METROMEDIA INTERNATIONAL GROUP INC, 10-Q, 2000-05-15

METROMEDIA INTERNATIONAL GROUP INC
10-Q, 2000-05-15
MOTION PICTURE & VIDEO TAPE PRODUCTION

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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 MARCH 31, 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 MAY 4, 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....................... 24

Item 3. Quantitative and Qualitative Disclosures about
Market Risk............................................... 60

PART II--OTHER INFORMATION

Item 1. Legal Proceedings................................... 62

Item 6. Exhibits and Reports on Form 8-K.................... 65

Signature................................................. 66
</TABLE>

1
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Revenues:
Communications Group...................................... $ 31,245 $ 7,608
Snapper................................................... 50,103 60,034
-------- --------
81,348 67,642

Cost and expenses:
Cost of sales and operating expenses--Communications
Group................................................... 8,281 655
Cost of sales and operating expenses--Snapper............. 32,619 39,941
Selling, general and administrative....................... 34,334 32,425
Depreciation and amortization............................. 16,191 4,367
-------- --------
Operating loss.............................................. (10,077) (9,746)

Other income (expense):
Interest expense.......................................... (7,928) (3,406)
Interest income........................................... 891 1,700
Equity in income (losses) of unconsolidated investees..... 250 (1,685)
Gain on settlement of option.............................. 2,500 --
Foreign currency loss..................................... (478) (508)
-------- --------
(4,765) (3,899)

Loss before income tax expense and minority interest........ (14,842) (13,645)
Income tax expense.......................................... (2,508) (94)
Minority interest........................................... 819 2,469
-------- --------
Net loss.................................................... (16,531) (11,270)

Cumulative convertible preferred stock dividend
requirement............................................... (3,752) (3,752)
-------- --------
Net loss attributable to common stockholders................ $(20,283) $(15,022)
======== ========
Weighted average number of common shares--Basic............. 93,807 69,123
======== ========
Loss per common share--Basic:
Net loss attributable to common stock shareholders.......... $ (0.22) $ (0.22)
======== ========
</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>
MARCH 31, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents................................. $ 63,235 $ 50,985
Accounts receivable:
Snapper, net............................................ 37,107 26,898
Communications Group, net............................... 20,292 20,682
Other, net.............................................. 238 265
Inventories............................................... 55,420 55,209
Other assets.............................................. 20,371 20,650
----------- -----------
Total current assets.................................. 196,663 174,689
Investments in and advances to Joint Ventures:
Eastern Europe and the republics of the former Soviet
Union................................................... 73,326 78,067
China..................................................... 25,216 40,982
Property, plant and equipment, net of accumulated
depreciation.............................................. 188,163 191,018
Intangible assets, less accumulated amortization............ 267,591 274,025
Other assets................................................ 9,236 18,073
----------- -----------
Total assets.......................................... $ 760,195 $ 776,854
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable.......................................... $ 31,561 $ 38,808
Accrued expenses.......................................... 93,989 85,527
Current portion of long-term debt......................... 7,699 11,383
----------- -----------
Total current liabilities............................. 133,249 135,718
Long-term debt.............................................. 221,435 212,569
Other long-term liabilities................................. 10,947 13,758
----------- -----------
Total liabilities..................................... 365,631 362,045
----------- -----------
Minority interest........................................... 29,055 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 94,024,298 and 93,284,589
shares at March 31, 2000 and December 31, 1999,
respectively............................................ 94,024 93,285
Paid-in surplus........................................... 1,102,722 1,102,308
Accumulated deficit....................................... (1,034,567) (1,014,284)
Accumulated other comprehensive loss...................... (3,670) (3,374)
----------- -----------
Total stockholders' equity............................ 365,509 384,935
----------- -----------
Total liabilities and stockholders' equity............ $ 760,195 $ 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>
THREE MONTHS ENDED MARCH 31,
-----------------------------
2000 1999
------------- -------------
<S> <C> <C>
Operating activities:
Net loss.................................................. $(16,531) $(11,270)

Items not requiring cash outlays:
Equity in (income) losses of unconsolidated investees..... (250) 1,685
Depreciation and amortization............................. 16,191 4,367
Gain on settlement of option.............................. (2,500) --
Minority interest......................................... (819) (2,469)
Other..................................................... 4,488 --

Changes in:
Accounts receivable....................................... (9,792) 33
Inventories............................................... (211) 1,600
Other assets and liabilities.............................. (2,297) (1,626)
Accounts payable and accrued expenses..................... 1,095 (1,177)
Other operating activities, net........................... (440) 435
-------- --------
Cash used in operating activities..................... (11,066) (8,422)
-------- --------

Investing activities:
Investments in and advances to Joint Ventures............. -- (5,065)
Distributions from Joint Ventures......................... 21,210 2,719
Cash paid for acquisitions and additional equity in
subsidiaries............................................ (2,437) (455)
Additions to property, plant and equipment................ (4,759) (1,560)
Cash received on settlement of option..................... 11,000 --
-------- --------
Cash provided by (used in) investing activities....... 25,014 (4,361)
-------- --------

Financing activities:
Proceeds from issuance of long-term debt.................. 5,598 8,149
Payments on notes and subordinated debt................... (4,697) (5,421)
Proceeds from issuance of common stock related to
incentive plans......................................... 1,153 27
Preferred stock dividends paid............................ (3,752) (3,752)
-------- --------
Cash used in financing activities..................... (1,698) (997)
-------- --------
Net increase (decrease) in cash and cash equivalents...... 12,250 (13,780)
Cash and cash equivalents at beginning of period.......... 50,985 137,625
-------- --------
Cash and cash equivalents at end of period................ $ 63,235 $123,845
======== ========
</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..................... -- -- -- -- -- (11,270) --
Other comprehensive income,
net of tax:
Foreign currency
translation
adjustments.............. -- -- -- -- -- -- (433)
Total comprehensive loss.....
Issuance of stock related to
incentive plans............ -- -- 5,000 5 22 -- --
Dividends on 7 1/4%
cumulative convertible
preferred stock............ -- -- -- -- -- (3,752) --
--------- -------- ---------- ------- ---------- ----------- -------
Balances, March 31, 1999..... 4,140,000 $207,000 69,123,841 $69,124 $1,012,816 $ (872,315) $(6,513)
========= ======== ========== ======= ========== =========== =======

Balances, December 31,
1999....................... 4,140,000 $207,000 93,284,589 $93,285 $1,102,308 $(1,014,284) $(3,374)
Net loss..................... -- -- -- -- -- (16,531) --
Other comprehensive income,
net of tax:
Foreign currency
translation
adjustments.............. -- -- -- -- -- -- (296)
Total comprehensive loss.....
Issuance of stock related to
incentive plans............ -- -- 739,709 739 414 -- --
Dividends on 7 1/4%
cumulative convertible
preferred stock............ -- -- -- -- -- (3,752) --
--------- -------- ---------- ------- ---------- ----------- -------
Balances, March 31, 2000..... 4,140,000 $207,000 94,024,298 $94,024 $1,102,722 $(1,034,567) $(3,670)
========= ======== ========== ======= ========== =========== =======

TOTAL
COMPREHENSIVE
LOSS
-------------
<S> <C>
Balances, December 31,
1998....................... $ --
Net loss..................... (11,270)
Other comprehensive income,
net of tax:
Foreign currency
translation
adjustments.............. (433)
--------
Total comprehensive loss..... $(11,703)
========
Issuance of stock related to
incentive plans............
Dividends on 7 1/4%
cumulative convertible
preferred stock............
Balances, March 31, 1999.....
Balances, December 31,
1999....................... $ --
Net loss..................... (16,531)
Other comprehensive income,
net of tax:
Foreign currency
translation
adjustments.............. (296)
--------
Total comprehensive loss..... $(16,827)
========
Issuance of stock related to
incentive plans............
Dividends on 7 1/4%
cumulative convertible
preferred stock............
Balances, March 31, 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 together 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 March 31 include the
financial results for those joint ventures for the three months ending
December 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).

