##### 



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

FORM 10-Q

(Mark One)

|        |  |                                                                                                                        
|------- |  | -----------------------------------------------------------------------------------------------------------------------
|(X Box) |  | Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly Period Ended:

MARCH 31, 2002

OR

|      |  |                                                                                                                           
|----- |  | --------------------------------------------------------------------------------------------------------------------------
|(Box) |  | Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period from
to

Commission File Number 33-83740

DIAMOND CABLE COMMUNICATIONS LIMITED

(Exact name of registrant as specified in its charter)


|                                                               |  |                                                          
|-------------------------------------------------------------- |  | ---------------------------------------------------------
|England and Wales                                              |  | N/A                                                      
|                                                               |  |                                                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)                     
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  | Secretary                                                
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  | NTL Incorporated                                         
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  | 110 East 59th Street                                     
|                                                              
|                                                              
|                                                              
|                                                              
|Diamond Plaza, Daleside Road                                   |  | New York, NY 10022                                       
|                                                              
|                                                              
|                                                              
|                                                              
|Nottingham NG2 3GG, England                                    |  | (212) 906-8440                                           
|                                                               |  |                                                          
|(Address of Registrants principal executive offices)          |  | (Name, address and telephone
number of agent for service)



---

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

|             |  |          
|------------ |  | ---------
|Yes  (X Box) |  | No  (Box)



---

As of June 14, 2002, there were 59,138,851 shares of the Registrants Ordinary
Shares of 2.5 pence each outstanding. The Registrant is an indirect, wholly
owned subsidiary of NTL Incorporated and there is no market for the
Registrants shares.





---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

TABLE OF CONTENTS

|         |  |                       |  |                                                                                                                    |  |        
|-------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------------ |  | -------
|         |  |                       |  |                                                                                                                    |  | Page   
|         |  |                       |  |                                                                                                                    |  | Number 
|         |  |                       |  |                                                                                                                    |  |        
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                   
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  | Item 1.               |  | Financial Statements                                                                                               |  |        
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  |                       |  | Condensed Consolidated Balance Sheets as of
March 31, 2002 (Unaudited) and December 31, 2001                       |  | 2      
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  |                       |  | Condensed Consolidated Statements of Operations
for Three Months Ended March 31, 2002 and
2001 (Unaudited)         |  | 3      
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  |                       |  | Condensed Consolidated Statement of Shareholders Deficiency
for the Three Months Ended March 31, 2002 (Unaudited) |  | 4      
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  |                       |  | Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2002 and 2001 (Unaudited)     |  | 5      
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  |                       |  | Notes to the Condensed Consolidated Financial Statements
(Unaudited)                                               |  | 6 - 19 
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  | Item 2.               |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations                              |  | 20 - 31
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures About Market Risk                                                         |  | 32     
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  | Risk Factors          |  |                                                                                                                    |  | 34     
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|PART II. |  | OTHER INFORMATION     |  |                                                                                                                   
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  | Item 3.               |  | Defaults Upon Senior Securities                                                                                    |  | 39     
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                                                   |  | 39     
|        
|        
|        
|        
|         |  |                       |  |                                                                                                                    |  |        
|        
|        
|        
|        
|         |  | SIGNATURES            |  |                                                                                                                    |  | 40     





---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                |                                                                                             |                                |          |             |           |              |          |           |           |  
|----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------------------ | -------- | ----------- | --------- | ------------ | -------- | --------- | --------- | -
|                                                                                                |                                                                                             |                                |          | March 31,   |           | December 31,
|                                                                                                |                                                                                             |                                |          | 2002        |           | 2001        
|                                                                                                |                                                                                             |                                |          |             |           |             
|                                                                                                |                                                                                             |                                |          | (Unaudited) |           | (See Note)  
|                                                                                                |                                                                                             |                                |          |             |           |             
|                                                                                                |                                                                                             |                                |          | (in £000's)
|Assets                                                                                          |                                                                                             |                                |          |             |           |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Current
assets                                                                                  |                                                                                             |                                |          |             |           |              |          |          
|                                                                                                | Cash and cash equivalents                                                                   |                                |          | £2,617      |           |              |          | £4,535    |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Trade receivables  less allowance for doubtful accounts
of £8,445 (2002) and £8,373 (2001) |                                |          | 17,519      |           |              |          | 20,049    |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Other                                                                                       |                                |          | 417         |           |              |          | 212       |          
|                                                                                                |                                                                                             |                                |          |             |           |              |          |          
|                                                                                                |                                                                                             | Total current assets           |          |             | 20,553    |              |          |           | 24,796    |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Property and equipment  net                                                                    |                                                                                             |                                | 517,612  |             |           |              | 530,215  |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Deferred financing costs  net of accumulated amortization of
£13,360 (2002) and £12,667 (2001) |                                                                                             |                                | 11,792   |             |           |              | 12,485   |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Goodwill  net of accumulated amortization of £30,313 (2002) and
£30,313 (2001)                 |                                                                                             |                                | 66,647   |             |           |              | 66,647   |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Franchise costs  net of accumulated amortization of £300 (2002) and
£300 (2001)                |                                                                                             |                                | 316      |             |           |              | 316      |          
|                                                                                                |                                                                                             |                                |          |             |           |              |          |          
|Total assets                                                                                    |                                                                                             |                                | £616,920 |             |           |              | £634,459 |          
|                                                                                                |                                                                                             |                                |          |             |           |              |          |          
|Liabilities and shareholders deficiency                                                        |                                                                                             |                                |          |             |           |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Current liabilities                                                                             |                                                                                             |                                |          |             |           |              |          |          
|                                                                                                | Accounts payable and accrued expenses                                                       |                                |          | £23,187     |           |              |          | £30,767   |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Deferred revenue                                                                            |                                |          | 5,167       |           |              |          | 4,017     |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Due to affiliates                                                                           |                                |          | 9,553       |           |              |          | 2,971     |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Interest payable                                                                            |                                |          | 33,427      |           |              |          | 16,788    |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Current portion of long-term debt                                                           |                                |          | 1,084,186   |           |              |          | 1,059,662 |          
|                                                                                                |                                                                                             |                                |          |             |           |              |          |          
|                                                                                                |                                                                                             | Total current liabilities      |          |             | 1,155,520 |              |          |           | 1,114,205 |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Long-term debt                                                                                  |                                                                                             |                                |         |             |           |              |         |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Commitments
and contingent liabilities                                                          |                                                                                             |                                |          |             |           |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Shareholders deficiency:                                                                       |                                                                                             |                                |          |             |           |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Ordinary shares: 150,000,060 authorized; 59,138,851 issued and outstanding                  |                                |          | 1,478       |           |              |          | 1,478     |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Additional paid-in-capital                                                                  |                                |          | 317,366     |           |              |          | 317,366   |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Accumulated deficit                                                                         |                                |          | (857,444    | )         |              |          | (798,590  | )        
|                                                                                                |                                                                                             |                                |          |             |           |              |          |          
|                                                                                                |                                                                                             | Total shareholders deficiency |          |             | (538,600  | )            |          |           | (479,746  | )
|                                                                                                |                                                                                             |                                |          |             |           |              |          |          
|Total liabilities and shareholders deficiency                                                  |                                                                                             |                                | £616,920 |             |           |              | £634,459 |          
|                                                                                                |                                                                                             |                                |          |             |           |              |          |          

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

See accompanying notes.

2



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                       |                                                                |  |                              |         |      |  |          |         |  
|---------------------- | -------------------------------------------------------------- |  | ---------------------------- | ------- | ---- |  | -------- | ------- | -
|                       |                                                                |  | Three
months ended March 31,
|                       |                                                                |  |                             
|                       |                                                                |  |                              |         |      |  |         
|                       |                                                                |  | 2002                         |         | 2001
|                       |                                                                |  |                              |         |     
|                       |                                                                |  | (in £000's)                 
|Revenue                |                                                                |  | £46,530                      |         |      |  | £42,357  |        
|                       |                                                                |  |                              |         |      |  |          |        
|Costs and expenses     |                                                                |  |                              |         |      |  |          |        
|                      
|                      
|                      
|                      
|                       | Operating                                                      |  |                              | 22,733  |      |  |          | 20,961  |  
|                      
|                      
|                      
|                      
|                       | Selling, general and administrative                            |  |                              | 14,823  |      |  |          | 23,987  |  
|                      
|                      
|                      
|                      
|                       | Other charges                                                  |  |                              | 7       |      |  |          |        |  
|                      
|                      
|                      
|                      
|                       | Depreciation and amortization                                  |  |                              | 15,680  |      |  |          | 11,196  |  
|                       |                                                                |  |                              |         |      |  |          |        
|                       |                                                                |  | 53,243                       |         |      |  | 56,144   |        
|                       |                                                                |  |                              |         |      |  |          |        
|Operating loss         |                                                                |  | (6,713                       | )       |      |  | (13,787  | )      
|                      
|                      
|                      
|                      
|Other income (expense) |                                                                |  |                              |         |      |  |          |        
|                      
|                      
|                      
|                      
|                       | Interest income                                                |  |                              | 95      |      |  |          |        |  
|                      
|                      
|                      
|                      
|                       | Interest expense and amortization of debt discount
and expense |  |                              | (31,297 | )    |  |          | (30,172 | )
|                      
|                      
|                      
|                      
|                       | Foreign exchange losses, net                                   |  |                              | (20,939 | )    |  |          | (47,594 | )
|                       |                                                                |  |                              |         |      |  |          |        
|Net loss               |                                                                |  | £(58,854                     | )       |      |  | £(91,553 | )      
|                       |                                                                |  |                              |         |      |  |          |        

See accompanying notes.

3



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS DEFICIENCY
(Unaudited)
(in £000s)

|                             |  |                 |            |                 |  |                     |        |            |  |            |          |  |  |  |           |                     |  |  |           |  
|---------------------------- |  | --------------- | ---------- | --------------- |  | ------------------- | ------ | ---------- |  | ---------- | -------- |  |  |  | --------- | ------------------- |  |  | --------- | -
|                             |  |                 |            |                 |  |                     |        |            |  | Additional |          |  |  |  |           | Total Shareholder's
|                             |  | Ordinary Shares |            | Paid-in-capital |  | Accumulated Deficit |        | Deficiency
|                             |  |                 |            |                 |  |                     |        |           
|                             |  | Shares          |            | Par             |  |                     |        |            |  |            |          |  |  |  |           |                    
|                             |  |                 |            |                 |  |                     |        |            |  |            |          |  |  |  |           |                    
|Balance at December 31, 2001 |  |                 | 59,138,851 |                 |  |                     | £1,478 |            |  |            | £317,366 |  |  |  | £(798,590 | )                   |  |  | £(479,746 | )
|                            
|                            
|                            
|                            
|Net loss                     |  |                 |           |                 |  |                     |       |            |  |            |         |  |  |  | (58,854   | )                   |  |  | (58,854   | )
|                             |  |                 |            |                 |  |                     |        |            |  |            |          |  |  |  |           |                     |  |  |           |  
|Balance at March 31, 2002    |  |                 | 59,138,851 |                 |  |                     | £1,478 |            |  |            | £317,366 |  |  |  | £(857,444 | )                   |  |  | £(538,600 | )
|                             |  |                 |            |                 |  |                     |        |            |  |            |          |  |  |  |           |                     |  |  |           |  

See accompanying notes.

4



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                                                          |                                    |                                       |         |                    |        |      |         |         |         |  
|----------------------------------------------------------------------------------------- | ---------------------------------- | ------------------------------------- | ------- | ------------------ | ------ | ---- | ------- | ------- | ------- | -
|                                                                                          |                                    |                                       |         | Three Months Ended
|                                                                                          |                                    |                                       |         | March 31,         
|                                                                                          |                                    |                                       |         |                   
|                                                                                          |                                    |                                       |         | 2002               |        | 2001
|                                                                                          |                                    |                                       |         |                    |        |     
|                                                                                          |                                    |                                       |         | (in £000's)       
|Net cash provided by operating activities                                                 |                                    |                                       | £3,923  |                    |        |      | £30,296 |        
|                                                                                          |                                    |                                       |         |                    |        |      |         |        
|Investing activities                                                                      |                                    |                                       |         |                    |        |      |         |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Purchase of property and equipment |                                       |         | (5,719             | )      |      |         | (32,358 | )      
|                                                                                          |                                    |                                       |         |                    |        |      |         |        
|                                                                                          |                                    | Net cash used in investing activities |         |                    | (5,719 | )    |         |         | (32,358 | )
|                                                                                          |                                    |                                       |         |                    |        |      |         |        
|Financing activities                                                                      |                                    |                                       |         |                    |        |      |         |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Principal payments                 |                                       |         | (95                | )      |      |         | (22     | )      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Capital lease payments             |                                       |         | (27                | )      |      |         | (274    | )      
|                                                                                          |                                    |                                       |         |                    |        |      |         |        
|                                                                                          |                                    | Net cash used in financing activities |         |                    | (122   | )    |         |         | (296    | )
|                                                                                          |                                    |                                       |         |                    |        |      |         |        
|Decrease in cash and cash equivalents                                                     |                                    |                                       | (1,918  | )                  |        |      | (2,358  | )      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Cash and cash equivalents at beginning of period                                          |                                    |                                       | 4,535   |                    |        |      | 8,166   |        
|                                                                                          |                                    |                                       |         |                    |        |      |         |        
|Cash and cash equivalents at end of period                                                |                                    |                                       | £2,617  |                    |        |      | £5,808  |        
|                                                                                          |                                    |                                       |         |                    |        |      |         |        
|Supplemental disclosure of cash flow information
Cash paid during the period for interest |                                    |                                       | £10,351 |                    |        |      | £23,562 |        

See accompanying notes.

