METROMEDIA INTERNATIONAL GROUP INC, 10-Q, 2000-08-10

METROMEDIA INTERNATIONAL GROUP INC
10-Q, 2000-08-10
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM 10-Q

(MARK ONE)

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE PERIOD ENDED JUNE 30, 2000

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

FOR THE TRANSITION PERIOD FROM TO

COMMISION FILE NUMBER 1-5706

------------------------

METROMEDIA INTERNATIONAL GROUP, INC.

(Exact name of registrant, as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 58-0971455
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>

ONE MEADOWLANDS PLAZA, EAST RUTHERFORD, NJ 07073-2137
(Address and zip code of principal executive offices)

(201) 531-8000
(Registrant's telephone number, including area code)

------------------------------

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES /X/ NO / /

THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF AUGUST 7, 2000 WAS
94,034,947.

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<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

INDEX TO
QUARTERLY REPORT ON FORM 10-Q

PART I--FINANCIAL INFORMATION

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Item 1. Financial Statements (unaudited)

Consolidated Condensed Statements of Operations............. 2
Consolidated Condensed Balance Sheets....................... 3
Consolidated Condensed Statements of Cash Flows............. 4
Consolidated Condensed Statement of Stockholders' Equity.... 5
Notes to Consolidated Condensed Financial Statements........ 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 27

Item 3. Quantitative and Qualitative Disclosures about
Market Risk............................................... 70

PART II--OTHER INFORMATION

Item 1. Legal Proceedings................................... 72

Item 4. Submission of Matters to a Vote of Security
Holders................................................... 75

Item 6. Exhibits and Reports on Form 8-K.................... 76

Signature................................................... 77
</TABLE>

1
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Communications Group............................... $ 32,456 $ 5,821 $ 63,701 $ 13,429
Snapper............................................ 52,427 59,184 102,530 119,218
-------- -------- -------- --------
84,883 65,005 166,231 132,647

Cost and expenses:
Cost of sales and operating
expenses--Communications Group................... 8,095 242 16,376 897
Cost of sales--Snapper............................. 34,296 38,734 66,915 78,675
Selling, general and administrative................ 38,038 28,177 72,372 60,602
Depreciation and amortization...................... 16,075 4,220 32,266 8,587
Reduction in estimate of asset impairment charge... (3,984) -- (3,984) --
-------- -------- -------- --------
Operating loss....................................... (7,637) (6,368) (17,714) (16,114)

Other income (expense):
Interest expense................................... (8,092) (3,523) (16,020) (6,929)
Interest income.................................... 632 2,546 1,523 4,246
Equity in income (losses) of unconsolidated
investees........................................ 1,894 (4,248) 2,144 (5,933)
Gain on settlement of option....................... -- -- 2,500 --
Foreign currency gain (loss)....................... 519 (2,286) 41 (2,794)
-------- -------- -------- --------

Loss before income tax expense and minority
interest........................................... (12,684) (13,879) (27,526) (27,524)
Income tax expense................................... (2,103) (111) (4,611) (205)
Minority interest.................................... (1,815) 2,383 (996) 4,852
-------- -------- -------- --------
Net loss............................................. (16,602) (11,607) (33,133) (22,877)
Cumulative convertible preferred stock dividend
requirement........................................ (3,752) (3,752) (7,504) (7,504)
-------- -------- -------- --------
Net loss attributable to common stock shareholders... $(20,354) $(15,359) $(40,637) $(30,381)
======== ======== ======== ========
Weighted average number of common shares--Basic...... 94,034 69,151 93,921 69,137
======== ======== ======== ========
Loss per common share--Basic:
Net loss attributable to common stock shareholders... $ (0.22) $ (0.22) $ (0.43) $ (0.44)
======== ======== ======== ========
</TABLE>

See accompanying notes to consolidated condensed financial statements.

2
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents................................. $ 77,098 $ 50,985
Accounts receivable:
Communications Group, net............................... 21,252 20,682
Snapper, net............................................ 27,059 26,898
Other, net.............................................. 313 265
Inventories............................................... 51,786 55,209
Other assets.............................................. 21,302 20,650
----------- -----------
Total current assets.................................. 198,810 174,689
Investments in and advances to joint ventures:
Eastern Europe and the republics of the former Soviet
Union................................................... 80,173 78,067
China..................................................... 2,361 40,982
Property, plant and equipment, net of accumulated
depreciation.............................................. 184,196 191,018
Intangible assets, less accumulated amortization............ 253,766 274,025
Other assets................................................ 9,027 18,073
----------- -----------
Total assets.......................................... $ 728,333 $ 776,854
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable.......................................... $ 26,127 $ 38,808
Accrued expenses.......................................... 92,879 85,527
Current portion of long-term debt......................... 8,026 11,383
----------- -----------
Total current liabilities............................. 127,032 135,718
Long-term debt.............................................. 215,909 212,569
Other long-term liabilities................................. 10,547 13,758
----------- -----------
Total liabilities..................................... 353,488 362,045
----------- -----------
Minority interest........................................... 29,855 29,874
Commitments and contingencies...............................
Stockholders' equity:
7 1/4% Cumulative Convertible Preferred Stock............. 207,000 207,000
Common Stock, $1.00 par value, authorized 400,000,000
shares, issued and outstanding 94,034,947 and 93,284,589
shares at June 30, 2000 and December 31, 1999,
respectively............................................ 94,035 93,285
Paid-in surplus........................................... 1,102,769 1,102,308
Accumulated deficit....................................... (1,054,921) (1,014,284)
Accumulated other comprehensive loss...................... (3,893) (3,374)
----------- -----------
Total stockholders' equity............................ 344,990 384,935
----------- -----------
Total liabilities and stockholders' equity............ $ 728,333 $ 776,854
=========== ===========
</TABLE>

See accompanying notes to consolidated condensed financial statements.

3
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Operating activities:
Net loss.................................................. $(33,133) $(22,877)

Items not requiring cash outlays:
Equity in income (losses) of unconsolidated investees..... (2,144) 5,933
Depreciation and amortization............................. 32,266 8,587
Reduction in estimate of asset impairment charge.......... (3,984) --
Amortization of debt discount............................. 9,204 --
Gain on settlement of option.............................. (2,500) --
Minority interest......................................... 996 (4,852)
Other..................................................... (466) 209

Changes in:
Accounts receivable....................................... (1,368) 6,768
Inventories............................................... 3,423 6,430
Other assets and liabilities.............................. (3,524) (2,273)
Accounts payable and accrued expenses..................... (5,571) (8,209)
Other operating activities, net........................... -- 855
-------- --------
Cash used in operating activities..................... (6,801) (9,429)
-------- --------

Investing activities:
Investments in and advances to joint ventures............. (2,731) (12,728)
Distributions from joint ventures......................... 51,797 7,822
Advances to PLD Telekom under bridge loan................. -- (3,000)
Cash paid for acquisitions and additional equity in
subsidiaries............................................ (2,695) (1,238)
Additions to property, plant and equipment................ (8,345) (2,452)
Cash received in settlement of option..................... 11,000 --
-------- --------
Cash provided by (used in) investing activities....... 49,026 (11,596)
-------- --------

Financing activities:
Payments on debt and capital lease obligations............ (8,804) (7,175)
Proceeds from issuance of common stock related to
incentive plans......................................... 1,211 27
Preferred stock dividends paid............................ (7,504) (7,504)
Dividends paid to minority interest in PeterStar.......... (1,015) --
-------- --------
Cash used in financing activities..................... (16,112) (14,652)
-------- --------
Net increase (decrease) in cash and cash equivalents...... 26,113 (35,677)
Cash and cash equivalents at beginning of period.......... 50,985 137,625
-------- --------
Cash and cash equivalents at end of period................ $ 77,098 $101,948
======== ========
</TABLE>

See accompanying notes to consolidated condensed financial statements.

4
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

(UNAUDITED)
<TABLE>
<CAPTION>
7 1/4%
CUMULATIVE
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ACCUMULATED
-------------------- --------------------- OTHER
NUMBER OF NUMBER OF PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT SURPLUS DEFICIT INCOME (LOSS)
--------- -------- ---------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31,
1998....................... 4,140,000 $207,000 69,118,841 $69,119 $1,012,794 $ (857,293) $(6,080)
Net loss..................... -- -- -- -- -- (22,877) --
Other comprehensive income,
net of tax:
Foreign currency
translation
adjustments.............. -- -- -- -- -- -- 515
Total comprehensive loss.....
Issuance of stock related to
incentive plans............ -- -- 43,096 43 193 -- --
Dividends on 7 1/4%
cumulative convertible
preferred stock............ -- -- -- -- -- (7,504) --
--------- -------- ---------- ------- ---------- ----------- -------
Balances, June 30, 1999...... 4,140,000 $207,000 69,161,937 $69,162 $1,012,987 $ (887,674) $(5,565)
========= ======== ========== ======= ========== =========== =======

Balances, December 31,
1999....................... 4,140,000 $207,000 93,284,589 $93,285 $1,102,308 $(1,014,284) $(3,374)
Net loss..................... -- -- -- -- -- (33,133) --
Other comprehensive income,
net of tax:
Foreign currency
translation
adjustments.............. -- -- -- -- -- -- (519)
Total comprehensive loss.....
Issuance of stock related to
incentive plans............ -- -- 750,358 750 461 -- --
Dividends on 7 1/4%
cumulative convertible
preferred stock............ -- -- -- -- -- (7,504) --
--------- -------- ---------- ------- ---------- ----------- -------
Balances, June 30, 2000...... 4,140,000 $207,000 94,034,947 $94,035 $1,102,769 $(1,054,921) $(3,893)
========= ======== ========== ======= ========== =========== =======

TOTAL
COMPREHENSIVE
LOSS
-------------
<S> <C>
Balances, December 31,
1998....................... $ --
Net loss..................... (22,877)
Other comprehensive income,
net of tax:
Foreign currency
translation
adjustments.............. 515
--------
Total comprehensive loss..... $(22,362)
========
Issuance of stock related to
incentive plans............
Dividends on 7 1/4%
cumulative convertible
preferred stock............
Balances, June 30, 1999......
Balances, December 31,
1999....................... $ --
Net loss..................... (33,133)
Other comprehensive income,
net of tax:
Foreign currency
translation
adjustments.............. (519)
--------
Total comprehensive loss..... $(33,652)
========
Issuance of stock related to
incentive plans............
Dividends on 7 1/4%
cumulative convertible
preferred stock............
Balances, June 30, 2000......
</TABLE>

See accompanying notes to consolidated condensed financial statements.

5
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND LIQUIDITY

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of
Metromedia International Group, Inc. ("MMG" or the "Company") and its
wholly-owned subsidiaries, Metromedia International Telecommunications, Inc.,
Snapper Inc. and as of September 30, 1999, PLD Telekom Inc. PLD Telekom,
Metromedia International Telecommunications and its majority owned subsidiary,
Metromedia China Corporation, are collectively known as the "Communications
Group". PLD Telekom has been included in the Company's results of operations
since September 30, 1999. All significant intercompany transactions and accounts
have been eliminated.

Investments in other companies, including those of the Communications Group's
joint ventures that are not majority owned, or in which the Company does not
have control but exercises significant influence, are accounted for using the
equity method. The Company reflects its net investments in joint ventures under
the caption "Investments in and advances to joint ventures."

Almost all of the Communications Group's joint ventures other than the
businesses of PLD Telekom report their financial results on a three-month lag.
Therefore, the Communications Group's financial results for June 30 include the
financial results for those joint ventures for the three and six months ending
March 31. The Company is currently evaluating the financial reporting of these
ventures and the possibility of reducing or eliminating the three-month
reporting lag for certain of its principal businesses during 2000 (see note 2),
for the purpose of presenting the Company's results of operations on a more
timely basis.

The accompanying interim consolidated condensed financial statements have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations although the Company believes that the disclosures made are adequate
to make the information presented not misleading. These financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
financial position of the Company as of June 30, 2000, and the results of its
operations and its cash flows for the three and six month periods ended
June 30, 2000 and 1999, have been included. The results of operations for the
interim period are not necessarily indicative of the results which may be
realized for the full year.

LIQUIDITY

The Company is a holding company and, accordingly, does not generate cash flows
from operations. The Company believes that its cash on hand and the receipt of
funds from Metromedia China will be sufficient to fund the Company's working
capital requirements for the near term.

The Communications Group is dependent on the Company for significant capital
infusions to fund its operations and make acquisitions, as well as to fulfill
its commitments to make capital contributions and loans to its joint ventures.
Each of the Communications Group's joint ventures operates or invests in
businesses, such as cable television, fixed telephony and cellular
telecommunications, that are capital intensive and require significant capital
investment in order to construct and develop operational systems and market
their services. To date, such financing requirements have been funded from cash
on hand. Future financing requirements of the Communications Group, including
future acquisitions, will

6
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

1. BASIS OF PRESENTATION AND LIQUIDITY (CONTINUED)
depend on available funding from the Company, receipt of funds from Metromedia
China and on the ability of the Communications Group's joint ventures to
generate positive cash flows.

In addition to funding the cash requirements of the Communications Group, the
Company has periodically funded the short-term working capital needs of Snapper.
PLD Telekom and Snapper are restricted under covenants contained in their credit
agreements from making dividend payments or advances, other than certain
permitted debt repayments, to the Company.

The Company will also be required to pay interest on the 10 1/2% senior discount
notes issued in connection with the acquisition of PLD Telekom commencing
September 30, 2002. As a result, the Company will require additional financing
in order to satisfy its on-going working capital requirements, debt service and
acquisition and expansion requirements. Such additional capital may be provided
through the public or private sale of equity or debt securities of the Company
or by separate equity or debt financings by the Communications Group or certain
companies of the Communications Group or proceeds from the sale of assets. No
assurance can be given that such additional financing will be available to the
Company on acceptable terms, if at all. If adequate additional funds are not
available, the Company may be required to curtail significantly its long-term
business objectives and the Company's results of operations may be materially
and adversely affected.

Management believes that its long-term liquidity needs (including debt service)
will be satisfied through a combination of the Company's successful
implementation and execution of its growth strategy to become a global
communications and media company and through the Communications Group's joint
ventures and subsidiaries achieving positive operating results and cash flows
through revenue and subscriber growth and control of operating expenses.

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION

GENERAL

The Communications Group records its investments in other companies and joint
ventures which are less than majority-owned, or which the Company does not
control but in which it exercises significant influence, at cost, net of its
equity in earnings or losses. Advances to the joint ventures under line of
credit agreements between the Company or one of its subsidiaries and the joint
ventures are reflected based on amounts recoverable under the credit agreement,
plus accrued interest.

Advances are made to joint ventures and subsidiaries in the form of cash, for
working capital purposes, payment of expenses or capital expenditures, or in the
form of equipment purchased on behalf of the joint ventures. Interest rates
charged to the joint ventures and subsidiaries range from prime rate to prime
rate plus 6%. The credit agreements generally provide for the payment of
principal and interest from 90% of the joint ventures' and subsidiaries'
available cash flow, as defined, prior to any substantial distributions of
dividends to the joint venture partners. The Communications Group has entered
into charter fund and credit agreements with its joint ventures and subsidiaries
to provide up to $234.0 million in funding of which $46.4 million in funding
obligations remain at June 30, 2000. The Communications Group's funding
commitments are contingent on its approval of the joint ventures' and
subsidiaries' business plans.

COMSTAR

As part of the Communications Group's strategy to develop further its fixed
telephony business, in June 2000 it entered into an agreement with Marconi
Communications Limited of the U.K. to acquire Marconi's 50% ownership position
in Comstar, a digital overlay operator in Moscow. The Company has

7
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
agreed to pay $60.0 million for the 50% interest in Comstar. The parties expect
the transaction to close in the fall of 2000. Comstar is a 50/50 joint venture
with the Moscow City Telephone Network ("MGTS"). It has an optical fiber network
throughout Moscow City. This network supports local, national and international
data and telephony services and is interconnected into MGTS' public network.
Comstar facilitates all types of IP services through a Central Internet Service
Node.

Completion of the transaction is conditioned upon a number of matters, including
the receipt of customary Russian regulatory approvals and obtaining financing
for the transaction. In addition, the transfer of the Comstar shares by Marconi
to the Communications Group requires the waiver of pre-emption rights by MGTS,
the other 50% shareholder in Comstar. The agreement with Marconi required the
Communications Group to place $3.0 million in escrow, pending closing of the
transaction. In the event that the acquisition is not completed by November 30,
2000, Marconi has the right to terminate the Purchase Agreement and, in certain
circumstances, retain the escrowed funds. In addition, if the transaction has
not been completed by August 31, 2000, the purchase price is subject to
escalation, with the additional amount not exceeding approximately
$1.2 million.

INTERNET SERVICES

The Communications Group is actively seeking to develop internet services and in
June 2000 the Company's joint venture in Romania, Romsat TV, acquired a 70%
ownership position in FX Internet, a leading ISP, web hosting and domain
registration service in Romania. FX Internet provides dial-up, leased line and
wireless internet access services in Romania with 9,100 active subscribers,
offering internet connectivity to customers in four districts, reaching a total
population of approximately five million. The Communications Group paid
$2.5 million for its 70% interest in FX Internet, $2.0 million of which was paid
to the existing shareholders and $500,000 of which will be used to expand its
network to eight additional regions before year-end to bring its total
serviceable population to over eight million.

FX Internet, working in combination with Romsat TV, will enable MITI ventures to
offer bundled TV and internet services to Romsat TV's approximately 100,000
existing customers with competitive advantages, such as tiers of service and
discounts, that other operators in the Romanian market are currently unable to
duplicate. The transaction is part of the Communications Group's convergence
strategy and is expected to enhance the value of Romsat TV by allowing it to
bundle services and facilitate internet and portal development in Romania.

1999 RESTRUCTURING AND IMPAIRMENT CHARGES

Shortly after completing its September 30, 1999 acquisition of PLD Telekom, the
Company began identifying synergies and redundancies between Metromedia
International Telecommunications, Inc. and PLD Telekom. The Company's efforts
were directed toward streamlining its operations. Following the review of its
operations, the Communications Group determined to make significant reductions
in its projected overhead costs for 2000 by closing its offices in Stamford,
Connecticut and London, England, consolidating its executive offices in New
York, New York, consolidating its operational headquarters in Vienna, Austria
and by consolidating its two Moscow offices into one. As part of this
streamlining of its operations, the Company announced an employee headcount
reduction. Employees impacted by the restructuring were notified in
December 1999 and in almost all cases were terminated effective December 31,
1999. Employees received a detailed description of their separation package
which was generally based on length of service. The total number of U.S.
domestic and expatriate

8
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
employees separated was approximately 60. In addition, there were reductions in
locally hired staff. In 1999 the Company recorded a charge of $8.4 million in
connection with the restructuring.

Concurrent with the review of its existing operations and the change in
management as the result of the acquisition of PLD Telekom, the Communications
Group completed a strategic review of its telephony, cable television, radio
broadcasting and paging assets. As a result of the Company's strategic review,
the Company determined that certain businesses (including pre-operational
businesses) in its portfolio did not meet certain of the objectives of its
strategic review, such as the Company's ability to obtain control of the
venture, geographic focus or convergence. The long lived assets or the
investments in these businesses were evaluated to determine whether any
impairment in their recoverability existed at the determination date. As a
result, the Company assessed whether the estimated cash flows of the businesses
over the estimated lives of the related assets were sufficient to recover their
costs. Where such cash flows were insufficient, the Company utilized a
discounted cash flow model to estimate the fair value of assets or investments
and recorded an impairment charge to adjust the carrying values to estimated
fair value. As a result of this evaluation, the Company recorded a non-cash
impairment charge during the year ended December 31, 1999 on certain of its
paging, cable television and telephony businesses of $23.2 million.

Following is a rollforward of the activity and balances of the restructuring
reserve account through June 30, 2000 (in thousands):

<TABLE>
<CAPTION>
RESTRUCTURING DECEMBER 31, JUNE 30,
TYPE OF COST COST PAYMENTS 1999 PAYMENTS ADJUSTMENTS 2000
------------ ------------- -------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Employee separations......... $6,175 $(303) $5,872 $(3,947) $ (214) $1,711
Facility closings............ 1,456 -- 1,456 (558) -- 898
------ ----- ------ ------- ------- ------
7,631 $(303) $7,328 $(4,505) $ (214) $2,609
===== ====== ======= ======= ======
Write off of fixed assets.... 800
------
$8,431
======
</TABLE>

Adjustments relate to reductions in the estimated severance liability. The
restructuring reserve is included in accrued expenses in the accompanying
balance sheet at June 30, 2000 and December 31, 1999.

9
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
EQUITY METHOD INVESTMENT INFORMATION

At June 30, 2000 and December 31, 1999, the Communications Group's
unconsolidated investments in and advances to joint ventures in Eastern Europe
and the republics of the former Soviet Union, at cost, net of adjustments for
its equity in earnings or losses, impairment charges and distributions were as
follows (in thousands):

<TABLE>
<CAPTION>
YEAR
OPERATIONS
NAME 2000 1999 OWNERSHIP % COMMENCED (1)
---- ------- ------- ----------- -------------
<S> <C> <C> <C> <C>
WIRELESS TELEPHONY
Baltcom GSM, Latvia (2).................... $ 8,462 $ 8,348 22% 1997
Magticom, Georgia.......................... 18,496 11,110 35% 1997
Tyumenruskom, Russia (3)................... 117 575 46% 1999
BELCEL, Belarus............................ 976 1,088 50% 1999
------- -------
28,051 21,121
------- -------
FIXED TELEPHONY
Instaphone, Kazakhstan..................... 151 (68) 50% 1998
Caspian American Telecom, Azerbaijan (3)... 2,074 3,206 37% 1999
MTR-Sviaz, Russia.......................... 5,754 5,620 49% 1999
Telecom Georgia, Georgia................... 3,729 4,018 30% 1994
------- -------
11,708 12,776
------- -------
CABLE TELEVISION
Kosmos TV, Moscow, Russia.................. 1,138 1,547 50% 1992
Baltcom TV, Riga, Latvia................... 4,923 5,285 50% 1992
Ayety TV, Tbilisi, Georgia................. 1,492 2,194 49% 1993
Kamalak TV, Tashkent, Uzbekistan........... 3,282 3,329 50% 1993
Sun TV, Chisinau, Moldova.................. 3,429 3,941 50% 1994
Cosmos TV, Minsk, Belarus.................. 2,105 2,783 50% 1996
Alma TV, Almaty, Kazakhstan................ 7,280 7,549 50% 1995
Teleplus, St. Petersburg, Russia (3)....... (73) -- 45% 1998
------- -------
23,576 26,628
------- -------
PAGING
Baltcom Plus, Latvia (3)................... -- -- 50% 1995
Paging One, Georgia (3).................... -- -- 45% 1994
Raduga Poisk, Nizhny Novgorod, Russia
(3)...................................... -- -- 45% 1994
PT Page, St. Petersburg, Russia (3)........ -- -- 40% 1995
Paging Ajara, Batumi, Georgia (3).......... -- -- 35% 1997
Kazpage, Kazakhstan (3).................... -- -- 26-41% 1997
Alma Page, Almaty, Kazakhstan (3).......... -- -- 50% 1995
Kamalak Paging, Tashkent, Uzbekistan....... 1,461 1,884 50% 1993
Mobile Telecom, Russia (4)................. 5,657 6,711 50% 1998
------- -------
7,118 8,595
------- -------
</TABLE>

10
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)

<TABLE>
<CAPTION>
YEAR
OPERATIONS
NAME 2000 1999 OWNERSHIP % COMMENCED (1)
---- ------- ------- ----------- -------------
<S> <C> <C> <C> <C>
RADIO BROADCASTING
Radio Nika, Socci, Russia.................. -- 287 51% 1995
AS Trio LSL, Estonia....................... 1,210 1,514 49% 1997
------- -------
1,210 1,801
------- -------
PRE-OPERATIONAL (5)
Telephony related ventures and equipment... 974 954
Other...................................... 7,536 6,192
------- -------
8,510 7,146
------- -------
Total...................................... $80,173 $78,067
======= =======
</TABLE>

------------------------

(1) Indicates year operations commenced, or in the case of acquired operational
entities, the year of acquisition.

(2) At December 31, 1999, the results of Baltcom GSM were taken off the
three-month lag. Accordingly, amounts reported above reflect results for the
six months ended June 30, 2000 and March 31, 1999.

(3) Investment balance reflects write down of investment.