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 March 31, 2000, and the results of its
operations and its cash flows for the three-month periods ended March 31, 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

MMG is a holding company and, accordingly, does not generate cash flows from
operations. In connection with the acquisition of PLD Telekom, the Company
issued 10 1/2% senior discount notes. The Communications Group is dependent on
MMG for significant capital infusions to fund its operations, its commitments to
make capital contributions and loans to its joint ventures and subsidiaries, and
any acquisitions. Such funding requirements are based on the anticipated funding
needs of its joint ventures and subsidiaries and certain acquisitions by the
Company. The ability to meet the future capital requirements of the
Communications Group, including future acquisitions, will depend on available
funding from the Company, or alternative sources of financing, and on the
ability of the Communications Group's joint ventures and subsidiaries to
generate positive cash flows. In addition, Snapper is restricted under covenants
contained in its credit agreement from making dividend payments or advances to
MMG. In the near-term, the Company intends to satisfy its working capital
requirements and capital commitments with available cash on hand and other
alternative sources of

6
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

1. BASIS OF PRESENTATION AND LIQUIDITY (CONTINUED)
funds, including receipt of funds from Metromedia China. However, the
Communications Group's businesses are capital intensive and require the
investment of significant amounts of capital in order to construct and develop
operational systems and market services. In addition, the Company will be
required to pay interest on the 10 1/2% senior discount notes commencing
September 30, 2002. As a result, the Company will likely require additional
financing in order to satisfy its on-going working capital, debt service,
acquisition and expansion requirements and to achieve its long-term business
strategies. 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 companies of the
Communications Group. The indenture for the senior notes described below permits
the Company to finance the development of its communications operations. No
assurance can be given that 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 from 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 the 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 $47.7 million in funding
obligations remain at March 31, 2000. The Communications Group's funding
commitments are contingent on its approval of the joint ventures' and
subsidiaries' business plans.

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,

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)
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 pre-operational
businesses) in its portfolio did not meet certain of its objectives of its
strategic review, such as the 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.

The following table displays a rollforward of the activity and balances of the
restructuring reserve account through March 31, 2000 (in thousands):

<TABLE>
<CAPTION>
RESTRUCTURING DECEMBER 31, MARCH 31,
TYPE OF COST COST PAYMENTS 1999 PAYMENTS 2000
- ------------ ------------- -------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
Employee separations.................... $6,175 $303 $5,872 $(3,519) $2,353
Facility closings....................... 1,456 -- 1,456 (315) 1,141
------ ---- ------ ------- ------
7,631 $303 $7,328 $(3,834) $3,494
==== ====== ======= ======
Write off of fixed assets............... 800
------
$8,431
======
</TABLE>

Such amount is included in accrued expenses in the accompanying balance sheet at
March 31, 2000 and December 31, 1999.

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)
EQUITY METHOD INVESTMENT INFORMATION

At March 31, 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).................... $ 8,110 $ 8,348 22% 1997
Magticom, Georgia.......................... 14,458 11,110 35% 1997
Tyumenruskom, Russia (3)................... 397 575 46% 1999
BELCEL, Belarus............................ 951 1,088 50% 1999
------- -------
23,916 21,121
------- -------
FIXED TELEPHONY
Instaphone, Kazakhstan..................... 37 (68) 50% 1998
Caspian American Telecom, Azerbaijan
(3)(4)................................... 2,454 3,206 37% 1999
MTR-Sviaz, Russia.......................... 5,685 5,620 49% 1999
Telecom Georgia, Georgia................... 3,557 4,018 30% 1994
------- -------
11,733 12,776
------- -------
CABLE TELEVISION
Kosmos TV, Moscow, Russia.................. 1,092 1,547 50% 1992
Baltcom TV, Riga, Latvia................... 5,119 5,285 50% 1992
Ayety TV, Tbilisi, Georgia................. 1,933 2,194 49% 1993
Kamalak TV, Tashkent, Uzbekistan........... 3,366 3,329 50% 1993
Sun TV, Chisinau, Moldova.................. 3,493 3,941 50% 1994
Cosmos TV, Minsk, Belarus.................. 2,604 2,783 50% 1996
Alma TV, Almaty, Kazakhstan................ 7,372 7,549 50% 1995
Teleplus, St. Petersburg, Russia (3)....... (48) -- 45% 1998
------- -------
24,931 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 (3)... 1,654 1,884 50% 1993
Mobile Telecom, Russia (5)................. 6,597 6,711 50% 1998
------- -------
8,251 8,595
------- -------
</TABLE>

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)

<TABLE>
<CAPTION>
YEAR
OPERATIONS
NAME 2000 1999 OWNERSHIP % COMMENCED (1)
- ---- ------- ------- ----------- -------------
<S> <C> <C> <C> <C>
RADIO BROADCASTING
Radio Nika, Socci, Russia.................. 284 287 51% 1995
AS Trio LSL, Estonia....................... 1,438 1,514 49% 1997
------- -------
1,722 1,801
------- -------
PRE-OPERATIONAL (6)
Telephony related ventures and equipment... 974 954
Other...................................... 1,799 6,192
------- -------
2,773 7,146
------- -------
Total...................................... $73,326 $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, reported results are for the three months
ended March 31, 2000 and December 31, 1998.

(3) Investment balance reflects write down of investment.

(4) In April 1999, Caspian American Telecom became operational; however, its
operational results are reported on a three-month lag. In May 1999, the
Communications Group sold 2.2% of its shares of Omni-Metromedia, thereby
reducing its ownership interest in Caspian American Telecom to 37%.

(5) The Company's purchase of Mobile Telecom closed during June 1998. The
Company purchased its 50% interest in Mobile Telecom for $7.0 million plus
two potential earnout payments to be made in 2000 and 2001. Each of the two
earnout payments was to be equal to $2.5 million, adjusted up or down based
upon performance in 1999 and 2000, respectively, as compared to certain
financial targets. The Company did not make a payment with respect to 1999.
Simultaneously with the purchase of Mobile Telecom, the Company purchased
50% of a related pager distribution company for $500,000. Approximately
$7.0 million of the purchase price was allocated to goodwill.

(6) At March 31, 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.

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)
Summarized combined balance sheet financial information of unconsolidated joint
ventures as of March 31, 2000 and December 31, 1999, and combined statement of
operations financial information for the three months ended March 31, 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>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
Assets:
Current assets.................................. $ 32,902 $ 37,611
Investments in systems and equipment............ 135,090 131,592
Other assets.................................... 5,193 5,642
-------- --------
Total assets.................................. $173,185 $174,845
======== ========
Liabilities and Joint Ventures' Deficit:
Current liabilities............................. $ 47,876 $ 46,160
Amount payable under credit facility............ 130,234 98,540
Other long-term liabilities..................... 47,247 79,053
-------- --------
225,357 223,753

Joint ventures' deficit......................... (52,172) (48,908)
-------- --------
Total liabilities and joint ventures'
deficit..................................... $173,185 $174,845
======== ========
</TABLE>

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 31, MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
Revenues........................................... $34,287 $26,388
Costs and Expenses:
Cost of sales and operating expenses............. 7,892 5,944
Selling, general and administrative.............. 15,798 13,938
Depreciation and amortization.................... 8,649 6,712
------- -------
Total expenses................................. 32,339 26,594
------- -------
Operating income (loss)............................ 1,948 (206)
Interest expense................................... (4,197) (3,655)
Other loss......................................... (1,009) (11)
Foreign currency transactions...................... (755) (966)
------- -------
Net loss........................................... $(4,013) $(4,838)
======= =======
</TABLE>

For the three months ended March 31, 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.

