214,181,138 |   |
|-------------------|--------|-------------|--------|
| Against           |   | 1,073,065   |   |
| Abstained         |   | 125,163     |   |
| Broker  non-votes |   | 38,299,541  |   |

 

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The adoption of the NTL Incorporated 2006 Stock Incentive Plan was approvedby the votes set forth below:

| For               |   | 139,819,898 |   |
|-------------------|--------|-------------|--------|
| Against           |   | 75,432,727  |   |
| Abstained         |   | 126,741     |   |
| Broker  non-votes |   | 38,299,541  |   |

 

**ITEM 5.**                OTHERINFORMATION

None.

**ITEM 6.**                EXHIBITS
| 4.1   |   | Indenture, dated as of July 25,  2006, among NTL Cable PLC, NTL Incorporated, the Intermediate Guarantors (as  defined in the Indenture), NTL Investment Holdings Limited, The Bank of New  York as trustee and paying agent and The Bank of New York (Luxembourg) S.A.  as Luxembourg paying agent (Incorporated by reference to NTL Incorporated’s  Current Report on Form 8-K as filed with the Securities and  Exchange Commission on July 25, 2006). |
|-------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1  |   | Investment Agreement dated as of  April 3, 2006 between NTL Incorporated and Virgin Entertainment  Investment Holdings Limited.*                                                                                                                                                                                                                                                                                                                                         |
| 10.2  |   | Trade Mark Licence dated April 3,  2006 between Virgin Enterprises Limited (“VEL”) and NTL Group Limited.*                                                                                                                                                                                                                                                                                                                                                     |
| 10.3  |   | Letter Agreement dated April 3, 2006  between NTL Incorporated and VEL relating to VEL’s right to propose a  candidate to serve on the NTL Incorporated Board of Directors.*                                                                                                                                                                                                                                                                                        |
| 10.4  |   | Form of Non-Qualified Stock Option  Notice for directors.*                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.5  |   | Form of Non-Qualified Stock Option  Notice for United Kingdom employees.*                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.6  |   | Form of Incentive Stock Option Notice  for United States employees.*                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.7  |   | Restricted Stock Agreement dated as of  March 16, 2006 between NTL Incorporated and Neil A. Berkett.*                                                                                                                                                                                                                                                                                                                                                          |
| 10.8  |   | Restricted Stock Agreement dated as of  May 26, 2006 between NTL Incorporated and Neil R. Smith.*                                                                                                                                                                                                                                                                                                                                                              |
| 10.9  |   | Restricted Stock Agreement dated as of  May 26, 2006 between NTL Incorporated and Malcolm Wall.*                                                                                                                                                                                                                                                                                                                                                                    |
| 10.10 |   | NTL Incorporated 2006 Stock Incentive  Plan as amended and restated as of June 15, 2006.*                                                                                                                                                                                                                                                                                                                                                                                |
| 10.11 |   | Forms of Incentive Stock Option Notice  (Incorporated by reference to NTL Incorporated’s Current Report on  Form 8-K as filed with the Securities and Exchange Commission on  July 12, 2006).                                                                                                                                                                                                                                                             |
| 10.12 |   | Form of Non-qualified Stock Option  Notice (Incorporated by reference to NTL Incorporated’s Current Report on  Form 8-K as filed with the Securities and Exchange Commission on  July 12, 2006).                                                                                                                                                                                                                                                     |
| 10.13 |   | Form of Restricted Stock Unit  Agreement (Incorporated by reference to NTL Incorporated’s Current Report on  Form 8-K as filed with the Securities and Exchange Commission on  July 12, 2006).                                                                                                                                                                                                                                                       |
| 10.14 |   | Amended and Restated Employment  Agreement, and Restricted Stock Agreement, entered into by and between NTL  Incorporated and James Mooney, dated as of July 5, 2006 (Incorporated by  reference to NTL Incorporated’s Current Report on Form 8-K as  filed with the Securities and Exchange Commission on July 7, 2006).                                                                                                                                 |

 