(4) The Company purchased its 50% interest in Mobile Telecom and a related
paging distribution company in June 1998 for $7.5 million plus two potential
earnout payments to be made in 2000 and 2001. The Company has not yet made
any earnout payments, based on the operational results of the ventures.
Approximately $7.0 million of the purchase price was allocated to goodwill.

(5) At June 30, 2000 and December 31, 1999, amounts disbursed for proposed joint
ventures, pre-operational joint ventures and amounts expended for equipment
for future wireless local loop projects are included in pre-operational
joint ventures.

11
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
Summarized combined balance sheet financial information of unconsolidated joint
ventures as of June 30, 2000 and December 31, 1999, and combined statement of
operations financial information for the six months ended June 30, 2000 and 1999
accounted for under the equity method that have commenced operations as of the
dates indicated are as follows (in thousands):

COMBINED INFORMATION OF UNCONSOLIDATED JOINT VENTURES

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
<S> <C> <C>
Assets:
Current assets...................................... $ 33,735 $ 37,611
Investments in systems and equipment................ 135,438 131,592
Other assets........................................ 4,980 5,642
-------- --------
Total assets...................................... $174,153 $174,845
======== ========
Liabilities and Joint Ventures' Deficit:
Current liabilities................................. $ 51,862 $ 46,160
Amount payable under credit facility................ 102,408 98,540
Other long-term liabilities......................... 75,603 79,053
-------- --------
229,873 223,753
Joint ventures' deficit............................. (55,720) (48,908)
-------- --------
Total liabilities and joint ventures' deficit..... $174,153 $174,845
======== ========
</TABLE>

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Revenues.............................................. $69,404 $ 50,905
Costs and Expenses:
Cost of sales and operating expenses................ 17,827 11,944
Selling, general and administrative................. 26,884 26,238
Depreciation and amortization....................... 17,224 13,896
------- --------
Total expenses.................................... 61,935 52,078
------- --------
Operating income (loss)............................... 7,469 (1,173)
Interest expense...................................... (9,043) (7,424)
Other income (expense)................................ (1,078) 42
Foreign currency transactions......................... (1,300) (3,832)
------- --------
Net loss.............................................. $(3,952) $(12,387)
======= ========
</TABLE>

For the six months ended June 30, 2000 and 1999 the results of operations
presented above are before the elimination of intercompany interest. Financial
information for joint ventures which are not yet operational is not included in
the above summary.

12
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
The following tables represent summary financial information for all operating
entities being grouped as indicated as of and for the six and three months ended
June 30, 2000 and 1999. For the three and six months ended June 30, 2000 and
1999, the results of operations presented below are before the elimination of
intercompany interest (in thousands):

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 2000
-----------------------------------------------------------------------
WIRELESS FIXED CABLE RADIO
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING TOTAL
--------- --------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues................................... $34,493 $14,243 $15,443 $ 849 $4,376 $69,404
Depreciation and amortization.............. 8,943 2,987 4,845 100 349 17,224
Operating income (loss).................... 9,624 (1,614) 690 (190) (1,041) 7,469
Interest expense........................... 5,106 882 2,928 26 101 9,043
Net income (loss).......................... 4,751 (3,088) (3,825) (254) (1,536) (3,952)
Assets..................................... 104,999 34,954 30,747 890 2,563 174,153
Capital expenditures....................... 15,245 3,747 2,774 10 535 22,311
Net investment in joint ventures........... 28,051 11,708 23,576 1,210 7,118 71,663
Equity in income (losses) of unconsolidated
investees................................ 6,999 (1,958) (812) (426) (1,121) 2,682
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999
-----------------------------------------------------------------------
WIRELESS FIXED CABLE RADIO
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING TOTAL
--------- --------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues................................... $17,920 $11,639 $13,627 $1,187 $6,532 $50,905
Depreciation and amortization.............. 6,555 1,061 5,845 131 304 13,896
Operating income (loss).................... (873) 757 (1,231) (18) 192 (1,173)
Interest income............................ 1 -- 148 -- -- 149
Interest expense........................... 4,589 172 2,561 22 80 7,424
Net loss................................... (5,479) (2,653) (3,967) (88) (200) (12,387)

Assets..................................... 80,804 21,784 32,748 1,160 5,236 141,732
Capital expenditures....................... 11,139 812 4,399 24 356 16,730

Net investment in joint ventures........... 20,700 5,588 25,727 2,055 9,027 63,097
Equity in losses of unconsolidated
investees................................ (2,244) (2,146) (1,237) (80) (79) (5,786)
</TABLE>

13
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 2000
-----------------------------------------------------------------------
WIRELESS FIXED CABLE RADIO
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING TOTAL
--------- --------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues................................... $18,076 $7,011 $7,587 $304 $2,139 $35,117
Depreciation and amortization.............. 4,428 1,596 2,329 47 175 8,575
Operating income (loss).................... 5,695 277 536 (171) (816) 5,521
Interest income............................ -- -- (3) -- -- (3)
Interest expense........................... 2,960 358 1,466 13 49 4,846
Net income (loss).......................... 3,431 (225) (1,915) (202) (1,028) 61
Equity in income (losses) of unconsolidated
investees................................ 4,450 (434) (419) (389) (776) 2,432
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1999
-----------------------------------------------------------------------
WIRELESS FIXED CABLE RADIO
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING TOTAL
--------- --------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues................................... $8,964 $5,470 $6,894 $484 $2,705 $24,517
Depreciation and amortization.............. 3,639 520 2,833 63 129 7,184
Operating loss............................. (419) (278) (129) (57) (84) (967)
Interest income............................ -- -- 83 -- -- 83
Interest expense........................... 2,275 119 1,323 11 41 3,769
Net loss................................... (3,448) (1,364) (2,230) (76) (431) (7,549)
Equity in losses of unconsolidated
investees................................ (1,716) (1,468) (875) (66) (241) (4,366)
</TABLE>

PRO FORMA INFORMATION

The following unaudited pro forma information illustrates the effect of the
acquisition of PLD Telekom on revenue, net loss and loss per share from
continuing operations attributable to common stockholders for the six months
ended June 30, 1999, and assumes that the acquisition of PLD Telekom occurred at
the beginning of 1999 (in thousands, except per share amount):

<TABLE>
<CAPTION>
1999
--------
<S> <C>
Revenues.................................................... $189,975
--------
Net loss.................................................... $(53,260)
========
Net loss per common share attributable to common stock
shareholders.............................................. $ (.57)
========
</TABLE>

The unaudited pro forma results have been prepared for comparative purposes only
and include certain adjustments, such as additional amortization expense as a
result of goodwill and increased interest expense on acquisition debt. They do
not purport to be indicative of the results of operations that actually would
have resulted had the acquisition occurred at the beginning of 1999, or of
future results of operations of the consolidated entity.

14
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA

At June 30, 2000 and December 31, 1999 the Company's investments, through
Metromedia China, in the joint ventures in China, at cost, net of adjustments
for its equity in earnings or losses and distributions, were as follows (in
thousands):

<TABLE>
<CAPTION>
YEAR YEAR
JUNE 30, DECEMBER 31, VENTURE OPERATIONS
NAME 2000 1999 OWNERSHIP % FORMED COMMENCED
---- -------- ------------ ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
Sichuan Tai Li Feng Telecommunications
Co., Ltd. ("Sichuan JV")............... $ -- $15,899 92% 1996 1999
Chongqing Tai Le Feng Telecommunications
Co., Ltd. ("Chongqing JV")............. -- 14,001 92% 1997 1999
Ningbo Ya Mei Telecommunications Co.,
Ltd. ("Ningbo JV")..................... 1,919 5,153 70% 1996 1997
Ningbo Ya Lian Telecommunications Co.,
Ltd. ("Ningbo JV II").................. -- 4,949 70% 1998 1998
Huaxia Metromedia Information Technology
Co., Ltd. ("Huaxia JV")................ 442 980 49% 1999 2000
------ -------
$2,361 $40,982
====== =======
</TABLE>

The reduction in investment in and advances to joint ventures during the first
six months of 2000 reflects the liquidation of Sichuan JV, Chongqing JV, Ningbo
JV and Ningbo JV II (as described below) and adjustments for its equity in
losses of Huaxia JV. In connection with the liquidation of the
telecommunications joint ventures, the Company as of July 1, 1999 stopped
recording its share of distributable cash flows and amortization of project
investments for the affected joint ventures. The $1.9 million balance of
telecommunications joint venture investments, as of June 30, 2000, is exclusive
of $15.2 million in goodwill.

Metromedia International Group and Metromedia International Telecommunications
have made intercompany loans to Metromedia China under a credit agreement, and
Metromedia China has used the proceeds of these loans to fund its investments in
these joint ventures in China. At June 30, 2000, Metromedia China owed
$22.2 million under this credit agreement (including accrued interest).

TELECOMMUNICATIONS JOINT VENTURES

The Company held interests in four telecommunications joint ventures in China,
each of which engaged in cooperation contracts with China United
Telecommunications Incorporated ("China Unicom") to finance and support
development of local telecommunications services. All four of these ventures
prematurely terminated operations by order of the Chinese government in 1999.
Concurrent with this termination, the Company reached agreement with China
Unicom and its Chinese partners in the ventures, for the distribution of
approximately $94.7 million (based on the June 30, 2000 exchange rates) in
settlement of all claims under the joint venture agreements and cooperation
contracts. The Company has received $77.5 million of this estimated total
distribution as of June 30, 2000. As of June 30, 2000, the balance of
investments in and advances to these joint ventures, exclusive of $15.2 million
in goodwill, was approximately $1.9 million.

As of June 30, 2000, Sichuan JV and Chongqing JV have been dissolved and all
previously agreed upon distributions have been made to the Company in full.
Ningbo JV and Ningbo JV II are expected to complete their formal dissolution
proceedings with the Chinese government prior to September 2000.

15
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
Due to favorable resolution of certain matters in connection with the
liquidation of the joint ventures, as of June 30, 2000 the Company now estimates
it will receive a total distribution from the liquidated joint ventures of
$94.7 million, an increase of $4.6 million over prior estimates.

This currently estimated $94.7 million in total payments from the joint ventures
is insufficient to fully recover the goodwill originally recorded in connection
with the Company's investment in these joint ventures. The Company had recorded
a non-cash impairment charge of $45.7 million in 1999 for the write-off of
goodwill based on its then estimate of amounts to be recovered in dissolution of
the ventures. With the $4.6 million increase in the estimated total dissolution
proceeds to the Company, goodwill was increased by $4.0 million. The remaining
goodwill amount at June 30, 2000 is $15.2 million.

CHINA E-COMMERCE JOINT VENTURES

In May 1999, Metromedia China's wholly-owned subsidiary, Asian American
Telecommunications, entered into a joint venture agreement with All Warehouse
Commodity Electronic Commerce Information Development Co., Ltd., a Chinese
trading company. This agreement was for the purpose of establishing Huaxia
Metromedia Information Technology Co., Ltd., known as Huaxia JV. The Chinese
government licensed Huaxia JV in July 1999 to develop and provide technical
services for the operation of electronic commerce computer information systems
for China-based corporate clients. Also in May 1999, Huaxia JV entered into a
30-year computer information system and services contract with All Warehouse and
its parent company, China Product Firm, that granted Huaxia JV exclusive rights
to manage all of China Product Firm's electronic trading systems during the
contract period. China Product Firm anticipated launching a commercial online
trading service employing systems provided and operated by Huaxia JV. By
agreement with All Warehouse and its parent, Huaxia JV's principal efforts were
to be initially directed to e-commerce systems for use by China Product Firm and
its affiliates and customers.

The terms under which Huaxia JV is licensed require a total amount to be
invested in the joint venture of $25.0 million, of which $10.0 million must be
in the form of registered capital contributions from its shareholders. At its
formation, Asian American Telecommunications owned a 49% interest in Huaxia JV
and was obligated to make total registered capital contributions of
$4.9 million over a three-year period. All Warehouse owned a 51% interest,
obligating it to contribute $5.1 million. The remaining investment in Huaxia JV
was to be in the form of up to $15.0 million of loans from Asian American
Telecommunications. As of June 30, 2000, Asian American Telecommunications has
made $980,000 of its scheduled registered capital investment.

16
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
increased obligation for future registered capital contributions. Huaxia JV's
business mission remains unchanged, except that its initial software development
and service efforts will no longer be principally restricted to China Product
Firm. Huaxia JV is currently recruiting other China-based clients for its
e-commerce support systems and the Company expects this joint venture to enter
into commercial operations in the fourth quarter of 2000. For the three months
ended June 30, 2000, the Company has recorded an equity in losses of the
operations of $538,000 which represents the costs for establishing the joint
venture and its technical and operational testing.

Huaxia JV does not have any contractual relationship with China Unicom and is
engaged in business fundamentally different from that of the Communications
Group's earlier joint ventures cooperating with China Unicom. Computer and
software services, such as offered by the Huaxia JV, are not subject to
regulations applied to telecommunications operations in China. The
Communications Group believes that the Company's equity interest in Huaxia JV
does not constitute foreign equity investment in telecommunications operations
or any other line of business restricted under current Chinese regulations.
Furthermore, the Company believes that the Chinese regulatory policy situation
and prospects facing Huaxia JV are fundamentally different from the regulatory
policy situation and prospects faced by the Communication Group's earlier joint
telecommunications projects with China Unicom.

In May 2000, the Company made an offer to purchase Twin Poplars LLC for
$300,000. Twin Poplars owns a 90% ownership interest in and controls two
sino-foreign joint ventures licensed in China to engage in information content
provision for print publishers and the internet and internet-based online sales.
As of June 30, 2000, the Company had loaned $150,000 to Twin Poplars against a
security interest in its China joint ventures. On July 24, 2000, the Company
completed the acquisition of an 80% interest in Twin Poplars and obtained
options to acquire the remaining 20%. The acquisition gives the Company 72%
ownership in and control over two sino-foreign joint ventures. The Twin Poplars
joint ventures provide content and services to Chinese publishers and have
completed development of a companion website for internet content provision and
online product sales. Both joint ventures are currently operational.

17
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
The Company is no longer recording the operations of its China
telecommunications joint ventures as of July 1, 1999. The following tables
represent summary financial information for the Company's China
telecommunications joint ventures and their related projects in China as of and
for the six and three months ended June 30, 1999, respectively, (in thousands):

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999
-----------------------------------------------------
NINGBO NINGBO SICHUAN CHONGQING
JV JVII JV JV TOTAL
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Revenues.......................................... $1,996 $ 504 $ -- $ 27 $2,527
Depreciation and amortization..................... (1,221) -- (255) (240) (1,716)
Operating income (loss)........................... 650 476 (424) (371) 331
Interest expense, net............................. (1,370) (110) (501) (126) (2,107)
Net income (loss)................................. (720) 366 (925) (497) (1,776)
Equity in income (losses) of joint ventures....... 287 336 (427) (343) (147)
Assets............................................ 32,971 15,643 21,348 17,969 87,931
Net investment in project......................... 30,112 12,239 20,088 10,762 73,201
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1999
-----------------------------------------------------
NINGBO NINGBO SICHUAN CHONGQING
JV JVII JV JV TOTAL
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Revenues.......................................... $1,008 $ 504 $ -- $ 3 $1,515
Depreciation and amortization..................... (613) -- (239) (182) (1,034)
Operating income (loss)........................... 357 491 (341) (228) 279
Interest expense, net............................. (508) (74) (267) (46) (895)
Net income (loss)................................. (151) 417 (608) (274) (616)
Equity in income (losses) of joint ventures....... 303 344 (334) (195) 118
</TABLE>

For the three and six months ended June 30, 1999 the results of operations
presented above are before the elimination of intercompany interest. Ningbo JV
records revenues from the Ningbo China Unicom GSM project based on amounts of
revenues and profits reported to it by China Unicom for the period October 1,
1998 to March 31, 1999.

4. EARNINGS PER SHARE OF COMMON STOCK

Basic earnings per share excludes all dilutive securities. It is based upon the
weighted average number of common shares outstanding during the period. Diluted
earnings per share reflects the potential dilution that would occur if
securities exercisable for or convertible into common stock were exercised or
converted into common stock. In calculating diluted earnings per share, no
potential shares of common stock are included in the computation if they would
have an antidilutive effect on earnings per share. For the three and six months
ended June 30, 2000 and 1999 the Company had not included diluted earnings per
share since the calculation is antidilutive.

The Company had at June 30, 2000 and 1999, potentially dilutive shares of common
stock of 26,726,000 and 18,846,000, respectively.

5. INVESTMENT IN RDM

The Company owns approximately 39% of the outstanding common stock of RDM Sports
Group, Inc. In August 1997, RDM and certain of its affiliates filed a voluntary
bankruptcy petition under chapter

18
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENT IN RDM (CONTINUED)
11 of the Bankruptcy Code. The chapter 11 trustee is in the process of selling
all of RDM's assets to satisfy RDM's obligations to its creditors and the
Company believes that it is unlikely that it will recover any distribution on
account of its equity interest in RDM. The Company also holds certain claims in
the RDM proceedings, although there can be no assurance that the Company will
receive any distributions with respect to such claims.

On August 19, 1998, a purported class action lawsuit, THEOHAROUS V. FONG, ET
AL., Civ. No. 1:98CV2366, was filed in United States District Court for the
Northern District of Georgia. On October 19, 1998, a second purported class
action lawsuit with substantially the same allegations, SCHUETTE V. FONG, ET
AL., Civ. No. 1:98CV3034, was filed in United States District Court for the
Northern District of Georgia. On June 7, 1999, plaintiffs in each of these
lawsuits filed amended complaints. The amended complaints alleged that certain
officers, directors and shareholders of RDM, including the Company and current
and former officers of the Company who served as directors of RDM, were liable
under federal securities laws for misrepresenting and failing to disclose
information regarding RDM's alleged financial condition during the period
between November 7, 1995 and August 22, 1997, the date on which RDM disclosed
that its management had discussed the possibility of filing for bankruptcy. The
amended complaints also alleged that the defendants, including the Company and
current and former officers of the Company who served as directors of RDM, were
secondarily liable as controlling persons of RDM. In an opinion dated March 10,
2000, the court dismissed these actions in their entirety. On April 7, 2000,
plaintiffs in each of these actions filed notices of appeal to the United States
Court of Appeals for the Eleventh Circuit.

On December 30, 1998, the chapter 11 trustee of RDM brought an adversary
proceeding in the bankruptcy of RDM, HAYS, ET AL V. FONG, ET AL., Adv. Proc.
No. 98-1128, in the United States Bankruptcy Court, Northern District of
Georgia, alleging that current and former officers of the Company, while serving
as directors on the board of RDM, breached fiduciary duties allegedly owed to
RDM's shareholders and creditors in connection with the bankruptcy of RDM. On
January 25, 1999, the plaintiff filed a first amended complaint. The official
committee of unsecured creditors of RDM has moved to proceed as co-plaintiff or
to intervene in this proceeding, and the official committee of bondholders of
RDM has moved to intervene in or join the proceeding. Plaintiffs in this
adversary proceeding seek the following relief against current and former
officers of the Company who served as directors of RDM: actual damages in an
amount to be proven at trial, reasonable attorney's fees and expenses, and such
other and further relief as the court deems just and proper. On February 16,
1999, the creditors' committee brought an adversary proceeding, THE OFFICIAL
COMMITTEE OF UNSECURED CREDITORS OF RDM SPORTS GROUP, INC. AND RELATED DEBTORS
V. METROMEDIA INTERNATIONAL GROUP INC., Adv. Proc. No. 99-1023, seeking in the
alternative to recharacterize as contributions to equity a secured claim in the
amount of $15 million made by the Company arising out of the Company's financing
of RDM, or to equitably subordinate such claim made by Metromedia against RDM
and other debtors in the bankruptcy proceeding. On March 3, 1999, the
bondholders' committee brought an adversary proceeding, THE OFFICIAL COMMITTEE
OF BONDHOLDERS OF RDM SPORTS GROUP, INC. V. METROMEDIA INTERNATIONAL
GROUP, INC., Adv. Proc. No. 99-1029, with substantially the same allegations as
the above proceeding. In addition to the equitable and injunctive relief sought
by plaintiffs described above, plaintiffs in these adversary proceedings seek
actual damages in an amount to be proven at trial, reasonable attorneys' fees,
and such other and further relief as the court deems just and proper. The
Company believes it has meritorious defenses and plans to vigorously defend
these actions. Due to the early stage of these proceedings, the Company cannot
evaluate the likelihood of an unfavorable outcome or an estimate of the likely
amount or range of possible loss, if any. Accordingly, the Company has not
recorded any liability in connection with these proceedings.

19
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA

The business activities of the Company consist of two operating groups, the
Communications Group and Snapper.

The Communications Group has operations in Eastern Europe and the republics of
the former Soviet Union and China. Operations in Eastern Europe and the
republics of the former Soviet Union provide the following services:
(i) wireless telephony; (ii) fixed telephony; (iii) cable television;
(iv) radio broadcasting; and (v) paging. Until recently, the Company also held
interests in several telecommunications joint ventures in China. Those joint
ventures were terminated in late 1999 and the Company reached agreement for the
distribution of approximately $94.7 million (based on the June 30, 2000 exchange
rate) in settlement of all claims under the joint venture agreements. The
Communications Group is continuing to develop e-commerce business opportunities
in China.

Legal restrictions in China prohibit foreign participation in the operations or
ownership in the telecommunications sector. The segment information for the
Communications Group's China joint ventures represents the investment in network
construction and development of telephony networks for China Unicom. The segment
information does not reflect the results of operations of China Unicom's
telephony networks.

Snapper manufactures Snapper-Registered Trademark- brand premium priced power
lawnmowers, lawn tractors, garden tillers, snow throwers and related parts and
accessories.

The Company evaluates the performance of its operating segments based on
earnings before interest, taxes, depreciation, and amortization. The segment
information is based on operating income (loss) which includes depreciation and
amortization. Equity in income (losses) of unconsolidated investees reflects
elimination of intercompany interest expense.