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)
The following tables represent summary financial information for the Company's
operating unconsolidated joint ventures being grouped as indicated as of and for
the three months ended March 31, 2000 and 1999. For the three months ended
March 31, 2000 and 1999 the results of operations presented below are before the
elimination of intercompany interest (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000
-----------------------------------------------------------------------
WIRELESS FIXED CABLE RADIO
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING TOTAL
--------- --------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues.................................. $16,417 $ 7,232 $ 7,856 $ 545 $2,237 $ 34,287
Depreciation and amortization............. 4,515 1,391 2,516 53 174 8,649
Operating income (loss)................... 3,929 (1,891) 154 (19) (225) 1,948
Interest income........................... -- -- 3 -- -- 3
Interest expense.......................... 2,146 524 1,462 13 52 4,197
Net income (loss)......................... 1,320 (2,863) (1,910) (52) (508) (4,013)
Assets.................................... 99,215 37,001 32,352 1,000 3,617 173,185
Capital expenditures...................... 9,052 3,007 1,765 -- 380 14,204
Net investment in joint ventures.......... 23,916 11,733 24,931 1,722 8,251 70,553
Equity in income (losses) of
unconsolidated investees................ 2,549 (1,524) (393) (37) (345) 250
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
-----------------------------------------------------------------------
WIRELESS FIXED CABLE RADIO
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING TOTAL
--------- --------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues.................................. $ 8,956 $ 6,169 $ 6,733 $ 703 $3,827 $ 26,388
Depreciation and amortization............. 2,916 541 3,012 68 175 6,712
Operating income (loss)................... (454) 1,035 (1,102) 39 276 (206)
Interest income........................... 1 -- 65 -- -- 66
Interest expense.......................... 2,314 53 1,238 11 39 3,655
Net income (loss)......................... (2,031) (1,289) (1,737) (12) 231 (4,838)
Assets.................................... 81,411 24,797 33,647 1,330 5,806 146,991
Capital expenditures...................... 10,281 781 3,243 24 224 14,553
Net investment in joint ventures.......... 22,097 6,520 26,743 2,113 9,500 66,973
Equity in income (losses) of
unconsolidated investees................ (528) (678) (362) (14) 162 (1,420)
</TABLE>

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)

PRO FORMA INFORMATION

The following unaudited pro forma information illustrates the effect of the
acquisition of PLD Telekom on revenue, loss from continuing operations and loss
per share from continuing operations attributable to common stockholders for the
three months ended March 31, 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.................................................... $ 96,996
========
Net loss.................................................... $(27,475)
========
Net loss per share attributable to common stock
shareholders.............................................. $ (.30)
========
</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.

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

At March 31, 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, were as follows (in thousands):

<TABLE>
<CAPTION>
YEAR YEAR
VENTURE OPERATIONS
NAME 2000 1999 OWNERSHIP % FORMED COMMENCED
- ---- -------- -------- ----------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Sichuan Tai Li Feng
Telecommunications Co., Ltd.
("Sichuan JV")....................... $ 8,316 $15,899 92% 1996 1999
Chongqing Tai Le Feng
Telecommunications Co., Ltd.
("Chongqing JV")..................... 14,001 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")........................ 980 980 49% 1999 Pre-operational
------- -------
$25,216 $40,982
======= =======
</TABLE>

13
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
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 March 31, 2000, Metromedia China owed
$61.0 million under this credit agreement (including accrued interest).

The Company held interests in several telecommunications joint ventures in
China. Those ventures were terminated in late 1999 and the Company reached
agreement with China Unicom, its Chinese partner in the ventures, for the
distribution of approximately $90.1 million (based on the March 31, 2000
exchange rate) in settlement of all claims under the joint venture agreements,
of which $45.4 million has been received. Over time, the Company anticipates
that it will fully recover its remaining investments in and advances to the four
affected joint ventures, but no assurances can be made as to the exact timing or
amount of such repayments. As of March 31, 2000, investments in and advances to
these four joint ventures, exclusive of goodwill, were approximately
$24.2 million.

Full distribution of all expected funds must await the Chinese government's
recognition and approval of the completion of formal dissolution proceedings for
the four joint ventures. This is expected by mid-2000 and the Company currently
anticipates no problems in ultimately dissolving the joint ventures.

However, some variance from the Company's current estimates of the amounts
finally distributed to its majority-owned subsidiary, Asian American
Telecommunications, may arise due to settlement of the joint ventures' tax
obligations in China and exchange rate fluctuations. The Company cannot make
assurance at this time that this variance will not be material.

The currently estimated $90.1 million in total payments from the Company's four
joint ventures that had cooperated with China Unicom is insufficient to fully
recover the goodwill originally recorded in connection with the Company's
investment in these joint ventures. As a result, the Company has recorded a
non-cash impairment charge of $45.7 million in 1999 for the write-off of
goodwill. The goodwill amount at March 31, 2000 is $20.5 million. Further
adjustments may be required after receipt of final distributions from the four
terminated joint ventures.

HUAXIA JV

On May 7, 1999, Asian American Telecommunications entered into a joint venture
agreement with All Warehouse Commodity Electronic Commerce Information
Development Co., Ltd., a Chinese trading company, for the purpose of
establishing Huaxia Metromedia Information Technology Co., Ltd., known as Huaxia
JV. Also on May 7, 1999, Huaxia JV entered into a computer information system
and services contract with All Warehouse and its parent company, China Product
Firm Corporation. The Huaxia JV will develop and operate electronic commerce
computer information systems for use by All Warehouse and China Product Firm and
its affiliates and customers. The contract has a term of thirty years and grants
Huaxia JV exclusive rights to manage all of All Warehouse and China Product
Firm's electronic trading systems during that period.

The total amount to be invested in Huaxia JV is $25.0 million with registered
capital contributions from its shareholders amounting to $10.0 million. Asian
American Telecommunications will make registered capital contributions of
$4.9 million and All Warehouse will contribute $5.1 million. The remaining
investment in Huaxia JV will be in the form of up to $15.0 million of loans from
Asian American Telecommunications. As of March 31, 2000, Asian American
Telecommunications has made

14
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES--CHINA (CONTINUED)
$980,000 of its scheduled registered capital investment. Ownership in Huaxia JV
is 49% by Asian American Telecommunications and 51% by All Warehouse.

The 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 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 in China. The Communications Group
believes that the fee-for-services arrangement of Huaxia JV and the lines of
business undertaken by the joint venture do not constitute foreign equity
investment in telecommunications operating companies, and that the regulatory
and policy situation and prospects for Huaxia JV is different from the
regulatory and policy situation and prospects for the Communication Group's
joint telecommunications projects with China Unicom at the equivalent stage in
their development.

The following tables represent summary financial information for the joint
ventures and their related projects in China as of and for the three months
ended March 31, 1999, (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
-----------------------------------------------------
NINGBO NINGBO SICHUAN CHONGQING
JV JV II JV JV TOTAL
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Revenues.......................................... $ 988 $ -- $ -- $ 24 $1,012
Depreciation and amortization..................... 608 -- 16 58 682
Operating income (loss)........................... 293 (15) (83) (143) 52
Interest expense, net............................. (862) (36) (234) (80) (1,212)
Net loss.......................................... (569) (51) (317) (223) (1,160)
Equity in losses of joint ventures................ (16) (8) (93) (148) (265)
Assets............................................ 33,095 16,176 22,028 18,179 89,478
Net investment in project......................... 30,718 12,162 19,877 10,882 73,639
</TABLE>

For the three months ended March 31, 1999, the results of operations presented
above are before the elimination of intercompany interest. Ningbo JV recorded
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
December 31, 1998.

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 to be included in the computation when a
loss from continuing operations attributable to common stockholders exists. For
the three months ended March 31, 2000 and 1999, the Company had losses from
continuing operations.

At March 31, 2000 and 1999, the Company had potentially dilutive shares of
common stock of 24,104,000 and 18,901,000, respectively.

15
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

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 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

16
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENT IN RDM (CONTINUED)
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.