5



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



|1. |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Diamond Cable Communications Limited (formerly Diamond Cable Communications
Plc) (the Company) is a holding company which holds all of the shares of
various companies which operate broadband communications networks for
telephone, cable television and Internet services in the United Kingdom (the
UK). The Company holds these shares through an intermediate holding
company, Diamond Holdings Limited (formerly Diamond Holdings Plc) (Diamond
Holdings). The Company is an indirect, wholly owned subsidiary of NTL
Incorporated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | The accompanying unaudited condensed consolidated financial statements of
the Company and its subsidiaries (the Group) have been prepared in
accordance with U.S. generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months
ended March 31, 2002 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2002. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Companys Annual Report on Form 10-K for the year ended
December 31, 2001.                             
|  
|   |  | As indicated below, substantial doubt exists about the Companys ability to
continue as a going concern. The accompanying consolidated financial
statements have been prepared assuming the Company will continue as a going
concern. The financial statements do not include any adjustments to reflect
the possible future effects on the recoverability of assets or
classification of assets or the amounts and classification of liabilities
that may result from the outcome of this uncertainty.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | Certain prior period amounts have been reclassified to conform to the
current presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|2. |  | Recapitalization Process and Ability to Continue Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | On May 8, 2002, NTL Incorporated (NTL Incorporated and, together with its
consolidated subsidiaries, NTL), NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. filed an arranged joint reorganization
plan under Chapter 11 of the United States Bankruptcy Code (referred to as
the proposed recapitalization plan). NTLs operating subsidiaries were not
included in the Chapter 11 filing. Toward the end of 2001, while NTL
continued to have sufficient liquidity to meet its near term obligations, it
recognized the negative impact of the collapsing European and U.S.
telecommunications markets on its ability to service its debt. Accordingly,
NTL began to implement a strategy to preserve and maximize its enterprise
value. This strategy included the implementation of cost-cutting measures
and the commencement of discussions with certain third parties regarding
strategic alternatives for NTLs business.
|  
|   |  | The Group historically incurred operating losses and negative operating cash
flow. In addition, the Group has required significant amounts of capital to
finance construction of its networks, connection of customers to the
networks, other capital expenditures and for working capital needs including
debt service requirements. The Group historically met these liquidity
requirements through issuances of high-yield debt securities in the capital
markets and equity contributions and loans from NTL Communications Corp.
Both the equity and debt capital markets have recently experienced periods
of significant volatility, particularly for securities issued by
telecommunications and technology companies. The ability of
telecommunications companies to access those markets as well as their
ability to obtain financing provided by bank lenders and equipment suppliers
has                                                                                                                                      

6



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



| |  | become more restricted and financing costs have increased. During some
recent periods, the capital markets have been largely unavailable to new
issues of securities by telecommunications companies. NTL Incorporateds
public equity is no longer trading on the New York Stock Exchange, and the
debt securities of NTL Incorporated and its subsidiaries are trading at or
near all time lows. These factors, together with NTLs substantial leverage,
means the Group does not currently have access to its historic sources of
capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In addition, NTLs UK credit facilities are fully drawn. The revolving
tranche of the Cablecom credit facility has been capped at its utilized
amount of CHF 1,055.0 million although the availability may be increased
with the consent of the requisite majority of the lenders under that
facility. The term tranche of the Cablecom credit facility is fully drawn.
NTL Communications Corp., a wholly-owned subsidiary of NTL Incorporated, did
not pay cash interest on certain series of its notes that was due on April
1, 2002, April 15, 2002 and May 15, 2002. NTL Incorporated and NTL
(Delaware), Inc., a wholly-owned subsidiary of NTL Incorporated, also did
not pay cash interest and related fees on a series of their notes that was
due on April 15, 2002. In accordance with the proposed recapitalization
plan, NTL does not plan to make future interest payments on its outstanding
publicly traded notes except notes issued by NTL Triangle and Diamond
Holdings Limited.                                                                                                                 
|
| |  | As of March 31, 2002, the Group had approximately £2.6 million in cash and
cash equivalents and in April 2002, received approximately £13.3 million in
cash from NTL Communications Corp. in exchange for 30% Senior Notes due
September 29, 2004. The Group may require additional cash in the twelve
months from April 1, 2002 to March 31, 2003. NTL Incorporated expects to
obtain a DIP Facility (as described below) to meet the potential cash
requirements of it and its subsidiaries, excluding Cablecom. NTL
Incorporated also expects that the DIP Facility will be replaced with an
exit facility for NTL Communications Corp. and its subsidiaries, including
the Company, upon the completion of the reorganization process. Management
of the Company believes that cash and cash equivalents at March 31, 2002,
the cash received in April 2002 from the issuance of senior notes and the
cash expected to be available from the DIP Facility and the exit facility
will be sufficient for its and its subsidiaries cash requirements during the
twelve months from April 1, 2002 to March 31, 2003.
|
| |  | Beginning in January 2002, NTL was contacted by an unofficial committee of
bondholders regarding the commencement of a comprehensive and consensual
restructuring process. NTL has been informed that the members of the
unofficial steering committee of bondholders currently own, in the
aggregate, more than 50% of the outstanding principal amount of NTLs notes.
In connection with the restructuring process, the steering committee of the
unofficial committee of bondholders retained advisors to facilitate the
negotiations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | On January 31, 2002 NTL announced that it had appointed Credit Suisse First
Boston, JP Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen its balance sheet and reduce
debt and put an appropriate capital structure in place for its business.
Subsequently, NTL evaluated various recapitalization alternatives, and met
with a number of strategic investors, to effect a comprehensive consensual
reorganization in a timely manner to minimize negative effects on its
business operations. Discussions with such strategic investors did not
result in a proposal which NTLs board of directors believed was comparable
or superior to the value provided to its stakeholders by the proposed plan
of reorganization.                                                                                                                                                                                                                                                                                                                                          
|
| |  | Liberty Media Corporation (Liberty), one of such potential strategic
investors, which is also a significant shareholder in Telewest plc, another
British cable and telephone company, has discussed various transactions with
NTL from time to time over the past several years. In March 2002, Liberty
and NTL amended a previously existing confidentiality agreement between them
to cover the restructuring process and to include a standstill agreement
which prohibited various acquisitions of, or offers, for NTL debt or equity
securities by Liberty and its subsidiaries until June 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

7



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



| |  | On April 17, 2002, Liberty sent a proposal to NTLs board of directors,
which proposed a cash tender offer for 30% of the outstanding bonds of NTL
Communications Corp. at a small premium to the prevailing market price and
an agreement to vote such acquired bonds in favor of the proposed plan of
reorganization, as well as a participation with NTL in a cash infusion of
up to $500 million into Cablecom. After consultation with NTLs board of
directors and the steering committee of bondholders on April 18, 2002, NTL
indicated to Liberty that it did not consider the Liberty proposal to be in
the best interests of NTL and that the best course of action for NTL to
maximize its enterprise value was to promptly consummate the proposed plan
of reorganization. Subsequent to April 18, 2002, Liberty has continued
discussions with NTL with respect to Cablecom.                                                                                                                                                           
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Promptly upon obtaining the requisite waivers from the lenders under its
credit facilities, in March 2002, NTL commenced negotiations with the
steering committee of the unofficial committee of bondholders and its legal
and financial advisors. The negotiations continued during the latter part
of March and throughout April 2002, and also included France Telecom. On
April 16, 2002, the Company announced that it had reached a comprehensive
agreement in principle with the committee (holding over 50% of the face
value of NTL and its subsidiaries public bonds) and France Telecom, a
significant holder of the Companys preferred stock, on implementing a
recapitalization plan. On May 2, 2002, a steering committee of the lending
banks under the Companys credit facilities gave their approval in principle
(on a non-legally binding basis) to the Companys proposed plan of
reorganization.                                                                                                                                 
|
| |  | On June 21, 2002, the United States Trustee appointed an official creditors
committee, comprised of the three indenture trustees for the publicly traded
debt of NTL and the ten members of the steering committee of
bondholders. The members of the official creditors committee are: The
Bank of New York; Wilmington Trust Company; Wells Fargo Bank Minnesota,
National Association; Angelo Gordon & Co. LP; Capital Research & Management
Company; Franklin Mutual Advisors, LLC; Oaktree Capital Management LLC;
Salomon Brothers Asset Management; Appaloosa Management, LP; Fidelity
Management & Research Co.; Mackay Shields LLC; SAB Capital Management L.P.;
and W.R. Huff Asset Management Co., LLC.                                                                                                                                                                                                                                                                                                                                     
|
| |  | The recapitalization plan, if implemented, would result in the cancellation
of all of NTL Incorporateds outstanding shares of common stock, preferred
stock and redeemable preferred stock, and the cancellation of all of the
publicly held notes of NTL Incorporated, NTL (Delaware), Inc. and NTL
Communications Corp. and the transfer of the Diamond Cable Communications
Limited publicly held notes to NTL UK and Ireland. In addition, NTL would
be discharged from its obligation to pay dividends accruing on the canceled
preferred stock and interest accruing on the canceled notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | To implement the proposed recapitalization, on May 8, 2002 NTL Incorporated,
NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp.
filed cases and a pre-arranged joint reorganization plan under Chapter 11 of
the United States Bankruptcy Code. NTLs operating subsidiaries were not
included in the Chapter 11 filing. The reorganization plan contemplates
that the bank debt will remain in place as part of the recapitalization. On
May 24, 2002, NTL and its debtor subsidiaries filed an amended joint
reorganization plan and disclosure statement. The bankruptcy court has
scheduled July 12, 2002 for a hearing to consider approval of the amended
joint reorganization plan and disclosure statement. A copy of the Amended
Joint Reorganization Plan of NTL Incorporated and Certain Subsidiaries and
the related Disclosure Statement are included as exhibits to NTL
Incorporateds Current Report on Form 8-K filed on May 28, 2002.

8



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



| |  | The filing of the petitions seeking relief filed under Chapter 11
constituted an event of default under the indentures of each of the entities
which filed such Chapter 11 petitions and amounts outstanding under these
indentures became immediately due and payable. The Chapter 11 petitions
also constituted an event of default under NTLs UK credit facilities and
the Cablecom credit facility, allowing the lenders thereunder to declare
amounts outstanding to be immediately payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In connection with the proposed joint reorganization plan, certain members
of the unofficial committee of bondholders have committed to provide up to
$500 million of new debt financing to NTL Incorporated and certain of its
subsidiaries during the Chapter 11 process and for the post-recapitalized
NTL, subject to bankruptcy court approval. The new financing will ensure
that NTLs business operations have access to sufficient liquidity to
continue ordinary operations. The bankruptcy court has set July 2, 2002 as
the date to consider approval of the DIP Facility, which has been agreed in
principle with NTL and the prospective lenders under the facility. Despite
such agreement, however, GE Capital, the sole holder of the 5 3/4%
Convertible Subordinated Notes due 2011, and Wilmington Trust Company, the
trustee, have objected to the DIP Facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Proposed Recapitalization Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Under the proposed recapitalization plan, NTL would be split into two
companies, one tentatively called NTL UK and Ireland and holding
substantially all of NTLs UK and Ireland assets, and one tentatively called
NTL Euroco and holding substantially all of NTLs continental European and
other assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), NTL Communications Corp. and
Diamond Cable Communications Limited would in the aggregate receive 100% of
the initial common stock of NTL UK and Ireland (excluding shares issuable in
the rights offerings and upon the exercise of warrants (discussed below) and
upon the exercise of options which will be granted to certain employees of
NTL UK and Ireland). Holders of notes of NTL Incorporated (other than
France Telecom), NTL (Delaware), Inc. (other than France Telecom) and NTL
Communications Corp. would in the aggregate receive (i) 100% of the
preferred stock of NTL Euroco and (ii) a certain amount of cash as specified
in the amended joint reorganization plan. Holders of the subordinated notes
of NTL Incorporated (other than France Telecom), NTL (Delaware), Inc. (other
than France Telecom) and NTL Communications Corp. would in the aggregate
receive 86.5% of the initial common stock of NTL Euroco (excluding shares
issuable upon the exercise of options which will be granted to certain
employees of NTL Euroco). Holders of senior notes of NTL Communications
Corp. would receive the value of a specified number of shares of common
stock of NTL Euroco pursuant to the amended joint reorganization plan.
Notes of Diamond Holdings and NTL (Triangle) LLC, also an indirect,
wholly-owned subsidiary of NTL Incorporated, would remain outstanding and
interest payments will be made.
|
| |  | Current preferred and common stockholders of NTL Incorporated, including
France Telecom, would receive warrants to purchase common stock of NTL UK
and Ireland and rights (to be priced at a $10.5 billion enterprise value of
NTL UK and Ireland) entitling them to purchase common stock of NTL UK and
Ireland. For each share of common stock purchased upon exercise of rights,
the person exercising such rights will receive a warrant to purchase one
share of common stock of NTL UK and Ireland. The rights will be exercisable,
on an oversubscription basis, for the 20-business day period after the entry
of the confirmation order, as such period may be extended, and the warrants
will be exercisable for a period of eight years at an exercise price of
$77.47 per share, subject to anti-dilution adjustments. If fully exercised,
the rights and warrants would entitle the current preferred stockholders of
NTL Incorporated to acquire approximately 23.6% and the current common
stockholders of NTL Incorporated to acquire approximately 8.9% of NTL UK and
Irelands primary common stock on the effective date of the
recapitalization. Holders of the subordinated notes of NTL Incorporated
(other                                                                                                                                                                                                                                                                                                                         