The Company's segment information is set forth as of and for the six months
ended June 30, 2000, and 1999 in the following tables (in thousands):

20
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)

SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMUNICATIONS GROUP--EASTERN EUROPE AND
THE REPUBLICS OF THE FORMER SOVIET UNION
------------------------------------------------------------------------------
RADIO SEGMENT
WIRELESS FIXED CABLE BROAD- HEAD- COMMUNICATIONS
TELEPHONY TELEPHONY TELEVISION CASTING PAGING QUARTERS TOTAL GROUP-CHINA
--------- --------- ---------- -------- -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMBINED
Revenues......................... $41,375 $56,643 $18,959 $8,723 $ 5,420 $ 1,985 $133,105
Depreciation and amortization.... 11,500 11,004 6,237 677 494 16,426 46,338
Operating income (loss).......... 7,750 5,414 362 (592) (1,292) (26,775) (15,133)

CONSOLIDATED
Revenues......................... $ 6,882 $42,400 $ 3,516 $7,874 $ 1,044 $ 1,985 $ 63,701 $ --
Gross profit.....................
Depreciation and amortization.... 2,557 8,017 1,392 577 145 16,426 29,114 102
Reduction in estimate of asset
impairment charge.............. -- -- -- -- -- -- -- (3,984)
Operating income (loss).......... (1,874) 7,028 (328) (402) (251) (26,775) (22,602) 417

UNCONSOLIDATED JOINT VENTURES
Revenues......................... $34,493 $14,243 $15,443 $ 849 $ 4,376 $ -- $ 69,404 $ --
Depreciation and amortization.... 8,943 2,987 4,845 100 349 -- 17,224 25
Operating income (loss).......... 9,624 (1,614) 690 (190) (1,041) -- 7,469 (540)
Net income (loss)................ 4,751 (3,088) (3,825) (254) (1,536) -- (3,952) (538)
Equity in income (losses) of
unconsolidated investees....... 6,999 (1,958) (812) (426) (1,121) -- 2,682 (538)
Foreign currency gain............ 41 --
Minority interest................ (2,251) 1,255
Interest expense.................
Interest income..................
Gain on settlement of option.....
Income tax expense...............
Net loss.........................
Capital expenditures............. 7,069 25
Assets at June 30, 2000.......... 527,346 21,610

CORPORATE
SNAPPER HEADQUARTERS CONSOLIDATED
-------- ------------ ------------
<S> <C> <C> <C>
COMBINED
Revenues.........................
Depreciation and amortization....
Operating income (loss)..........
CONSOLIDATED
Revenues......................... $102,530 $ -- $166,231
Gross profit..................... 35,615
Depreciation and amortization.... 3,015 35 32,266
Reduction in estimate of asset
impairment charge.............. -- -- (3,984)
Operating income (loss).......... 7,528 (3,057) (17,714)
UNCONSOLIDATED JOINT VENTURES
Revenues.........................
Depreciation and amortization....
Operating income (loss)..........
Net income (loss)................
Equity in income (losses) of
unconsolidated investees....... -- -- 2,144
Foreign currency gain............ -- -- 41
Minority interest................ -- -- (996)
Interest expense................. (16,020)
Interest income.................. 1,523
Gain on settlement of option..... 2,500
Income tax expense............... (4,611)
--------
Net loss......................... $(33,133)
========
Capital expenditures............. 1,251 -- $ 8,345
Assets at June 30, 2000.......... 113,611 65,766 $728,333
</TABLE>

21
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)

SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMUNICATIONS GROUP--EASTERN EUROPE AND
THE REPUBLICS OF THE FORMER SOVIET UNION
------------------------------------------------------------------------------
RADIO SEGMENT
WIRELESS FIXED CABLE BROAD- HEAD-
TELEPHONY TELEPHONY TELEVISION CASTING PAGING QUARTERS TOTAL
--------- --------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
COMBINED
Revenues.......................... $17,920 $11,639 $16,288 $ 9,292 $ 8,277 $ 918 $ 64,334
Depreciation and amortization..... 6,555 1,061 6,798 662 611 2,166 17,853
Operating income (loss)........... (873) 757 (1,409) (1,271) (1,107) (14,029) (17,932)

CONSOLIDATED
Revenues.......................... $ -- $ -- $ 2,661 $ 8,105 $ 1,745 $ 918 $ 13,429
Gross profit......................
Depreciation and amortization..... -- -- 953 531 307 2,166 3,957
Operating income (loss)........... -- -- (178) (1,253) (1,299) (14,029) (16,759)

UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $17,920 $11,639 $13,627 $ 1,187 $ 6,532 $ -- $ 50,905
Depreciation and amortization..... 6,555 1,061 5,845 131 304 -- 13,896
Operating income (loss)........... (873) 757 (1,231) (18) 192 -- (1,173)
Net loss.......................... (5,479) (2,653) (3,967) (88) (200) -- (12,387)
Equity in losses of unconsolidated
investees....................... (2,244) (2,146) (1,237) (80) (79) -- (5,786)
Foreign currency loss............. (2,794)
Minority interest................. 624
Interest expense..................
Interest income...................
Income tax expense................
Net loss..........................
Capital expenditures.............. 1,088
Assets at December 31, 1999....... 537,279

COMMUNICATIONS CORPORATE
GROUP-CHINA SNAPPER HEADQUARTERS CONSOLIDATED
--------------- -------- ------------ ------------
<S> <C> <C> <C> <C>
COMBINED
Revenues..........................
Depreciation and amortization.....
Operating income (loss)...........
CONSOLIDATED
Revenues.......................... $ -- $119,218 $ -- $132,647
Gross profit...................... 40,543
Depreciation and amortization..... 1,574 3,053 3 8,587
Operating income (loss)........... (7,073) 10,651 (2,933) (16,114)
UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $ 2,527
Depreciation and amortization..... 1,716
Operating income (loss)........... 331
Net loss.......................... (1,776)
Equity in losses of unconsolidated
investees....................... (147) -- -- (5,933)
Foreign currency loss............. -- -- -- (2,794)
Minority interest................. 4,228 -- -- 4,852
Interest expense.................. (6,929)
Interest income................... 4,246
Income tax expense................ (205)
--------
Net loss.......................... $(22,877)
========
Capital expenditures.............. 2 1,362 -- $ 2,452
Assets at December 31, 1999....... 66,451 118,259 54,865 $776,854
</TABLE>

22
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)

Information about the Communications Group's consolidated operations by
geographic location for the six months ended June 30, 2000 and 1999 and as of
June 30, 2000 and December 31, 1999 is as follows (in thousands):

<TABLE>
<CAPTION>
REVENUES ASSETS
------------------- -------------------
COUNTRY 2000 1999 2000 1999
------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Austria............................................... $ -- $ 346 $ -- $ --
Azerbaijan............................................ -- -- 4,037 3,274
Belarus............................................... 425 -- 6,690 6,985
Cyprus................................................ -- -- 52 --
Czech Republic........................................ 863 829 3,202 3,117
Estonia............................................... 267 370 1,358 1,636
Georgia............................................... 110 187 26,252 19,372
Germany............................................... 148 57 298 1,555
Hungary............................................... 3,116 3,747 3,455 5,469
Kazakhstan............................................ 6,882 -- 61,303 63,432
Krgyzstan............................................. 98 -- 1,984 1,668
Latvia................................................ 245 368 13,891 14,029
Lithuania............................................. 655 516 1,385 1,643
Moldova............................................... -- -- 3,429 4,147
People's Republic of China............................ -- -- 21,610 66,451
Romania............................................... 2,596 2,564 10,433 10,470
Russia................................................ 46,280 3,198 252,084 256,304
Ukraine............................................... 463 339 873 975
United Kingdom........................................ -- -- 54 226
United States (1)..................................... 1,553 908 131,823 137,765
Uzbekistan............................................ -- -- 4,743 5,212
------- ------- -------- --------
$63,701 $13,429 $548,956 $603,730
======= ======= ======== ========
</TABLE>

------------------------

(1) Assets include goodwill of $116.6 million, and $123.6 million at June 30,
2000 and December 31, 1999, respectively.

All of the Company's remaining assets and substantially all remaining revenue
relate to operations in the United States.

7. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION

ACCOUNTS RECEIVABLE

The total allowance for doubtful accounts at June 30, 2000 and December 31, 1999
was $2.3 million and $2.9 million, respectively.

23
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

7. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION (CONTINUED)
INVENTORIES

Inventories consist of the following as of June 30, 2000 and December 31, 1999
(in thousands):

<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Lawn and garden equipment:
Raw materials........................................... $ 8,550 $11,346
Finished goods.......................................... 40,382 40,380
------- -------
48,932 51,726
Less: LIFO reserve........................................ -- --
------- -------
48,932 51,726
------- -------
Telecommunications:
Pagers.................................................. 138 152
Telephony............................................... 2,418 2,934
Cable................................................... 298 397
------- -------
2,854 3,483
------- -------
$51,786 $55,209
======= =======
</TABLE>

INTEREST EXPENSE

Interest expense includes amortization of debt discount of $9.2 million for the
six months ended June 30, 2000.

GAIN ON SETTLEMENT OF OPTION

For the six months ended June 30, 2000, the Company recorded a $2.5 million gain
representing the gain realized on the buyout of options to acquire an indirect
interest in Telecominvest, a holding company with diverse telecommunications
interests in northwest Russia.

8. CONTINGENCIES

RISKS ASSOCIATED WITH THE COMMUNICATIONS GROUP'S INVESTMENTS

The ability of the Communications Group and its joint ventures and subsidiaries
(including PLD Telekom Inc.) to establish profitable operations is subject to,
among other things, significant political, economic and social risks inherent in
doing business in emerging markets such as Eastern Europe, the republics of the
former Soviet Union and China. These include matters arising out of government
policies, economic conditions, imposition of or changes in government
regulations or policies, imposition of or changes to taxes or other similar
charges by government bodies, exchange rate fluctuations and controls, civil
disturbances, deprivation or unenforceability of contractual rights, and taking
of property without fair compensation. These and other risks associated with the
Company are discussed more fully in the Company's Form 10-K "Item 1--Risks
Associated with the Company."

24
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

8. CONTINGENCIES (CONTINUED)
the economic climate may be improving, however, at this time, the prospects for
complete recovery for the economies of Russia and the other republics of the
former Soviet Union and Eastern Europe negatively affected by the economic
crisis remain unclear. The economic crisis of 1998 resulted in a number of
defaults by borrowers in Russia and other countries. Although some debt was
rescheduled in the first part of 2000, a reduced level of financing remains
available to investors in these countries. The devaluation of many of the
currencies in the region in 2000 has not been as marked as in previous years but
the potential still remains for future negative effect on the U.S. dollar value
of the revenues generated by certain of the Communications Group's joint
ventures and may lead to certain additional restrictions on the convertibility
of certain local currencies. The effect of these uncertainties has negatively
impacted the financial performance of certain of the Communications Group's
cable television, telephony, radio broadcasting and paging ventures.

Some of the Communications Group's subsidiaries and joint ventures operate in
countries where the inflation rate in the past has been high. For example,
inflation in Russia increased dramatically following the August 1998 financial
crisis and there are increased risks of inflation in Kazakhstan. The inflation
rates in Belarus have been at hyperinflationary levels for some years and as a
result, the currency has essentially lost all intrinsic value. Although the rate
of inflation in 2000 has not been as high as in previous years, the risk of
further increases in the future remains possible.

While the Communications Group's subsidiaries and joint ventures attempt to
increase their subscription rates to offset increases in operating costs, there
is no assurance that they will be able to do so. Therefore, operating costs may
rise faster than associated revenue, resulting in a material negative impact on
operating results. The Company itself is generally negatively impacted by
inflationary increases in salaries, wages, benefits and other administrative
costs, the effects of which to date have not been material to the Company.

The value of the currencies in the countries in which the Communications Group
operates in the past has fluctuated, sometimes significantly. For example,
during 1998 and 1999, the value of the Russian Rouble was under considerable
economic and political pressure and has suffered significant declines against
the U.S. dollar and other currencies. In addition, in 1999 local currency
devaluations in Uzbekistan, Kazakhstan and Georgia, in addition to weakening of
local currencies in Austria and Germany, had an adverse effect on the
Communications Group's ventures in these countries. The Communications Group
currently does not hedge against exchange rate risk and therefore could be
negatively impacted by declines in exchange rates between the time one of its
joint ventures receives its funds in local currency and the time it distributes
these funds in U.S. dollars to the Communications Group.

The Communications Group's strategy is to minimize its foreign currency risk. To
the extent possible, the Communications Group bills and collects all revenues in
U.S. dollars or an equivalent local currency amount adjusted on a monthly basis
for exchange rate fluctuations. The Communications Group's subsidiaries and
joint ventures are generally permitted to maintain U.S. dollar accounts to
service their U.S. dollar denominated debt and current account obligations,
thereby reducing foreign currency risk. As the Communications Group's
subsidiaries and joint ventures expand their operations and become more
dependent on local currency based transactions, the Communications Group expects
that its foreign currency exposure will increase.

25
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

8. CONTINGENCIES (CONTINUED)
CHINA TELECOMMUNICATIONS JOINT VENTURES

Due to favorable resolution of certain matters in connection with the
liquidation of the joint ventures as of June 30, 2000, the Company now estimates
it will receive a total distribution from the liquidated joint ventures of
$94.7 million, an increase of $4.6 million over prior estimates. This currently
estimated $94.7 million in total payments from the joint ventures is
insufficient to fully recover the goodwill originally recorded in connection
with the Company's investment in these joint ventures. The Company had recorded
a non-cash impairment charge of $45.7 million in 1999 for the write-off of
goodwill based on its then estimate of amounts to be recovered in dissolution of
the ventures. With the $4.6 million increase in the estimated total dissolution
proceeds to the Company, goodwill was increased by $4.0 million. The remaining
goodwill amount at June 30, 2000 is $15.2 million.

CHINA E-COMMERCE JOINT VENTURE

The Communication Group's Huaxia JV is established as a sino-foreign equity
joint venture between Asian American Telecommunications and All Warehouse
Commodity Electronic Commerce Information Development Co., Ltd. Huaxia JV is
licensed to develop and provide technical services for the operation of
electronic commerce computer information systems for China-based corporate
clients. Huaxia JV does not have any contractual relationship with China Unicom
and is engaged in business fundamentally different from that of the
Communications Group's earlier joint ventures cooperating with China Unicom.
Computer and software services, such as offered by the Huaxia JV, are subject to
regulations different from those applied to telecommunications operations in
China. The Communications Group believes that the Company's equity interest in
Huaxia JV does not constitute foreign equity investment in telecommunications
operations or any other line of business restricted under current Chinese
regulations. Furthermore, the Company believes that the Chinese regulatory
policy situation and prospects facing Huaxia JV are fundamentally different from
the regulatory policy situation and prospects faced by the Communication Group's
earlier joint telecommunications projects with China Unicom.

The investment in Twin Poplars entails certain risks resulting from regulatory
uncertainty and the fact that certain necessary licenses, while applied for,
have not yet been obtained. The Chinese regulatory regime is currently unclear
as to the precise extent of the restrictions on foreign investment in the
publishing and internet content provision industries. With respect to
publishing, the Communications Group believes that Twin Poplars' information
content joint venture cannot be deemed to be operating a publishing business,
since it is merely providing content to Chinese publishers for fixed fees. With
respect to internet content-related operations, given the lack of explicit
regulations, the Communications Group may be required in the future to adjust
the webhosting and internet content provision arrangements of Twin Poplars to
comply with any new regulatory developments. Other transitional risks are that
the publication for which content is currently primarily provided by Twin
Poplars' joint venture is still in the process of obtaining relevant publishing
and advertising licenses, and Twin Poplars' internet joint venture is still in
the process of obtaining an online advertising license. Twin Poplars will not be
entitled to legally receive certain revenues until such licenses are obtained.

LITIGATION

The Company is involved in various legal and regulatory proceedings and while
the results of any litigation or regulatory issue contain an element of
uncertainty, management believes that the outcome of any known, pending or
threatened legal proceedings, except as disclosed in note 5, will not have a
material effect on the Company's consolidated financial position and results of
operations.

26
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the Company's
consolidated condensed financial statements and related notes thereto.

The business activities of the Company consist of two operating groups, the
Communications Group and Snapper.

COMMUNICATIONS GROUP

OVERVIEW

The Communications Group has operations in Eastern Europe and the republics of
the former Soviet Union and an e-commerce business in China. Operations in
Eastern Europe and the republics of the former Soviet Union provide the
following services: (i) wireless telephony; (ii) fixed telephony; (iii) cable
television; (iv) radio broadcasting; and (v) paging. The Company also held
interests in several telecommunications joint ventures in China. These ventures
terminated operations in late 1999 and the Company reached agreement for the
distribution of approximately $94.7 million (based on the June 30, 2000 exchange
rate) in settlement of all claims under the joint venture agreements, of which
$77.5 million has been received. The Communications Group is now developing
e-commerce business opportunities in China.

During 1999 the Company continued to focus its growth strategy on opportunities
in communications businesses in Eastern Europe and the republics of the former
Soviet Union. The convergence of cable television and telephony, and the
relationship of each business to internet access, provides the Company with new
opportunities.

On September 30, 1999, the Company consummated the acquisition of PLD Telekom, a
provider of high quality long distance and international telecommunications
services in the republics of the former Soviet Union. As a result of the
acquisition, PLD Telekom became a wholly owned subsidiary of the Company.

The Communications Group's consolidated revenues represent approximately 38% and
10% of the Company's total consolidated revenues for the six months ended
June 30, 2000 and 1999, respectively. The Company expects this proportion to
increase with the acquisition of PLD Telekom and as the Communications Group's
joint ventures develop their businesses. Consolidated revenues of the Company
for the six months ended June 30, 2000 include $49.7 million attributable to PLD
Telekom.

BASIS OF PRESENTATION

Almost all of the Communications Group's joint ventures other than the PLD
Telekom businesses report their financial results on a three-month lag.
Therefore, the Communications Group's financial results for June 30 include the
financial results for those joint ventures for the three and six months ending
March 31. The Company is currently evaluating the financial reporting of these
ventures and the possibility of reducing or eliminating the three-month
reporting lag for certain of its principal businesses during 2000 for the
purpose of presenting the Company's results of operations on a more timely
basis.

1999 RESTRUCTURING AND IMPAIRMENT CHARGES

27
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
its projected overhead costs for 2000 by closing its offices in Stamford,
Connecticut and London, England, consolidating its executive offices in New
York, New York, consolidating its operational headquarters in Vienna, Austria
and by consolidating its two Moscow offices into one. As part of this
streamlining of its operations, the Company announced an employee headcount
reduction. Employees impacted by the restructuring were notified in
December 1999 and in almost all cases were terminated effective December 31,
1999. Employees received a detailed description of their separation package
which was generally based on length of service. The total number of U.S.
domestic and expatriate employees separated was approximately 60. In addition,
there were reductions in locally hired staff. In 1999 the Company recorded a
charge of $8.4 million in connection with the restructuring.

Concurrent with the review of its existing operations and the change in
management as the result of the acquisition of PLD Telekom, the Communications
Group completed a strategic review of its telephony, cable television, radio
broadcasting and paging assets. As a result of the Company's strategic review,
the Company determined that certain businesses (including some pre-operational
businesses) in its portfolio did not meet certain of the objectives of the
strategic review, such as the Company's ability to obtain control of the
venture, geographic focus or convergence. The long lived assets or the
investments in these businesses were evaluated to determine whether any
impairment in their recoverability existed at the determination date. As a
result, the Company assessed whether the estimated cash flows of the businesses
over the estimated lives of the related assets were sufficient to recover their
costs. Where such cash flows were insufficient, the Company utilized a
discounted cash flow model to estimate the fair value of assets or investments
and recorded an impairment charge to adjust the carrying values to estimated
fair value. As a result of this evaluation, the Company recorded a non-cash
impairment charge on certain of its paging, cable television and telephony
businesses of $23.2 million.

Following is a rollforward of the activity and balances of the restructuring
reserve account from inception to June 30, 2000 (in thousands):

<TABLE>
<CAPTION>
RESTRUCTURING DECEMBER 31, JUNE 30,
TYPE OF COST COST PAYMENTS 1999 PAYMENTS ADJUSTMENTS 2000
------------ ------------- -------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Employee separations.................. $6,175 $(303) $5,872 $(3,947) $(214) $1,711
Facility closings..................... 1,456 -- 1,456 (558) -- 898
------ ----- ------ ------- ----- ------
7,631 $(303) $7,328 $(4,505) $(214) $2,609
===== ====== ======= ===== ======
Write off of fixed assets............. 800
------
$8,431
======
</TABLE>

Adjustments relate to reductions in the estimated severance liability.

CHINA TELECOMMUNICATIONS JOINT VENTURES

28
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
have been repaid plus accrued interest thereon and the balance of investments in
these joint ventures, exclusive of $15.2 million in goodwill, was approximately
$1.9 million. As of June 30, 2000, Sichuan JV and Chongqing JV have been fully
dissolved and all previously agreed upon distributions have been made to the
Company in full. Ningbo JV and Ningbo JV II are expected to complete their
formal dissolution proceedings with the Chinese government prior to
September 2000.

Huaxia JV was established as a sino-foreign equity joint venture between the
Communications Group and All Warehouse Commodity Electronic Commerce Information
Development Co. Ltd., a Chinese trading company. Huaxia JV will develop and
provide technical services for the operation of electronic commerce computer
information systems for use by Chinese enterprises under transaction
fee-for-services arrangements.

JOINT VENTURE OWNERSHIP STRUCTURES

The following table summarizes the Communications Group's joint ventures and
subsidiaries at June 30, 2000 and the Communications Group's ownership in each
company:

<TABLE>
<CAPTION>
COMPANY
JOINT VENTURE (1) OWNERSHIP %
----------------- -----------
<S> <C>
WIRELESS TELEPHONY
Baltcom GSM (Latvia)........................................ 22%
Magticom (Tbilisi, Georgia)................................. 35%
ALTEL (Kazakhstan) (2)...................................... 50%
BELCEL (Belarus)............................................ 50%
Tyumenruskom (Tyumen, Russia)............................... 46%
Gorizont-RT (Sakha) (3)..................................... 25%
Ningbo Ya Mei Telecommunications Co., Ltd. (Ningbo City,
China) (4)................................................ 41%
Ningbo Ya Lian Telecommunications Co., Ltd. (Ningbo
Municipality, China) (4).................................. 41%
</TABLE>

29
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

<TABLE>
<CAPTION>
COMPANY
JOINT VENTURE (1) OWNERSHIP %
----------------- -----------
<S> <C>
FIXED AND OTHER TELEPHONY
PeterStar (St. Petersburg, Russia) (2)...................... 71%
Baltic Communications Limited (St. Petersburg, Russia)
(2)....................................................... 100%
Teleport-TP (Moscow, Russia) (2) (5)........................ 56%
Telecom Georgia (Tbilisi, Georgia).......................... 30%
MTR-Sviaz (Moscow, Russia) (5).............................. 49%
Instaphone (Kazakhstan)..................................... 50%
Caspian American Telecommunications (Azerbaijan) (6)........ 37%
CPY Yellow Pages (St. Petersburg, Russia) (2) (7)........... 100%
Cardlink ZAO (Moscow, Russia) (2) (8)....................... 84.5%
Spectrum (Kazakhstan)....................................... 33%

INTERNET SERVICES
Huaxia Metromedia Information Technology Co., Ltd. (China)
(9)....................................................... 29%
FX Internet (Romania)....................................... 70%
CABLE TELEVISION
Romsat Cable TV (Bucharest, Romania) (2).................... 100%
Viginta (Vilnius, Lithuania) (2)............................ 55%
ATK (Archangelsk, Russia) (2)............................... 81%
Ala TV (Bishkek, Kyrghizstan) (2) (10)...................... 53%
Kosmos TV (Moscow, Russia).................................. 50%
Baltcom TV (Riga, Latvia)................................... 50%
Ayety TV (Tbilisi, Georgia) (11)............................ 49%
Kamalak TV (Tashkent, Uzbekistan)........................... 50%
Sun TV (Chisinau, Moldova) (12)............................. 50%
Alma TV (Almaty, Kazakhstan)................................ 50%
Cosmos TV (Minsk, Belarus).................................. 50%
Teleplus (St. Petersburg, Russia)........................... 45%

RADIO BROADCASTING
Radio Juventus (Budapest, Hungary) (2)...................... 100%
SAC (Moscow, Russia) (2).................................... 83%
Radio Skonto (Riga, Latvia) (2)............................. 55%
Radio One (Prague, Czech Republic) (2)...................... 80%
NewsTalk Radio (Berlin, Germany) (2) (13)................... 85%
Radio Vladivostok, (Vladivostok, Russia) (2)................ 51%
Country Radio (Prague, Czech Republic) (2).................. 85%
Radio Georgia (Tbilisi, Georgia) (2) (14)................... 51%
Radio Katusha (St. Petersburg, Russia) (2) (14)............. 75%
Radio Nika (Sochi, Russia) (15)............................. 51%
AS Trio LSL (Estonia) (14).................................. 49%
</TABLE>

30
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

<TABLE>
<CAPTION>
COMPANY
JOINT VENTURE (1) OWNERSHIP %
----------------- -----------
<S> <C>
PAGING
Baltcom Paging (Estonia) (2)................................ 85%
CNM (Romania) (2) (16)...................................... 54%
Eurodevelopment (Ukraine) (2)............................... 51%
Baltcom Plus (Latvia)....................................... 50%
Paging One (Tbilisi, Georgia)............................... 45%
Raduga Poisk (Nizhny Novgorod, Russia)...................... 45%
PT Page (St. Petersburg, Russia)............................ 40%
Kazpage (Kazakhstan) (17)................................... 26-41%
Kamalak Paging (Tashkent, Samarkand, Bukhara and Andijan,
Uzbekistan)............................................... 50%
Alma Page (Almaty and Ust-Kamenogorsk, Kazakhstan).......... 50%
Paging Ajara (Batumi, Georgia).............................. 35%
Mobile Telecom (Russia) (18)................................ 50%
</TABLE>

------------------------

(1) Each parenthetical notes the area of operations for each operational joint
venture or the area for which each pre-operational joint venture is
licensed.

(2) Results of operations are consolidated with the Company's financial
statements.

(3) The Communications Group is selling its 25% interest to one of the other
partners in the venture and the sale is expected to close in the second half
of 2000.

(4) See note 3 to the consolidated condensed financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

(5) The Company's interests in Teleport-TP and MTR-Sviaz are held through its
wholly owned subsidiary Technocom Limited.

(6) In August 1998, the Communications Group acquired a 76% interest in
Omni-Metromedia Caspian, Ltd., a company that owns 50% of a joint venture in
Azerbaijan, Caspian American. Caspian American has been licensed by the
Ministry of Communications of Azerbaijan to provide high speed wireless
local loop services and digital switching throughout Azerbaijan.
Omni-Metromedia has committed to provide up to $40.5 million in loans to
Caspian American for the funding of equipment acquisition and operational
expenses subject to its concurrence with Caspian American's business plans.
Caspian American Telecommunications launched commercial operations in
April 1999. In May 1999, the Communications Group sold 2.2% of
Omni-Metromedia thereby reducing its ownership interest in Caspian American
Telecommunications to 37%.