45

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| 10.15 |   | Terms &  Conditions of Employment of Robert Gale effective January 1, 2002 as amended  on October 21, 2005.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.16 |   | Senior  Facilities Agreement dated 3 March 2006 as amended and restated on 22  May 2006 and 10 July 2006 between, among others, the Company,  certain of its subsidiaries (as Borrowers and/or Guarantors) and Deutsche  Bank AG, London Branch, J.P. Morgan Plc, The Royal Bank of Scotland Plc and  Goldman Sachs International (as Bookrunners and Mandated Lead Arrangers)  (excluding schedules) (Incorporated by reference to NTL Incorporated’s  Current Report on Form 8-K as filed with the Securities and Exchange  Commission on July 10, 2006). |
| 10.17 |   | Group  Intercreditor Deed dated 3 March 2006 as amended and restated on 13  June 2006 and 10 July 2006 between, among others, Deutsche  Bank AG, London Branch as Facility Agent and Security Trustee and the Senior  Lenders, the Intergroup Debtors and the Intergroup Creditors named therein  (excluding schedules) (Incorporated by reference to NTL Incorporated’s  Current Report on Form 8-K as filed with the Securities and  Exchange Commission on July 10, 2006).                                                                               |
| 10.18 |   | Deed of  Accession dated July 18, 2006 between NTL Investment Holdings Limited  and Deutsche Bank AG, London Branch as C Facility Lender and as Facility  Agent (Incorporated by reference to NTL Incorporated’s Current Report on  Form 8-K as filed with the Securities and Exchange Commission on  July 18, 2006).                                                                                                                                                                                                                                                      |
| 10.19 |   | Deed of  Accession dated July 18, 2006 among NTL Investment Holdings Limited,  JPMorgan Chase Bank as C Facility Lender and Deutsche Bank AG, London Branch  as Facility Agent (Incorporated by reference to NTL Incorporated’s Current  Report on Form 8-K as filed with the Securities and Exchange  Commission on July 18, 2006).                                                                                                                                                                                                                                       |
| 10.20 |   | Deed of  Accession dated July 18, 2006 among NTL Investment Holdings Limited,  Goldman Sachs Credit Partners, L.P. as C Facility Lender and Deutsche Bank  AG, London Branch as Facility Agent (Incorporated by reference to NTL  Incorporated’s Current Report on Form 8-K as filed with the  Securities and Exchange Commission on July 18, 2006).                                                                                                                                                                                                                       |
| 10.21 |   | Deed of  Accession dated July 18, 2006 among NTL Investment Holdings Limited, The  Royal Bank of Scotland plc as C Facility Lender and Deutsche Bank AG, London  Branch as Facility Agent (Incorporated by reference to NTL Incorporated’s  Current Report on Form 8-K as filed with the Securities and  Exchange Commission on July 18, 2006).                                                                                                                                                                                                                            |
| 10.22 |   | Form of  Senior Facilities Amendment Letter (Incorporated by reference to NTL  Incorporated’s Current Report on Form 8-K as filed with the  Securities and Exchange Commission on May 18, 2006).                                                                                                                                                                                                                                                                                                                                                                      |
| 10.23 |   | Form of Bridge  Facilities Amendment Letter (Incorporated by reference to NTL Incorporated’s  Current Report on Form 8-K as filed with the Securities and  Exchange Commission on May 18, 2006).                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1  |   | Certification  of Chief Executive Officer, pursuant to Rule 13(a)-14(a) and  Rule 15d-14(a) of the Exchange Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 31.2  |   | Certification  of Chief Financial Officer, pursuant to Rule 13(a)-14(a) and  Rule 15d-14(a) of the Exchange Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 32.1  |   | Certifications  of CEO and CFO Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to  Section 906 of the Sarbanes Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                             |

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                 * Filed herewith

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**SIGNATURES**

Pursuantto the requirements of Section 13 or 15 (d) of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

|                            | NTL INCORPORATED |
|----------------------------|------------------|
| Date: August 9,  2006 | By:              | /s/ STEPHEN A. BURCH |
|                       | * *         | Stephen A. Burch |
|                       | * *         | *Chief Executive Officer* |
| Date: August 9,  2006 | By:              | /s/ JACQUES KERREST |
|                       | * *         | Jacques Kerrest |
|                       | * *         | *Chief Financial Officer* |

 

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