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 $90.1 million (based on the March 31, 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 represent 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 three months
ended March 31, 2000, and 1999 in the following tables (in thousands):

17
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)

THREE MONTHS ENDED MARCH 31, 2000
(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.......................... $19,911 $27,489 $ 9,386 $5,298 $2,769 $ 679 $ 65,532
Depreciation and amortization..... 5,813 5,400 3,198 390 246 8,245 23,292
Operating income (loss)........... 3,030 598 (226) 251 (231) (12,460) (9,038)

CONSOLIDATED
Revenues.......................... $ 3,494 $20,257 $ 1,530 $4,753 $ 532 $ 679 $ 31,245
Gross profit......................
Depreciation and amortization..... 1,298 4,009 682 278 72 8,304 14,643
Operating income (loss)........... (899) 2,489 (380) 329 (6) (12,519) (10,986)

UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $16,417 $ 7,232 $ 7,856 $ 545 $2,237 -- $ 34,287
Depreciation and amortization..... 4,515 1,391 2,516 53 174 -- 8,649
Operating income (loss)........... 3,929 (1,891) 154 (19) (225) -- 1,948
Net income (loss)................. 1,320 (2,863) (1,910) (52) (508) -- (4,013)
Equity in income (losses) of
unconsolidated investees........ 2,549 (1,524) (393) (37) (345) -- 250

Foreign currency loss............. (478)
Minority interest................. (638)
Interest expense..................
Interest income...................
Gain on settlement of option......
Income tax expense................
Net loss..........................
Capital expenditures.............. 4,244
Assets at March 31, 2000.......... 526,157

COMMUNICATIONS CORPORATE
GROUP-CHINA SNAPPER HEADQUARTERS CONSOLIDATED
--------------- -------- ------------ ------------
<S> <C> <C> <C> <C>
COMBINED
Revenues..........................
Depreciation and amortization.....
Operating income (loss)...........
CONSOLIDATED
Revenues.......................... $ -- $50,103 $ -- $ 81,348
Gross profit...................... 17,484
Depreciation and amortization..... 52 1,479 17 16,191
Operating income (loss)........... (1,905) 4,165 (1,351) (10,077)
UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $ --
Depreciation and amortization..... --
Operating income (loss)........... --
Net income (loss)................. --
Equity in income (losses) of
unconsolidated investees........ -- -- -- 250
Foreign currency loss............. -- -- -- (478)
Minority interest................. 1,457 -- -- 819
Interest expense.................. (7,928)
Interest income................... 891
Gain on settlement of option...... 2,500
Income tax expense................ (2,508)
--------
Net loss.......................... $(16,531)
========
Capital expenditures.............. 23 492 -- $ 4,759
Assets at March 31, 2000.......... 59,647 127,679 46,712 $760,195
</TABLE>

18
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)

THREE MONTHS ENDED MARCH 31, 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.......................... $ 8,956 $ 6,169 $ 7,981 $5,892 $4,771 $ 227 $ 33,996
Depreciation and amortization..... 2,916 541 3,455 451 466 910 8,739
Operating income (loss)........... (454) 1,035 (1,160) (425) (877) (6,486) (8,367)

CONSOLIDATED
Revenues.......................... $ -- $ -- $ 1,248 $5,189 $ 944 $ 227 $ 7,608
Gross profit......................
Depreciation and amortization..... -- -- 443 383 291 910 2,027
Operating income (loss)........... -- -- (58) (464) (1,153) (6,486) (8,161)

UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $ 8,956 $ 6,169 $ 6,733 $ 703 $3,827 $ -- $ 26,388
Depreciation and amortization..... 2,916 541 3,012 68 175 -- 6,712
Operating income (loss)........... (454) 1,035 (1,102) 39 276 -- (206)
Net income (loss)................. (2,031) (1,289) (1,737) (12) 231 -- (4,838)
Equity in income (losses) of
unconsolidated investees........ (528) (678) (362) (14) 162 -- (1,420)
Foreign currency loss............. (508)
Minority interest................. 293
Interest expense..................
Interest income...................
Income tax expense................
Net loss..........................
Capital expenditures.............. 928
Assets at December 31, 1999....... 537,279

COMMUNICATIONS
GROUP- CORPORATE
CHINA SNAPPER HEADQUARTERS CONSOLIDATED
--------------- -------- ------------ ------------
<S> <C> <C> <C> <C>
COMBINED
Revenues..........................
Depreciation and amortization.....
Operating income (loss)...........
CONSOLIDATED
Revenues.......................... $ -- $60,034 $ -- $ 67,642
Gross profit...................... 20,093
Depreciation and amortization..... 784 1,555 1 4,367
Operating income (loss)........... (3,547) 3,319 (1,357) (9,746)
UNCONSOLIDATED JOINT VENTURES
Revenues.......................... $ 1,012
Depreciation and amortization..... 682
Operating income (loss)........... 52
Net income (loss)................. (1,160)
Equity in income (losses) of
unconsolidated investees........ (265) -- -- (1,685)
Foreign currency loss............. -- -- -- (508)
Minority interest................. 2,176 -- -- 2,469
Interest expense.................. (3,406)
Interest income................... 1,700
Income tax expense................ (94)
--------
Net loss.......................... $(11,270)
========
Capital expenditures.............. 2 630 -- $ 1,560
Assets at December 31, 1999....... 66,451 118,259 54,865 $776,854
</TABLE>

19
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)

Information about the Communications Group's operations in different geographic
locations for the three months ended March 31, 2000 and 1999 and as of
March 31, 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................................................ $ -- $ 140 $ -- $ --
Azerbaijan............................................. -- -- 4,461 3,274
Belarus................................................ 212 -- 7,000 6,985
Cyprus................................................. -- -- 23 --
Czech Republic......................................... 558 588 3,092 3,117
Estonia................................................ 118 205 1,516 1,636
Georgia................................................ 64 120 22,541 19,372
Germany................................................ 45 28 906 1,555
Hungary................................................ 2,049 2,593 4,429 5,469
Kazakhstan............................................. 3,282 -- 62,018 63,432
Kyrgystan.............................................. 41 -- 1,796 1,668
Latvia................................................. -- 229 13,229 14,029
Lithuania.............................................. 320 251 1,439 1,643
Moldova................................................ -- -- 3,493 4,147
People's Republic of China............................. -- -- 59,647 66,451
Romania................................................ 1,124 1,326 7,775 10,470
Russia................................................. 22,530 1,745 251,423 256,304
Ukraine................................................ 230 165 951 975
United Kingdom......................................... -- -- 269 226
United States (1)...................................... 672 218 134,776 137,765
Uzbekistan............................................. -- -- 5,020 5,212
------- ------ -------- --------
$31,245 $7,608 $585,804 $603,730
======= ====== ======== ========
</TABLE>

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

(1) Assets include goodwill of $121.7 million, and $123.6 million at March 31,
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 March 31, 2000 and December 31,
1999 was $2.5 million and $2.9 million, respectively.

20
<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 March 31, 2000 and December 31, 1999
(in thousands):

<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Lawn and garden equipment:
Raw materials........................................... $10,782 $11,346
Finished goods.......................................... 41,502 40,380
------- -------
52,284 51,726
Less: LIFO reserve........................................ -- --
------- -------
52,284 51,726
------- -------
Telecommunications:
Pagers.................................................. 139 152
Telephony............................................... 2,699 2,934
Cable................................................... 298 397
------- -------
3,136 3,483
------- -------
$55,420 $55,209
======= =======
</TABLE>

INTEREST EXPENSE

Interest expense includes amortization of debt discount of $4.5 million for the
three months ended March 31, 2000.

GAIN ON SETTLEMENT OF OPTION

For the three months ended March 31, 2000, the Company recorded a $2.5 million
gain which represents the gain on the settlement on an option agreement in
connection with a cancelled private placement.

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."

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. At this time, the prospects for recovery for the

21
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

8. CONTINGENCIES (CONTINUED)
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 has resulted in a number of defaults by borrowers in Russia and
other countries and a reduced level of financing available to investors in these
countries. The devaluation of many of the currencies in the region has also
negatively affected 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
Communications Group expects that these problems will negatively affect the
financial performance of certain of its 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 is extremely high. 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.

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 tends to fluctuate, 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.

During 1997 and 1998, the Company made several investments in telecommunications
joint ventures in China through its majority-owned subsidiary, Asian American
Telecommunications Corporation. These ventures were terminated in late 1999 and
agreements were entered into in December 1999 terminating the joint ventures'
further cooperation with China Unicom. Under the terms of the settlement
contracts, the four joint ventures will each receive cash amounts in RMB from
China Unicom in full and final payment for the termination of their cooperation
contracts with China Unicom. The

22
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

8. CONTINGENCIES (CONTINUED)
Company's current estimate of the total amount it will ultimately receive from
the four terminated joint ventures is $90.1 million (at March 31, 2000 exchange
rates) of which $45.4 million has been received. Full distribution of all
expected funds must await the Chinese government's recognition and approval of
the completion of formal dissolution proceedings for the four joint ventures.
This is expected by mid-2000 and the Company anticipates no problems in
ultimately dissolving the joint ventures. However, some variance from the
Company's current estimates of the amounts finally distributed to Asian American
Telecommunications may arise due to settlement of the joint ventures' tax
obligations in China and exchange rate fluctuations. The Company cannot assure
at this time that this variance will not be material.