During the fourth quarter of 1999, the Company determined that there was a
decline in value of its investment in Caspian American that was other than
temporary and has recorded the decline of $9.9 million as an impairment
charge.

(7) CPY Yellow Pages is the publisher of a yellow pages directory in St.
Petersburg.

(8) Cardlink ZAO is utilizing proprietary wireless technology for the processing
and management of wireless electronic transactions, initially in Moscow.

(9) The Communications Group currently owns 49% of a joint venture in China
licensed to provide e-commerce trading support systems to the Chinese
partner in the joint venture. The partner is a

31
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
domestic trading company pursuing internet-based commerce among Chinese
state-owned enterprises. The Company is currently negotiating to obtain a
98% ownership interest in Huaxia JV upon Chinese government approval of a
revised joint venture contract.

(10) Launched service in June 1999.

(11) The Communications Group is currently negotiating to increase its ownership
interest to 76%.

(12) The Communications Group is currently negotiating to increase its ownership
interest to 65%.

(13) The Communications Group disposed of the operations of News Talk Radio on
July 28, 2000.

(14) Radio Katusha includes two radio stations operating in St. Petersburg,
Russia. AS Trio LSL and Radio Georgia include five radio stations operating
in various cities throughout Estonia and two radio stations operating in
Georgia, respectively.

(15) The Company's ownership interest was sold on June 30, 2000.

(16) Joint venture is currently in liquidation.

(17) Kazpage is comprised of a service entity and 10 paging joint ventures that
provide services in Kazakhstan. The Company's interest in the joint ventures
ranges from 26% to 41% and its interest in the service entity is 51%.

(18) The Company purchased its 50% interest in Mobile Telecom and a related
paging distribution company in June 1998 for $7.5 million plus two potential
earnout payments to be made in 2000 and 2001. The Company has not yet made
any earnout payments, based on the operational results of the ventures.
Approximately $7.0 million of the purchase price was allocated to goodwill.

SNAPPER

Snapper manufactures Snapper-Registered Trademark- brand premium-priced power
lawnmowers, lawn tractors, garden tillers, snowthrowers and related parts and
accessories. The lawnmowers include rear engine riding mowers, front-engine
riding mowers or lawn tractors, and self-propelled and push-type walk-behind
mowers. Snapper also manufactures a line of commercial lawn and turf equipment
under the Snapper brand.

Snapper provides lawn and garden products through distribution channels to
domestic and foreign retail markets.

CERTAIN DISPOSITIONS OF ASSETS AND OTHER COMPANY INFORMATION

On November 1, 1995, as a result of the mergers of Orion Pictures Corporation
and Metromedia International Telecommunications, Inc. with and into wholly-owned
subsidiaries of the Company and of MCEG Sterling Incorporated with and into the
Company, the Company changed its name from "The Actava Group Inc." to
"Metromedia International Group, Inc." As part of the November 1, 1995 merger,
the Company acquired approximately 39% of RDM Sports Group, Inc. On August 29,
1997, RDM and certain of its affiliates filed voluntary bankruptcy petitions
under chapter 11. The Company does not believe it will receive any funds in
respect of its equity interest in RDM.

Certain statements set forth below under this caption constitute
"Forward-Looking Statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended. See "Special Note Regarding Forward-Looking Statements" on page 70.

SEGMENT INFORMATION

The following tables set forth operating results for the three and six months
ended June 30, 2000 and 1999, for the Company's Communications Group and
Snapper.

32
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

SEGMENT INFORMATION
THREE MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)
SEE NOTE 1
<TABLE>
<CAPTION>
COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER
SOVIET UNION
----------------------------------------------------------------------------------
SEGMENT
WIRELESS FIXED CABLE RADIO HEAD-
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING QUARTERS TOTAL
--------- --------- ---------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
COMBINED
Revenues.......................... $21,464 $29,154 $ 9,573 $3,425 $2,651 $ 1,306 $ 67,573
Depreciation and amortization..... 5,687 5,604 3,039 346 248 8,122 23,046
Operating income (loss)........... 4,720 4,816 588 (902) (1,061) (14,256) (6,095)

CONSOLIDATED
Revenues.......................... $ 3,388 $22,143 $ 1,986 $3,121 $ 512 $ 1,306 $ 32,456
Gross profit......................
Depreciation and amortization..... 1,259 4,008 710 299 73 8,122 14,471
Reduction in estimate of asset
impairment charge............... -- -- -- -- -- -- --
Operating income (loss)........... (975) 4,539 52 (731) (245) (14,256) (11,616)

UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $18,076 $ 7,011 $ 7,587 $ 304 $2,139 $ -- $ 35,117
Depreciation and amortization..... 4,428 1,596 2,329 47 175 -- 8,575
Operating income (loss)........... 5,695 277 536 (171) (816) -- 5,521
Net income (loss)................. 3,431 (225) (1,915) (202) (1,028) -- 61
Equity in income (losses) of
unconsolidated investees (note
2).............................. 4,450 (434) (419) (389) (776) -- 2,432
Foreign currency gain............. 519
Minority interest................. (1,613)
Interest expense..................
Interest income...................
Income tax expense................
Net loss..........................

COMMUNICATIONS CORPORATE
GROUP-CHINA SNAPPER HEADQUARTERS CONSOLIDATED
-------------- -------- ------------ ------------
<S> <C> <C> <C> <C>
COMBINED
Revenues..........................
Depreciation and amortization.....
Operating income (loss)...........
CONSOLIDATED
Revenues.......................... $ -- $52,427 $ -- $ 84,883
Gross profit...................... 18,131
Depreciation and amortization..... 50 1,536 18 16,075
Reduction in estimate of asset
impairment charge............... (3,984) -- -- (3,984)
Operating income (loss)........... 2,322 3,363 (1,706) (7,637)
UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $ --
Depreciation and amortization..... 25
Operating income (loss)........... (540)
Net income (loss)................. (538)
Equity in income (losses) of
unconsolidated investees (note
2).............................. (538) -- -- 1,894
Foreign currency gain............. -- -- -- 519
Minority interest................. (202) -- -- (1,815)
Interest expense.................. (8,092)
Interest income................... 632
Income tax expense................ (2,103)
--------
Net loss.......................... $(16,602)
========
</TABLE>

---------------

Note 1: The Company evaluates the performance of its operating segments based on
earnings before interest, taxes, depreciation, and amortization. The above
segment information and the discussion of the Company's operating segments is
based on operating income (loss) which includes depreciation and amortization.
In addition, the Company evaluates the performance of the Communications Group's
operating segment in Eastern Europe and the republics of the former Soviet Union
on a combined basis. The Company is providing as supplemental information an
analysis of combined revenues and operating income (loss) for its consolidated
and unconsolidated joint ventures in Eastern Europe and the republics of the
former Soviet Union. As previously discussed, legal restrictions in China
prohibit foreign participation in the operations or ownership in the
telecommunications sector. The above segment information for the Communications
Group's China joint ventures represents, in part, the investment in network
construction and development of telephony networks for China Unicom. The above
segment information does not reflect the results of operations of China Unicom's
telephony networks. The Company terminated operations of its joint ventures
formerly engaged in cooperation with China Unicom pursuant to a Chinese
government ruling that demanded the termination. These joint ventures executed
settlement contracts with China Unicom on December 3, 1999, the terms of which
include substantial payments to the joint ventures from China Unicom.

Note 2: Equity in income (losses) of unconsolidated investees reflects
elimination of intercompany interest expense.

33
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

SEGMENT INFORMATION
THREE MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER
SOVIET UNION
----------------------------------------------------------------------------------
SEGMENT
WIRELESS FIXED CABLE RADIO HEAD-
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING QUARTERS TOTAL
--------- --------- ---------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
COMBINED
Revenues.......................... $ 8,964 $ 5,470 $ 8,307 $3,400 $3,506 $ 691 $ 30,338
Depreciation and amortization..... 3,639 520 3,343 211 145 1,256 9,114
Operating loss.................... (419) (278) (249) (846) (230) (7,543) (9,565)

CONSOLIDATED
Revenues.......................... $ -- $ -- $ 1,413 $2,916 $ 801 $ 691 $ 5,821
Gross profit......................
Depreciation and amortization..... -- -- 510 148 16 1,256 1,930
Operating income (loss)........... -- -- (120) (789) (146) (7,543) (8,598)

UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $ 8,964 $ 5,470 $ 6,894 $ 484 $2,705 $ -- $ 24,517
Depreciation and amortization..... 3,639 520 2,833 63 129 -- 7,184
Operating income (loss)........... (419) (278) (129) (57) (84) -- (967)
Net loss.......................... (3,448) (1,364) (2,230) (76) (431) -- (7,549)
Equity in income (losses) of
unconsolidated investees (note
2).............................. (1,716) (1,468) (875) (66) (241) -- (4,366)
Foreign currency loss............. (2,286)
Minority interest................. 331
Interest expense..................
Interest income...................
Income tax expense................
Net loss..........................

COMMUNICATIONS CORPORATE
GROUP-CHINA SNAPPER HEADQUARTERS CONSOLIDATED
-------------- -------- ------------ ------------
<S> <C> <C> <C> <C>
COMBINED
Revenues..........................
Depreciation and amortization.....
Operating loss....................
CONSOLIDATED
Revenues.......................... $ -- $59,184 $ -- $ 65,005
Gross profit...................... 20,450
Depreciation and amortization..... 790 1,498 2 4,220
Operating income (loss)........... (3,526) 7,332 (1,576) (6,368)
UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $ 1,515
Depreciation and amortization..... 1,034
Operating income (loss)........... 279
Net loss.......................... (616)
Equity in income (losses) of
unconsolidated investees (note
2).............................. 118 -- -- (4,248)
Foreign currency loss............. -- -- -- (2,286)
Minority interest................. 2,052 -- -- 2,383
Interest expense.................. (3,523)
Interest income................... 2,546
Income tax expense................ (111)
--------
Net loss.......................... $(11,607)
========
</TABLE>

34
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
SEGMENT INFORMATION
SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER
SOVIET UNION
----------------------------------------------------------------------------------
SEGMENT
WIRELESS FIXED CABLE RADIO HEAD-
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING QUARTERS TOTAL
--------- --------- ---------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
COMBINED
Revenues.......................... $41,375 $56,643 $18,959 $8,723 $5,420 $ 1,985 $133,105
Depreciation and amortization..... 11,500 11,004 6,237 677 494 16,426 46,338
Operating income (loss)........... 7,750 5,414 362 (592) (1,292) (26,775) (15,133)
CONSOLIDATED
Revenues.......................... $ 6,882 $42,400 $ 3,516 $7,874 $1,044 $ 1,985 $ 63,701
Gross profit......................
Depreciation and amortization..... 2,557 8,017 1,392 577 145 16,426 29,114
Reduction in estimate of asset
impairment charge............... -- -- -- -- -- -- --
Operating income (loss)........... (1,874) 7,028 (328) (402) (251) (26,775) (22,602)
UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $34,493 $14,243 $15,443 $ 849 $4,376 $ -- $ 69,404
Depreciation and amortization..... 8,943 2,987 4,845 100 349 -- 17,224
Operating income (loss)........... 9,624 (1,614) 690 (190) (1,041) -- 7,469
Net income (loss)................. 4,751 (3,088) (3,825) (254) (1,536) -- (3,952)
Equity in income (losses) of
unconsolidated investees (note
2).............................. 6,999 (1,958) (812) (426) (1,121) -- 2,682
Foreign currency gain............. 41
Minority interest................. (2,251)
Interest expense..................
Interest income...................
Gain on settlement of option......
Income tax expense................
Net loss..........................

COMMUNICATIONS CORPORATE
GROUP-CHINA SNAPPER HEADQUARTERS CONSOLIDATED
-------------- -------- ------------ ------------
<S> <C> <C> <C> <C>
COMBINED
Revenues..........................
Depreciation and amortization.....
Operating income (loss)...........
CONSOLIDATED
Revenues.......................... $ -- $102,530 $ -- $166,231
Gross profit...................... 35,615
Depreciation and amortization..... 102 3,015 35 32,266
Reduction in estimate of asset
impairment charge............... (3,984) -- -- (3,984)
Operating income (loss)........... 417 7,528 (3,057) (17,714)
UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $ --
Depreciation and amortization..... 25
Operating income (loss)........... (540)
Net income (loss)................. (538)
Equity in income (losses) of
unconsolidated investees (note
2).............................. (538) -- -- 2,144
Foreign currency gain............. -- -- -- 41
Minority interest................. 1,255 -- -- (996)
Interest expense.................. (16,020)
Interest income................... 1,523
Gain on settlement of option...... 2,500
Income tax expense................ (4,611)
--------
Net loss.......................... $(33,133)
========
</TABLE>

35
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

SEGMENT INFORMATION
SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER
SOVIET UNION
----------------------------------------------------------------------------------
SEGMENT
WIRELESS FIXED CABLE RADIO HEAD-
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING QUARTERS TOTAL
--------- --------- ---------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
COMBINED
Revenues.......................... $17,920 $11,639 $16,288 $9,292 $8,277 $ 918 $ 64,334
Depreciation and amortization..... 6,555 1,061 6,798 662 611 2,166 17,853
Operating income (loss)........... (873) 757 (1,409) (1,271) (1,107) (14,029) (17,932)

CONSOLIDATED
Revenues.......................... $ -- $ -- $ 2,661 $8,105 $1,745 $ 918 $ 13,429
Gross profit......................
Depreciation and amortization..... -- -- 953 531 307 2,166 3,957
Operating income (loss)........... -- -- (178) (1,253) (1,299) (14,029) (16,759)

UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $17,920 $11,639 $13,627 $1,187 $6,532 $ -- $ 50,905
Depreciation and amortization..... 6,555 1,061 5,845 131 304 -- 13,896
Operating income (loss)........... (873) 757 (1,231) (18) 192 -- (1,173)
Net loss.......................... (5,479) (2,653) (3,967) (88) (200) -- (12,387)
Equity in losses of unconsolidated
investees (note 2).............. (2,244) (2,146) (1,237) (80) (79) -- (5,786)
Foreign currency loss............. (2,794)
Minority interest................. 624
Interest expense..................
Interest income...................
Income tax expense................
Net loss..........................

COMMUNICATIONS CORPORATE
GROUP-CHINA SNAPPER HEADQUARTERS CONSOLIDATED
-------------- -------- ------------ ------------
<S> <C> <C> <C> <C>
COMBINED
Revenues..........................
Depreciation and amortization.....
Operating income (loss)...........
CONSOLIDATED
Revenues.......................... $ -- $119,218 $ -- $132,647
Gross profit...................... 40,543
Depreciation and amortization..... 1,574 3,053 3 8,587
Operating income (loss)........... (7,073) 10,651 (2,933) (16,114)
UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $ 2,527
Depreciation and amortization..... 1,716
Operating income (loss)........... 331
Net loss.......................... (1,776)
Equity in losses of unconsolidated
investees (note 2).............. (147) -- -- (5,933)
Foreign currency loss............. -- -- -- (2,794)
Minority interest................. 4,228 -- -- 4,852
Interest expense.................. (6,929)
Interest income................... 4,246
Income tax expense................ (205)
--------
Net loss.......................... $(22,877)
========
</TABLE>

36
<PAGE>
RESULTS OF OPERATIONS--THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS
ENDED JUNE 30, 1999, AND SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS
ENDED JUNE 30, 1999

LEGEND

C = Consolidated
D = Dissolution
E = Equity method
P = Pre-operational
N/A = Not applicable
N/M = Not meaningful

COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION

Operations in Eastern Europe and the republics of the former Soviet Union
provide the following services: (i) wireless telephony; (ii) fixed telephony;
(iii) cable television; (iv) radio broadcasting; and (v) paging. Certain of the
Communications Group's ventures pay management fees to their shareholders. The
figures presented for the ventures reflect all payments of such fees (i.e.
management fees are included in operating expenses in the same way as other
expenses of the ventures). Certain of the Communications Group's investments
have been written down to zero and, since the Communications Group no longer
funds their operations, the results of these ventures are no longer reported.

WIRELESS TELEPHONY

The following sets forth the names, ownership percentage and accounting
treatment of the Communications Group's wireless telephony ventures as of and
for the three and six months ended June 30, 2000 and 1999:

<TABLE>
<CAPTION>
JUNE 30,
-------------------
VENTURE OWNERSHIP % 2000 1999
------- ----------- -------- --------
<S> <C> <C> <C>
ALTEL* (Almaty, Kazakhstan)................................. 50% C N/A
Baltcom GSM (Latvia)........................................ 22% E E
Magticom (Tbilisi, Georgia)................................. 35% E E
Tyumenruskom (Tyumen, Russia)............................... 46% E P
BELCEL* (Minsk, Belarus).................................... 50% E N/A
</TABLE>

------------------------

* Acquired in connection with the Company's acquisition of PLD Telekom on
September 30, 1999.

37
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

The following table sets forth the revenues and operating loss for consolidated
wireless telephony ventures (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
WIRELESS TELEPHONY--CONSOLIDATED 2000 1999 % CHANGE 2000 1999 % CHANGE
-------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues...................................... $3,388 $ -- N/A $ 6,882 $ -- N/A
Operating loss................................ $ (975) $ -- N/A $(1,874) $ -- N/A
</TABLE>

REVENUES. Wireless telephony consolidated revenues for the six months ended
June 30, 2000 amounted to $6.9 million and were attributable to ALTEL, the
Kazakhstan D-AMPS operator acquired with PLD Telekom Inc. in September 1999.
ALTEL's revenues for the first six months of 1999 amounted to $13.8 million.
ALTEL's first half year 2000 revenues continued to be adversely affected by
competition from two GSM operators who entered the Kazakhstan market in 1999.

Wireless telephony consolidated revenues for the three months ended June 30,
2000 amounted to $3.4 million.

OPERATING LOSS. As a result of the above mentioned competition from the two GSM
operators, ALTEL in March 2000 lowered its tariffs and moved to a one second
billing step from the previous full minute billing step. The resultant reduction
in operating margins together with the reduced revenues led the venture to
report an operating loss of $1.9 million for the six months ended June 30, 2000,
compared to operating income of $2.8 million for the same period in 1999. The
long term effect of ALTEL's change in tariffs and billing steps on revenues is
uncertain. However, continued competition in the remainder of 2000 is likely to
have further adverse effects on the venture's operating results.

Wireless telephony consolidated operating losses for the three months ended
June 30, 2000 amounted to $975,000.

The following table sets forth the revenues, operating income (loss), net income
(loss), equity in income (losses) of the unconsolidated joint ventures, which
are recorded under the equity method (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
WIRELESS TELEPHONY--UNCONSOLIDATED 2000 1999 % CHANGE 2000 1999 % CHANGE
---------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues..................................... $18,076 $ 8,964 102% $34,493 $17,920 92%
Operating income (loss)...................... $ 5,695 $ (419) N/M $ 9,624 $ (873) N/M
Net income (loss)............................ $ 3,431 $(3,448) N/M $ 4,751 $(5,479) N/M
Equity in income (losses) of joint
ventures................................... $ 4,450 $(1,716) N/M $ 6,999 $(2,244) N/M
</TABLE>

EQUITY IN INCOME (LOSSES) OF JOINT VENTURES. The share in income from
investments in wireless telephony ventures for the six months ended June 30,
2000 amounted to $7.0 million, compared to losses of $2.2 million in the six
months ended June 30, 1999. These results were attributable mainly to GSM
wireless operations in Latvia and Georgia.

In Latvia, Baltcom GSM's six months ended June 30, 2000 revenues increased by
58% to $17.4 million from $11.0 million in the six months ended June 30, 1999.
In late 1999 the three month reporting lag for Baltcom GSM was eliminated.
Accordingly, first half year 2000 revenues for the venture represented results
for the six months ended June 30, 2000, whereas first half year 1999 results
represented those of the six months ended March 31, 1999. The increase in the
six months ended June 30, 2000 revenues as compared with the six months ended
June 30, 1999 was due primarily to

38
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
continued subscriber growth and wider service area coverage, as well as the
above mentioned reporting lag elimination. Baltcom GSM's operating profit for
the first six months of 2000 increased to $2.7 million from a loss of $585,000
in the six months ended June 30, 1999.

In Georgia, Magticom's six months ended June 30, 2000 revenues amounted to
$13.3 million, a 93% increase on the six months ended June 30, 1999 revenues of
$6.9 million and due in part to the settlement of a legal claim of $1.8 million
in the venture's favor in early 2000. In addition, revenues increased due to
strong subscriber growth. As a result of the above, Magticom achieved a net
income of $6.9 million in the first six months of 2000, as compared to a net
loss of $2.0 million during the first six months of 1999. Magticom's future
growth could be adversely affected by the recent emergence of competing wireless
networks in Georgia.

Other ventures in this category include BELCEL, which operates an NMT 450
wireless network in Belarus and was acquired with PLD Telekom in
September 1999, and Tyumenruscom, the D-AMPS operator in Tyumen, Russia. These
ventures jointly generated revenues of $3.8 million and net losses of
$1.0 million in the first half year 2000.

The share in income from investments in wireless telephony ventures for the
three months ended June 30, 2000 amounted to $4.5 million, compared to losses of
$1.7 million for the three months ended June 30, 1999. In Latvia, Baltcom GSM
reported operating income of $1.6 million for the three months ended June 30,
2000 compared with operating losses of $356,000 for the three months ended
June 30, 1999. In Georgia, for the three months ended June 30, 2000 Magticom had
operating income of $4.2 million as compared with an operating loss of $63,000
in the corresponding period of 1999. For the three months ended June 30, 2000
operating losses for Tyumenruscom and BELCEL jointly amounted to $73,000.

FIXED TELEPHONY

The following sets forth the names, ownership percentage and accounting
treatment of the Communications Group's fixed telephony ventures as of and for
the three and six months ended June 30, 2000 and 1999:

<TABLE>
<CAPTION>
JUNE 30
-------------------
VENTURE OWNERSHIP % 2000 1999
------- ----------- -------- --------
<S> <C> <C> <C>
Technocom (Moscow, Russia)*................................. 100% C N/A
PeterStar (St. Petersburg, Russia)*......................... 71% C N/A
Baltic Communications (St. Petersburg, Russia)*............. 100% C N/A
Instaphone (Kazakhstan)**................................... 50% E E
MTR Sviaz*.................................................. 49% E N/A
Caspian American Telecommunications (Azerbaijan)............ 38% E P
Telecom Georgia (Tbilisi, Georgia).......................... 30% E E
Spectrum (Kazakhstan)**..................................... 33% E E
</TABLE>

------------------------

* Acquired in connection with the Company's acquisition of PLD Telekom on
September 30, 1999.

** Results not reported.

39
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
The following table sets forth the revenues and operating income (loss) for the
consolidated fixed telephony ventures (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
FIXED TELEPHONY--CONSOLIDATED 2000 1999 % CHANGE 2000 1999 % CHANGE
----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues...................................... $22,143 $ -- N/A $42,400 $ -- N/A
Operating income.............................. $ 4,539 $ -- N/A $ 7,028 $ -- N/A
</TABLE>

REVENUES. Fixed telephony consolidated revenues for the six months ended
June 30, 2000 amounted to $42.4 million and were attributable to subsidiaries
acquired in connection with the Company's acquisition of PLD Telecom on
September 30, 1999. The most significant ventures acquired were PeterStar, which
operates a fully digital, city-wide fiber optic telecommunications network in St
Petersburg, Russia, and Technocom, which through Teleport-TP operates
Moscow-based long distance and international telephony networks using satellite
and fiber optic technology. The Company also acquired Baltic Communications,
which provides international direct dial, payphone and leased line services for
Russian and international businesses in St Petersburg, Russia.

In the first six months of 2000 PeterStar generated revenues of $26.9 million as
compared to $27.7 million in the same period in 1999, with the reduction due
primarily to lower installation revenue in 2000.

In the first six months of 2000, Technocom generated revenues of $11.6 million
compared to $9.0 million in the same period in 1999. The venture continued to
experience higher international and long distance traffic volumes in the six
months ended June 30, 2000 which caused Technocom's revenues to increase
compared to those in 1999. Technocom's traffic levels in the remaining part of
2000 are expected to continue to improve.

Fixed telephony consolidated revenues for the three months ended June 30, 2000
amounted to $22.1 million. PeterStar's revenues for the three months ended
June 30, 2000 amounted to $13.9 million, a slight increase on revenues of
$13.8 million generated in the same period in 1999. Technocom's revenues
increased from $4.7 million for the three months ended June 30, 1999 to
$6.4 million in the same period in 2000.