9



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



| |  | than France Telecom), NTL (Delaware), Inc. (other than France Telecom), and
NTL Communications Corp. would have the right to purchase any shares of NTL
UK and Ireland common stock and warrants not subscribed for in the rights
offering by the preferred and common stockholders of NTL Incorporated. It
is expected that the warrants will be listed or quoted on the same
securities exchange or inter-dealer quotation system as the shares of common
stock of the reorganized NTL.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Current preferred stockholders of NTL Incorporated, other than France
Telecom, would receive approximately 3.2% and current common stockholders,
other than France Telecom, would receive approximately 10.3% of the primary
equity of NTL Euroco. It is contemplated that, subject to the consummation
of the recapitalization, France Telecom would also receive NTL
Incorporateds 27% interest in Noos, pursuant to a pledge of such interest
to France Telecom given at the time of its acquisition by NTL.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | During the recapitalization process, NTL has maintained normal and regular
trade terms with its suppliers and customers. There can be no assurance that
NTLs suppliers will continue to provide normal trade credit or credit on
acceptable terms, if at all, or that customers will continue to do business
or enter into new business with NTL. See also Risk Factors for a summary
of risks related to NTLs business in general and the recapitalization
process in particular.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Section 1129 of the United States Bankruptcy Code requires, among other
things, a showing that confirmation of the proposed recapitalization plan
will not be followed by liquidation or the need for further financial
reorganization of NTL Incorporated, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited or Diamond Holdings Limited, and
that the value of distributions to dissenting holders of claims and
interests may not be less than the value such holders would receive in a
liquidation under Chapter 7 of the United States Bankruptcy Code. Although
NTL believes that the proposed recapitalization plan will meet these tests,
there can be no assurance that the Bankruptcy Court will reach the same
conclusion.                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | The United States Bankruptcy Code also requires that a plan must provide the
same treatment for each claim or interest in a particular class, unless a
holder agrees to a less favorable treatment of its particular claim or
interest. NTL believes that the proposed recapitalization plan complies with
this requirement of the United States Bankruptcy Code. However, if a member
of a class objects to its treatment, or if the Bankruptcy Court finds that
the proposed recapitalization plan does not comply with the requirements of
the United States Bankruptcy Code, confirmation of the plan could be delayed
or prevented. In addition, each class of impaired claims and interests that
will (or may) be entitled to receive property under the plan will have the
opportunity to vote to accept or reject the plan. If an impaired class of
claims or interests rejects the plan, NTL may request confirmation of the
plan pursuant to the cramdown provisions of the United States Bankruptcy
Code. Even if the requirements for cramdown are met, the Bankruptcy
Court, which, as a court of equity may exercise substantial discretion, may
choose not to confirm the plan.
|
| |  | Bank Waivers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Before NTL could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under its
credit facilities. Effective March 8, 2002, these lenders granted waivers
which, until March 29, 2002, provided that the commencement of negotiations
with bondholders with a view to rescheduling its debt would not constitute
an event of default under the credit facilities. Such initial waivers did
not permit NTL to make to any of its noteholders an exchange or similar
offer for NTLs outstanding public notes or to enter into a legally binding
agreement with the unofficial steering committee of bondholders, subject to
some exceptions, without the consent of the lenders under the credit
facilities. But for the initial waivers, the commencement of negotiations
with bondholders would have been an event of default under the credit
facilities.                                                                                                                                                                                                                                                                    

10



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



| |  | Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended
the duration of the initial waivers to April 29, 2002 in the case of the UK
credit facilities or May 14, 2002 in the case of the Cablecom credit facility,
unless the interest payments missed by NTL Communications Corp. on April 1,
2002 were remedied or a sufficient number of bondholders agreed to forbear
in respect of such non-payment, in which case, the UK credit facilities
waivers were to be extended to May 14, 2002. As a condition to the amendment
to the initial waivers, the UK lenders required NTL (Delaware), Inc. to loan
£90 million to NTL (UK) Group, Inc. following receipt of the proceeds from
the sale of NTL Australia. Such loan was actually made (with the approval of
the lenders under the UK credit facilities) to NTL (UK) Group, Inc. and then
on-lent to certain subsidiaries of NTL (UK) Group, Inc. This loan, which was
made on April 5, 2002, is structurally senior to the outstanding public
notes issued by NTL Communications Corp. and contractually senior to
intra-group debt owed by NTL (UK) Group, Inc. to NTL Communications Corp.
but contractually subordinated to the UK credit facilities. In connection
with the amendments to the waivers, NTL affirmed the provisions of the
initial waivers and agreed, among other things, not to commence voluntary
dissolution proceedings, including proceedings under Chapter 11 of the
United States Bankruptcy Code, without the consent of these lenders.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | As of the date of this Form 10-Q, there are no current waivers from NTLs
secured lenders and NTL is therefore in default under its UK credit
facilities and the Cablecom credit facility. In connection with the
proposed recapitalization plan, it is intended that the existing events of
default under the credit facilities will be cured by amendment with effect
from the effective date of the recapitalization, if it is approved by
creditors and the bankruptcy court. On May 2, 2002, a memorandum was
executed by NTL Incorporated, a steering committee of its lending banks
and the unofficial committee of its public bondholders indicating the
parties agreement in principle (on a non-legally binding basis) to the
terms of the proposed recapitalization and the terms on which the NTLs UK
credit facilities should be amended and restated and with respect to certain
matters relating to the sale of, or investment in, Cablecom.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Cablecom GmbH, an indirect wholly-owned subsidiary of NTL (Delaware), Inc.,
is the principal trading company of NTLs Swiss group. There were a number
of technical defaults under the Swiss credit facility made available to
Cablecom and various of its subsidiaries. In addition, as of December 31,
2001, Cablecoms and six of its direct and indirect subsidiaries
liabilities exceeded their respective assets. As a consequence, under Swiss
law, those entities were deemed to be overindebted. This also constituted
an event of default under the Cablecom credit facility, which entitled the
lenders to accelerate repayment. Such an acceleration would have resulted in
an event of default under NTL Incorporateds and NTL Delawares 5.75%
convertible subordinated notes due 2011 and 5.75% convertible subordinated
notes due 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Under Swiss law, the board of directors of an overindebted company is
generally obliged to notify a judge of overindebtedness so that the judge
may either institute insolvency proceedings or postpone such adjudication
and take appropriate measures to preserve the value of the assets. An
overindebted company is not required to notify a judge only if the creditors
of the overindebted entity subordinate their claims in the amount of the
overindebtedness.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

11



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



| |  | On April 30, 2002, Cablecom reached an agreement with the lenders under the
Cablecom credit facility which, together with the implementation of an
intra-group transaction, resolved its overindebtedness. The agreement
included a waiver by the lenders of various additional covenant breaches
under the credit facility. Temporary measures were put in place to ensure
that Cablecoms overindebted subsidiaries were not required to institute
insolvency proceedings. On June 28, 2002, the commercial registry in
Switzerland confirmed the registration of the merger on July 26 and 27, 2002
of three subsidiaries of Cablecom into Cablecom or another member of the
Cablecom group, which mergers resolved the problem of overindebtedness in
respect of those three subsidiaries. With respect to the remaining three
subsidiaries which were affected by the overindebtedness issue,
subordination agreements were reached, precluding the need to notify the
judge of the overindebtedness.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Interest Payments on Public Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | NTL has substantial interest payment obligations under its existing
indebtedness. NTL Communications Corp. did not make scheduled interest
payments due April 1, 2002, in the aggregate amount of $74.2 million, in
respect of its 9 1/2% notes due 2008, 11 1/2% notes due 2008 and 11 7/8%
notes due 2010. NTL Communications Corp. also did not make interest payments
falling due on April 15, 2002, totaling $17.7 million, in respect of the 12
3/4% Senior Deferred Coupon Notes due 2005 and NTL Incorporated and NTL
(Delaware), Inc. did not make interest payments and payment of related fees
falling due on April 15, 2002, totaling $2.5 million, in respect of their 5
3/4% Convertible Subordinated Notes due 2011. In addition, NTL
Communications Corp. did not make the scheduled interest payments due May
15, 2002 in the aggregate amount of $65.0 million, in respect of its 9 1/4%
notes due 2006, 6 3/4% notes due 2008 and 9 7/8% notes due 2009. Interest
payments of $18.9 million were made, when due, on April 2, 2002 in respect
of Diamond Cable Communications 13.25% senior discount notes due 2004. In
accordance with the proposed recapitalization plan, NTL does not plan to
make future interest payments on its outstanding publicly traded notes
except notes issued by NTL Triangle and Diamond Holdings Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. An event of
default entitles the trustee under the indenture or the holders of 25% of
the outstanding notes to declare the principal amount of those notes to be
immediately due and payable. Even if the maturity of those notes is not
accelerated after the 30 day grace period, such an event of default would
also result in an event of default in respect of other debt (commonly called
cross defaults) under most of our other notes. Therefore, there was an event
of default for failure to pay interest on May 1, 2002 under the indentures
relating to the missed interest payments due April 1, 2002 and on May 16,
2002, under the indentures relating to the missed interest payments due
April 15, 2002. As a result, cross defaults occurred under the indentures at
NTL Communications Corp., NTL (Delaware), Inc., NTL Incorporated and under
NTLs UK credit facilities and under the Cablecom credit facility. This gave
holders of the outstanding series of debt at these entities the right to
accelerate repayment of those debts by declaring the principal amount of the
debts to be immediately due and payable. As a result of the payment
defaults as well as NTLs voluntary filing under Chapter 11 of the United
States Bankruptcy Code on May 8, 2002, there is an event of default under
all of NTLs credit facilities and the indentures governing all of its
publicly traded debt, other than debt of NTL Triangle. As a result of the
Chapter 11 filings, all of NTLs publicly traded debts, other than the debt
of NTL Triangle, became immediately due and payable, pursuant to the terms
of the indentures governing such debt. The automatic stay of Section 362 of
the United States Bankruptcy Code prevents the holders of such debt from
seeking to enforce their collection rights under the indentures, except
within the context of the Chapter 11 cases, and even then only with the
prior approval of the bankruptcy court. However, NTL has received letters
from the agents for the lenders under the UK credit facilities reserving
such lenders rights to accelerate repayment of the facilities and to
enforce the security granted in respect of the facilities on account of the
defaults thereunder, actions which would not be prohibited by the automatic
stay.