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. The Huaxia JV
does not have any contractual relationship with China Unicom and is engaged in
business fundamentally different from that of the Communication Group's 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 in China. The Communications Group believes that the
fee-for-services arrangement of Huaxia JV and the lines of business undertaken
by the joint venture do not constitute foreign equity investment in
telecommunications operating companies, and that the regulatory and policy
situation and prospects for Huaxia JV is different from the regulatory and
policy situation and prospects for the Communication Group's joint
telecommunications projects with China Unicom at the equivalent stage in their
development.

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.

23
<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 a pre-operational 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
were terminated in late 1999 and the Company reached agreement for the
distribution of approximately $90.1 million (based on the March 31, 2000
exchange rate) in settlement of all claims under the joint venture agreements of
which $45.4 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 represented approximately 38%,
and 11% of the Company's total revenues for the three months ended March 31,
2000 and 1999, respectively. The Company expects this proportion to increase as
the Communications Group's joint ventures develop their businesses and with the
acquisition of PLD Telekom. Consolidated revenues of the Company for the three
months ended March 31, 2000 include $23.8 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 March 31 include the
financial results for those joint ventures for the three months ending
December 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.

1999 RESTRUCTURING AND IMPAIRMENT CHARGES

24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
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 pre-operational
businesses) in its portfolio did not meet certain of its objectives of the
strategic review, such as the 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.

1998 IMPAIRMENT CHARGE

In 1998, the Communications Group's paging business continued to incur operating
losses. Accordingly, the Communications Group developed a revised operating plan
to stabilize its paging operation. Under the revised plan, the Communications
Group managed its paging business to a level that did not require significant
additional funding for its operations. As a result of the revised plan, in 1998
the Company recorded a non-cash charge on its paging assets of $49.9 million,
which included a $35.9 million write off of goodwill and other intangibles. The
non-cash charge adjusted the carrying value of goodwill and other intangibles,
fixed assets and investments in and advances to joint ventures and wrote down
inventory.

Under the revised plan, the paging business's operating losses have decreased
significantly. The non-cash charge adjusted the carrying value of goodwill and
other intangibles, fixed assets of $4.4 million and investments in and advances
to joint ventures of $5.4 million and wrote down inventory of $4.2 million.

25
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
The following table displays a rollforward of the activity and balances of the
restructuring reserve account from inception to March 31, 2000 (in thousands):

CHINA TELECOMMUNICATIONS JOINT VENTURES

Until recently, the Company also held interests in several telecommunications
joint ventures in China. Those ventures were terminated in late 1999 and the
Company reached agreement with China Unicom, its Chinese partner in the
ventures, for the distribution of approximately $90.1 million (based on the
March 31, 2000 exchange rate) in settlement of all claims under the joint
venture agreements, of which $45.4 million has been received. Over time, the
Company anticipates that it will fully recover its remaining investments in and
advances to the four affected joint ventures, but no assurances can be made as
to the exact timing or amount of such repayments. As of March 31, 2000,
investments in and advances to these four joint ventures, exclusive of goodwill,
were approximately $24.2 million.

Full distribution of all expected funds must await the Chinese government's
recognition and approval of the completion of formal dissolution proceedings for
the four joint ventures. This is expected by mid-2000 and the Company
anticipates no problems in ultimately dissolving the joint ventures.

However, some variance from the Company's current estimates of the amounts
finally distributed to Asian American Telecommunications may arise due to
settlement of the joint ventures' tax obligations in China and exchange rate
fluctuations. The Company cannot assure at this time that this variance will not
be material.

The currently estimated $90.1 million in total payments from the Company's four
joint ventures that had cooperated with China Unicom is insufficient to fully
recover the goodwill originally recorded in connection with the Company's
investment in these joint ventures. As a result, the Company has recorded a
non-cash impairment charge of $45.7 million in 1999 for the write-off of
goodwill. Further adjustments may be required after receipt of final
distributions from the four terminated joint ventures.

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. Under this structure, Huaxia JV
will develop and operate electronic commerce computer information systems for
use by its Chinese partner, its affiliates and customers in return for
transaction fees under a fee-for-services arrangement.

26
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
JOINT VENTURE OWNERSHIP STRUCTURES

The following table summarizes the Communications Group's joint ventures and
subsidiaries at March 31, 2000 and the Communications Group's ownership in each
company:

<TABLE>
<CAPTION>
COMPANY
JOINT VENTURE (1) OWNERSHIP %
- ----------------- -----------
<S> <C>
WIRELESS TELECOMMUNICATIONS
Baltcom GSM (Latvia)........................................ 22%
Magticom (Tbilisi, Georgia)................................. 35%
ALTEL (Kazakhstan) (2)...................................... 50%
BELCEL (Belarus)............................................ 50%
Tyumenruskom (Tyumen, Russia)............................... 46%
Gorizont-RT (Sakha) (4)..................................... 25%
Ningbo Ya Mei Telecommunications Co., Ltd. (Ningbo City,
China) (5)................................................ 41%
Ningbo Ya Lian Telecommunications Co., Ltd. (Ningbo
Municipality, China) (5).................................. 41%

FIXED AND OTHER TELEPHONY
PeterStar (St. Petersburg, Russia) (2)...................... 71%
Baltic Communications Limited (St. Petersburg, Russia)
(2)....................................................... 100%
Teleport-TP (Moscow, Russia) (2) (6)........................ 56%
Telecom Georgia (Tbilisi, Georgia).......................... 30%
MTR-Sviaz (Moscow, Russia) (6).............................. 49%
Instaphone (Kazakhstan)..................................... 50%
Caspian American Telecommunications (Azerbaijan) (7)........ 37%
CPY Yellow Pages (St. Petersburg, Russia) (2) (8)........... 100%
Cardlink ZAO (Moscow, Russia) (2) (9)....................... 84.5%
Spectrum (Kazakhstan) (10).................................. 33%
Sichuan Tai Li Feng Telecommunications Co., Ltd. (Sichuan
Province, China) (11)..................................... 54%
Chongqing Tai Le Feng Telecommunications Co., Ltd.
(Chongqing Municipality, China) (11)...................... 54%

INTERNET SERVICES
Huaxia Metromedia Information Technology Co., Ltd. (China)
(3) (12).................................................. 29%

CABLE TELEVISION
Romsat Cable TV (Bucharest, Romania) (2).................... 100%
Viginta (Vilnius, Lithuania) (2)............................ 55%
ATK (Archangelsk, Russia) (2)............................... 81%
Ala TV (Bishkek, Kyrghizstan) (2) (13)...................... 53%
Kosmos TV (Moscow, Russia).................................. 50%
Baltcom TV (Riga, Latvia)................................... 50%
Ayety TV (Tbilisi, Georgia)................................. 49%
Kamalak TV (Tashkent, Uzbekistan)........................... 50%
Sun TV (Chisinau, Moldova).................................. 50%
Alma TV (Almaty, Kazakhstan)................................ 50%
Cosmos TV (Minsk, Belarus).................................. 50%
Teleplus (St. Petersburg, Russia)........................... 45%
</TABLE>

27
<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>
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) (14)................... 85%
Radio Vladivostok, (Vladivostok, Russia) (2)................ 51%
Country Radio (Prague, Czech Republic) (2).................. 85%
Radio Georgia (Tbilisi, Georgia) (2) (15)................... 51%
Radio Katusha (St. Petersburg, Russia) (2) (15)............. 75%
Radio Nika (Sochi, Russia).................................. 51%
AS Trio LSL (Estonia) (15).................................. 49%

PAGING
Baltcom Paging (Estonia) (2)................................ 85%
CNM (Romania) (2)........................................... 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) (16)................................... 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) (17)................................ 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) Pre-operational system as of March 31, 2000.

(4) 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 first half
of 2000.