OPERATING INCOME. During the six months ended June 30, 2000, fixed telephony
consolidated ventures generated operating income of $7.0 million. PeterStar's
operating income for the six months ended June 30, 2000 amounted to
$9.6 million compared to $8.6 million for the six months ended June 30, 1999.
PeterStar's profitability for the six months ended June 30, 2000 was favorably
affected by reduced overhead expenses. Technocom generated an operating loss of
$508,000 during the first six months of 2000 compared to a loss of $6.2 million
in the corresponding period in 1999. The reduction of Technocom's operating loss
was due to a restructuring of operations in early 1999 resulting in reduced
overhead expense and also to the above mentioned increases in revenue.

Fixed telephony operating profits for the three months ended June 30, 2000
amounted to $4.5 million. PeterStar's operating income for the three months
ended June 30, 2000 increased by $1.1 million from $4.5 million in the same
period of 1999 to $5.6 million for the three months ended June 30, 2000.
Technocom generated for the three months ended June 30, 2000 operating income of
$31,000 as compared with an operating loss of $2.3 million in the corresponding
period of 1999.

40
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
The following table sets forth the revenues, operating income (loss), net loss
and equity in losses of the unconsolidated fixed telephony joint ventures which
are recorded under the equity method (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
FIXED TELEPHONY--UNCONSOLIDATED 2000 1999 % CHANGE 2000 1999 % CHANGE
------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues.................................... $7,011 $ 5,470 28% $14,243 $11,639 22%
Operating income (loss)..................... $ 277 $ (278) N/M $(1,614) $ 757 N/M
Net loss.................................... $ (225) $(1,364) (84)% $(3,088) $(2,653) 16%
Equity in losses of joint ventures.......... $ (434) $(1,468) (70)% $(1,958) $(2,146) (9)%
</TABLE>

EQUITY IN LOSSES OF JOINT VENTURES. The Communications Group's share in losses
from investments in fixed telephony ventures for the six months ended June 30,
2000 decreased to $2.0 million from $2.1 million in the six months ended
June 30 1999. These results were attributable mainly to the operations of
Telecom Georgia and Caspian American Telephone ("CAT").

In the first six months of 2000, Telecom Georgia generated revenues of
$12.4 million compared to revenues of $11.6 million in the first six months of
1999. Telecom Georgia's operating losses for the period amounted to $599,000 as
compared with operating income of $940,000 achieved in the first six months of
1999. The venture's first six months of 2000 operating results were adversely
affected by higher interconnect costs and by local competition.

CAT generated revenues of $973,000 in the first six months of 2000 and reported
operating losses and net losses for the period of $1.2 million and
$1.9 million, respectively. Results for the six months ended June 30, 1999 are
not applicable as the venture was pre-operational at that time. High start up
costs and slow build up of the venture's customer base continued to adversely
affect CAT's results. In late 1999 the Company recorded an impairment charge of
$9.9 million in the value of its investment in this venture. The Communications
Group is reviewing various options to maximize the value of this venture.

The above results also include those of MTR Sviaz which was acquired with PLD
Telekom on September 30, 1999 and operates a Moscow-based telephony network
using fiber optic technology. During the six months ended June 30, 2000 MTR
Sviaz generated revenues of $919,000 and an operating income of $156,000, as
compared to revenues of $730,000 and operating income of $60,000 in the same
period of 1999. The venture's results are expected to improve over the remainder
of 2000 as a result of improved cross-marketing opportunities with Mosenergo,
the Company's 51% partner in MTR Sviaz.

The Communications Group's share in losses from investments in fixed telephony
ventures for the three months ended June 30, 2000 decreased by 70% to $434,000
from $1.5 million during the same period in 1999. Telecom Georgia generated for
the three months ended June 30, 2000 operating income of $549,000 as compared
with an operating loss of $201,000 for the same period of 1999. CAT still in its
first year of operation, reported for the three months ended June 30, 2000
operating losses of $364,000.

41
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
CABLE TELEVISION

The following sets forth the names, ownership percentage and accounting
treatment of the Communications Group's cable television ventures as of and for
the three and six months ended June 30, 2000 and 1999:

<TABLE>
<CAPTION>
JUNE 30
-------------------
VENTURE OWNERSHIP % 2000 1999
------- ----------- -------- --------
<S> <C> <C> <C>
Romsat Cable TV (Bucharest, Romania)........................ 100% C C
Ala TV (Bishkek, Kyrgyzstan)................................ 53% C N/A
Viginta (Vilnius, Lithuania)................................ 55% C C
ATK (Archangelsk, Russia)................................... 81% C C
Kosmos TV (Moscow, Russia).................................. 50% E E
Baltcom TV (Riga, Latvia)................................... 50% E E
Ayety TV (Tbilisi, Georgia)................................. 49% E E
Kamalak TV (Tashkent, Uzbekistan)........................... 50% E E
Sun TV (Chisinau, Moldova).................................. 50% E E
Alma TV (Almaty, Kazakhstan)................................ 50% E E
Cosmos TV (Minsk, Belarus).................................. 50% E E
Teleplus (St. Petersburg, Russia)*.......................... 45% E E
</TABLE>

------------------------

* Results not reported.

The following table sets forth the revenues and operating loss for consolidated
cable television ventures (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
CABLE TELEVISION--CONSOLIDATED 2000 1999 % CHANGE 2000 1999 % CHANGE
------------------------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues..................................... $1,986 $1,413 41% $3,516 $2,661 32%
Operating loss............................... $ 52 $ (120) N/M $ (328) $ (178) 84%
</TABLE>

REVENUES. Cable television operations generated consolidated revenues of
$3.5 million in the first six months of 2000, representing a 32% increase on
first half year 1999 consolidated revenues of $2.7 million. The majority of
consolidated revenues were attributable to Romsat, Viginta, and ATK.

In Romania, Romsat reported revenues of $2.3 million for the six months ended
June 30, 2000 as compared to revenues of $1.9 million in the same period of 1999
due to increased subscriber numbers, and incremental revenues generated by the
Devasat operation which was acquired by Romsat in late 1999.

In Lithuania, Viginta generated revenues of $655,000 in the first six months of
2000, representing an increase of 27% on the six months ended June 30, 1999
revenues of $516,000 and attributable to higher subscriber numbers. ATK, which
recently commenced operations in Arkhangelsk, Russia, reported revenues of
$481,000 for the first six months of 2000, a 77% increase on revenues for the
same period in 1999 when the venture was still in its start up phase.

In the three months ended June 30, 2000 cable television operations generated
consolidated revenues of $2.0 million, being 41% higher than consolidated
revenues generated in the corresponding period of 1999. Romsat generated for the
three months ended June 30, 2000 revenues of $1.3 million, a 37% increase on
revenues of $982,000 reported during the same period in 1999. For the three
months ended

42
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
June 30, 2000, Viginta's revenues amounted to $335,000 compared with the
corresponding period in 1999 revenues of $265,000. ATK had revenues of $251,000
for the three months ended June 30, 2000, a 51% increase compared with the same
period of 1999 revenues of $166,000.

For the remainder of 2000 consolidated revenues arising from cable operations
are expected to continue to grow as a result of improved programming, network
expansion, tariff increases and possible further acquisitions.

OPERATING LOSS. Cable television reported consolidated operating losses for the
first six months of 2000 of $328,000, compared to the six months ended June 30,
1999 operating losses of $178,000. Romsat reported for the six months ended
June 30, 2000 operating income of $238,000 compared to $137,000 for the same
period in 1999, mainly due to the effects of the Devasat business acquired in
late 1999. Viginta's operating loss for the six months ended June 30, 2000
decreased to $179,000 as compared to $384,000 in the corresponding period in
1999, the improvement is due to the above mentioned increase in revenues. ATK
reported six months ended June 30, 2000 operating losses of $197,000, as
compared to six months ended June 30, 1999 operating losses of $116,000.

For the three months ended June 30, 2000, cable television consolidated
operating income amounted to $52,000 as compared with operating losses of
$120,000 for the corresponding period in 1999. Romsat had for the three months
ended June 30, 2000 operating income of $274,000 as compared with an operating
loss of $66,000 for the same period of 1999. Viginta reported an operating loss
of $38,000 for the three months ended June 30, 2000 compared to $235,000 in the
same period of 1999. ATK's operating loss increased from $19,000 for the three
months ended June 30, 1999 to $101,000 in the same period of 2000.

The following table sets forth the revenues, operating income (loss), net loss
and equity in losses of unconsolidated cable television joint ventures, which
are recorded under the equity method (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
CABLE TELEVISION--UNCONSOLIDATED 2000 1999 % CHANGE 2000 1999 % CHANGE
-------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues.................................... $ 7,587 $ 6,894 10% $15,443 $13,627 13%
Operating income (loss)..................... $ 536 $ (129) N/M $ 690 $(1,231) N/M
Net loss.................................... $(1,915) $(2,230) (14)% $(3,825) $(3,967) (4)%
Equity in losses of joint ventures.......... $ (419) $ (875) (52)% $ (812) $(1,237) (34)%
</TABLE>

EQUITY IN LOSSES OF JOINT VENTURES. The Communications Group's share in losses
from equity investments in cable television ventures in the six months ended
June 30, 2000 amounted to $812,000, compared to losses of $1.2 million in the
six months ended June 30, 1999. The operating results for unconsolidated cable
television ventures were mainly attributable to Baltcom TV in Latvia, Kosmos TV
in Moscow and Alma TV in Kazakhstan.

Baltcom TV reported revenues of $3.6 million in the first six months of 2000, a
9% increase on the same period in 1999 revenues of $3.3 million due to increases
in subscriber numbers arising from improved programming. The venture reported
operating income of $522,000 in the first six months of 2000 compared to
$498,000 in the first six months of 1999.

Kosmos TV's revenues increased by $300,000 in the six months ended June 30, 2000
to $3.1 million from $2.8 million in the same period of 1999 due to increased
subscriber numbers. The venture

43
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
generated operating income of $105,000 for the first six months of 2000 as
compared with operating losses of $323,000 for the same period in 1999.

Alma TV's revenues increased from $2.4 million in the six months ended June 30,
1999 to $3.1 million in the six months ended June 30, 2000 due to growth of
subscriber numbers and continued geographic expansion in Kazakhstan. However,
due to increased costs associated with improved programming, the venture
reported a decrease in operating income of $128,000 in the first six months of
2000. Alma TV expects to improve profitability over the remainder of 2000 with
the continued build out of its networks and improved subscriber management.

The Communications Group's share in losses from equity investments in cable
television ventures for the three months ended June 30, 2000 amounted to
$419,000, 52% less than losses of $875,000 recorded in the same period of 1999.
Baltcom TV reported for the three months ended June 30, 2000 operating income of
$227,000, down 21% on the same period in 1999 operating income of $287,000.
Kosmos TV had operating income of $6,000 in the three months ended June 30, 2000
as compared with $158,000 in the corresponding period of 1999. Alma TV's
operating income for the three months ended June 30, 2000 amounted to $28,000,
down slightly from the same period of 1999 operating income of $47,000.

RADIO BROADCASTING

The following sets forth the names, ownership percentage and accounting
treatment of the Communications Group's radio broadcasting ventures as of and
for the three and six months ended June 30, 2000 and 1999:

<TABLE>
<CAPTION>
JUNE 30,
-------------------
VENTURE OWNERSHIP % 2000 1999
------- ----------- -------- --------
<S> <C> <C> <C>
Radio Juventus (Budapest, Hungary).......................... 100% C C
SAC (Moscow, Russia)........................................ 83% C C
Radio Skonto (Riga, Latvia)................................. 55% C C
Radio One (Prague, Czech Republic).......................... 80% C C
NewsTalk Radio (Berlin, Germany)............................ 85% C C
Radio Vladivostok (Vladivostok, Russia)..................... 51% C C
Country Radio (Prague, Czech Republic)...................... 85% C C
Radio Georgia (Tbilisi, Georgia)............................ 51% C C
Radio Katusha (St. Petersburg, Russia)...................... 75% C C
Radio Nika (Socci, Russia).................................. 51% E E
AS Trio LSL (Tallinn, Estonia).............................. 49% E E
</TABLE>

The following table sets forth the revenues and operating loss for consolidated
radio broadcasting ventures (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
RADIO--CONSOLIDATED 2000 1999 % CHANGE 2000 1999 % CHANGE
------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues..................................... $3,121 $2,916 7% $7,874 $ 8,105 (3)%
Operating loss............................... $ (731) $ (789) (7)% $ (402) $(1,253) (68)%
</TABLE>

REVENUES. Radio operations reported consolidated revenues of $7.9 million in
the first six months of 2000, representing a 3% decrease compared with the same
period in 1999 revenues of $8.1 million. The

44
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
majority of revenues were generated by SAC and Radio Katusha in Russia, and
Radio Juventus in Hungary. In Russia, SAC and Radio Katusha's revenues rose from
$2.1 million and $771,000, respectively, in the six months ended June 30, 1999,
when the after effects of the Russian economic crisis in late 1998 were still
having an impact on operations, to $2.4 million and $957,000 respectively in the
same period of 2000. In Hungary, Radio Juventus in the six months ended
June 30, 2000 generated revenues of $3.1 million, down 17% compared with same
period of 1999 revenues of $3.7 million. Radio Juventus' results continue to be
adversely affected by competition from recently launched national Hungarian
radio networks.

Consolidated radio revenues for the three months ended June 30, 2000 amounted to
$3.1 million, 7% greater than revenues of $2.9 million generated in the
corresponding period in 1999. SAC and Radio Katusha in Russia together generated
revenues of $1.5 million for three months ended June 30, 2000, compared with
$1.3 million in the same period of 1999. In Hungary, Radio Juventus reported for
three months ended June 30, 2000 revenues of $1.1 million, down slightly from
1999 revenues of $1.2 million.

OPERATING LOSS. Notwithstanding the reduced revenues noted above, in the six
months ended June 30, 2000, radio operations generated operating losses of
$402,000, down from operating losses of $1.3 million during the same period in
1999. In the six months ended June 30, 2000, profitability was favorably
affected by increased revenues at SAC and Radio Katusha. Together these ventures
generated operating income of $1.1 million compared to $670,000 in the same
period in 1999. In addition, News Talk Radio in Germany reported in the first
six months of 2000 operating losses of $1.7 million, representing a 36% decrease
in its operating losses of $2.7 million for the corresponding period of 1999.
Disposal of the operations of NewsTalk Radio was finalized on July 28, 2000. In
Hungary, Radio Juventus generated operating income of $100,000, a decrease of
$475,000 compared with the first six months of 1999 operating income of $575,000
due to reduced revenues.

The Communications Group's radio businesses generated consolidated operating
losses of $731,000 for the three months ended June 30, 2000, as compared with
losses of $789,000 for the three months ended June 30, 1999. SAC and Radio
Katusha reported operating income of $346,000 and an operating loss of $25,000
for the three months ended June 30, 2000, compared with operating income of
$261,000 and $25,000 respectively, in the corresponding period of 1999. Radio
Juventus had for the three months ended June 30, 2000 operating losses of
$151,000, an increase of $99,000 compared with the corresponding period in 1999.

The following table sets forth the revenues, operating loss, net loss and equity
in losses of the Communications Group's investment in unconsolidated radio joint
ventures, which are recorded under the equity method (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
RADIO--UNCONSOLIDATED 2000 1999 % CHANGE 2000 1999 % CHANGE
--------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues...................................... $ 304 $484 (37)% $ 849 $1,187 (28)%
Operating loss................................ $(171) $(57) 200% $(190) $ (18) 956%
Net loss...................................... $(202) $(76) 166% $(254) $ (88) 189%
Equity in losses of joint ventures............ $(389) $(66) 489% $(426) $ (80) 433%
</TABLE>

EQUITY IN LOSSES OF JOINT VENTURES. The Communications Group's share in losses
from equity investments in radio ventures amounted to $426,000 in the six months
ended June 30, 2000, compared to losses of $80,000 in the six months ended
June 30, 1999. These results were partly attributable to a loss of $205,000 on
the sale of Radio Nika, Russia, in June 2000. In Estonia, Radio Trio generated
revenues of

45
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
$812,000 during the first six months of 2000 compared to $1.1 million during the
same period in 1999. The decrease in revenues was attributable to continued
competition and contraction of the local advertising market. As a result Radio
Trio reported in the six months ended June 30, 2000 operating losses of $180,000
as compared with operating losses of $17,000 in the corresponding 1999 period.

The share in losses for the three months ended June 30, 2000 from equity
investments in radio joint ventures amounted to $389,000, including the above
mentioned loss on the sale of Radio Nika, compared to losses of $66,000 in the
same period of 1999. Radio Trio reported for the three months ended June 30,
2000 operating losses of $164,000 compared with operating losses of $50,000 in
the same period of 1999.

PAGING

OVERVIEW. In 1999 the Communications Group stopped funding most paging
operations and it continues to manage almost all of its paging ventures on a
cash break even basis. The Communications Group will continue to manage its
paging businesses to levels not requiring significant additional funding as it
continues to review options to maximize the value of its paging investments.
Paging ventures generated losses during the six months ended June 30, 2000. For
the remainder of the year it is expected that the paging operations will
continue to generate losses. The Company has adjusted its investment in certain
paging operations which were recorded under the equity method to zero, and
unless it provides future funding, will no longer record its proportionate share
of any future net losses of these ventures.

The following sets forth the names, ownership percentage and accounting
treatment of the Communications Group's paging ventures as of and for the three
and six months ended June 30, 2000 and 1999:

<TABLE>
<CAPTION>
JUNE 30,
-------------------
VENTURE OWNERSHIP % 2000 1999
------- ----------- -------- --------
<S> <C> <C> <C>
Baltcom Paging (Tallinn, Estonia)........................... 85% C C
CNM (Romania)............................................... 54% C C
Paging One Services (Austria)............................... 100% N/A C
Eurodevelopment (Ukraine)................................... 51% C C
Baltcom Plus (Riga, Latvia)*................................ 50% E E
Paging One (Tbilisi, Georgia)*.............................. 45% E E
Raduga Poisk (Nizhny Novgorod, Russia)*..................... 45% E E
PT Page (St. Petersburg, Russia)*........................... 40% E E
Kazpage (Kazakhstan)*....................................... 26-41% E E
Alma Page (Almaty and Ust-Kamenogorsk, Kazakhstan)*......... 50% E E
Paging Ajara (Batumi, Georgia)*............................. 35% E E
Kamalak Paging (Tashkent, Samarkand, Bukhara and Andijan,
Uzbekistan)............................................... 50% E E
Mobile Telecom (Russia)..................................... 50% E E
</TABLE>

------------------------

* Results not reported.

46
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
The following table sets forth the revenues and operating loss for consolidated
paging ventures (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
PAGING--CONSOLIDATED 2000 1999 % CHANGE 2000 1999 % CHANGE
-------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues..................................... $ 512 $ 801 (36)% $1,044 $ 1,745 (40)%
Operating loss............................... $(245) $(146) 68% $ (251) $(1,299) (81)%
</TABLE>

REVENUES. The Communications Group's paging ventures generated consolidated
revenues of $1.0 million in the first six months of 2000, representing a 40%
decrease compared with revenues of $1.7 million for the same period in 1999. The
decrease was due primarily to continued competition from the wireless telephony
market and the disposition of Paging One Services in 1999. A significant portion
of the revenues for the six months ended June 30, 2000 were attributable to
Eurodevelopment in the Ukraine, whose revenues amounted to $463,000 compared
with $339,000 for the same period in 1999 when the venture was in its start up
phase. CNM, Romania, generated revenues of $314,000 for the six months ended
June 30, 2000 compared to $690,000 in the first six months of 1999. The
Communications Group has recently concluded negotiations to dispose of this
venture in the third quarter of 2000. Other consolidated paging revenues were
attributable to Baltcom Estonia, which had revenues of $267,000 in the first six
months of 2000 as compared with $370,000 for the six months ended June 30, 1999.

Consolidated paging revenues for the three months ended June 30, 2000 amounted
to $512,000, representing a 36% decrease compared with paging revenues during
the same period in 1999.

OPERATING LOSS. Consolidated operating losses arising from paging operations
amounted to $251,000 in the six months of 2000, compared to $1.3 million in the
same period in 1999. Operating losses for the six months ended June 30, 1999
were adversely affected by Paging One Services whose operations generated
operating losses of $1.3 million for that period and which was disposed of later
in 1999. CNM's operating losses, including costs connected with the disposition
of the venture, amounted to $267,000 for the six months of 2000 as compared with
income of $171,000 for the corresponding period in 1999.

Consolidated operating losses arising from paging operations for the three
months ended June 30, 2000 amounted to $245,000, 68% higher than the three
months ended June 30, 1999 operating losses of $146,000.

The following table sets forth the revenues, operating income (loss), net loss
and equity in losses of unconsolidated joint ventures, which are recorded under
the equity method (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
PAGING--UNCONSOLIDATED 2000 1999 % CHANGE 2000 1999 % CHANGE
---------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues....................................... $ 2,139 $2,705 (21)% $ 4,376 $6,532 (33)%
Operating income (loss)........................ $ (816) $ (84) 871% $(1,041) $ 192 N/M
Net loss....................................... $(1,028) $ (431) 139% $(1,536) $ (200) 668%
Equity in losses of joint ventures............. $ (776) $ (241) 222% $(1,121) $ (79) 1,319%
</TABLE>

EQUITY IN LOSSES OF JOINT VENTURES. The Communications Group's share of losses
from equity investments in paging ventures for the first six months of 2000
amounted to $1.1 million compared to losses of $79,000 for the same period in
1999 and related primarily to the operations of Mobile Telecom in Moscow.

47
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

Mobile Telecom generated revenues of $3.8 million during the first six months of
2000, a decrease of $1.8 million compared to the same period in 1999. The
venture has experienced strong competition from the wireless telephony sector.
As a result of decreased revenues, the venture reported a net loss of
$1.0 million for the six months ended June 30, 2000 compared to net losses of
$161,000 for the six months ended June 30, 1999.

For the three months ended June 30, 2000, the Company's share of losses from
equity investments in paging ventures amounted to $776,000 compared to losses of
$241,000 for the corresponding period in 1999.

SEGMENT HEADQUARTERS

Segment headquarters operations relate to executive, administrative, logistical
and joint venture support activities. The following table sets forth the
consolidated revenues and operating loss for the segment headquarters (in
thousands):

REVENUES. Increased revenues in the first six months of 2000 compared to the
same period in the prior year reflect continued growth in programming and
management fee revenues from the Communications Group's unconsolidated
businesses

OPERATING LOSS. Operating losses for the first six months of 2000 amounted to
$26.8 million, a 91% increase on 1999 first six months operating losses of
$14.0 million. Increased operating losses were due to increased depreciation and
amortization charges related to goodwill arising from, and telephony licenses
acquired pursuant to, the Company's acquisition of PLD Telekom in
September 1999, of $12.4 million, and to the revision of the amortization life
of goodwill in July 1999 from 25 years to 10 years which increased amortization
from $1.3 million in 1999 to $4.3 million in 2000.

FOREIGN CURRENCY GAIN (LOSS) AND MINORITY INTEREST

The following table sets forth foreign currency gain (loss) and minority
interest for the consolidated operations of the Communications Group--Eastern
Europe and the republics of the former Soviet Union.

Foreign currency gains for the first six months of 2000 amounted to $41,000
compared to losses of $2.8 million in the first six months of 1999 and
represented the remeasurement of the ventures' financial statements, in all
cases using the U.S. dollar as the functional currency. U.S. dollar transactions
are shown at their historical value. Monetary assets and liabilities denominated
in local currencies are translated into U.S. dollars at the prevailing
period-end exchange rate. All other assets and liabilities are translated at
historical exchange rates. Results of operations have been translated

48
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
using the monthly average exchange rates. The foreign currency loss also relates
to the transaction differences resulting from the use of these different rates.
The first six months of 2000 foreign currency gain resulted primarily from the
fluctuation of the U.S. dollar against the local currency in Russia. Large
foreign currency losses in 1999 were incurred in connection with the disposal of
the Communications Group's Austrian paging venture.

Minority interest represents the allocation of income for the three and six
months ended June 30, 2000, principally PeterStar, as compared to losses for the
three and six months ended June 30, 1999 by the Communications Group's majority
owned subsidiaries and joint ventures to its minority ownership interest.