12



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



| |  | Credit Rating Downgrades                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | On April 3, 2002, credit rating agency Standard & Poors lowered NTLs
long-term corporate credit rating to D from CCC, citing NTLs failure to
make a bond interest payment due on April 1, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Delisting of NTL Incorporated Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | On March 28, 2002, the New York Stock Exchange (NYSE) announced that it
was suspending NTL Incorporateds common stock from trading on the NYSE.
This determination was based upon, among other things, the selling price of
NTL Incorporateds common stock, which closed at $0.20 on March 26, 2002.
The continued listing standards of the NYSE, which were applicable to NTL
Incorporated, required maintenance of a minimum share price of $1.00 over a
30 trading day period and average global market capitalization of $100
million over a 30 trading day period. NTLs common stock fell below both of
these continued listing standards. In addition, on May 9, 2002, Nasdaq
Europe halted trading of NTLs common stock pending receipt of information
relating to the restructuring process because of the filing of NTLs Chapter
11 cases. NTL has complied with this information request, although there
can be no assurance that Nasdaq Europe will (1) not make additional
information requests, (2) remove the trading halt on shares of NTLs common
stock or (3) not delist shares of NTLs common stock. NTLs common stock is
currently quoted on the Over the Counter Bulletin Board under the symbol
NTLD.
|
| |  | Sale of NTL Australia                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | On April 2, 2002, NTL Incorporated announced that it had completed the
previously announced sale of its Australian broadcast business to Macquarie
Communications Infrastructure Holding Pty Limited for A$850 million (US$448
million) in an all cash transaction. The net proceeds from the sale were
approximately A$581 million (US$306 million). At that time, the business
bank debt outstanding totaled A$227 million (US$120 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | On April 5, 2002, NTL (Delaware), Inc. loaned £90 million to NTL (UK) Group,
Inc., which loan was funded by the proceeds of the sale of NTL Australia.
This loan is subordinated to NTLs UK credit facilities. The remaining
proceeds of the sale of NTL Australia remain at NTL (Delaware), Inc. and the
proposed plan of reorganization anticipates that such proceeds will form a
portion of the consideration to be offered to bondholders of NTL (Delaware),
Inc. and NTL Incorporated in satisfaction of their claims against those
companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Potential Sale of, or Outside Investment in, Cablecom                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | It has been agreed to engage UBS Warburg LLC by August 31, 2002 to advise in
connection with an outside investment in, or sale of all or part of,
Cablecom. As part of this process, NTL (Delaware), Inc. and certain of its
subsidiaries have agreed to approve any such outside investment or sale,
which is acceptable to the lenders under the Cablecom credit facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | It has also been agreed that if such a sale of all or part of Cablecom is
consummated on or before August 31, 2003, the lenders under the Cablecom
credit facility will be entitled to receive additional interest equal to 20%
of the net proceeds of such a sale after repayment of the amounts
outstanding under the Cablecom credit facility and other expenses and taxes
of the sale. There can be no assurance that any outside investment in, or
sale of all or part of, Cablecom pursuant to the Cablecom credit facility
will be on terms that are favorable to NTL and such investment or sale could
have a material adverse effect on NTLs finances and business. In
particular, in the current environment, NTLs shareholding in Cablecom may
have little or no value, which may result in NTL receiving little or no
consideration for its equity interest in Cablecom.                                                                                                                                                                                                                                                                                                                                                

13



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



|   |  | Further, if a third party makes an investment in Cablecom there can be no
assurance that NTL will be able to maintain its ability to direct the
management of Cablecom.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Uncertainty Related to Suppliers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | The uncertainty over NTLs financial condition may adversely affect its
relationships with its suppliers. If NTLs suppliers become increasingly
concerned about its financial condition, they may demand quicker payment
terms or not extend normal trade credit, both of which could further
adversely affect its results of operations, financial condition and cash
flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|3. |  | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets, effective for the
Company on January 1, 2002. This Statement superceded SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of and other related accounting guidance. The
adoption of this new standard had no significant effect on the results of
operations, financial condition or cash flows of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, effective for the Company on January 1, 2003. This Statement
addresses financial accounting and reporting for obligations associated with
the retirement of tangible fixed assets and the associated asset retirement
costs. The Company is in the process of evaluating the financial statement
impact of the adoption of SFAS No. 143.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | In June 2001, the FASB issued SFAS No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations
initiated after June 30, 2001. Use of the pooling-of-interests method is no
longer permitted. SFAS No. 141 also includes guidance on the initial
recognition and measurement of goodwill and other intangible assets acquired
in a business combination that is completed after June 30, 2001.SFAS No. 142
ends the amortization of goodwill and indefinite-lived intangible assets.
Instead, these assets must be reviewed annually (or more frequently under
certain conditions) for impairment in accordance with this statement. This
impairment test uses a fair value approach rather than the undiscounted cash
flow approach previously required by SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. The Company adopted SFAS No. 142 on January 1, 2002. The adoption of
this new standard did not have a significant effect on the results of
operations, financial condition or cash flows of the Company.
|  
|   |  | The following table shows the Companys net loss as adjusted for the
adoption of SFAS No. 142, had SFAS No. 142 been in effect on January 1, 2001
(unaudited) (in £000s).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                         |                 |  |                              |   |      |  |          |       | 
|------------------------ | --------------- |  | ---------------------------- | - | ---- |  | -------- | ----- | 
|                         |                 |  | Three Months Ended March 31,
|                         |                 |  |                             
|                         |                 |  | 2002                         |   | 2001
|                         |                 |  |                              |   |     
|Net (loss)  as reported |                 |  | £(58,854                     | ) |      |  | £(91,553 | )    
|                        
|                        
|                        
|                        
|Amortization of:         |                 |  |                              |   |      |  |          |      
|                        
|                        
|                        
|                        
|                         | Goodwill        |  |                              |  |      |  |          | 1,212 | 
|                        
|                        
|                        
|                        
|                         | Franchise costs |  |                              |  |      |  |          | 7     | 
|                         |                 |  |                              |   |      |  |          |      
|                         |                 |  |                             |   |      |  | 1,219    |      
|                         |                 |  |                              |   |      |  |          |      
|Net (loss)  as adjusted |                 |  | £(58,854                     | ) |      |  | £(90,334 | )    
|                         |                 |  |                              |   |      |  |          |      

14



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



|4. |  | Comprehensive Loss                                                                                                                   
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Consolidated comprehensive loss for the three months ended March 31, 2002
and 2001 was £58.9 million and £91.6 million, respectively.
|  
|5. |  | Property and Equipment                                                                                                               
|  
|   |  | Property and equipment consists of (in £000s):                                                                                      

|                                    |                           |               |                  |  |           |  |              |         |          |  |          |         | 
|----------------------------------- | ------------------------- | ------------- | ---------------- |  | --------- |  | ------------ | ------- | -------- |  | -------- | ------- | 
|                                    |                           |               | Estimated Useful |  | March 31, |  | December 31,
|                                    |                           |               | Life             |  | 2002      |  | 2001        
|                                    |                           |               |                  |  |           |  |             
|                                    |                           |               |                  |  |           |  | (Unaudited)  |         |          |  |         
|Set-top boxes and materials         |                           | 3 Years       |                  |  | £161,527  |  |              |         | £161,527 | 
|                                   
|                                   
|                                   
|                                   
|Head-ends, switches and electronics |                           | 15 Years      |                  |  | 276,856   |  |              |         | 275,921  | 
|                                   
|                                   
|                                   
|                                   
|Civil work                          |                           | 40 Years      |                  |  | 315,975   |  |              |         | 311,849  | 
|                                    |                           |               |                  |  |           |  |              |         |          |  |          |        
|                                    | Total Operating Equipment |               |                  |  |           |  |              | 754,358 |          |  |          | 749,297 | 
|                                    |                           |               |                  |  |           |  |              |         |          |  |          |        
|Land and Buildings                  |                           | 50 Years      |                  |  | 5,872     |  |              |         | 5,872    | 
|                                   
|                                   
|                                   
|                                   
|Leasehold Buildings                 |                           | 25 Years      |                  |  | 2,440     |  |              |         | 2,440    | 
|                                   
|                                   
|                                   
|                                   
|Computer Equipment                  |                           | 3 or 5 Years  |                  |  | 12,354    |  |              |         | 12,354   | 
|                                   
|                                   
|                                   
|                                   
|Vehicles, furniture and other       |                           | 3 to 15 Years |                  |  | 3,720     |  |              |         | 3,720    | 
|                                    |                           |               |                  |  |           |  |              |         |          |  |          |        
|                                    | Total Other Equipment     |               |                  |  |           |  |              | 24,386  |          |  |          | 24,386  | 
|                                    |                           |               |                  |  |           |  |              |         |          |  |          |        
|Construction in progress            |                           |               |                  |  |           |  | 8,753        |         |          |  | 10,738   |        
|                                    |                           |               |                  |  |           |  |              |         |          |  |          |        
|                                    |                           |               |                  |  |           |  | 787,497      |         |          |  | 784,421  |        
|                                   
|                                   
|                                   
|                                   
|Accumulated depreciation            |                           |               |                  |  |           |  | (269,885     | )       |          |  | (254,206 | )      
|                                    |                           |               |                  |  |           |  |              |         |          |  |          |        
|                                    |                           |               |                  |  |           |  | £517,612     |         |          |  | £530,215 |        
|                                    |                           |               |                  |  |           |  |              |         |          |  |          |        



|6. |  | Notes Payable                        
|-- |  | -------------------------------------
|  
|   |  | Notes payable consist of (in £000s):

|                              |  |                |            |                   |  |  |            | 
|----------------------------- |  | -------------- | ---------- | ----------------- |  |  | ---------- | 
|                              |  | March
31, 2002 |            | December 31, 2001
|                              |  | (Unaudited)    |            |                   |  | 
|13 1/4% Senior Discount Notes |  |                | £200,451   |                   |  |  | £196,040   | 
|                             
|                             
|                             
|                             
|11 3/4% Senior Discount Notes |  |                | 373,306    |                   |  |  | 365,092    | 
|                             
|                             
|                             
|                             
|10 3/4% Senior Discount Notes |  |                | 295,647    |                   |  |  | 285,446    | 
|                             
|                             
|                             
|                             
|10% Senior Sterling Notes     |  |                | 135,000    |                   |  |  | 135,000    | 
|                             
|                             
|                             
|                             
|9 1/8% Senior Notes           |  |                | 77,269     |                   |  |  | 75,569     | 
|                             
|                             
|                             
|                             
|Mortgage loan                 |  |                | 2,063      |                   |  |  | 2,098      | 
|                             
|                             
|                             
|                             
|Capital leases                |  |                | 450        |                   |  |  | 417        | 
|                              |  |                |            |                   |  |  |            | 
|                              |  |                | £1,084,186 |                   |  |  | £1,059,662 | 
|                              |  |                |            |                   |  |  |            | 

15



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



|   |  | See Note 2 for discussion of the events of default and uncertainties about
compliance with the terms and conditions of the Notes. The holders of the
debt have the right to accelerate repayment, or may have such right, which
has caused all of the debt to be classified as current. The automatic stay
of Section 362 of the United States Bankruptcy Code prevents the holders of
such debt from seeking to enforce their collection rights under the
indentures, except within the context of the Chapter 11 cases, and even then
only with the prior approval of the bankruptcy court.                                                                                                                                                                                                                                                                                                                                   
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|7. |  | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | On April 2, 2002, NTL Communications Corp. loaned Diamond Cable
Communications Limited $18.9 million (£13.3 million) in cash in exchange for
30% Senior Notes due September 29, 2004. Interest is payable semiannually
in cash at a rate of 30% per annum beginning on September 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | Since the acquisition of the Company by NTL in March 1999, a subsidiary of
NTL has been providing infrastructure and management support services to the
Group. Benefits include usage of NTL network assets, network maintenance,
marketing and shared overhead. Additionally, in 2001 certain elements of
the Groups network operations and customer operations were integrated with
NTLs national and regional operations in order for the Group to gain the
advantage of NTLs scale.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | The related charges, which began in the fourth quarter of 1999, represent
the Groups portion of costs incurred by a subsidiary of NTL for the benefit
of all UK operations within NTL. These charges are made on the basis of an
allocation formula appropriate to each category of charge. The Group was
charged £24.4 million and £23.9 million for the three months ended March 31,
2002 and 2001, respectively. For 2002, £9.6 million was included in
operating costs and £14.8 million was included in selling, general and
administrative expense. For 2001, £9.0 million was included in operating
costs and £14.9 million was included in selling, general and administrative
expense. It is not practicable to determine the amount of these expenses
that would have been incurred had the Group operated as an unaffiliated
entity. In the opinion of management of the Group, the allocation method is
reasonable.
|  
|   |  | As of March 31, 2002 and December 31, 2001, the due to affiliates balance
includes payments made to third parties on behalf of the Group by a
subsidiary of NTL. The Group has reduced direct transactions with third
parties as a result of the continued integration of the Group with NTL. The
Group has therefore had its liabilities to third parties significantly
reduced, with a rise in amounts due to affiliates. The payments made on
behalf of the Group represent directly attributable expenses incurred by the
Group.                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | Through March 31, 2002, the Company has received from its parent, in the
form of equity contributions, cash of £182.9 million which exceeds the
aggregate allocated costs charged to the Group.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|8. |  | Commitments and Contingent Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | The Group is involved in legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially
affect the financial position, results of operations or liquidity of the
Group.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

16



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)



|9. |  | Summarized Financial Information about Diamond Holdings Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | On February 6, 1998, Diamond Holdings, a subsidiary of the Company, issued
£135.0 million principal amount of its 10% Senior Notes due February 1, 2008
and $110.0 million principal amount of its 9 1/8% Senior Notes due February
1, 2008 (together, the 1998 Notes). The 1998 Notes have been fully and
unconditionally guaranteed by the Company as to principal, interest and
other amounts due. The Company has no independent operations and no
subsidiaries other than Diamond Holdings. Diamond Holdings is restricted in
its ability to make funds available to the Company except for funds to pay
interest on the Companys Notes and £5.0 million annually. The following
condensed consolidating financial information of the Company as of March 31,
2002 and December 31, 2001 and for the three months ended March 31, 2002 and
2001 is being provided pursuant to Article 3-10(c) of Regulation S-X.