(5) Ningbo Ya Mei Telecommunications supported development by China Unicom, a
Chinese telecommunications operator, of a GSM mobile telephone system in
Ningbo City, China. Ningbo Ya Lian Telecommunications similarly supported
development by China Unicom of expansion of GSM services throughout Ningbo
Municipality, China. Both joint ventures provided financing, technical
assistance and consulting services to the Chinese operator. The operations
of these joint ventures have been terminated at the direction of the Chinese
government and settlement payments have been received from China Unicom in
consideration of this termination. The joint ventures are currently being
dissolved and the Company anticipates full recovery of its investments

28
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
in and advances to the joint ventures. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations".

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

(7) 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.

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

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

(10) In July 1998 the Communications Group sold its share of Protocall Ventures
Limited; however, it retained Protocall Ventures Limited's interest in
Spectrum. The Company recorded a gain of approximately $7.1 million on the
sale. The Company's interest in Spectrum of $1.6 million was written down
and offset against the gain on the sale of Protocall Ventures.

(11) Sichuan Tai Li Feng Telecommunications supported development by China
Unicom, a Chinese telecommunications operator, of a fixed line public
switched telephone network in Sichuan Province, China. Chongqing Tai Le Feng
Telecommunications supported development by China Unicom of a fixed line
telephone network in Chongqing City, China. Both joint ventures provided
financing, technical assistance and consulting services to the Chinese
operator. The operations of these joint ventures have been terminated at the
direction of the Chinese government and settlement payments have been
received from China Unicom in consideration of this termination. The joint
ventures are currently being dissolved and the Company anticipates full
recovery of investments in and advances to the joint ventures. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

(12) The Communications Group owns 49% of a pre-operational joint venture in
China licensed to provide e-commerce trading support systems to the Chinese
partner in the joint venture. The partner is a domestic trading company
pursuing internet-based commerce among Chinese state-owned enterprises.

(13) Launched service in June 1999.

(14) The Communications Group entered into an agreement to dispose of the
operations of NewsTalk Radio during the second quarter of 2000.

29
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
(15) Radio Katusha includes two radio stations operating in St. Petersburg,
Russia and AS Trio LSL includes five radio stations operating in various
cities throughout Estonia. Radio Georgia includes two radio stations
operating in Georgia.

(16) 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%.

(17) The Company's purchase of Mobile Telecom closed during June 1998. The
Company purchased its 50% interest in Mobile Telecom for $7.0 million plus
two potential earnout payments to be made in 2000 and 2001. Each of the two
earnout payments is to be equal to $2.5 million, adjusted up or down based
upon performance in 1999 and 2000, respectively, as compared to certain
financial targets. The Company did not make any payment with respect to
1999. Simultaneously with the purchase of Mobile Telecom, the Company
purchased 50% of a related pager distribution company for $500,000.

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 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 61.

SEGMENT INFORMATION

The following tables set forth operating results for the three ended March 31,
2000 and 1999, for the Company's Communications Group and Snapper.

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

SEGMENT INFORMATION
THREE MONTHS ENDED MARCH 31, 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- COMMUNICATIONS
TELEPHONY TELEPHONY TELEVISION BROADCASTING PAGING QUARTERS TOTAL GROUP-CHINA
--------- --------- ---------- ------------ ------ -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMBINED
Revenues........................ $19,911 $27,489 $ 9,386 $5,298 $2,769 $ 679 $ 65,532
Depreciation and amortization... 5,813 5,400 3,198 390 246 8,245 23,292
Operating income (loss)......... 3,030 598 (226) 251 (231) (12,460) (9,038)

CONSOLIDATED
Revenues........................ $ 3,494 $20,257 $ 1,530 $4,753 $ 532 $ 679 $ 31,245 $ --
Gross profit....................
Depreciation and amortization... 1,298 4,009 682 278 72 8,304 14,643 52
Operating income (loss)......... (899) 2,489 (380) 329 (6) (12,519) (10,986) (1,905)

UNCONSOLIDATED JOINT VENTURES
Revenues........................ $16,417 $ 7,232 $ 7,856 $ 545 $2,237 $ -- $ 34,287 $ --
Depreciation and amortization... 4,515 1,391 2,516 53 174 -- 8,649 --
Operating income (loss)......... 3,929 (1,891) 154 (19) (225) -- 1,948 --
Net income (loss)............... 1,320 (2,863) (1,910) (52) (508) -- (4,013) --
Equity in income (losses) of
unconsolidated investees (note
2)............................ 2,549 (1,524) (393) (37) (345) -- 250 --
Foreign currency loss........... (478) --
Minority interest............... (638) 1,457
Interest expense................
Interest income.................
Gain on settlement of option....
Income tax expense..............
Net loss........................

CORPORATE
SNAPPER HEADQUARTERS CONSOLIDATED
------- ------------ ------------
<S> <C> <C> <C>
COMBINED
Revenues........................
Depreciation and amortization...
Operating income (loss).........
CONSOLIDATED
Revenues........................ $50,103 $ -- $ 81,348
Gross profit.................... 17,484
Depreciation and amortization... 1,479 17 16,191
Operating income (loss)......... 4,165 (1,351) (10,077)
UNCONSOLIDATED JOINT VENTURES
Revenues........................
Depreciation and amortization...
Operating income (loss).........
Net income (loss)...............
Equity in income (losses) of
unconsolidated investees (note
2)............................ -- -- 250
Foreign currency loss........... -- -- (478)
Minority interest............... -- -- 819
Interest expense................ (7,928)
Interest income................. 891
Gain on settlement of option.... 2,500
Income tax expense.............. (2,508)
--------
Net loss........................ $(16,531)
========
</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.

31
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

SEGMENT INFORMATION
THREE MONTHS ENDED MARCH 31, 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........................... $ 8,956 $ 6,169 $ 7,981 $5,892 $ 4,771 $ 227 $33,996
Depreciation and amortization...... 2,916 541 3,455 451 466 910 8,739
Operating income (loss)............ (454) 1,035 (1,160) (425) (877) (6,486) (8,367)

CONSOLIDATED
Revenues........................... $ -- $ -- $ 1,248 $5,189 $ 944 $ 227 $ 7,608
Gross profit.......................
Depreciation and amortization...... -- -- 443 383 291 910 2,027
Operating income (loss)............ -- -- (58) (464) (1,153) (6,486) (8,161)

UNCONSOLIDATED JOINT VENTURES
Revenues........................... $ 8,956 $ 6,169 $ 6,733 $ 703 $ 3,827 $ -- $26,388
Depreciation and amortization...... 2,916 541 3,012 68 175 -- 6,712
Operating income (loss)............ (454) 1,035 (1,102) 39 276 -- (206)
Net income (loss).................. (2,031) (1,289) (1,737) (12) 231 -- (4,838)
Equity in income (losses) of
unconsolidated investees
(note 2)......................... (528) (678) (362) (14) 162 -- (1,420)
Foreign currency loss.............. (508)
Minority interest.................. 293
Interest expense...................
Interest income....................
Income tax expense.................
Net loss...........................

COMMUNICATIONS
GROUP-- CORPORATE
CHINA SNAPPER HEADQUARTERS CONSOLIDATED
-------------- -------- ------------ ------------
<S> <C> <C> <C> <C>
COMBINED
Revenues...........................
Depreciation and amortization......
Operating income (loss)............
CONSOLIDATED
Revenues........................... $ -- $60,034 $ -- $ 67,642
Gross profit....................... 20,093
Depreciation and amortization...... 784 1,555 1 4,367
Operating income (loss)............ (3,547) 3,319 (1,357) (9,746)
UNCONSOLIDATED JOINT VENTURES
Revenues........................... $ 1,012
Depreciation and amortization...... 682
Operating income (loss)............ 52
Net income (loss).................. (1,160)
Equity in income (losses) of
unconsolidated investees
(note 2)......................... (265) -- -- (1,685)
Foreign currency loss.............. -- -- -- (508)
Minority interest.................. 2,176 -- -- 2,469
Interest expense................... (3,406)
Interest income.................... 1,700
Income tax expense................. (94)
--------
Net loss........................... $(11,270)
========
</TABLE>

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

RESULTS OF OPERATION--THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS
ENDED
MARCH 31, 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.