COMMUNICATIONS GROUP--CHINA

The following sets forth the names, ownership percentage and accounting
treatment of the Communications Group's ventures as of and for the three and six
months ended June 30, 2000 and 1999:

<TABLE>
<CAPTION>
JUNE 30,
-------------------
JOINT VENTURE/SUBSIDIARY OWNERSHIP % 2000 1999
------------------------ ----------- -------- --------
<S> <C> <C> <C>
WIRELESS TELEPHONY
Ningbo Ya Mei Telecommunications Co., Ltd. (Ningbo City,
China).................................................... 70% D E
Ningbo Ya Lian Telecommunications Co., Ltd. (Ningbo
Municipality, China)...................................... 70% D E

FIXED TELEPHONY
Sichuan Tai Li Feng Telecommunications Co., Ltd. (Sichuan
Province, China).......................................... 92% D P
Chongqing Tai Le Feng Telecommunications Co., Ltd.
(Chongqing Municipality, China)........................... 92% D P

INTERNET SERVICES--E-COMMERCE
Huaxia Metromedia Information Technology Co., Ltd........... 49% E N/A
</TABLE>

49
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
WIRELESS AND FIXED TELEPHONY JOINT VENTURE INFORMATION

The Company stopped recording the operations of its China telecommunications
joint ventures as of July 1, 1999. The following tables represent summary
financial information for the Company's telecommunications joint ventures and
their related projects in China as of and for the six and three months ended
June 30, 1999, respectively, (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1999
-----------------------------------------------------
NINGBO NINGBO SICHUAN CHONGQING
JV JV II JV JV TOTAL
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Revenues.......................................... $1,008 $504 $ -- $ 3 $ 1,515
Depreciation and amortization..................... $ (613) $ -- $(239) $(182) $(1,034)
Operating income (loss)........................... $ 357 $491 $(341) $(228) $ 279
Net income (loss)................................. $ (151) $417 $(608) $(274) $ (616)
Equity in income (losses) of joint ventures....... $ 303 $344 $(334) $(195) $ 118
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999
-----------------------------------------------------
NINGBO NINGBO SICHUAN CHONGQING
JV JV II JV JV TOTAL
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Revenues......................................... $ 1,996 $504 $ -- $ 27 $ 2,527
Depreciation and amortization.................... $(1,221) $ -- $(255) $(240) $(1,716)
Operating income (loss).......................... $ 650 $476 $(424) $(371) $ 331
Net income (loss)................................ $ (720) $366 $(925) $(497) $(1,776)
Equity in income (losses) of joint ventures...... $ 287 $336 $(427) $(343) $ (147)
</TABLE>

OVERVIEW. The Company held interests in four telecommunications joint ventures
in China, each of which engaged in cooperation contracts with China United
Telecommunications Incorporated ("China Unicom") to finance and support
development of local telecommunications services. All four of these ventures
prematurely terminated operations by order of the Chinese government in 1999.
Concurrent with this termination, the Company reached agreement with China
Unicom and its Chinese partners in the ventures, for the distribution of
approximately $94.7 million (based on the June 30, 2000 exchange rates) in
settlement of all claims under the joint venture agreements and cooperation
contracts. The Company has received $77.5 million of this estimated total
distribution as of June 30, 2000. As of June 30, 2000, the balance of
investments in and advances to these joint ventures, exclusive of $15.2 million
in goodwill, was approximately $1.9 million.

Due to favorable resolution of certain matters in connection with the
liquidation of the joint ventures, as of June 30, 2000 the Company now estimates
it will receive a total distribution from the liquidated joint ventures of
$94.7 million, an increase of $4.6 million over prior estimates.

50
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
goodwill was increased by $4.0 million. The remaining goodwill amount at
June 30, 2000 is $15.2 million.

CHINA INTERNET SERVICES--E-COMMERCE JOINT VENTURE INFORMATION

Huaxia JV commenced trial operation of an e-commerce system with China Product
Firm in late 1999. The Company considered this business activity to be
"pre-operational" since its purpose was to test technical and operational
aspects of Huaxia JV's intended computer services and to support China Product
Firm's initial trial of commercial online trading services. The technical and
operational trials continued successfully through May 2000, but China Product
Firm proved unable to successfully launch its intended online trading service.
All Warehouse proposed in May 2000 to substantially reduce its equity interest
in Huaxia JV and that Huaxia JV be relieved of further contractual obligations
to serve All Warehouse's parent company China Product Firm. Negotiations to
effect a change in the equity structure of Huaxia JV were concluded in
June 2000 and the Company anticipates that it will obtain a 98% ownership
interest in Huaxia JV upon Chinese government approval of a revised joint
venture contract. The Company's only material cost for its increased ownership
position in Huaxia JV will be its increased obligation for future registered
capital contributions. Huaxia JV's business mission remains unchanged, except
that its initial software development and service efforts will no longer be
principally restricted to China Product Firm. Huaxia JV is currently recruiting
other China-based clients for its e-commerce support systems and the Company
expects this joint venture to enter into commercial operations in the fourth
quarter of 2000. For the three months ended June 30, 2000, the Company has
recorded an equity in losses of the operations of $538,000 which represents the
costs for establishing the joint venture and its technical and operational
testing.

Huaxia JV does not have any contractual relationship with China Unicom and is
engaged in business fundamentally different from that of the Communications
Group's earlier joint ventures cooperating with China Unicom. Computer and
software services, such as offered by the Huaxia JV, are subject to regulations
different from those applied to telecom operations in China. The Communications
Group believes that the Company's equity interest in Huaxia JV does not
constitute foreign equity investment in telecommunications operations or any
other line of business restricted under current Chinese regulations.
Furthermore, the Company believes that the Chinese regulatory policy situation
and prospects facing Huaxia JV are fundamentally different from the regulatory
policy situation and prospects faced by the Communications Group's earlier joint
telecommunications projects with China Unicom.

In May 2000, the Company made an offer to purchase Twin Poplars LLC for
$300,000. Twin Poplars owns a 90% ownership interest in and controls two
sino-foreign joint ventures licensed in China to engage in information content
provision for print publishers and the internet and internet-based online sales.
As of June 30, 2000 the Company had loaned $150,000 to Twin Poplars against a
security interest in Twin Poplars China JVs. On July 24, 2000 the Company
completed the acquisition of an 80% interest in Twin Poplars and obtained
options to acquire the remaining 20%. The acquisition gives the Company 72%
ownership in and control over two sino-foreign joint ventures. The Twin Poplars
joint ventures provide content and services to Chinese publishers and have
completed development of a companion website for internet content provision and
online product sales. Both joint ventures are currently operational.

The Company is currently evaluating other investment opportunities in China's
information industry sector. The Company's majority-owned subsidiary, Metromedia
China Corporation, is actively

51
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
negotiating e-commerce and internet ventures similar to the Huaxia JV and Twin
Poplars joint ventures.

The following table sets forth operating loss, equity in losses of joint
ventures and minority interests for the Communications Group's various
telephony-related ventures in China (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
2000 1999 % CHANGE 2000 1999 % CHANGE
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss)....................... $2,322 $(3,526) N/M $ 417 $(7,073) N/M
Equity in income (losses) of joint ventures... $ (538) $ 118 N/M $ (538) $ (147) 266 %
Minority interests............................ $ (202) $ 2,052 N/M $1,255 $ 4,228 (70)%
</TABLE>

OPERATING LOSS, INCLUDING CHANGE IN ESTIMATE OF ASSET IMPAIRMENT CHARGE. For
the three and six months ended June 30, 2000, operating income was $2.3 million
and $417,000, respectively. In the comparable periods in the prior years, the
Company recorded operating losses of $3.5 million and $7.1 million,
respectively. The principal reason for operating income in the current year is
the Company's revised estimate of an increase in the expected proceeds of
$4.6 million in connection with the dissolution of its telecommunications joint
venture. Operating expenses for the three and six months ended June 30, 2000
were $1.9 million and $3.5 million, respectively, as compared to $2.8 million
and $5.5 million, respectively, for the three and six months ended June 30,
1999. With the dissolution of its telecommunications joint ventures, the Company
has substantially reduced its overhead expenses.

EQUITY IN LOSSES OF JOINT VENTURES. For the three and six months ended
June 30, 2000, the Company has recorded an equity in losses of the operations of
$538,000 which represents the costs for establishing the Huaxia JV and its
technical and operational testing. Equity in losses of the Communications
Group's joint ventures in China for the three and six months ended June 30, 1999
reflect the operations prior to the joint ventures signing the settlement
agreements with China Unicom on December 3, 1999.

MINORITY INTERESTS. For the three and six months ended June 30, 2000 and 1999,
minority interests represents the allocation of income (losses) to Metromedia
China Corporation's minority ownership.

INFLATION AND FOREIGN CURRENCY

During 1998, and continuing in 1999, a number of emerging market economies
suffered significant economic and financial difficulties resulting in liquidity
crises, devaluation of currencies, higher interest rates and reduced
opportunities for financing. In the early part of 2000, there have been
indications that the economic climate may be improving, however, at this time,
the prospects for complete recovery for the economies of Russia and the other
republics of the former Soviet Union and Eastern Europe negatively affected by
the economic crisis remain unclear. The economic crisis of 1998 resulted in a
number of defaults by borrowers in Russia and other countries. Although some
debt was rescheduled in the first part of 2000, a reduced level of financing
remains available to investors in these countries. The devaluation of many of
the currencies in the region in 2000 has not been as marked as in previous years
but the potential still remains for future negative effect on the U.S. dollar
value of the revenues generated by certain of the Communications Group's joint
ventures and may lead to certain additional restrictions on the convertibility
of certain local currencies. The effect of these uncertainties has negatively
impacted the financial performance of certain of the Communications Group's
cable television, telephony, radio broadcasting and paging ventures.

52
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
Some of the Communications Group's subsidiaries and joint ventures operate in
countries where the inflation rate in the past has been high. For example,
inflation in Russia increased dramatically following the August 1998 financial
crisis and there are increased risks of inflation in Kazakhstan. The inflation
rates in Belarus have been at hyperinflationary levels for some years and as a
result, the currency has essentially lost all intrinsic value. Although the rate
of inflation in 2000 has not been as high as in previous years, the risk of
further increases in the future remains possible.

SNAPPER

The following table sets forth Snapper's results of operations for the three and
six months ended June 30, 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
2000 1999 % CHANGE 2000 1999 % CHANGE
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues................................ $52,427 $59,184 (11.4)% $102,530 $119,218 (14.0)%
Gross profit............................ $18,131 $20,450 (11.3)% $ 35,615 $ 40,543 (12.2)%
Operating income........................ $ 3,363 $ 7,332 (54.1)% $ 7,528 $ 10,651 (29.3)%
</TABLE>

REVENUES. Snapper's sales for the three months ended June 30, 2000 were
$52.4 million as compared to $59.2 million for the same period in 1999. Sales of
lawn and garden equipment contributed the majority of the revenues during both
periods. June 30, 2000 sales were lower in all lawn and garden categories due to
drought conditions in the Southeast. Also, in the first quarter of 2000, Snapper
notified a number of its commissioned distributors and commissioned agents
informing them of

53
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
Snapper's decision not to extend their existing contracts, which are set to
expire August 31, 2000. Snapper chose not to renew these contracts in order to
give it direct control over these territories, which may allow it to improve
profit margins in the future. This announcement negatively impacted sales during
the second quarter, and is anticipated to negatively impact sales for the
remainder of 2000.

Snapper's sales for the six months ended June 30, 2000 were $102.5 million as
compared to $119.2 million for the same period in 1999. Drought conditions in
the Southeast and its decision not to renew the commissioned distributor and
agent contracts discussed above and a $5.0 million decrease in snowthrower sales
in 2000 as compared to 1999 accounted for decreased sales year-to-date.

GROSS PROFIT. Gross profit for the three months ended June 30, 2000 was
$18.1 million as compared to $20.4 million for the same period in 1999. The
lower gross profit was due to lower sales noted above.

Gross profit for the six months ended June 30, 2000 was $35.6 million as
compared to $40.5 million for the same period in 1999. The lower gross profit
was due to lower sales noted above.

OPERATING INCOME. Operating income for the three months ended June 30, 2000 was
$3.4 million as compared to $7.3 million for the same period in 1999. The
decrease in operating income was due principally to lower sales as noted above.
In addition, 1999 operating income included the reversal of a legal liability
accrual of $2.4 million as a result of the settlement of certain legal matters.

For the six months ended June 30, 2000 operating income was $7.5 million as
compared to $10.7 million for the same period in 1999. Operating income
decreases were due to lower sales as noted above and, in addition, the effect on
1999 operating income of the settlement of certain legal matters referred to
above.

In connection with Snapper's decision not to extend the existing sales contracts
to certain commissioned distributors and commissioned agents, Snapper has
incurred approximately $645,000 in costs. Snapper anticipates incurring an
additional $2.6 million of costs to complete this program, which should be
completed prior to December 31, 2000.

CORPORATE HEADQUARTERS

The following table sets forth the operating loss for Corporate Headquarters (in
thousands):

OPERATING LOSS. For the three and six months ended June 30, 2000 and 1999,
Corporate Headquarters had general and administrative expenses of approximately
$1.7 million and $3.1 million, and $1.6 million and $2.9 million, respectively.
Corporate headquarters includes general and administrative expenses.

54
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
MMG CONSOLIDATED

The following table sets forth on a consolidated basis the following items for
the three months and six months ended June 30, 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
2000 1999 % CHANGE 2000 1999 % CHANGE
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest expense....................... $ (8,092) $ (3,523) 130 % $(16,020) $ (6,929) 131 %
Interest income........................ $ 632 $ 2,546 (75)% $ 1,523 $ 4,246 (64)%
Gain on settlement of option........... $ -- $ -- N/M $ 2,500 $ -- N/M
Income tax expense..................... $ (2,103) $ (111) N/M $ (4,611) $ (205) N/M
Net loss............................... $(16,602) $(11,607) 43 % $(33,133) $(22,877) 45 %
</TABLE>

INTEREST EXPENSE. Interest expense increased $4.6 million to $8.1 million, and
$9.1 million to $16.0 million, for the three and six months ended June 30, 2000,
respectively, when compared to 1999. The increase in interest was principally
due to the $4.7 million and $9.2 million, respectively, of amortization of debt
discount on the Company's 10 1/2% senior discount notes for the three and six
months ended June 30, 2000.

INTEREST INCOME. Interest income decreased $1.9 million to $632,000 for the
three months ended June 30, 2000 when compared to 1999, principally from the
reduction of funds at Corporate Headquarters which have been utilized in the
operation of the Company.

Interest income decreased $2.7 million to $1.5 million for the six months ended
June 30, 2000, principally from the reduction of funds at Corporate Headquarters
which have been utilized in the operations of the Company.

INCOME TAX EXPENSE. For the three and six months ended June 30, 2000 and 1999,
the income tax benefit that would have resulted from applying the federal
statutory rate of 35% was $5.2 million and $4.0 million, $10.1 million and
$7.9 million, respectively. The income tax benefit in 2000 and 1999 was reduced
principally by losses attributable to foreign operations, equity losses in joint
ventures currently not deductible and a 100% valuation allowance on the current
year loss not utilized. The income tax expense in 2000 is principally from
income taxes on the Company's PeterStar operations. The income tax expense in
1999 reflects foreign taxes in excess of the federal credit.

NET LOSS INCLUDING GAIN ON SETTLEMENT OF OPTION. Net loss increased to
$16.6 million for the three months ended June 30, 2000 from $11.6 million for
the three months ended June 30, 1999. The increase in the net loss is
principally from increased amortization of goodwill and licenses attributable to
the acquisition of PLD Telekom, the change in the estimated useful life from
25 years to 10 years on goodwill attributable to the Communications Group's
operations in Eastern Europe and the republics of the former Soviet Union, the
increase in interest expense of $4.6 million principally from the amortization
of debt discount on the Company's 10 1/2% senior discount notes and increased
income tax expense of $2.0 million partially offset by the improvement in the
Communications Group's operations in Eastern Europe and the republics of the
former Soviet Union and the net gain from the change in estimate on the asset
impairment of the Communications Group's operations in China.

Net loss increased to $33.1 million for the six months ended June 30, 2000 from
$22.9 million for the six months ended June 30, 1999. The increase in the net
loss is principally from increased amortization of goodwill and licenses
attributable to the acquisition of PLD Telekom, the change in the estimated
useful life from 25 years to 10 years on goodwill attributable to the
Communications Group's

55
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
operations in Eastern Europe and the republics of the former Soviet Union, the
increase in interest expense of $9.2 million principally from the amortization
of debt discount on the Company's 10 1/2% senior discount notes and increased
income tax expense of $4.4 million. The increase in the current period was
partially offset by the improvement in the Communications Group's operations in
Eastern Europe and the republics of the former Soviet Union, the net gain from
the change in estimate in the asset impairment of the Communications Group's
operation in China of $4.0 million and a gain of $2.5 million which represents
the gain realized on the buyout of options to acquire an indirect interest in
Telecominvest, a holding company with various telecommunications interests in
northwest Russia.

LIQUIDITY AND CAPITAL RESOURCES

THE COMPANY

OVERVIEW. The Company is a holding company and, accordingly, does not generate
cash flows from operations. The Company believes that its cash on hand and the
receipt of funds from Metromedia China will be sufficient to fund the Company's
working capital requirements for the near-term.

Management believes that its long-term liquidity needs (including debt service)
will be satisfied through a combination of the Company's successful
implementation and execution of its growth strategy to become a global
communications and media company and the Communications Group's joint ventures
and subsidiaries achieving positive operating results and cash flows through
revenue and subscriber growth and control of operating expenses.

56
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
The Company expects to generate consolidated net losses for the foreseeable
future as the Communications Group continues to build out and market its
services.

CONVERTIBLE PREFERRED STOCK. On September 16, 1997 the Company completed a
public offering of 4,140,000 shares of $1.00 par value, 7 1/4% cumulative
convertible preferred stock with a liquidation preference of $50.00 per share,
generating net proceeds of approximately $199.4 million. Dividends on the
preferred stock are cumulative from the date of issuance and payable quarterly,
in arrears, commencing on December 15, 1997. The Company may make any payments
due on the preferred stock, including dividend payments and redemptions (i) in
cash; (ii) through issuance of the Company's common stock or (iii) through a
combination thereof. If the Company were to elect to continue to pay the
dividend in cash, the annual cash requirement would be $15.0 million. Since its
initial dividend payment on December 15, 1997 through June 15, 2000, the Company
has paid its quarterly dividends on the preferred stock in cash. The preferred
stock is convertible at the option of the holder at any time, unless previously
redeemed, into the Company's common stock, at a conversion price of $15.00 per
share equivalent to a conversion rate of 3 1/3 shares of common stock for each
share of preferred stock, subject to adjustment under certain conditions.

The preferred stock is redeemable at any time on or after September 15, 2000, in
whole or in part, at the option of the Company, initially at a price of $52.5375
and thereafter at prices declining to $50.00 per share on or after
September 15, 2007, plus in each case all accrued and unpaid dividends to the
redemption date. Upon any change of control, as defined in the certificate of
designation of the preferred stock, each holder of preferred stock shall, in the
event that the market value at such time is less than the conversion price of
$15.00, have a one-time option to convert the preferred stock into the Company's
common stock at a conversion price equal to the greater of (i) the market value,
as of the change of control date, as defined in the certificate of designation,
and (ii) $8.00. In lieu of issuing shares of the Company's common stock, the
Company may, at its option, make a cash payment equal to the market value of the
Company's common stock otherwise issuable.

SENIOR DISCOUNT NOTES. In connection with the acquisition of PLD Telekom, the
Company issued $210.6 million in aggregate principal amount at maturity of its
10 1/2% Senior Discount Notes due 2007 (the "Senior Discount Notes") to the
holders of PLD Telekom's then outstanding 14% senior discount notes due 2004 and
9% convertible subordinated notes due 2006 pursuant to an agreement to exchange
and consent, dated as of May 18, 1999, by and among the Company, PLD Telekom and
such holders. The terms of the Senior Discount Notes are set forth in an
Indenture, dated as of September 30, 1999, between the Company and U.S. Bank
Trust National Association, as Trustee. The Senior Discount Notes will mature on
September 30, 2007. The Senior Discount Notes were issued at a discount to their
aggregate principal amount at maturity and will accrete in value until
March 30, 2002 at the rate of 10 1/2% per year, compounded semi-annually to an
aggregate principal amount at maturity of $210.6 million. The Senior Discount
Notes will not accrue cash interest before March 30, 2002. After this date, the
Senior Discount Notes will pay interest at the rate of 10 1/2% per year, payable
semi-annually in cash and in arrears to the holders of record on March 15 or
September 15 immediately preceding the interest payment date on March 30 and
September 30 of each year, commencing September 30, 2002. The interest on the
Senior Discount Notes will be computed on the basis of a 360-day year comprised
of twelve months.

57
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

The Senior Discount Notes are general senior unsecured obligations of the
Company, rank senior in right of payment to all existing and future subordinated
indebtedness of the Company, rank equal in right of payment to all existing and
future senior indebtedness of the Company and will be effectively subordinated
to all existing and future secured indebtedness of the Company to the extent of
the assets securing such indebtedness and to all existing and future
indebtedness of the Company's subsidiaries, whether or not secured.

The Senior Discount Notes will be redeemable at the sole option of the Company
on and after March 30, 2002 only at a redemption price equal to their principal
amount plus accrued and unpaid interest, if any, up to but excluding the date of
redemption.

Upon the occurrence of a change of control of the Company (as such term is
defined in the Indenture), the holders of the Senior Discount Notes will be
entitled to require the Company to repurchase such holders' notes at a purchase
price equal to 101% of the accreted value of the Senior Discount Notes (if such
repurchase is before March 30, 2002) or 101% of the principal amount of such
notes plus accrued and unpaid interest to the date of repurchase (if such
repurchase is after March 30, 2002).

The Indenture for the Senior Discount Notes permits the Company to finance the
development of its communications operations. The Indenture for the Senior
Discount Notes limits the ability of the Company and certain of its subsidiaries
to, among other things, incur additional indebtedness or issue capital stock or
preferred stock, pay dividends on, and repurchase or redeem their capital stock
or subordinated obligations, invest in and sell assets and subsidiary stock,
engage in transactions with affiliates and incur additional liens. The Indenture
for the Senior Discount Notes also limits the ability of the Company to engage
in consolidations, mergers and transfers of substantially all of its assets and
also contains limitations on restrictions on distributions from its
subsidiaries.

TRAVELERS. Also at completion of the Company's acquisition of PLD Telekom, PLD
Telekom paid The Travelers Insurance Company and The Travelers Indemnity Company
(together, "Travelers") approximately $8.7 million of amounts due under the
revolving credit and warrant agreement dated November 26, 1997 between PLD
Telekom and Travelers (the "Old Travelers Agreement"). PLD Telekom and Travelers
also entered into an amended and restated revolving credit note agreement (the
"New Travelers Agreement") pursuant to which PLD Telekom has agreed to repay
Travelers the remaining $4.9 million due under the Old Travelers Agreement on
August 30, 2000 and to pay interest on the outstanding amount at a rate of
10 1/2%. In addition, Travelers received at the closing of the merger 100,000
shares of PLD Telekom common stock (which were converted in the merger into
shares of common stock of the Company at the .6353 exchange ratio) and 10-year
warrants to purchase 700,000 shares of common stock of the Company at an
exercise price to be determined in December 2000 that will be between $10.00 and
$15.00 per share. However, if the amount outstanding under the New Travelers
Agreement has not been fully repaid by August 30, 2000, the exercise price of
the warrants will be reset to $.01 per share. Travelers retained its existing
security interests in certain of PLD Telekom's assets. The performance by PLD
Telekom of its obligations under the New Travelers Agreement is guaranteed by
the Company and certain subsidiaries of PLD Telekom.

COMSTAR. As part of the Communications Group's strategy to further develop its
fixed telephony business, in June 2000 it entered into an agreement with Marconi
Communications Limited of the U.K. to acquire Marconi's 50% ownership position
in Comstar, the third largest digital overlay operator in Moscow. The Company
has agreed to pay $60.0 million for the 50% interest in Comstar. The parties
expect the transaction to close in the fall of 2000. Comstar is a 50/50 joint
venture with the Moscow City

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
Telephone Network ("MGTS"). It has a 756 mile optical fiber network throughout
Moscow City. This network supports local, national and international data and
telephony services and is interconnected into MGTS' public network of
4.5 million customers. Comstar has a well-established platform that facilitates
all types of IP services through a Central Internet Service Node based on
Marconi technology. This platform will enable Comstar to develop VoIP services,
point-to-point data communications, frame relay, ATM and a total package of ISP
services.