17



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)

Note 9(continued)



|                                                                |  |                                   |          |          |  |              |          |             |  |               |          |   |  |              |          |   |  |             |          |  
|--------------------------------------------------------------- |  | --------------------------------- | -------- | -------- |  | ------------ | -------- | ----------- |  | ------------- | -------- | - |  | ------------ | -------- | - |  | ----------- | -------- | -
|                                                                |  |                                   |          |          |  |              |          |             |  |               |          |   |  |              |          |   |  | (in £000's)
|                                                                |  | Three Months Ended March 31, 2002
|                                                                |  |                                  
|                                                                |  | Diamond                           |          | Diamond  |  |              |          |             |  |               |          |   |  | Consolidated
|Statements of Operations                                        |  | Cable                             |          | Holdings |  | Subsidiaries |          | Adjustments |  | Diamond Cable
|                                                                |  |                                   |          |          |  |              |          |             |  |              
|Revenue                                                         |  |                                   | £       |          |  |              | £       |             |  |               | £46,530  |   |  |              | £       |   |  |             | £46,530  |  
|                                                                |  |                                   |          |          |  |              |          |             |  |               |          |   |  |              |          |   |  |             |          |  
|Costs
and expenses                                             
|                                                               
|                                                               
|                                                               
|                                                               
|Operating                                                       |  |                                   |         |          |  |              |         |             |  |               | 22,733   |   |  |              |         |   |  |             | 22,733   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Selling, general and administrative                             |  |                                   |         |          |  |              |         |             |  |               | 14,823   |   |  |              |         |   |  |             | 14,823   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Other charges                                                   |  |                                   |         |          |  |              |         |             |  |               | 7        |   |  |              |         |   |  |             | 7        |  
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation and amortization                                   |  |                                   |         |          |  |              |         |             |  |               | 15,680   |   |  |              |         |   |  |             | 15,680   |  
|                                                                |  |                                   |          |          |  |              |          |             |  |               |          |   |  |              |          |   |  |             |          |  
|                                                                |  |                                   |         |          |  |              |         |             |  |               | 53,243   |   |  |              |         |   |  |             | 53,243   |  
|                                                                |  |                                   |          |          |  |              |          |             |  |               |          |   |  |              |          |   |  |             |          |  
|Operating loss                                                  |  |                                   |         |          |  |              |         |             |  |               | (6,713   | ) |  |              |         |   |  |             | (6,713   | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other
income (expense)                                         
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income                                                 |  |                                   | 30,100   |          |  |              | 4,829    |             |  |               | 95       |   |  |              | (34,929  | ) |  |             | 95       |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense and amortization of
debt discount and expenses |  |                                   | (25,913  | )        |  |              | (5,317   | )           |  |               | (34,996  | ) |  |              | 34,929   |   |  |             | (31,297  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign exchange losses, net                                    |  |                                   | (1,306   | )        |  |              | (126     | )           |  |               | (19,507  | ) |  |              |         |   |  |             | (20,939  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Equity in net loss of subsidiary                                |  |                                   | (61,735  | )        |  |              | (61,121  | )           |  |               |         |   |  |              | 122,856  |   |  |             |         |  
|                                                                |  |                                   |          |          |  |              |          |             |  |               |          |   |  |              |          |   |  |             |          |  
|Net loss                                                        |  |                                   | £(58,854 | )        |  |              | £(61,735 | )           |  |               | £(61,121 | ) |  |              | £122,856 |   |  |             | £(58,854 | )
|                                                                |  |                                   |          |          |  |              |          |             |  |               |          |   |  |              |          |   |  |             |          |  

[Additional columns below]

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

|                                                                |  |                                   |          |                  |  |              |          |             |  |               |          |   |  |  |          |   |  |              |          |  
|--------------------------------------------------------------- |  | --------------------------------- | -------- | ---------------- |  | ------------ | -------- | ----------- |  | ------------- | -------- | - |  |  | -------- | - |  | ------------ | -------- | -
|                                                                |  | (in £000's)                       |          |                  |  |              |          |             |  |               |          |   |  |  |          |   |  |             
|                                                                |  | Three Months Ended March 31, 2001
|                                                                |  |                                  
|                                                                |  |                                   |          |                  |  |              |          |             |  |               |          |   |  |  |          |   |  | Consolidated
|Statements of Operations                                        |  | Diamond Cable                     |          | Diamond Holdings |  | Subsidiaries |          | Adjustments |  | Diamond Cable
|                                                                |  |                                   |          |                  |  |              |          |             |  |              
|Revenue                                                         |  |                                   | £       |                  |  |              | £       |             |  |               | £42,357  |   |  |  | £       |   |  |              | £42,357  |  
|                                                                |  |                                   |          |                  |  |              |          |             |  |               |          |   |  |  |          |   |  |              |          |  
|Costs
and expenses                                             
|                                                               
|                                                               
|                                                               
|                                                               
|Operating                                                       |  |                                   |         |                  |  |              |         |             |  |               | 20,961   |   |  |  |         |   |  |              | 20,961   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Selling, general and administrative                             |  |                                   |         |                  |  |              |         |             |  |               | 23,987   |   |  |  |         |   |  |              | 23,987   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Other charges                                                   |  |                                   |         |                  |  |              |         |             |  |               |         |   |  |  |         |   |  |              |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation and amortization                                   |  |                                   |         |                  |  |              |         |             |  |               | 11,196   |   |  |  |         |   |  |              | 11,196   |  
|                                                                |  |                                   |          |                  |  |              |          |             |  |               |          |   |  |  |          |   |  |              |          |  
|                                                                |  |                                   |         |                  |  |              |         |             |  |               | 56,144   |   |  |  |         |   |  |              | 56,144   |  
|                                                                |  |                                   |          |                  |  |              |          |             |  |               |          |   |  |  |          |   |  |              |          |  
|Operating loss                                                  |  |                                   |         |                  |  |              |         |             |  |               | (13,787  | ) |  |  |         |   |  |              | (13,787  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other
income (expense)                                         
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income                                                 |  |                                   | 27,364   |                  |  |              | 4,875    |             |  |               |         |   |  |  | (32,239  | ) |  |              |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense and amortization of
debt discount and expenses |  |                                   | (24,883  | )                |  |              | (5,289   | )           |  |               | (32,239  | ) |  |  | 32,239   |   |  |              | (30,172  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign exchange losses, net                                    |  |                                   | (914     | )                |  |              | (326     | )           |  |               | (46,354  | ) |  |  |         |   |  |              | (47,594  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Equity in net loss of subsidiary                                |  |                                   | (93,120  | )                |  |              | (92,380  | )           |  |               |         |   |  |  | 185,500  |   |  |              |         |  
|                                                                |  |                                   |          |                  |  |              |          |             |  |               |          |   |  |  |          |   |  |              |          |  
|Net loss                                                        |  |                                   | £(91,553 | )                |  |              | £(93,120 | )           |  |               | £(92,380 | ) |  |  | £185,500 |   |  |              | £(91,553 | )
|                                                                |  |                                   |          |                  |  |              |          |             |  |               |          |   |  |  |          |   |  |              |          |  

18



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)

Note 9(continued)



|                                               |  |                |          |          |  |              |           |             |  |               |           |   |  |              |            |   |  |             |            |  
|---------------------------------------------- |  | -------------- | -------- | -------- |  | ------------ | --------- | ----------- |  | ------------- | --------- | - |  | ------------ | ---------- | - |  | ----------- | ---------- | -
|                                               |  |                |          |          |  |              |           |             |  |               |           |   |  |              |            |   |  | (in £000's)
|                                               |  | March 31, 2002
|                                               |  |               
|                                               |  | Diamond        |          | Diamond  |  |              |           |             |  |               |           |   |  | Consolidated
|Balance Sheets                                 |  | Cable          |          | Holdings |  | Subsidiaries |           | Adjustments |  | Diamond Cable
|                                               |  |                |          |          |  |              |           |             |  |              
|Current assets                                 |  |                | £70      |          |  |              | £70       |             |  |               | £20,413   |   |  |              | £         |   |  |             | £20,553    |  
|                                              
|                                              
|                                              
|                                              
|Investments in and advances to subsidiaries    |  |                | 360,150  |          |  |              | (379,446  | )           |  |               |          |   |  |              | 19,296     |   |  |             |           |  
|                                              
|                                              
|                                              
|                                              
|Fixed and noncurrent assets                    |  |                | 7,764    |          |  |              | 4,034     |             |  |               | 584,569   |   |  |              |           |   |  |             | 596,367    |  
|                                               |  |                |          |          |  |              |           |             |  |               |           |   |  |              |            |   |  |             |            |  
|Total Assets                                   |  |                | £367,984 |          |  |              | £(375,342 | )           |  |               | £604,982  |   |  |              | £19,296    |   |  |             | £616,920   |  
|                                               |  |                |          |          |  |              |           |             |  |               |           |   |  |              |            |   |  |             |            |  
|Current liabilities                            |  |                | £899,499 |          |  |              | £215,602  |             |  |               | £40,419   |   |  |              | £-         |   |  |             | £1,155,520 |  
|                                              
|                                              
|                                              
|                                              
|Due to affiliates                              |  |                |         |          |  |              |          |             |  |               | 1,523,419 |   |  |              | (1,523,419 | ) |  |             |           |  
|                                              
|                                              
|                                              
|                                              
|Shareholders deficiency                       |  |                | (531,515 | )        |  |              | (590,944  | )           |  |               | (958,856  | ) |  |              | 1,542,715  |   |  |             | (538,600   | )
|                                               |  |                |          |          |  |              |           |             |  |               |           |   |  |              |            |   |  |             |            |  
|Total liabilities and shareholders deficiency |  |                | £367,984 |          |  |              | £(375,342 | )           |  |               | £604,982  |   |  |              | £19,296    |   |  |             | £616,920   |  
|                                               |  |                |          |          |  |              |           |             |  |               |           |   |  |              |            |   |  |             |            |  

[Additional columns below]

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

|                                               |  |                   |          |                  |  |              |           |             |  |               |           |   |  |  |            |   |  |              |            |  
|---------------------------------------------- |  | ----------------- | -------- | ---------------- |  | ------------ | --------- | ----------- |  | ------------- | --------- | - |  |  | ---------- | - |  | ------------ | ---------- | -
|                                               |  | (in £000's)       |          |                  |  |              |           |             |  |               |           |   |  |  |            |   |  |             
|                                               |  | December 31, 2001
|                                               |  |                  
|                                               |  |                   |          |                  |  |              |           |             |  |               |           |   |  |  |            |   |  | Consolidated
|Balance Sheets                                 |  | Diamond Cable     |          | Diamond Holdings |  | Subsidiaries |           | Adjustments |  | Diamond Cable
|                                               |  |                   |          |                  |  |              |           |             |  |              
|Current assets                                 |  |                   | £250     |                  |  |              | £-        |             |  |               | £24,546   |   |  |  | £-         |   |  |              | £24,796    |  
|                                              
|                                              
|                                              
|                                              
|Investments in and advances to subsidiaries    |  |                   | 314,716  |                  |  |              | (460,445  | )           |  |               |          |   |  |  | 145,729    |   |  |              |           |  
|                                              
|                                              
|                                              
|                                              
|Fixed and noncurrent assets                    |  |                   | 8,277    |                  |  |              |           |             |  |               | 601,386   |   |  |  |            |   |  |              | 609,663    |  
|                                               |  |                   |          |                  |  |              |           |             |  |               |           |   |  |  |            |   |  |              |            |  
|Total Assets                                   |  |                   | £323,243 |                  |  |              | £(460,445 | )           |  |               | £625,932  |   |  |  | £145,729   |   |  |              | £634,459   |  
|                                               |  |                   |          |                  |  |              |           |             |  |               |           |   |  |  |            |   |  |              |            |  
|Current liabilities                            |  |                   | £869,636 |                  |  |              | £214,869  |             |  |               | £29,700   |   |  |  | £-         |   |  |              | £1,114,205 |  
|                                              
|                                              
|                                              
|                                              
|Due to affiliates                              |  |                   |          |                  |  |              |           |             |  |               | 1,340,729 |   |  |  | (1,340,729 | ) |  |              |           |  
|                                              
|                                              
|                                              
|                                              
|Shareholders deficiency                       |  |                   | (546,393 | )                |  |              | (675,314  | )           |  |               | (744,497  | ) |  |  | 1,486,458  |   |  |              | (479,746   | )
|                                               |  |                   |          |                  |  |              |           |             |  |               |           |   |  |  |            |   |  |              |            |  
|Total liabilities and shareholders deficiency |  |                   | £323,243 |                  |  |              | £(460,445 | )           |  |               | £625,932  |   |  |  | £145,729   |   |  |              | £634,459   |  
|                                               |  |                   |          |                  |  |              |           |             |  |               |           |   |  |  |            |   |  |              |            |  