WIRELESS TELEPHONY

The following sets forth the names, ownership percentage and accounting
treatment of the Communications Group's wireless telephony ventures for the
three months ended March 31, 2000 and 1999:

<TABLE>
<CAPTION>
MARCH 31,
-------------------
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 E
BELCEL* (Minsk, Belarus).................................... 50% E N/A
</TABLE>

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

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

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

<TABLE>
<CAPTION>
% CHANGE
WIRELESS TELEPHONY--CONSOLIDATED 2000 1999 2000 TO 1999
- -------------------------------- -------- -------- ------------
<S> <C> <C> <C>
Revenues.................................................... $3,494 $-- N/A
Operating loss.............................................. $ (899) $-- N/A
</TABLE>

REVENUES. Wireless telephony consolidated revenues for the first quarter of
2000 amounted to $3.5 million and were primarily attributable to ALTEL, the
Kazakhstan D-AMPS operator acquired in connection with the Company's acquisition
of PLD Telekom Inc. in September 1999. ALTEL's revenues for the first quarter of
1999 amounted to $7.9 million. The reduction in revenues compared to 1999 was
due to continued competition from two GSM operators who entered the Kazakhstan
market in 1999.

33
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
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 margins led the venture to report a first quarter 2000 operating loss of
$1.1 million compared to operating income of $2.2 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 remaining part of
2000 is likely to have further adverse effects on the venture's operating
results.

<TABLE>
<CAPTION>
% CHANGE
2000 TO
WIRELESS TELEPHONY--UNCONSOLIDATED 2000 1999 1999
- ---------------------------------- -------- -------- --------
<S> <C> <C> <C>
Revenues.................................................... $16,417 $ 8,956 83%
Operating income (loss)..................................... $ 3,929 $ (454) N/M
Net income (loss)........................................... $ 1,320 $(2,031) N/M
Equity in income (losses) of joint ventures................. $ 2,549 $ (528) N/M
</TABLE>

EQUITY IN INCOME (LOSSES) OF JOINT VENTURES. The share in income from
investments in wireless telephony ventures for the first quarter of 2000
amounted to $2.5 million, compared to losses of $528,000 in the first quarter of
1999. These results were attributable mainly to GSM wireless operations in
Latvia and Georgia.

In Latvia, Baltcom GSM's first quarter of 2000 revenues increased by 57% to
$8.3 million from $5.3 million in the first quarter of 1999. In late 1999 the
three month reporting lag for Baltcom GSM was eliminated. Accordingly, first
quarter of 2000 revenues for the venture therefore represented results for the
three months ended March 31, 2000, whereas first quarter of 1999 results
represented those of the three months ended December 31, 1998. The increase in
first quarter of 2000 revenues as compared with the first quarter of 1999 was
due primarily to strong subscriber growth, wider service area coverage and
higher subscriber air time. Baltcom GSM's operating profit for the first three
months of 2000 increased to $1.1 million from a loss of $229,000 in the first
quarter of 1999.

In Georgia, Magticom's first quarter of 2000 revenues were $6.6 million, a 78%
increase on first quarter of 1999 revenues of $3.7 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 subscriber growth. As a result of
the above, Magticom achieved a net income of $3.2 million in the first three
months of 2000, as compared to a net loss of $1.1 million during the first three
months of 1999.

Other ventures in this category include BELCEL, which operates an NMT 450
wireless network in Belarus and was acquired pursuant to the Company's
acquisition of PLD Telekom in September 1999, and Tyumenruscom, the D-AMPS
operator in Tyumen, Russia. These ventures jointly generated revenues of
$1.5 million and net losses of $773,000 in the first quarter of 2000.

34
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
FIXED TELEPHONY

The following sets forth the names, ownership percentage and accounting
treatment of the Communications Group's fixed telephony ventures for the three
months ended March 31, 2000 and 1999:

<TABLE>
<CAPTION>
MARCH 31,
-------------------
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.

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

<TABLE>
<CAPTION>
% CHANGE
2000 TO
FIXED TELEPHONY--CONSOLIDATED 2000 1999 1999
- ----------------------------- -------- -------- --------
<S> <C> <C> <C>
Revenues.................................................... $20,257 $-- N/A
Operating income............................................ $ 2,489 $-- N/A
</TABLE>

REVENUES. Fixed telephony consolidated revenues for the first quarter of 2000
amounted to $20.3 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 BCL, which provides international direct dial, payphone
and leased line services for Russian and international businesses in St
Petersburg, Russia.

In the first three months of 2000 PeterStar generated revenues of $13.0 million
as compared to $13.9 million in the same period in 1999, the reduction primarily
due to adjustments relating to deferred installation revenue.

In the first three months of 2000, Technocom generated revenues of $5.2 million
compared to $4.4 million in the same period in 1999. Higher international and
long distance traffic volumes in the first quarter of 2000 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.

OPERATING INCOME. During the first quarter of 2000, fixed telephony
consolidated ventures generated operating profits of $2.5 million. PeterStar's
operating profit for the quarter was $3.9 million compared to $4.0 million for
the first quarter of 1999. PeterStar's first quarter of 2000 profitability was
adversely

35
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
affected by the above mentioned adjustments to deferred installation revenues.
Technocom generated an operating loss of $539,000 during the first quarter of
2000 compared to a loss of $3.8 million in the first quarter of 1999. This
reduction of operating loss was due to a restructuring of operations in early
1999 and a resultant reduction in overhead expense and because of increased
revenue.

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

<TABLE>
<CAPTION>
% CHANGE
2000 TO
FIXED TELEPHONY--UNCONSOLIDATED 2000 1999 1999
- ------------------------------- -------- -------- --------
<S> <C> <C> <C>
Revenues.................................................... $ 7,232 $ 6,169 17%
Operating income (loss)..................................... $(1,891) $ 1,035 N/M
Net loss.................................................... $(2,863) $(1,289) 122%
Equity in losses of joint ventures.......................... $(1,524) $ (678) 125%
</TABLE>

EQUITY IN LOSSES OF JOINT VENTURES. The Communications Group's share in losses
from investments in fixed telephony ventures for the first quarter of 2000
increased to $1.5 million from $678,000 in the first quarter of 1999. These
results were attributable mainly to the operations of Telecom Georgia and
Caspian American Telephone ("CAT").

In the first three months of 2000, Telecom Georgia generated revenues of
$6.2 million compared to revenues of $6.1 million in the first quarter of 1999.
The venture's first quarter of 2000 operating results were adversely affected by
higher interconnect costs leading to operating losses of $1.1 million as
compared to an operating income of $1.1 million achieved in the first quarter of
1999.

CAT generated revenues of $561,000 in the first three months of 2000 and
recorded operating losses and net losses of $807,000 million and $1.2 million
respectively. Results for the first quarter of 1999 are not applicable as the
venture was pre-operational at that time. High start up costs coupled with a
slower build up of CAT's customer base resulted in the operating and net loss.
In late 1999 the Company recorded an impairment charge of $9.9 million in the
value of its investment in this venture.

The above results also include those of MTR Sviaz which was acquired in
connection with the Company's acquisition of PLD Telekom on September 30, 1999
and operates a Moscow-based telephony network using fiber optic technology.
During the first quarter of 2000 MTR Sviaz generated revenues of $451,000 and an
operating profit of $64,000, as compared to revenues of $446,000 and operating
income of $38,000 in the first quarter 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.

36
<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 for the three
months ended March 31, 2000 and 1999:

<TABLE>
<CAPTION>
MARCH 31,
-------------------
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>
% CHANGE
CABLE TELEVISION--CONSOLIDATED 2000 1999 2000 TO 1999
- ------------------------------ -------- -------- ------------
<S> <C> <C> <C>
Revenues.................................................... $1,530 $1,248 23%
Operating loss.............................................. $ (380) $ (58) 555%
</TABLE>

REVENUES. Cable television operations generated consolidated revenues of
$1.5 million in the first three months of 2000, representing a 23% increase on
first quarter of 1999 consolidated revenues of $1.2 million. The majority of
1999 consolidated revenues were attributable to Romsat, Viginta, and ATK.