The acquisition of the Comstar interest is expected to give the Communications
Group a significant presence in the Moscow market, which remains the most
important in Russia, and complements its position in Russia's second largest
city, St. Petersburg, through its majority owned interests in PeterStar and its
wholly owned interest in Baltic Communications Limited.

TELECOMINVEST. In September and October 1999, PLD Telekom entered into certain
option agreements (subsequently assigned to the Company) with Commerzbank AG and
First National Holding S.A. which owns the majority of the ordinary shares of
OAO Telecominvest, a Russian company with interests in a wide range of
telecommunications companies in St. Petersburg and Northwestern Russia, and
which is PLD Telekom's joint venture partner in its subsidiary PeterStar. The
aggregate consideration for the options was $8.5 million. The options gave the
Company the right to participate in a planned private placement by First
National Holding by acquiring, for nominal value, that number of shares equal to
$8.5 million divided by 80% of the issuance price in the placement or, if the
placement was not completed on or before December 31, 1999 (extended by
amendment to January 31, 2000), to acquire up to 16% of First National Holding
for additional consideration of approximately $8.5 million. In resolution of
disputes regarding the parties' rights under those agreements, on March 30,
2000, First National Holding paid the Company $11.0 million in full settlement
of the Company's and PLD Telekom's rights under the option agreements.

COMMUNICATIONS GROUP--EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION

OVERVIEW. The Communications Group has invested significantly (in cash or
equipment through capital contributions, loans and management assistance and
training) in its joint ventures. The Communications Group has also incurred
significant expenses in identifying, negotiating and pursuing new
telecommunications opportunities in selected emerging markets.

The Communications Group and many of its joint ventures are experiencing
continuing losses and negative operating cash flow since many of the businesses
are in the development and start-up phase of operations. The Communications
Group's primary source of funds has been from the Company in the form of
inter-company loans.

Until the Communications Group's operations generate positive cash flow, the
Communications Group will require significant capital to fund its operations,
and to make capital contributions and loans to its

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
joint ventures. The Communications Group relies on the Company to provide the
financing for these activities. The Company believes that as more of the
Communications Group's joint ventures commence operations and reduce their
dependence on the Communications Group for funding, the Communications Group
will be able to finance its own operations and commitments from its operating
cash flow and will be able to attract its own financing from third parties.
There can be no assurance, however, that additional capital in the form of debt
or equity will be available to the Communications Group at all or on terms and
conditions that are acceptable to the Communications Group or the Company, and
as a result, the Communications Group may continue to depend upon the Company
for its financing needs.

Credit agreements between certain of the joint ventures and the Communications
Group are intended to provide such ventures with sufficient funds for operations
and equipment purchases. The credit agreements generally provide for interest to
accrue at rates ranging from the prime rate to the prime rate plus 6% and for
payment of principal and interest from 90% of the joint venture's available cash
flow, as defined, prior to any distributions of dividends to the Communications
Group or its joint venture partners. The credit agreements also often provide
the Communications Group the right to appoint the general director of the joint
venture and the right to approve the annual business plan of the joint venture.
Advances under the credit agreements are made to the joint ventures in the form
of cash for working capital purposes, as direct payment of expenses or
expenditures, or in the form of equipment, at the cost of the equipment plus
cost of shipping. As of June 30, 2000, the Communications Group was committed to
provide funding under various charter fund agreements and credit lines in an
aggregate amount of approximately $234.0 million, of which $46.4 million
remained unfunded. The Communications Group's funding commitments under a credit
agreement are contingent upon its approval of the joint venture's business plan.
To the extent that the Communications Group does not approve a joint venture's
business plan, the Communications Group is not required to provide funds to the
joint venture under the credit line.

The Communications Group's consolidated and unconsolidated joint ventures'
ability to generate positive operating results is dependent upon their ability
to attract subscribers to their systems, the sale of commercial advertising time
and their ability to control operating expenses.

FORMER PLD BUSINESSES. PLD Telekom's operating businesses have become largely
self-sustaining, and while they continue to have on-going capital requirements
associated with the development of their businesses, they have been able to pay
for capital expenditures and operational expenses out of internally generated
cash flows from operations and/or have been able to arrange their own financing,
including supplier financing. In no case is PLD Telekom specifically obligated
to provide capital to its operating businesses as all past obligations have been
met.

As a result of the acquisition of PLD Telekom by the Company, the majority of
PLD Telekom's commitments at the holding company level have been satisfied or
assumed by the Company, such that the $4.9 million due to Travelers on
August 30, 2000, as described above is the only material obligation to be
satisfied during 2000.

BALTCOM GSM. In June 1997, the Communications Group's Latvian GSM Joint
Venture, Baltcom GSM, entered into certain agreements with the European Bank for
Reconstruction and Development pursuant to which the European Bank for
Reconstruction and Development agreed to lend up to $23.0 million to Baltcom GSM
in order to finance its system buildout and operations. Baltcom GSM's ability to
borrow under these agreements is conditioned upon reaching certain gross revenue
targets. The loan has an interest rate equal to the 3-month London interbank
offered rate or LIBOR plus 4% per annum, with interest payable quarterly. The
principal amount must be repaid in installments

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
starting in March 2002 with final maturity in December 2006. The shareholders of
Baltcom GSM were required to provide $20.0 million to Baltcom GSM as a condition
precedent to European Bank for Reconstruction and Development funding the loan.
In addition, the Communications Group and Western Wireless agreed to provide or
cause one of the shareholders of Baltcom GSM to provide an additional
$7.0 million in funding to Baltcom GSM if requested by European Bank for
Reconstruction and Development which amount has been provided. In August 1998,
the European Bank for Reconstruction and Development and Baltcom GSM amended
their loan agreement in order to provide Baltcom GSM the right to finance the
purchase of up to $3.5 million in additional equipment from Nortel. As part of
such amendment, the Communications Group and Western Wireless agreed to provide
Baltcom GSM the funds needed to repay Nortel, if necessary, and to provide
Baltcom GSM debt service support for the loan agreement with the European Bank
for Reconstruction Development in an amount not to exceed the greater of
$3.5 million or the aggregate of the additional equipment purchased from Nortel
plus interest payable on the financing.

As part of the financing, the European Bank for Reconstruction and Development
was also provided a 5% interest in the joint venture which it can put back to
Baltcom GSM at certain dates in the future at a multiple of Baltcom GSM's
earnings before interest, taxes, depreciation and amortization or EBITDA, not to
exceed $6.0 million. The Company and Western Wireless have guaranteed the
obligation of Baltcom GSM to pay such amount. All of the shareholders of Baltcom
GSM, including Metromedia International Telecommunications, pledged their
respective shares to the European Bank for Reconstruction and Development as
security for repayment of the loan. Under the European Bank for Reconstruction
and Development agreements, amounts payable to the Communications Group are
subordinated to amounts payable to the European Bank for Reconstruction and
Development.

MAGTICOM. In April 1997, the Communications Group's Georgian GSM Joint Venture,
Magticom, entered into a financing agreement with Motorola, Inc. pursuant to
which Motorola agreed to finance 75% of the equipment, software and service it
provides to Magticom up to $15.0 million. Interest on the financed amount
accrues at 6-month London interbank offered rate or LIBOR plus 5% per annum,
with interest payable semi-annually. Repayment of principal with respect to each
drawdown commences twenty-one months after such drawdown with the final payment
being due 60 months after such drawdown. All drawdowns must be made within
3 years of the initial drawdown date. Magticom is obligated to provide Motorola
with a security interest in the equipment provided by Motorola to the extent
permitted by applicable law. As additional security for the financing, the
Company has guaranteed Magticom's repayment obligation to Motorola. In
June 1998, the financing agreement was amended and Motorola agreed to make
available an additional $10.0 million in financing. Interest on the additional
$10.0 million accrues at 6-month LIBOR plus 3.5%. Under such amendment, the
Company guaranteed Magticom's repayment obligation to Motorola.

The Communications Group and Western Wireless have funded the balance of the
financing to Magticom through a combination of debt and equity. Repayment of
indebtedness owed to such partners is subject to certain conditions set forth in
the Motorola financing agreements.

AZERBAIJAN. As of August 1998, the Communications Group acquired a 76% interest
in Omni-Metromedia Caspian, Ltd., a company that owns 50% of a Joint Venture in
Azerbaijan, Caspian American. Caspian American has been licensed by the Ministry
of Communications of Azerbaijan to provide high speed wireless local loop
services and digital switching throughout Azerbaijan. Omni-Metromedia has
committed to provide up to $40.5 million in loans to Caspian American for the
acquisition of equipment and operational expenses subject to its concurrence
with Caspian American's business plans. The Communications Group was obligated
to contribute approximately $5.0 million in

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
equity to Omni-Metromedia and to lend up to $36.5 million subject to its
concurrence with Caspian American's business plan.

As part of the original transaction, the Communications Group sold a 17.1%
participation in the $36.5 million loan commitment to AIG Silk Road Fund, Ltd.,
which requires AIG Silk Road Fund to provide the Communications Group 17.1% of
the funds to be provided under the loan agreement and entitles AIG Silk Road
Fund to 17.1% of the repayments to the Communications Group. The Communications
Group agreed to repurchase such loan participation from AIG Silk Road Fund in
August 2005 on terms and conditions agreed by the parties. In addition, the
Communications Group provided AIG Silk Road Fund the right to put its 15.7%
ownership interest in Omni-Metromedia to the Communications Group starting in
February 2001 for a price equal to seven times the EBITDA of Caspian American
minus debt, as defined, multiplied by AIG Silk Road Fund's percentage ownership
interest.

In May 1999, the Communications Group sold 2.2% of the shares of Omni-Metromedia
to Verbena Servicos e Investimentos, S.A., thereby reducing its ownership
interest in Caspian American from 38% to 37%. In addition, the Communications
Group sold a 2.4% participation in the $36.5 million loan to Verbena Servicos e
Investimentos, which requires Verbena Servicos e Investimentos to provide the
Communications Group 2.4% of the funds to be provided under the loan agreement
and entitles Verbena Servicos e Investimentos to 2.4% of the repayments to the
Communications Group. The Communications Group has agreed to repurchase such
loan participation from Verbena Servicos e Investimentos in August 2005 on terms
and conditions agreed by the parties. In addition, the Communications Group
provided Verbena Servicos e Investimentos the right to put its 2.2% ownership
interest in Omni Metromedia to the Communications Group starting in
February 2001 for a price equal to seven times the EBITDA of Caspian American
minus debt, as defined, multiplied by Verbena Servicos e Investimentos
percentage ownership interest.

In January 1999, Caspian American entered into an equipment purchase agreement
with Innowave Tadiran Telecommunications Wireless Systems, Ltd. to purchase
wireless local loop telecommunications equipment. In connection with such
agreement, the Communications Group provided Innowave Tadiran a payment
guarantee of $2.0 million, which was paid during 1999.

As part of its ongoing strategic review, in late 1999 the Company reevaluated
the operations of Caspian American in order to ascertain the requirement to
account for impairment losses. In view of the limited number of potential
customers in the region in which the business operates and limited potential for
growth, it was determined that an impairment loss of $9.9 million was required
in 1999 relating to the Company's investment in Caspian American. The venture
has developed a revised operating plan to stabilize its operations and minimize
future funding requirements until potential restructuring options have been
fully explored.

TYUMENRUSKOM. As part of its investment in Tyumenruskom announced in
November 1998, the Company agreed to provide a guarantee of payment of
$6.1 million to Ericsson Radio Systems, A.B. for equipment financing provided by
Ericsson to one of the Communication Group's wholly owned subsidiaries and to
its 46% owned joint venture, Tyumenruskom. Tyumenruskom has purchased a digital
advanced mobile phone or DAMPS cellular system from Ericsson in order to provide
fixed and mobile cellular telephone in the regions of Tyumen and Tobolsk,
Russian Federation. The Communications Group has made a $1.7 million equity
contribution to Tyumenruskom and has agreed to lend the joint venture up to
$4.0 million for start-up costs and other operating expenses. Tyumenruskom also
intends to provide wireless local loop telephone services.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
Following a reevaluation of the venture's operations as part of the Company's
ongoing strategic reviews, in 1999, $3.8 million of the Company's investment in
this venture was recorded as an impairment charge in view of its low
profitability and limited potential for improvement.

INTERNET SERVICES

The Communications Group is actively seeking to develop internet services and in
June 2000 the Company's venture in Romania acquired a 70% ownership position in
FX Internet, a leading ISP, web hosting and domain registration service in
Romania. FX Internet provides dial-up, leased line and wireless internet access
services in Romania with 9,100 active subscribers, offering internet
connectivity to customers in four districts, reaching a total population of
approximately five million. The Communications Group paid $2.5 million for its
70% interest in FX Internet, $2.0 million of which was paid to the existing
shareholders and $500,000 of which will be used to expand its network to eight
additional regions before year-end to bring its total serviceable population to
over eight million.

PORTAL DEVELOPMENT

During the quarter ended June 30, 2000, the Communications Group commenced the
roll out of two national language portal websites affiliated with its radio
stations in Estonia and Hungary. Over the next twelve months, the Communications
Group expects to rollout additional national language portal websites in Russia,
Latvia and the Czech Republic, and using the marketing power of its eighteen
radio stations in Eastern Europe and the republics of the former Soviet Union to
create the first transnational network of consumer-oriented entertainment
portals in this part of the world. In addition, the Company is working to
develop a full range of internet service offerings related to all of the
Company's assets in Eastern Europe and the republics of the former Soviet Union.

The portal UunoWeb features all the functionalities of a general portal site
including real time local and international news, search engines, classified and
personal sections, TV and radio schedule information, SMS- short message
service, forums and chat rooms. Users can access real time information about the
song playing on the appropriate MITI radio station, including information on the
artist, engage in voting and polling, and purchase CDs on-line. Users have the
ability to listen to the latest newscast, updated every half hour. This service
will be extended to provide mobile users the ability to access this information
and more, using WAP (wireless access protocol) services.

The portal also contains banner ads and a full database of current advertisers,
including product mini websites and product commercials, offered through
UunoWeb's proprietary software, the rights to which are controlled by the
Communications Group. This proprietary software, the only one of its kind in use
in Eastern Europe, will form the basis of the development and rollout of the
Communications Group's portal network. In addition, UunoWeb has peering
agreements with other sites such as Yahoo, AltaVista and Rolling Stone, enabling
the portal to generate revenues each time these sites are accessed via the
portal.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
CARDLINK

The Communications Group is continuing the development of its Cardlink business,
which utilizes proprietary wireless technology owned by the Communications Group
and is targeted initially at the processing and management of wireless
electronic payment transactions. Cardlink ZAO, in which the Communications Group
has a 84.5% interest, is introducing this technology in Moscow, but it has
potential application in other regions of Russia and Eastern and Central Europe.
Cardlink has entered into agreements with several Russian banks for the
processing of card transactions, and the card processing network commenced
operations in June 2000, processing point of sale transactions for a Russian
Bank.

Although initially targeted as wireless card verification transactions with
banks and credit card issuers, the Cardlink technology can be applied to
developing and implementing other wireless data communication network
infrastructures where conventional telephone networks are either non-existent or
poor in terms of coverage and availability. Cardlink has also recently entered
into an agreement in the United Kingdom to utilize the Cardlink technology in
the recharge of prepaid mobile phones and is exploring the commercial
development of other applications using this technology.

COMMUNICATIONS GROUP--CHINA

During 1997 and 1998, the Company made investments in four telecommunications
joint ventures in China through its majority-owned subsidiary, Asian American
Telecommunications Corporation. All four of these ventures prematurely
terminated operations by order of the Chinese government in late 1999.
Concurrent with this termination, the Company reached agreement with China
Unicom and its Chinese partners in the ventures, for the distribution of
approximately $94.7 million (based on the June 30, 2000 estimates and exchange
rate) in settlement of all claims under the joint venture agreements and
cooperation contracts. The Company has received $77.5 million of this estimated
total distribution as of June 30, 2000. As of June 30, 2000, all Company
advances to the four joint ventures have been repaid plus accrued interest
thereon and the balance of investments in these joint ventures, exclusive of
$15.2 million in goodwill, was approximately $1.9 million. As of June 30, 2000,
Sichuan JV and Chongqing JV have been fully dissolved and all previously agreed
upon distributions were made to the Company in full. Ningbo JV and Ningbo JV II
are expected to complete their formal dissolution proceedings with the Chinese
government prior to September 2000.

Metromedia International Group and Metromedia International
Telecommunications, Inc. have made inter-company loans to Metromedia China under
a credit agreement, and Metromedia China has used the proceeds of these loans to
fund its investments in these joint ventures in China. At June 30, 2000,
Metromedia China owed $22.2 million under this credit agreement (including
accrued interest).

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
In May 1999, Metromedia China's wholly-owned subsidiary, Asian American
Telecommunications, entered into a joint venture agreement with All Warehouse
Commodity Electronic Commerce Information Development Co., Ltd., a Chinese
trading company. This agreement was for the purpose of establishing Huaxia
Metromedia Information Technology Co., Ltd., known as Huaxia JV. The Chinese
government licensed Huaxia JV in July 1999 to develop and provide technical
services for the operation of electronic commerce computer information systems
for China-based corporate clients. Also in May 1999, Huaxia JV entered into a
30-year computer information system and services contract with All Warehouse and
its parent company, China Product Firm, that granted Huaxia JV exclusive rights
to manage all of China Product Firm's electronic trading systems during the
contract period. China Product Firm anticipated launching a commercial online
trading service employing systems provided and operated by Huaxia JV. By
agreement with All Warehouse and its parent, Huaxia JV's principal efforts were
to be initially directed to e-commerce systems for use by China Product Firm and
its affiliates and customers.

The terms under which Huaxia JV is licensed require a total amount to be
invested in the joint venture of $25.0 million, of which $10.0 million must be
in the form of registered capital contributions from its shareholders. At its
formation, Asian American Telecommunications owned a 49% interest in Huaxia JV
and would be obligated to make total registered capital contributions of
$4.9 million over a three-year period. All Warehouse owned a 51% interest,
obligating it to contribute $5.1 million. The remaining investment in Huaxia JV
was to be in the form of up to $15.0 million of loans from Asian American
Telecommunications. As of June 30, 2000, Asian American Telecommunications has
made $980,000 of its scheduled registered capital investment.

Huaxia JV commenced trial operation of an e-commerce system with China Product
Firm Corporation in late 1999. The Company considered this business activity to
be "pre-operational" since its purpose was to test technical and operational
aspects of Huaxia JV's intended computer services and to support China Product
Firm Corporation's initial trial of commercial online trading services. The
technical and operational trials continued successfully through May 2000, but
China Product Firm Corporation proved unable to successfully launch its intended
online trading service. Since launch of this anticipated trading service was the
principal reason for All Warehouse's investment in Huaxia JV, All Warehouse
proposed that its equity interest in Huaxia JV be substantially reduced and that
Huaxia JV be relieved of further contractual obligations to serve All
Warehouse's parent company China Product Firm. Negotiations to effect a change
in equity structure of Huaxia JV were concluded in June and the Company
anticipates that it will obtain a 98% ownership interest in Huaxia JV upon
Chinese government approval of a revised JV contract. The Company's only
material cost for its increased ownership position in Huaxia JV will be its
larger obligation for future registered capital contribution. Huaxia JV's
business mission remains unchanged, except that its initial software development
and service efforts will no longer be principally restricted to China Product
Firm. Huaxia JV is currently recruiting other China-based clients for its
e-commerce support systems and the Company expects this joint venture to enter
into commercial operations in the fourth quarter of 2000.

Huaxia JV does not have any contractual relationship with China Unicom and is
engaged in business fundamentally different from that of the Communications
Group's earlier joint ventures cooperating with China Unicom. Computer and
software services, such as offered by the Huaxia JV, are subject to regulations
different from those applied to telecom operations in China. The Communications
Group believes that the Company's equity interest in Huaxia JV does not
constitute foreign equity investment in telecommunications operations or any
other line of business restricted under current Chinese regulations.
Furthermore, the Company believes that the Chinese regulatory policy situation
and prospects facing Huaxia JV are fundamentally different from the regulatory
policy situation and

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
prospects faced by the Communication Group's earlier joint telecommunications
projects with China Unicom.

In May 2000, the Company made an offer to purchase Twin Poplars LLC. Twin
Poplars owns a 90% ownership interest in and controls two sino-foreign joint
ventures licensed in China to engage in information content provision for print
publishers and the internet and internet-based online sales. As of June 30, 2000
the Company had loaned $150,000 to Twin Poplars against security a interest in
its China joint venture. On July 24, 2000 the Company completed the acquisition
of an 80% interest in Twin Poplars and obtained options to acquire the remaining
20%. The acquisition gives the Company 72% ownership in and control over two
sino-foreign joint ventures. One provides original Chinese and English language
information content to Chinese print publishers. This joint venture currently
has contracts to provide editorial content and certain advertising-related
services to the Chinese publisher of "City Weekend" magazine, an English
language print publication targeted to the Beijing and Shanghai markets. It also
provides content and distribution-related services to the Chinese publishers of
several Chinese-language domestic travel and entertainment guides published in
book format. The other joint venture supports a companion website to the print
publications offering frequently updated content in an online browsing format
accompanied by related online product sales offers. The purchase price,
including advances to Twin Poplars, was $1.3 million.

The Communications Group is currently evaluating other investment opportunities
in China's information industry sector. The Communications Group is actively
negotiating e-commerce and internet ventures similar to the Huaxia JV and Twin
Poplars joint ventures.

SNAPPER

Snapper's liquidity is generated from operations and borrowings. On
November 11, 1998, Snapper entered into a loan and security agreement with the
Lenders named therein and Fleet Capital Corporation, as agent and as the initial
lender, pursuant to which the lenders have agreed to provide Snapper with a
$5.0 million term loan facility and a $55.0 million revolving credit facility,
the proceeds of which were used to refinance Snapper's then outstanding
obligations under its prior revolving credit agreement and will also be used for
working capital purposes. The Snapper loan will mature in November 2003 (subject
to automatic one-year renewals), and is guaranteed by the Company up to
$10.0 million (increasing to $15.0 million on the occurrence of specified
events). Interest on the Snapper loan is payable at Snapper's option at a rate
equal to prime plus up to 0.5% or the London interbank offered rate or LIBOR
plus between 2.5% and 3.25%, in each case depending on Snapper's leverage ratio
under the Snapper loan agreement. The agreements governing the Snapper loan
contain standard representations and warranties, covenants, conditions precedent
and events of default, and provide for the grant of a security interest in
substantially all of Snapper's assets other than real property. At June 30,
2000, Snapper was in compliance with all covenants under the loan and security
agreement.

Snapper signed a $2.5 million term loan on June 1, 2000 with its lenders to fund
additional capital expenditures, over and above the capital expenditures the
Company is allowed to purchase under its Loan and Security Agreement. The loan
will be funded on an as approved basis for up to 12 months after the effective
date, and will be due in 20 consecutive quarterly installments beginning
September 1, 2000, with the interest rate at prime plus .25%.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

On March 24, 2000, Snapper's leased distribution facility in Greenville, Ohio
was substantially damaged by fire. Snapper is adequately insured for the loss,
and anticipates receiving approximately $1.9 million for inventory losses and
expenses incurred related to the fire. The payment from the insurer is expected
to be received in the third quarter of 2000.

Snapper has entered into various long-term manufacturing and purchase agreements
with certain vendors for the purchase of manufactured products and raw
materials. As of June 30, 2000, noncancelable commitments under these agreements
amounted to approximately $9.6 million.

Snapper has an agreement with a financial institution which makes available
floor plan financing to dealers of Snapper products. This agreement provides
financing for inventories and accelerates Snapper's cash flow. Under the terms
of the agreement, a default in payment by a dealer is nonrecourse to Snapper.
However, the third-party financial institution can require Snapper to repurchase
new and unused equipment, if the dealer defaults and the inventory can not be
sold to another dealer. At June 30, 2000, there was approximately $89.5 million
outstanding under this floor plan financing arrangement. The Company has
guaranteed Snapper's payment obligations under this agreement.

The Company believes that Snapper's available cash on hand, the cash flow
generated by operating activities, borrowings from the Snapper loan agreement
and, on an as needed basis, short-term working capital funding from the Company,
will provide sufficient funds for Snapper to meet its obligations and capital
requirements.