|                                                    |  |                                   |        |          |  |              |         |             |  |               |        |   |  |              |         |   |  |  |        |  
|--------------------------------------------------- |  | --------------------------------- | ------ | -------- |  | ------------ | ------- | ----------- |  | ------------- | ------ | - |  | ------------ | ------- | - |  |  | ------ | -
|                                                    |  | Three Months Ended March 31, 2002
|                                                    |  |                                  
|                                                    |  | Diamond                           |        | Diamond  |  |              |         |             |  |               |        |   |  | Consolidated
|Statements of Cash Flows                            |  | Cable                             |        | Holdings |  | Subsidiaries |         | Adjustments |  | Diamond Cable
|                                                    |  |                                   |        |          |  |              |         |             |  |              
|Net cash (used in) provided by
operating activities |  |                                   | £8,606 |          |  |              | £(4,341 | )           |  |               | £3,783 |   |  |              | £(4,125 | ) |  |  | £3,923 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Investing activities:                               |  |                                   |        |          |  |              |         |             |  |               |        |   |  |              |         |   |  |  |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|(Advances to) repayments from
subsidiaries, net     |  |                                   | (8,536 | )        |  |              | 4,411   |             |  |               |       |   |  |              | 4,125   |   |  |  |       |  
|                                                   
|                                                   
|                                                   
|                                                   
|Purchase of property and equipment                  |  |                                   |       |          |  |              |        |             |  |               | (5,719 | ) |  |              |        |   |  |  | (5,719 | )
|                                                    |  |                                   |        |          |  |              |         |             |  |               |        |   |  |              |         |   |  |  |        |  
|Net cash provided by (used in)
investing activities |  |                                   | (8,536 | )        |  |              | 4,411   |             |  |               | (5,719 | ) |  |              | 4,125   |   |  |  | (5,719 | )
|                                                    |  |                                   |        |          |  |              |         |             |  |               |        |   |  |              |         |   |  |  |        |  
|Financing activities:                               |  |                                   |        |          |  |              |         |             |  |               |        |   |  |              |         |   |  |  |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|Principal payments                                  |  |                                   |       |          |  |              |        |             |  |               | (95    | ) |  |              |        |   |  |  | (95    | )
|                                                   
|                                                   
|                                                   
|                                                   
|Capital lease payments                              |  |                                   |       |          |  |              |        |             |  |               | (27    | ) |  |              |        |   |  |  | (27    | )
|                                                    |  |                                   |        |          |  |              |         |             |  |               |        |   |  |              |         |   |  |  |        |  
|Net cash provided by (used in)
financing activities |  |                                   |       |          |  |              |        |             |  |               | (122   | ) |  |              |        |   |  |  | (122   | )
|                                                    |  |                                   |        |          |  |              |         |             |  |               |        |   |  |              |         |   |  |  |        |  
|(Decrease) increase in cash                         |  |                                   | 70     |          |  |              | 70      |             |  |               | (2,058 | ) |  |              |        |   |  |  | (1,918 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Cash and cash equivalents at beginning
of period    |  |                                   |       |          |  |              |        |             |  |               | 4,535  |   |  |              |        |   |  |  | 4,535  |  
|                                                    |  |                                   |        |          |  |              |         |             |  |               |        |   |  |              |         |   |  |  |        |  
|Cash and cash equivalents at end of period          |  |                                   | £70    |          |  |              | £70     |             |  |               | £2,477 |   |  |              | £      |   |  |  | £2,617 |  
|                                                    |  |                                   |        |          |  |              |         |             |  |               |        |   |  |              |         |   |  |  |        |  

[Additional columns below]

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

|                                                    |  |                                   |          |                  |  |              |      |             |  |               |         |   |  |  |         |   |  |              |         |  
|--------------------------------------------------- |  | --------------------------------- | -------- | ---------------- |  | ------------ | ---- | ----------- |  | ------------- | ------- | - |  |  | ------- | - |  | ------------ | ------- | -
|                                                    |  | Three Months Ended March 31, 2001
|                                                    |  |                                  
|                                                    |  |                                   |          |                  |  |              |      |             |  |               |         |   |  |  |         |   |  | Consolidated
|Statements of Cash Flows                            |  | Diamond Cable                     |          | Diamond Holdings |  | Subsidiaries |      | Adjustments |  | Diamond Cable
|                                                    |  |                                   |          |                  |  |              |      |             |  |              
|Net cash (used in) provided by
operating activities |  |                                   | £(12,576 | )                |  |              | £(52 | )           |  |               | £30,296 |   |  |  | £12,628 |   |  |              | £30,296 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Investing activities:                               |  |                                   |          |                  |  |              |      |             |  |               |         |   |  |  |         |   |  |              |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|(Advances to) repayments from
subsidiaries, net     |  |                                   | 12,576   |                  |  |              | 52   |             |  |               | (32,358 | ) |  |  | (12,628 | ) |  |              | (32,358 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Purchase of property and equipment                  |  |                                   |         |                  |  |              |     |             |  |               |        |   |  |  |        |   |  |              |        |  
|                                                    |  |                                   |          |                  |  |              |      |             |  |               |         |   |  |  |         |   |  |              |         |  
|Net cash provided by (used in)
investing activities |  |                                   | 12,576   |                  |  |              | 52   |             |  |               | (32,358 | ) |  |  | (12,628 | ) |  |              | (32,358 | )
|                                                    |  |                                   |          |                  |  |              |      |             |  |               |         |   |  |  |         |   |  |              |         |  
|Financing activities:                               |  |                                   |          |                  |  |              |      |             |  |               |         |   |  |  |         |   |  |              |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|Principal payments                                  |  |                                   |         |                  |  |              |     |             |  |               | (22     | ) |  |  |        |   |  |              | (22     | )
|                                                   
|                                                   
|                                                   
|                                                   
|Capital lease payments                              |  |                                   |         |                  |  |              |     |             |  |               | (274    | ) |  |  |        |   |  |              | (274    | )
|                                                    |  |                                   |          |                  |  |              |      |             |  |               |         |   |  |  |         |   |  |              |         |  
|Net cash provided by (used in)
financing activities |  |                                   |         |                  |  |              |     |             |  |               | (296    | ) |  |  |        |   |  |              | (296    | )
|                                                    |  |                                   |          |                  |  |              |      |             |  |               |         |   |  |  |         |   |  |              |         |  
|(Decrease) increase in cash                         |  |                                   |         |                  |  |              |     |             |  |               | (2,358  | ) |  |  |        |   |  |              | (2,358  | )
|                                                   
|                                                   
|                                                   
|                                                   
|Cash and cash equivalents at beginning
of period    |  |                                   |         |                  |  |              |     |             |  |               | 8,166   |   |  |  |        |   |  |              | 8,166   |  
|                                                    |  |                                   |          |                  |  |              |      |             |  |               |         |   |  |  |         |   |  |              |         |  
|Cash and cash equivalents at end of period          |  |                                   | £       |                  |  |              | £   |             |  |               | £5,808  |   |  |  | £      |   |  |              | £5,808  |  
|                                                    |  |                                   |          |                  |  |              |      |             |  |               |         |   |  |  |         |   |  |              |         |  

19



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

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

Overview

Diamond Cable Communications Limited (formerly Diamond Cable Communications
Plc) (the Company) is a holding company which holds all of the shares of
various companies which operate broadband communications networks for
telephone, cable television and Internet services in the United Kingdom (the
UK). The Company holds these shares through an intermediate holding company,
Diamond Holdings Limited (formerly Diamond Holdings Plc) (Diamond Holdings).
Except as the context may otherwise require, references to the Group refer to
the Company and its subsidiaries.

Liquidity and Capital Resources

Recapitalization Process and Ability to Continue Operations

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

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

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

20



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

As of March 31, 2002, the Group had approximately £2.6 million in cash and cash
equivalents and in April 2002, received approximately £13.3 million in cash
from NTL Communications Corp. in exchange for 30% Senior Notes due September
29, 2004. The Group may require additional cash in the twelve months from
April 1, 2002 to March 31, 2003. NTL Incorporated expects to obtain a DIP
Facility (as described below) to meet the potential cash requirements of it and
its subsidiaries, excluding Cablecom. NTL Incorporated also expects that the
DIP Facility will be replaced with an exit facility for NTL Communications
Corp. and its subsidiaries, including the Company, upon the completion of the
reorganization process. Management of the Company believes that cash and cash
equivalents at March 31, 2002, the cash received in April 2002 from the
issuance of senior notes and the cash expected to be available from the DIP
Facility and the exit facility will be sufficient for its and its subsidiaries
cash requirements during the twelve months from April 1, 2002 to March 31,
2003.

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

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

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

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

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

21



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

On June 21, 2002, the United States Trustee appointed an official creditors
committee, comprised of the three indenture trustees for the publicly traded
debt of NTL and the ten members of the steering committee of bondholders. The members of the official creditors committee are: The Bank of
New York; Wilmington Trust Company; Wells Fargo Bank Minnesota, National
Association; Angelo Gordon & Co. LP; Capital Research & Management Company;
Franklin Mutual Advisors, LLC; Oaktree Capital Management LLC; Salomon Brothers
Asset Management; Appaloosa Management, LP; Fidelity Management & Research Co.;
Mackay Shields LLC; SAB Capital Management L.P.; and W.R. Huff Asset Management
Co., LLC.

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

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

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

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

In connection with the proposed joint reorganization plan, certain members of
the unofficial committee of bondholders have committed to provide up to $500
million of new debt financing to NTL Incorporated and certain of its
subsidiaries during the Chapter 11 process and for the post-recapitalized NTL,
subject to bankruptcy court approval. The new financing will ensure that NTLs
business operations have access to sufficient liquidity to continue ordinary
operations. The bankruptcy court has set July 2, 2002 as the date to consider
approval of the DIP Facility, which has been agreed in principle with NTL and
the prospective lenders under the facility. Despite such agreement, however,
GE Capital, the sole holder of the 5 3/4% Convertible Subordinated Notes due
2011, and Wilmington Trust Company, the trustee, have objected to the DIP
Facility.

Proposed Recapitalization Plan

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

22



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

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

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

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

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

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

23



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

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

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

Bank Waivers

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

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

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

24



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

Cablecom GmbH, an indirect wholly-owned subsidiary of NTL (Delaware), Inc., is
the principal trading company of NTLs Swiss group. There were a number of
technical defaults under the Swiss credit facility made available to Cablecom
and various of its subsidiaries. In addition, as of December 31, 2001,
Cablecoms and six of its direct and indirect subsidiaries liabilities
exceeded their respective assets. As a consequence, under Swiss law, those
entities were deemed to be overindebted. This also constituted an event of
default under the Cablecom credit facility, which entitled the lenders to
accelerate repayment. Such an acceleration would have resulted in an event of
default under NTL Incorporateds and NTL Delawares 5.75% convertible
subordinated notes due 2011 and 5.75% convertible subordinated notes due 2009.

Under Swiss law, the board of directors of an overindebted company is generally
obliged to notify a judge of overindebtedness so that the judge may either
institute insolvency proceedings or postpone such adjudication and take
appropriate measures to preserve the value of the assets. An overindebted
company is not required to notify a judge only if the creditors of the
overindebted entity subordinate their claims in the amount of the
overindebtedness.

On April 30, 2002, Cablecom reached an agreement with the lenders under the
Cablecom credit facility which, together with the implementation of an
intra-group transaction, resolved its overindebtedness. The agreement included
a waiver by the lenders of various additional covenant breaches under the
credit facility. Temporary measures were put in place to ensure that Cablecoms
overindebted subsidiaries were not required to institute insolvency
proceedings. On June 28, 2002, the commercial registry in Switzerland
confirmed the registration of the merger on July 26 and 27, 2002 of three
subsidiaries of Cablecom into Cablecom or another member of the Cablecom group,
which mergers resolved the problem of overindebtedness in respect of those
three subsidiaries. With respect to the remaining three subsidiaries which were
affected by the overindebtedness issue, subordination agreements were reached,
precluding the need to notify the judge of the overindebtedness.