RISKS ASSOCIATED WITH THE COMPANY

The ability of the Communications Group and its joint ventures to establish
profitable operations is subject to significant political, economic and social
risks inherent in doing business in emerging markets such as Eastern Europe,
republics of the former Soviet Union and China. These include matters arising
out of government policies, economic conditions, imposition of or changes in
government regulations or policies, imposition of or changes to taxes or other
similar charges by governmental bodies, exchange rate fluctuations and controls,
civil disturbances, deprivation or unenforceability of contractual rights, and
taking of property without fair compensation.

The Communications Group's strategy is to minimize its foreign currency risk. To
the extent possible, in countries that have experienced high rates of inflation,
the Communications Group bills and collects all revenues in U.S. dollars or an
equivalent local currency amount adjusted on a monthly basis for exchange rate
fluctuations. The Communications Group's joint ventures are generally permitted
to maintain U. S. dollar accounts to serve their U.S. dollar obligations,
thereby reducing foreign currency risk. As the Communications Group and its
joint ventures expand their operations and become more dependent on local
currency based transactions, the Communications Group expects that its foreign
currency exposure will increase. The Communications Group does not hedge against
foreign exchange rate risks at the current time and, therefore, could be subject
in the future to any declines in exchange rates between the time a joint venture
receives its funds in local currencies and the time it distributes such funds in
U.S. dollars to the Communications Group.

The Company held interests in four telecommunications joint ventures with China
United Telecommunications Incorporated, a Chinese telecommunications operator
known as China Unicom. Because legal restrictions in China prohibited direct
foreign investment and operating participation in Chinese telephone companies,
these ventures were structured as a "sino-sino-foreign joint venture
cooperation", a structure commonly accepted at the time the ventures were
formed. Subsequently, the

67
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
Chinese government began reconsidering the advisability of continuing these
arrangements, leading ultimately to the directive in 1999 to all participants in
such arrangements, including the Company, that they should be terminated.

The Communications Group's Huaxia JV in China is established as a sino-foreign
equity joint venture between Asian American Telecommunications and All Warehouse
Commodity Electronic Commerce Information Development Co., Ltd. Huaxia JV is
licensed to develop and provide technical services for the operation of
electronic commerce computer information systems for China-based corporate
clients. Huaxia JV does not have any contractual relationship with China Unicom
and is engaged in business fundamentally different from that of the
Communications Group's earlier telecommunications joint ventures cooperating
with China Unicom. Computer and software services, such as offered by the Huaxia
JV, are subject to regulations different from those applied to
telecommunications operations in China. The Communications Group believes that
the Company's equity interest in Huaxia JV does not constitute foreign equity
investment in telecommunications operations or any other line of business
restricted under current Chinese regulations. Furthermore, the Company believes
that the Chinese regulatory policy situation and prospects facing Huaxia JV are
fundamentally different from the regulatory policy situation and prospects faced
by the Communication Group's earlier joint telecommunications projects with
China Unicom.

MMG CONSOLIDATED

SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

CASH FLOWS FROM OPERATING ACTIVITIES

Cash used in operating activities for the six months ended June 30, 2000 was
$6.8 million, a decrease in cash used in operating activities of $2.6 million
from the same period in the prior year.

Losses from operating activities include significant non-cash items such as
depreciation, amortization, equity in income (losses) of investees, gain on
settlement of option, amortization of interest, and income (loss) allocable to
minority interests. Non-cash items increased $23.5 million from $9.9 million to
$33.4 million for the six months ended June 30, 1999 and 2000, respectively. The
increase relates principally to depreciation and amortization expenses. Changes
in operating assets and liabilities, net of the effect of acquisitions,
decreased cash flows for the six months ended June 30, 2000 by $7.0 million and
increased cash flows for the six months ended June 30, 1999 by $3.6 million.

68
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
CASH FLOWS FROM INVESTING ACTIVITIES

Cash provided by investing activities for the six months ended June 30, 2000 was
$49.0 million as compared to cash used in investing activities was
$11.6 million for the six months ended June 30, 1999. The principal sources of
funds in 2000 are cash received of $11.0 million in connection with the
settlement of an option agreement and distributions received from joint ventures
of $51.8 million, primarily related to the liquidation of the telecommunications
joint ventures in China. In 2000, the Company utilized $8.3 million in additions
to property, plant and equipment and $2.7 million of funds for acquisitions. The
principal uses of funds for the six months ended June 30, 1999 were investments
in and advances to joint ventures of $12.7 million, advances to PLD Telekom
under a bridge loan agreement of $3.0 million, acquisitions by the
Communications Group of $1.2 million and additions to property, plant and
equipment of $2.5 million.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash used in financing activities was $16.1 million and $14.7 million, for the
six months ended June 30, 2000 and 1999, respectively. For the six months ended
June 30, 2000 the Company used $7.5 million to pay its preferred stock dividend,
and there were $8.8 million of debt payments. Funds used in financing activities
in 1999 were for the preferred stock dividend of $7.5 million and payments of
Snapper's debt of $7.2 million.

NEW ACCOUNTING DISCLOSURES

ACCOUNTING FOR DERIVATIVES

In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS 133"), was issued.
SFAS 133 established accounting and reporting standards for derivative
instruments and for hedging activities. SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities and measure those
instruments at fair value. The accounting for the gain or loss due to changes in
fair value of the derivative instrument depends on whether the derivative
instrument qualifies as a hedge. In June 2000, SFAS 138 was issued which
addresses a limited number of issues causing implementation difficulties for
numerous entities that have applied SFAS 133. SFAS 133 and SFAS 138 are
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
SFAS 133 can not be applied retroactively to financial statements of prior
periods. Given the complexity of SFAS 133 and SFAS 138 and the continued
uncertainty surrounding certain implementation issues, which has led to a
Derivatives Implementation Group, the Company has not completed its evaluation
of the impact of SFAS 133 and SFAS 138 on its consolidated financial position
and results of operations.

ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION

In March 2000, the Financial Accounting Standards Board ("FASB") issued FASB
No. 44 "Accounting for Certain Transactions involving Stock Compensation" ("FIN
44"), an interpretation of APB Opinion No. 25 "Accounting for Stock Issued to
Employees". FIN 44 is effective July 1, 2000.

Among other issues, FIN 44 clarifies (a) the definition of employee for the
purposes of applying Opinion No. 25, (b) the criteria for determining whether a
plan qualifies as a noncompensatory plan, (c) the accounting consequence of
various modifications to the terms of a previously fixed stock option or award,
and (d) the accounting for an exchange of stock compensation awards in a
business combination.

69
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
The guidance in FIN 44 is generally more stringent than existing practice and
its application to accounting for stock options could generate compensation
expense when none had been recognized prior to its issuance.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, the financial position of the Company is
routinely subjected to a variety of risks. In addition to the market risk
associated with interest rate movements on outstanding debt and currency rate
movements on non-U.S. dollar denominated assets and liabilities, other examples
of risk include collectibility of accounts receivable and significant political,
economic and social risks inherent in doing business in emerging markets such as
Eastern Europe, republics of the former Soviet Union and China.

With the exception of Snapper and prior to the acquisition of PLD Telekom at
September 30, 1999, the Company did not have any significant long term
obligations. Since Snapper's bank debt is a floating rate instrument, its
carrying value approximates its fair value. A 100 basis point increase in the
level of interest rates with all other variables held constant would result in
an increase in interest expense of $19,000. In addition, a 100 basis point
increase in interest rates on Snapper's floor plan financing for dealers would
have resulted in an increase in interest expense of $44,000.

With the exception of certain vendor financing at the operating business level
(approximately $6.8 million in the aggregate), the Company's debt obligations
and those of its operating businesses are fixed rate obligations, and are
therefore not exposed to market risk from changes in interest rates. The Company
does not believe that it is exposed to a material market risk from changes in
interest rates. Furthermore, with the exception of the approximately
$5.9 million in vendor financing which is denominated in Euros, Deutsche Marks
and Dutch Guilders, the Company's long-term debt and that of its operating
businesses are denominated in U.S. dollars. The Company does not believe that
the Communications Group's debt not denominated in U.S. dollars exposes the
Company to a material market risk from changes in foreign exchange rates.

The Company does not hedge against foreign exchange rate risks at the current
time. In the majority of the countries that the Communications Group's joint
ventures operate, there currently do not exist derivative instruments to allow
the Communications Group to hedge foreign currency risk. In addition, at the
current time the majority of the Communications Group's joint ventures are in
the early stages of development and the Company does not expect in the near term
to repatriate significant funds from the Communications Group's joint ventures.
"Item 2--Management's Discussion and Analysis of Financial Conditions and
Results of Operations--Inflation and Foreign Currency" contains additional
information on risks associated with the Company's investments in Eastern
Europe, the republics of the former Soviet Union and China.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q including, without limitation, statements
under "Legal Proceedings" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Certain, but not
necessarily all, of such forward-looking statements can be identified by the use
of forward-looking terminology, such as "believes," "expects," "may," "will,"
"should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involves risks and
uncertainties. Such forward-looking statements involve

70
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS (CONTINUED)
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company, or industry results,
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions, which
will, among other things, affect demand for the Company's products and services;
industry capacity, which tends to increase during strong years of the business
cycle; changes in public taste and industry trends; demographic changes;
competition from other communications companies, which may affect the Company's
ability to enter into or acquire new joint ventures or to generate revenues;
political, social and economic conditions and changes in laws, rules and
regulations or their administration or interpretation, particularly in Eastern
Europe and the republics of the former Soviet Union, China and selected other
emerging markets, which may affect the Company's results of operations; timely
completion of construction projects for new systems for the joint ventures in
which the Company has invested, which may impact the costs of such projects;
developing legal structures in Eastern Europe and the republics of the former
Soviet Union, China and other selected emerging markets, which may affect the
Company's results of operations; cooperation of local partners for the Company's
communications investments in Eastern Europe and the republics of the former
Soviet Union, China and other selected emerging markets, which may affect the
Company's results of operations; exchange rate fluctuations; license renewals
for the Company's communications investments in Eastern Europe and the republics
of the former Soviet Union, China and other selected emerging markets; the loss
of any significant customers; changes in business strategy or development plans;
quality of management; availability of qualified personnel; changes in or the
failure to comply with government regulations; and other factors referenced
herein. Any forward-looking statement speaks only as of the date on which it is
made. New factors emerge from time to time and it is not possible for the
Company to predict which will arise. In addition, the Company cannot assess the
impact of each factor on its business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statement.

71
<PAGE>
PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Updated information on litigation and environmental matters subsequent to
December 31, 1999 is as follows:

FUQUA INDUSTRIES, INC. SHAREHOLDER LITIGATION

IN RE FUQUA INDUSTRIES, INC. SHAREHOLDER LITIGATION, Del. Ch., Consolidated C.A.
No. 11974, plaintiff Virginia Abrams filed a purported class and derivative
action in the Delaware Court of Chancery on February 22, 1991 against Fuqua
Industries, Inc., Intermark, Inc., the then-current directors of Fuqua
Industries and certain past members of the board of directors. The action
challenged certain transactions which were alleged to be part of a plan to
change control of the board of Fuqua Industries from J.B. Fuqua to Intermark and
sought a judgment against defendants in the amount of $15.7 million, other
unspecified money damages, an accounting, declaratory relief and an injunction
prohibiting any business combination between Fuqua Industries and Intermark in
the absence of approval by a majority of Fuqua Industries' disinterested
shareholders. Subsequently, two similar actions, styled BEHRENS V. FUQUA
INDUSTRIES, INC. ET AL., Del. Ch., C.A. No. 11988 and FREBERG V. FUQUA
INDUSTRIES, INC. ET AL., Del. Ch., C.A. No. 11989 were filed with the Court. On
May 1, 1991, the Court ordered all of the foregoing actions consolidated. On
October 7, 1991, all defendants moved to dismiss the complaint. Plaintiffs
thereafter took three depositions during the next three years.

On December 28, 1995, plaintiffs filed a consolidated second amended derivative
and class action complaint, purporting to assert additional facts in support of
their claim regarding an alleged plan, but deleting their prior request for
injunctive relief. On January 31, 1996, all defendants moved to dismiss the
second amended complaint. After the motion was briefed, oral argument was held
on November 6, 1996. On May 13, 1997, the Court issued a decision on defendants'
motion to dismiss, the Court dismissed all of plaintiffs' class claims and
dismissed all of plaintiffs' derivative claims except for the claims that Fuqua
Industries board members (i) entered into an agreement pursuant to which Triton
Group, Inc. (which was subsequently merged into Intermark), was exempted from 8
Del. C. 203 and (ii) undertook a program pursuant to which 4.9 million shares of
Fuqua Industries common stock were repurchased, allegedly both in furtherance of
an entrenchment plan. On January 16, 1998, the Court entered an order
implementing the May 13, 1997 decision. The order also dismissed one of the
defendants from the case with prejudice and dismissed three other defendants
without waiver of any rights plaintiffs might have to reassert the claims if the
opinion were to be vacated or reversed on appeal.

On February 5, 1998, plaintiffs filed a consolidated third amended derivative
complaint and named as defendants Messrs. J.B. Fuqua, Klamon, Sanders, Scott,
Warner and Zellars. The complaint alleged that defendants (i) entered into an
agreement pursuant to which Triton was exempted from 8 Del. C. 203 and
(ii) undertook a program pursuant to which 4.9 million shares of Fuqua
Industries common stock were repurchased, both allegedly in furtherance of an
entrenchment plan. For their relief, plaintiffs seek damages and an accounting
of profits improperly obtained by defendants.

In March 1998, defendants J. B. Fuqua, Klamon, Sanders, Zellars, Scott and
Warner filed their answers denying each of the substantive allegations of
wrongdoing contained in the third amended complaint. The Company also filed its
answer, submitting itself to the jurisdiction of the Court for a proper
resolution of the claims purported to be set forth by the plaintiffs. Discovery
is ongoing.

72
<PAGE>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
ANTHONY NICHOLAS GEORGIOU, ET AL. V. MOBIL EXPLORATION AND PRODUCING
SERVICES, INC., METROMEDIA INTERNATIONAL TELECOMMUNICATIONS, INC., ET AL.

On January 14, 1998, ANTHONY NICHOLAS GEORGIOU, ET AL. V. MOBIL EXPLORATION AND
PRODUCING SERVICES, INC., METROMEDIA INTERNATIONAL TELECOMMUNICATIONS, INC., ET
AL., Civil Action No. H-98-0098, was filed in the United States District Court
for the Southern District of Texas. Plaintiffs claim that Metromedia
International Telecommunications conspired against and tortuously interfered
with plaintiffs' potential contracts involving certain oil exploration and
production contracts in Siberia and telecommunications contracts in the Russian
Federation. Plaintiffs are claiming damages, for which all defendants could be
held jointly and severally liable, of an amount in excess of $395.0 million. On
or about February 27, 1998 Metromedia International Telecommunications filed its
answer denying each of the substantive allegations of wrongdoing contained in
the complaint. The contracts between plaintiff Tiller International Limited and
defendant Mobil Exploration and Producing Services, Inc. which are at issue in
this case contain broad arbitration clauses. In accordance with these
arbitration clauses, Mobil Exploration and Producing Services instituted
arbitration proceeding before the London Court of International Arbitration on
July 31, 1997. On August 27, 1998, Judge David Hittner entered an order staying
and administratively closing the Houston litigation pending final completion of
arbitration proceedings in Great Britain. As such, this matter is presently
inactive. The parties have engaged in some discovery. The Company believes it
has meritorious defenses and is vigorously defending this action.

LEGAL PROCEEDINGS IN CONNECTION WITH RDM

In December 1994, the Company acquired 19,169,000 shares of RDM common stock,
representing approximately 39% of the outstanding shares of RDM common stock as
of the date thereof, in exchange for all of the issued and outstanding capital
stock of four of its wholly owned subsidiaries. At the time of the transaction,
RDM, a New York Stock Exchange listed company, through its operating
subsidiaries, was a leading manufacturer of fitness equipment and toy products
in the United States.

In connection with the transaction pursuant to which the Company acquired the
RDM shares, the Company, RDM and certain officers of RDM entered into a
shareholders agreement, pursuant to which, among other things, the Company
obtained the right to designate four individuals to serve on RDM's Board of
Directors, subject to certain reductions.

In June 1997, RDM entered into a $100.0 million revolving credit facility with a
syndicate of lenders led by Foothill Capital Corporation and used a portion of
the proceeds of such facility to refinance its existing credit facility. In
order to induce Foothill to extend the entire amount of the RDM credit facility,
Metromedia Company, an affiliate of the Company, provided Foothill with a
$15.0 million letter of credit that could be drawn by Foothill (i) upon five
days notice, if RDM defaulted in any payment of principal or interest or
breached any other convenant or agreement in the RDM credit facility and as a
result of such other default the lenders accelerated the amounts outstanding
under the RDM credit facility, subject, in each such case, to customary grace
periods, or (ii) immediately, upon the bankruptcy or insolvency of RDM. In
consideration for the Metromedia Company letter of credit, RDM issued to
Metromedia Company 10-year warrants to acquire 3,000,000 shares of RDM common
stock, exercisable after 90 days from the date of issuance at an exercise price
of $.50 per share. In accordance with the terms of the agreement entered into in
connection with the RDM credit facility, Metromedia Company offered the Company
the opportunity to substitute its letter of credit for the Metromedia Company
letter of credit and to receive the RDM warrants. On July 10, 1997, the
Company's Board of Directors elected to substitute its letter of credit for
Metromedia Company's letter of credit and the RDM warrants were assigned to the
Company.

73
<PAGE>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
On August 22, 1997, RDM announced that it had failed to make the August 15, 1997
interest payment due on its subordinated debentures and that it had no present
ability to make such payment. As a result, on August 22, 1997, Foothill declared
an event of default under the RDM credit facility and accelerated all amounts
outstanding under such facility. On August 29, 1997, RDM and certain of its
affiliates each subsequently filed voluntary petitions for relief under chapter
11 of the Bankruptcy Code. Since the commencement of their respective chapter 11
cases, RDM and its affiliates have discontinued ongoing business operations and
their assets are being liquidated. As of August 22, 1997, the closing price per
share of RDM common stock was $.50 and the quoted market value of the Company's
investment in RDM was approximately $9.6 million. As a result of RDM's financial
difficulties and uncertainties, the New York Stock Exchange halted trading in
the shares of RDM common stock and the Company believes that it will not receive
any compensation for its equity interest.

After the commencement of the chapter 11 cases, Foothill drew the entire amount
of the letter of credit. Consequently, the Company will become subrogated to
Foothill's secured claims against the Company in an amount equal to the drawing
under the letter of credit, following payment in full of Foothill. The Company
intends to vigorously pursue its subrogation claims in the chapter 11 cases.
However, it is uncertain whether the Company will succeed in any such
subrogation claims or if it is successful in asserting any such subrogation
claims, whether RDM's remaining assets will be sufficient to pay them.

On February 18, 1998, the Office of the United States Trustee filed a motion to
appoint a chapter 11 trustee in the United States Bankruptcy Court for the
Northern Division of Georgia. RDM and its affiliates subsequently filed a motion
to convert the chapter 11 cases to cases under chapter 7 of the Bankruptcy Code.
On February 19, 1998, the bankruptcy court granted the United States Trustee's
motion and ordered that a chapter 11 trustee be appointed. The bankruptcy court
also ordered that the chapter 11 cases not convert to cases under chapter 7 of
the Bankruptcy Code. On February 25, 1998, each of the Company's designees on
RDM's board of directors submitted a letter of resignation.

The chapter 11 trustee is in the process of selling all of RDM's assets to
satisfy its obligations to its creditors and the Company believes that its
equity interest will not be entitled to receive any distributions.

On December 30, 1998, the chapter 11 trustee of RDM brought an adversary
proceeding in the bankruptcy of RDM, HAYS, ET AL. V. FONG, ET AL., Adv. Proc.
No. 98-1128, in the United States

74
<PAGE>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
Bankruptcy Court, Northern District of Georgia, alleging that current and former
officers or directors of the Company, while serving as directors of RDM,
breached fiduciary duties allegedly owed to RDM's shareholders and creditors in
connection with the bankruptcy of RDM. On January 25, 1999, the plaintiff filed
a first amended complaint. The official committee of unsecured creditors of RDM
has moved to proceed as co-plaintiff or to intervene in this proceeding, and the
official committee of bondholders of RDM has moved to intervene in or join the
proceeding. Plaintiffs in this adversary proceeding seek the following relief
against current and former officers of the Company who served as directors of
RDM: actual damages in an amount to be proven at trial, reasonable attorney's
fees and expenses, and such other and further relief as the court deems just and
proper. On February 16, 1999, the creditors' committee brought an adversary
proceeding, THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF RDM SPORTS
GROUP, INC. AND RELATED DEBTORS V. METROMEDIA INTERNATIONAL GROUP, INC., Adv.
Proc. No. 99-1023, seeking in the alternative to recharacterize as contributions
to equity a secured claim in the amount of $15 million made by the Company
arising out of the Company's financing of RDM, or to equitably subordinate such
claim made by the Company against RDM and other debtors in the bankruptcy
proceeding. On March 3, 1999, the bondholders' committee brought an adversary
proceeding, THE OFFICIAL COMMITTEE OF BONDHOLDERS OF RDM SPORTS GROUP, INC. V.
METROMEDIA INTERNATIONAL GROUP, INC., Adv. Proc. No. 99-1029, with substantially
the same allegations as the above proceeding. In addition to the equitable and
injunctive relief sought by plaintiffs described above, plaintiffs in these
adversary proceedings seek actual damages in an amount to be proven at trial,
reasonable attorneys' fees, and such other and further relief as the court deems
just and proper. The Company believes it has meritorious defenses and plans to
vigorously defend these actions. Due to the early stage of these proceedings,
the Company cannot evaluate the likelihood of an unfavorable outcome or an
estimate of the likely amount or range of possible loss, if any.

INDEMNIFICATION AGREEMENTS

In accordance with Section 145 of the General Corporation Law of the State of
Delaware, pursuant to the Company's Restated Certificate of Incorporation, the
Company has agreed to indemnify its officers and directors against, among other
things, any and all judgments, fines, penalties, amounts paid in settlements and
expenses paid or incurred by virtue of the fact that such officer or director
was acting in such capacity to the extent not prohibited by law.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Company's 2000 Annual Meeting of Stockholders held on May 17, 2000, the
stockholders of the Company were asked to consider and vote on the following
matters: (i) the election of three members to the Company's Board of Directors
to serve as Class II Directors for three year terms ending in the year 2003;
(ii) the ratification of the appointment of KPMG LLP as the Company's
independent accountants for the year ending December 31, 2000; and (iii) a
proposal submitted by a stockholder of the Company to amend the Company's
certificate of incorporation to allow stockholders of the Company to take action
by written consent and to call special meetings (the "Stockholder Proposal").

At such meeting, a majority of the Company's stockholders voted to approve the
election of James R. S. Hatt, I. Martin Pompadur and Leonard White as Class II
Directors for three year terms ending in the year 2003 and the ratification of
the appointment of KPMG LLP as the Company's independent accountants for the
year ending December 31, 2000. A majority of the stockholders did not approve
the Stockholder Proposal.

75
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (CONTINUED)
The following is a summary of the voting results with respect to each of the
proposals:

<TABLE>
<CAPTION>
PROPOSAL VOTES FOR WITHELD
------------------------------------------------------------ ---------- ---------
<S> <C> <C> <C>
1. The Election of Class II Directors
Name

James R. S. Hatt............................................ 62,038,399 7,545,472
I. Martin Pompadur.......................................... 62,425,739 7,158,132
Leonard White............................................... 62,119,731 7,464,140
</TABLE>

<TABLE>
<CAPTION>
VOTES FOR AGAINST ABSTAIN BROKER NON-VOTES
---------- ---------- -------- -----------------
<S> <C> <C> <C> <C> <C>
2. Ratification of the Appointment of 69,330,799 167,776 85,296 -0-
Independent Accountants............
3. The Stockholder Proposal............. 18,833,782 26,098,709 392,136 24,259,244
</TABLE>

No other matters were submitted to a vote of the Company's stockholders, through
the solicitation of proxies or otherwise, during the second quarter of the year
ending December 31, 2000.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- ------------------------------------------
<S> <C> <C>
11 * Computation of Earnings Per Share
27 * Financial Data Schedule
(b) Reports on Form 8-K
None
</TABLE>

------------------------

* Filed herewith

76
<PAGE>
SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

<TABLE>
<S> <C> <C>
METROMEDIA INTERNATIONAL GROUP, INC.

By: /s/ SILVIA KESSEL
-----------------------------------------
Silvia Kessel
EXECUTIVE VICE PRESIDENT
CHIEF FINANCIAL OFFICER
AND TREASURER

Dated: August 10, 2000
</TABLE>