Interest Payments on Public Notes

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

If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. An event of
default entitles the trustee under the indenture or the holders of 25% of the
outstanding notes to declare the principal amount of those notes to be
immediately due and payable. Even if the maturity of those notes is not
accelerated after the 30 day grace period, such an event of default would also
result in an event of default in respect of other debt (commonly called cross
defaults) under most of our other notes. Therefore, there was an event of
default for failure to pay interest on May 1, 2002 under the indentures
relating to the missed interest payments due April 1, 2002 and on May 16, 2002,
under the indentures relating to the missed interest payments due April 15,
2002. As a result, cross defaults occurred under the indentures at NTL
Communications Corp., NTL (Delaware), Inc., NTL Incorporated and under NTLs UK
credit facilities and under the Cablecom credit facility. This gave holders of
the outstanding series of debt at these entities the right to accelerate
repayment of those debts by declaring the principal amount of the debts
to be immediately due and payable. As a result of the payment defaults as well
as NTLs voluntary filing under
25DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002Chapter 11 of the United States Bankruptcy Code on May 8, 2002, there is an
event of default under all of NTLs credit facilities and the indentures
governing all of its publicly traded debt, other than debt of NTL Triangle. As
a result of the Chapter 11 filings, all of NTLs publicly traded debts, other
than the debt of NTL Triangle, became immediately due and payable, pursuant to
the terms of the indentures governing such debt. The automatic stay of Section
362 of the United States Bankruptcy Code prevents the holders of such debt from
seeking to enforce their collection rights under the indentures, except within
the context of the Chapter 11 cases, and even then only with the prior approval
of the bankruptcy court. However, NTL has received letters from the agents for
the lenders under the UK credit facilities reserving such lenders rights to
accelerate repayment of the facilities and to enforce the security granted in
respect of the facilities on account of the defaults thereunder, actions which
would not be prohibited by the automatic stay.Credit Rating DowngradesOn April 3, 2002, credit rating agency Standard & Poors lowered NTLs
long-term corporate credit rating to D from CCC, citing NTLs failure to make
a bond interest payment due on April 1, 2002.Delisting of NTL Incorporated Common StockOn March 28, 2002, the New York Stock Exchange (NYSE) announced that it was
suspending NTL Incorporateds common stock from trading on the NYSE. This
determination was based upon, among other things, the selling price of NTL
Incorporateds common stock, which closed at $0.20 on March 26, 2002. The
continued listing standards of the NYSE, which were applicable to NTL
Incorporated, required maintenance of a minimum share price of $1.00 over a 30
trading day period and average global market capitalization of $100 million
over a 30 trading day period. NTLs common stock fell below both of these
continued listing standards. In addition, on May 9, 2002, Nasdaq Europe halted
trading of NTLs common stock pending receipt of information relating to the
restructuring process because of the filing of NTLs Chapter 11 cases. NTL has
complied with this information request, although there can be no assurance that
Nasdaq Europe will (1) not make additional information requests, (2) remove the
trading halt on shares of NTLs common stock or (3) not delist shares of NTLs
common stock. NTLs common stock is currently quoted on the Over the Counter
Bulletin Board under the symbol NTLD.Sale of NTL AustraliaOn April 2, 2002, NTL Incorporated announced that it had completed the
previously announced sale of its Australian broadcast business to Macquarie
Communications Infrastructure Holding Pty Limited for A$850 million (US$448
million) in an all cash transaction. The net proceeds from the sale were
approximately A$581 million (US$306 million). At that time, the business bank
debt outstanding totaled A$227 million (US$120 million).On April 5, 2002, NTL (Delaware), Inc. loaned £90 million to NTL (UK) Group,
Inc., which loan was funded by the proceeds of the sale of NTL Australia. This
loan is subordinated to NTLs UK credit facilities. The remaining proceeds of
the sale of NTL Australia remain at NTL (Delaware), Inc. and the proposed plan
of reorganization anticipates that such proceeds will form a portion of the
consideration to be offered to bondholders of NTL (Delaware), Inc. and NTL
Incorporated in satisfaction of their claims against those companies.Potential Sale of, or Outside Investment in, CablecomIt has been agreed to engage UBS Warburg LLC by August 31, 2002 to advise in
connection with an outside investment in, or sale of all or part of, Cablecom.
As part of this process, NTL (Delaware), Inc. and certain of its subsidiaries
have agreed to approve any such outside investment or sale, which is acceptable
to the lenders under the Cablecom credit facility.26DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002It has also been agreed that if such a sale of all or part of Cablecom is
consummated on or before August 31, 2003, the lenders under the Cablecom credit
facility will be entitled to receive additional interest equal to 20% of the
net proceeds of such a sale after repayment of the amounts outstanding under
the Cablecom credit facility and other expenses and taxes of the sale. There
can be no assurance that any outside investment in, or sale of all or part of,
Cablecom pursuant to the Cablecom credit facility will be on terms that are
favorable to NTL and such investment or sale could have a material adverse
effect on NTLs finances and business. In particular, in the current
environment, NTLs shareholding in Cablecom may have little or no value, which
may result in NTL receiving little or no consideration for its equity interest
in Cablecom.Further, if a third party makes an investment in Cablecom there can be no
assurance that NTL will be able to maintain its ability to direct the
management of Cablecom.Description of Outstanding NotesThe following summarizes the terms of the significant notes issued by the
Company and Diamond Holdings as of March 31, 2002. The holders of the debt
have the right to accelerate repayment, or may have such right, which has
caused all of the Groups long-term debt to be classified as current. The
automatic stay of Section 362 of the United States Bankruptcy Code prevents the
holders of such debt from seeking to enforce their collection rights under the
indentures, except within the context of the Chapter 11 cases, and even then
only with the prior approval of the bankruptcy court.The Company issued senior discount notes in September 1994, December 1995 and
February 1997 (collectively, the Discount Notes). In February 1998, Diamond
Holdings issued two new series of notes (the 1998 Notes). The 1998 Notes are
guaranteed by the Company as to payment of principal, interest and any other
amounts due. In connection with the issuance of the 1998 Notes, the Group
terminated its existing bank facility.Diamond Holdings has £135.0 million in principal amount of its 10% Senior Notes
due February 1, 2008 and $110.0 million in principal amount of its 9 1/8%
Senior Notes due February 1, 2008 outstanding. Interest on these notes is
payable semiannually on February 1 and August 1.The Company has $285.1 million in principal amount at maturity of its 13 1/4%
Senior Discount Notes due September 30, 2004 (the 1994 Notes) outstanding.
Interest on the 1994 Notes is payable semiannually on March 31 and September
30.The Company also has $531.0 million in principal amount at maturity of its 11
3/4% Senior Discount Notes due December 15, 2005 (the 1995 Notes)
outstanding. Interest on the 1995 Notes is payable semiannually on June 15 and
December 15.Finally, the Company has $420.5 million in principal amount at maturity of its
10 3/4% Senior Discount Notes due February 15, 2007 (the 1997 Notes)
outstanding. Cash interest was not payable on the 1997 Notes prior to February
15, 2002. Thereafter, interest accrues on the 1997 Notes and will be payable
semiannually, commencing August 15, 2002, at a rate of 10 3/4% per annum.27DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002Contractual Obligations and Commercial CommitmentsThe following table includes aggregate information about the Groups
contractual obligations as of March 31, 2002 and the periods in which payments
are due. The holders of the long-term debt have the right to accelerate
repayment, or may have such right, which has caused all of the Groups
long-term debt to be classified as current. The automatic stay of Section 362
of the United States Bankruptcy Code prevents the holders of such debt from
seeking to enforce their collection rights under the indentures, except within
the context of the Chapter 11 cases, and even then only with the prior approval
of the bankruptcy court.The Group has no significant commercial commitments as of March 31, 2002.

|                                   |  |                        |          |        |   |               |      |       |   |         |        |       |   |  |        |  |   |  |        | 
|---------------------------------- |  | ---------------------- | -------- | ------ | - | ------------- | ---- | ----- | - | ------- | ------ | ----- | - |  | ------ |  | - |  | ------ | 
|                                   |  | Payments Due by Period
|                                   |  |                       
|                                   |  |                        |          |        |   | Less than     |      | 1-3   |   | 4-5     |        | After
|Contractual Obligations            |  | Total                  |          | 1 Year |   | Years         |      | Years |   | 5 Years
|                                   |  |                        |          |        |   |               |      |       |   |        
|                                   |  |                        |          |        |   | (in millions) |      |       |   |         |        |       |   | 
|Long-Term Debt                     |  |                        | £1,081.7 |        |   |               | £   |       |   |         | £200.5 |       |   |  | £373.3 |  |   |  | £507.9 | 
|                                  
|                                  
|                                  
|                                  
|Capital Lease Obligations (1)      |  |                        | 0.4      |        |   |               | 0.4  |       |   |         |       |       |   |  |       |  |   |  |       | 
|                                  
|                                  
|                                  
|                                  
|Operating Leases (1)               |  |                        | 0.7      |        |   |               | 0.3  |       |   |         | 0.4    |       |   |  |       |  |   |  |       | 
|                                  
|                                  
|                                  
|                                  
|Unconditional Purchase Obligations |  |                        | 1.0      |        |   |               | 1.0  |       |   |         |       |       |   |  |       |  |   |  |       | 
|                                  
|                                  
|                                  
|                                  
|Other Long-Term Obligations        |  | None                   |          |        |  |               |      |       |  |         |        |       |  |  |        |  |  | 
|                                  
|                                  
|                                  
|                                  
|Total Contractual Cash Obligations |  |                        | £1,083.8 |        |   |               | £1.7 |       |   |         | £200.9 |       |   |  | £373.3 |  |   |  | £507.9 | 



---

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

Condensed Consolidated Statements of Cash Flows

Net cash provided by operating activities amounted to £3.9 million and £30.3
million for the three months ended March 31, 2002 and 2001, respectively.
During the three months ended March 31, 2001, net cash provided by operating
activities was primarily due to a £50.6 million increase in due to affiliates.
The remainder of the change for the three months ended March 31, 2001 and for
the three months ended March 31, 2002 is due to changes in working capital as a
result of the timing of receipts and disbursements.

Net cash used in investing activities amounted to £5.7 million and £32.4
million for the three months ended March 31, 2002 and 2001, respectively,
primarily for continuing fixed asset purchases and construction. The Company
expects to further reduce purchases of fixed assets in 2002 in an effort to
conserve cash.

Net cash used in financing activities amounted to £0.1 million and £0.3 million
in the three months ended March 31, 2002 and 2001, respectively, resulting from
mortgage principal payments and capital lease payments.

Results of Operations for the Three Months Ended March 31, 2002 and 2001

We expect our growth in 2002 to be curtailed by funding constraints. Although
our current business plan includes a reduction in the number of new customers
and an increase in revenue from existing customers, our cash constraints
present many challenges to the successful execution of the plan. We are
conserving cash through a reduction in capital expenditures including
expenditures to connect new customers to our network. In order to maintain
revenues and cash from operations while reducing the number of new customers,
we must reduce and limit customer churn. We intend to continue to improve our
customer service and increase our service offering to customers in an effort to
curtail and reduce churn. We are in the process of integrating our various
billing systems and customer databases in an effort to improve one of the main
tools we use to provide customer service.

28



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

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

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

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

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

Revenue for the three months ended March 31, 2002 and 2001 was £46.5 million,
and £42.4 million, respectively, representing an increase of 9.9%. The
increase in revenue was due to price increases and upselling new services to
customers. The increase was partially offset by a reduction in the customer
base due to disconnects and a reduction in sales activity.

Operating costs (including network expenses) for the three months ended March
31, 2002 and 2001 were £22.7 million and £21.0 million, respectively,
representing an increase of 8.5%. Operating costs (including network expenses)
as a percentage of revenue were 48.9% and 49.5% in the three months ended March
31, 2002 and 2001, respectively. The improved margin has resulted from
efficiencies gained in the network and negotiated reductions in the costs of
interconnection and television programming. Operating costs include certain
costs which are charged by a subsidiary of NTL for the provision of network
services and support, the use of NTLs national backbone telephony network for
carriage of the Groups telephony traffic, as well as the provision of
technical infrastructure and network capacity by NTL for the Groups
subscription free Internet service. In the three months ended March 31, 2002
and 2001, these charges were £9.6 million and £9.0 million, respectively.

Selling, general and administrative expenses for the three months ended March
31, 2002 and 2001 were £14.8 million and £24.0 million, respectively,
representing a decrease of 38.2%. Selling, general and administrative expenses
as a percentage of revenue were 31.9% and 56.6% in the three months ended March
31, 2002 and 2001, respectively.This reduction results from the continued
progress NTL has made in improving efficiencies and reducing costs. Selling,
general and administrative expenses include certain costs which are charged by
a subsidiary of NTL for the provision of corporate services, including finance,
legal, human resources and facility services, and for the provision of IT
services, including the Groups use of the related IT equipment. These charges
were £14.8 million and £14.9 million in the three months ended March 31, 2002
and 2001, respectively.

29



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

Other charges of £7,000 in 2002 were allocated to the Group by a subsidiary of
NTL and include costs related to information technology integration, as well as
costs incurred for business rationalization consulting.

Depreciation and amortization expense for three months ended March 31, 2002 and
2001 was £15.7 million and £11.2 million, respectively, representing an
increase of £4.5 million. The Group adopted SFAS No. 142 on January 1, 2002,
which ended the amortization of goodwill and other indefinite lived intangible
assets. Depreciation and amortization expense in the three months ended March
31, 2001, after deducting the amortization of goodwill and other indefinite
lived intangible assets of £1.2 million, would have been £10.0 million. The
increase in 2002 as compared to 2001 as adjusted is primarily due to an
increase in depreciation of telecommunications and cable television equipment.

Interest expense and amortization of debt discount and expenses for the three
months ended March 31, 2002 and 2001 was £31.3 million and £30.2 million,
respectively, representing an increase of £1.1 million. For the three months
ended March 31, 2002, interest expense includes the accretion of the discount
on the Discount Notes of £3.7 million, interest on the notes of £26.9 million
and amortization of deferred financing costs of £0.7 million. For the three
months ended March 31, 2001, interest expense includes the accretion of the
discount on the Discount Notes of £7.0 million, interest on the 1994, 1995 and
1998 Notes of £22.5 million and amortization of deferred financing costs of
£0.7 million.

A substantial portion of the Groups existing debt obligations are denominated
in U.S. dollars, while the Groups revenues and expenses are generated and
stated in UK pounds sterling. During the three months March 31, 2002 and 2001,
the Group recognized net foreign exchange losses of £20.9 million and £47.6
million, respectively, primarily due to the unrealized losses on translation of
its Discount Notes and 1998 Notes. Changes in foreign currency exchange rates
may affect the Groups ability to satisfy its obligations under these debt
instruments as they become due.

Recent Accounting Pronouncements

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

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

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

30



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

The following table shows the Companys net loss as adjusted for the adoption
of SFAS No. 142, had SFAS No. 142 been in effect on January 1, 2001 (unaudited)
(in £ 000s).

|                         |                 |  |                              |   |      |  |          |       | 
|------------------------ | --------------- |  | ---------------------------- | - | ---- |  | -------- | ----- | 
|                         |                 |  | Three Months Ended March 31,
|                         |                 |  |                             
|                         |                 |  | 2002                         |   | 2001
|                         |                 |  |                              |   |     
|Net (loss)  as reported |                 |  | £(58,854                     | ) |      |  | £(91,553 | )    
|                        
|                        
|                        
|                        
|Amortization of:         |                 |  |                              |   |      |  |          |      
|                        
|                        
|                        
|                        
|                         | Goodwill        |  |                              |  |      |  |          | 1,212 | 
|                        
|                        
|                        
|                        
|                         | Franchise costs |  |                              |  |      |  |          | 7     | 
|                         |                 |  |                              |   |      |  |          |      
|                         |                 |  |                             |   |      |  | 1,219    |      
|                         |                 |  |                              |   |      |  |          |      
|Net (loss)  as adjusted |                 |  | £(58,854                     | ) |      |  | £(90,334 | )    
|                         |                 |  |                              |   |      |  |          |      

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

Certain statements contained herein constitute forward-looking statements as
that term is defined under the Private Securities Litigation Reform Act of
1995. When used herein, the words, believe, anticipate, should, intend,
plan, will, expects, estimates, projects, positioned, strategy,
and similar expressions identify such forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Group, or industry results, to be materially different from those
contemplated, projected, forecasted, estimated or budgeted, whether expressed
or implied, by such forward-looking statements. Such factors include, among
others, those set forth under the caption Risk Factors in this Form 10-Q as
well as: the ability of the Group to continue as a going concern; the ability
of the Group to obtain trade credit and shipments and terms with vendors and
service providers for current orders; the Groups ability to maintain contracts
that are critical to its operations; potential adverse developments with
respect to the Groups liquidity or results of operations; the ability to fund
and execute its business plan; the ability to attract, retain and compensate
key executives and associates; the ability of the Group to attract and retain
customers; general economic and business conditions, technological
developments, the Groups ability to continue to design networks, install
facilities, obtain and maintain any required governmental licenses or approvals
and finance construction and development, all in a timely manner at reasonable
costs and on satisfactory terms and conditions, as well as assumptions about
customer acceptance, churn rates, overall market penetration and competition
from providers of alternative services, the impact of restructuring and
integration actions, the impact of new business opportunities requiring
significant up-front investment and interest rate and currency exchange rate
fluctuations. The Company assumes no obligation to update the forward-looking
statements contained herein to reflect actual results, changes in assumptions
or changes in factors affecting such statements.

31



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

The Group is exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange and interest rates. Since 1998, the Group has not entered
into derivative financial instruments.

Foreign Exchange Risk

The principal form of market risk to which the Group is exposed is foreign
exchange rate risk. The Companys Discount Notes and Diamond Holdings 1998
Notes, which together constitute a substantial portion of the Groups existing
debt obligations, are denominated in U.S. dollars, while the Groups revenues
are generated and stated in UK pounds sterling. In the future, the Group may
from time to time enter into foreign currency contracts based on its assessment
of foreign currency market conditions and its effect on the Groups operations
and financial condition. Changes in currency exchange rates may have a material
effect on the results of operations of the Group and the Groups ability to
satisfy its obligations, including obligations under outstanding debt
instruments, as they become due.

Interest Rate Risk

The Group is exposed to interest rate risk on the fair market value of its
long-term fixed interest rate debt. Generally, the fair market value of fixed
interest rate debt will increase as interest rates fall and decrease as
interest rates rise. In the following table, fair values were determined from
quoted market prices.

32



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

DIAMOND CABLE COMMUNICATIONS LIMITED

|                                         |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   |        |   |  |   |         |  |  |   |       | 
|---------------------------------------- | ----------------------------- |  | -------- | - | -------- |  | -------- | - | -------- |  | -------- | ----- | -------- |  | ---------- | ----- | ----- |  | -------- | - |  |  | ----- | ----- | - |  | - | ------ | - |  | - | ------- |  |  | - | ----- | 
|                                         |                               |  | Nine     |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   |        |   |  |   |         |  |  |  
|                                         |                               |  | Months   |   | Year     |  | Year     |   | Year     |  | Year     |       | Year     |  |            |       |       |  |          |   |  |  | Fair 
|                                         |                               |  | Ending   |   | Ending   |  | Ending   |   | Ending   |  | Ending   |       | Ending   |  |            |       |       |  |          |   |  |  | Value
|                                         |                               |  | 12/31/02 |   | 12/31/03 |  | 12/31/04 |   | 12/31/05 |  | 12/31/06 |       | 12/31/07 |  | Thereafter |       | Total |  | 03/31/02
|Long-term Debt Including Current Portion |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   |        |   |  |   |         |  |  |   |      
|                                        
|                                        
|                                        
|                                        
|U.S. Dollars                             |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   |        |   |  |   |         |  |  |   |      
|                                         | Fixed Rate                    |  |          |  |          |  |          |  |          |  | $        | 285.1 |          |  | $          | 531.0 |       |  |          |  |  |  | $     | 420.5 |   |  | $ | 110.0  |   |  | $ | 1,346.6 |  |  | $ | 482.4 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |  |          |   |          |  |          |   |          |  |          | 13.25 | %        |  |            | 11.75 | %     |  |          |   |  |  |       | 10.75 | % |  |   | 9.13   | % |  |   |         |  |  |   |       | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |  |          |   |          |  |          |   |          |  |          | .7076 |          |  |            | .7066 |       |  |          |   |  |  |       | .7021 |   |  |   | .6989  |   |  |   |         |  |  |   |       | 
|                                        
|                                        
|                                        
|                                        
|U.K. Pound                               |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   |        |   |  |   |         |  |  |   |      
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |  |          |  |          |  |          |  |          |  |          |      |          |  |            |      |       |  |          |  |  |  |       |      |   |  |   | £135.0 |   |  |   | £135.0  |  |  |   | £98.6 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   | 10.0   | % |  |   |         |  |  |   |       | 

33



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

Risk Factors

Diamond Cable Communications and Diamond Holdings are intermediate holding
companies that are dependent upon receipt of sufficient funds from their
subsidiaries or parent companies to meet their obligations. Unless NTLs
proposed recapitalization plan is implemented, it is likely that NTL will not
be able to provide us with cash in the future, at least in the short-term.

Diamond Cable Communications and Diamond Holdings are intermediate holding
companies with no independent operations or significant assets other than
investments in and advances to their respective subsidiaries. We do not
generate sufficient cash flow from our operations to fund our operational
expenses and interest payments. We have historically met our cash requirements
through debt or equity from NTL Incorporated and or other NTL Incorporated
subsidiaries. Given NTLs liquidity situation, unless its proposed
recapitalization plan is implemented it is likely that NTL will not be able to
provide us with cash at least for the short-term.

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

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

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

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

34



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

Despite an agreement in principle between NTL and its prospective lenders under
the DIP facility, there can be no assurance that a definitive agreement will be
reached which may adversely affect reorganized NTLs ability to access
sufficient liquidity to continue ordinary operations.

Despite an agreement in principle between NTL and the prospective lenders under
the DIP facility, GE Capital, the sole holder of the 5 3/4% Convertible
Subordinated Notes due 2011, and Wilmington Trust Company, the trustee, have
objected to the terms of the DIP Facility. There can be no assurance that a
definitive agreement will be reached with the prospective lenders or that the
objections by Wilmington Trust Company and GE Capital will not continue to
delay or prevent the entering by the United States Trustee of the final order
approving the terms of the DIP Facility as it is currently drafted. Failure to
reach an agreement or obtain a final order may have an adverse affect on NTLs
ability to access sufficient liquidity to continue ordinary operations.

NTL is in default under its credit facilities.

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

The UK credit facilities waivers terminated on April 29, 2002, as a result of
which, there was an event of default under each of the credit facilities with
respect to the missed interest payments on April 1, 2002. In addition, NTLs
voluntary filing under Chapter 11 of the United States Bankruptcy Code
constituted an event of default under NTL's UK credit facilities and the Cablecom
credit facility.

NTL did not pay interest due on some of its outstanding notes on April 1, 2002,
April 15, 2002 and May 15, 2002, and NTL does not plan to make future interest
payments on most of its outstanding notes.

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

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

NTL has no current availability under its existing credit facilities.

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

35



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

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

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

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

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

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

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

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

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

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

36



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

Our growth has been curtailed by funding constraints.

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

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

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

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

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

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

We are dependent upon a small number of key personnel.

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

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

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

37



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

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

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

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

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

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

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

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

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

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

38



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002



|        |  |                                
|------- |  | -------------------------------
|PART II |  | OTHER INFORMATION              
|       
|       
|       
|       
|        |  |                                
|       
|       
|       
|       
|ITEM 3. |  | DEFAULTS UPON SENIOR SECURITIES

Chapter 11 Bankruptcy Filing

On May 8, 2002, NTL Incorporated, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. filed an arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code. NTLs operating
subsidiaries were not included in the Chapter 11 filing. The Chapter 11
bankruptcy filing constituted an event at default under the indentures of each
of the entities which made the Chapter 11 filing and amounts outstanding under
these indentures became immediately due and payable.

Aggregate Amount of Defaults

Principal



| |  |  | As of March 31, 2002, Diamond Cable Communications and Diamond
Holdings are in default in respect of an aggregate of $1,539.0 million
in principal amount of debt. However, the automatic stay of Section
362 of the U.S. Bankruptcy Code serves to prevent the holders of such
debt from seeking to enforce their collection rights under the
indentures, except within the context of the Chapter 11 cases, and
even then only with the prior approval of the bankruptcy court.
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|        |  |                                                                                          
|------- |  | -----------------------------------------------------------------------------------------
|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K                                                         
|       
|       
|       
|       
|        |  |                                                                                          
|       
|       
|       
|       
|(a)     |  | Exhibits:                                                                                
|       
|       
|       
|       
|        |  |                                                                                          
|       
|       
|       
|       
|        |  | None.                                                                                    
|       
|       
|       
|       
|        |  |                                                                                          
|       
|       
|       
|       
|(b)     |  | Reports on Form 8-K:                                                                     
|       
|       
|       
|       
|        |  |                                                                                          
|       
|       
|       
|       
|        |  | No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 2002.

39



---



##### 



DIAMOND CABLE COMMUNICATIONS LIMITED
FORM 10-Q
QUARTER ENDED MARCH 31, 2002

SIGNATURES

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

|                    |  |                                      |  |                                         
|------------------- |  | ------------------------------------ |  | ----------------------------------------
|                    |  | DIAMOND CABLE COMMUNICATIONS LIMITED
|                   
|                   
|                   
|                   
|                    |  |                                      |  |                                         
|                   
|                   
|                   
|                   
|Date: June 28, 2002 |  | By:                                  |  | /s/ Barclay Knapp
Barclay Knapp
Director
|                   
|                   
|                   
|                   
|                   
|Date: June 28, 2002 |  | By:                                  |  | /s/ John Gregg
John Gregg
Director      

40