In Romania, Romsat reported first quarter of 2000 revenues of $940,000, as
compared to first quarter of 1999 revenues of $892,000 due to a slight increase
in subscriber numbers in the Targu Mures region of the country. In Lithuania,
Viginta generated revenues of $320,000 in the first three months of 2000,
representing an increase of 27% on first quarter of 1999 revenues of $251,000
attributable to better programming. ATK, which recently commenced operations in
Arkhangelsk, Russia, reported revenues of $230,000 for the first quarter of
2000, a 119% increase on revenues for the same period in 1999 when the venture
was still in its start up phase.

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 acquisitions.

37
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
OPERATING LOSS. Cable television reported consolidated operating losses for the
first three months of 2000 of $380,000, compared to first quarter 1999 operating
losses of $58,000. Romsat reported first quarter of 2000 operating losses of
$36,000 compared to a $203,000 operating income for the same period in 1999,
mainly due to higher goodwill amortization charges following network
acquisitions in late 1999 and higher first quarter 2000 bad debt charges.
Viginta increased marketing costs to develop market share resulting in higher
sales and a slight decrease in operating loss from $149,000 in the first three
months of 1999 to $141,000 for the first quarter of 2000. ATK reported first
quarter of 2000 operating losses of $96,000, as compared to first quarter of
1999 operating losses of $97,000.

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

<TABLE>
<CAPTION>
% CHANGE
CABLE TELEVISION-UNCONSOLIDATED 2000 1999 2000 TO 1999
- ------------------------------- -------- -------- ------------
<S> <C> <C> <C>
Revenues.................................................... $ 7,856 $ 6,733 17%
Operating income (loss)..................................... $ 154 $(1,102) N/M
Net loss.................................................... $(1,910) $(1,737) 10%
Equity in losses of joint ventures.......................... $ (393) $ (362) 9%
</TABLE>

EQUITY IN LOSSES OF JOINT VENTURES. The Communications Group's share in losses
from equity investments in cable television ventures in the first quarter of
2000 amounted to $393,000, compared to losses of $362,000 in the first quarter
of 1999. The operating results for unconsolidated cable television ventures were
mainly attributable to Baltcom TV in Latvia, Kosmos TV in Moscow, and Almaty TV
in Kazakhstan.

Baltcom TV reported revenues of $1.8 million in the first three months of 2000,
a 13% increase on first quarter 1999 revenues of $1.6 million due to increases
in tariffs and subscriber numbers. As a result the venture reported increased
operating income of $295,000 in the first three months of 2000 compared to
$211,000 in the first quarter of 1999.

Kosmos TV's revenues increased by $321,000 in the first quarter of 2000 to
$1.6 million from $1.3 million in the first quarter of 1999 due to programming
improvements. The venture generated operating income of $99,000 for the first
three months of 2000 as compared with operating losses of $481,000 for 1999.

Almaty TV's revenues increased from $1.1 million in the first quarter of 1999 to
$1.6 million in the first quarter of 2000 due to continued marketing and
advertising efforts together with implementation of tiered subscriber pricing
policies. However, due to strong competitive pressure on margins, and higher
costs due to the increased scale of operational activity, the venture reported
reduced operating income of $100,000 in the first quarter of 2000 compared to
$226,000 in the first quarter of 1999, and a net loss of $123,000 in the first
quarter of 2000 compared to net income of $54,000 in the same period in 1999.
Alma TV expects to improve profitability over the remainder of 2000 as a result
of the continued build out of its networks and improved subscriber management.

38
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

RADIO BROADCASTING

The following sets forth the names, ownership percentage and accounting
treatment of the Communications Group's radio broadcasting ventures for the
three months ended March 31, 2000 and 1999:

<TABLE>
<CAPTION>
MARCH 31,
-------------------
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 income (loss) for
consolidated radio broadcasting ventures (in thousands):

<TABLE>
<CAPTION>
% CHANGE
RADIO--CONSOLIDATED 2000 1999 2000 TO 1999
- ------------------- -------- -------- ------------
<S> <C> <C> <C>
Revenues.................................................... $4,753 $5,189 (8)%
Operating income (loss)..................................... $ 329 $ (464) N/M
</TABLE>

REVENUES. Radio operations generated consolidated revenues of $4.8 million in
the first quarter of 2000, representing an 8% decrease on first quarter of 1999
revenues of $5.2 million. The majority of revenues were from Radio Juventus in
Budapest, SAC in Moscow, and Radio Katusha in St. Petersburg. Radio Juventus in
the first quarter of 2000 had revenues of $2.0 million, 23% lower than in the
same period in 1999. The decrease was due to the continued effect of competition
from the new national Hungarian radio network. In Russia, SAC and Radio
Katusha's revenues rose from $1.2 million and $463,000 in the first quarter of
1999, when the immediate after effects of the Russian economic crisis in late
1998 were still being felt, to $1.3 million and $574,000 respectively in the
first quarter of 2000.

OPERATING INCOME (LOSS). In the first quarter of 2000, radio operations
generated operating income of $329,000, compared to operating losses of $464,000
during the first three months of 1999. First quarter of 2000 profitability was
favorably affected by increased revenues at SAC and Radio Katusha. Together
these ventures generated operating income of $755,000 in the first quarter of
2000 compared to $384,000 in the same period in 1999. In addition, News Talk
Radio, Germany, recorded a first quarter of 2000 operating loss of $867,000,
representing a 46% decrease in its first quarter of 1999 operating loss of
$1.6 million. The Communications Group entered into an agreement to dispose of
the operations of NewsTalk Radio during the second quarter of 2000. In Hungary,
Radio Juventus generated an operating income of $252,000, a decrease of $375,000
on the first quarter of 1999 operating income of $627,000 due to the reduced
revenues.

39
<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 income
(loss) and equity in income (losses) of the Communications Group's investment in
unconsolidated radio joint ventures, which are recorded under the equity method
(in thousands):

<TABLE>
<CAPTION>
% CHANGE
RADIO--UNCONSOLIDATED 2000 1999 2000 TO 1999
- --------------------- -------- -------- ------------
<S> <C> <C> <C>
Revenues.................................................... $545 $703 (22)%
Operating income (loss)..................................... $(19) $ 39 N/M
Net loss.................................................... $(52) $(12) 333 %
Equity in losses of joint ventures.......................... $(37) $(14) 164 %
</TABLE>

EQUITY IN LOSSES OF JOINT VENTURES. The Communications Group's share in losses
from equity investments in radio ventures amounted to $37,000, compared to
losses of $14,000 in the first quarter of 1999. These results were mainly
attributable to Radio Trio, Tallinn, Estonia, which generated revenues of
$524,000 during the first three months of 2000 compared to $667,000 during the
same period in 1999. The decrease in revenues was attributable to increased
competition and local restrictions on pricing. As a result Radio Trio reported
first quarter of 2000 operating losses of $16,000 as compared with a first
quarter of 1999 operating income of $33,000.

PAGING

OVERVIEW. In 1998 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 and is
developing a strategy to maximize the value of its paging investments. Paging
ventures generated losses during the first quarter of 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 investees.

40
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
The following sets forth the names, ownership percentage and accounting
treatment of the Communications Group's paging ventures for the three months
ended March 31, 2000 and 1999:

<TABLE>
<CAPTION>
MARCH 31,
-------------------
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.

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

<TABLE>
<CAPTION>
% CHANGE
PAGING--CONSOLIDATED 2000 1999 2000 TO 1999
- -------------------- -------- -------- ------------
<S> <C> <C> <C>
Revenues.................................................... $532 $ 944 (44)%
Operating loss.............................................. $ (6) $(1,153) (99)%
</TABLE>

REVENUES. The Communications Group's paging ventures generated consolidated
revenues of $532,000 in the first quarter of 2000, representing a 44% decrease
on revenues of $944,000 for the same period in 1999. The decrease was due
primarily to continued competition from the wireless telephony market and the
disposal of Vienna Paging in 1999. A significant portion of first quarter of
2000 revenues were attributable to Eurodevelopment, Ukraine, whose revenues
amounted to $230,000 compared with $165,000 for the same period in the previous
year when the venture was in its start up phase. CNM, Romania, generated first
quarter of 2000 revenues of $184,000 compared to $434,000 in the first quarter
of 1999. Other consolidated paging revenues were attributable to Baltcom
Estonia, which had revenues of $118,000 in the first quarter of 2000 as compared
with $205,000 in the first quarter of 1999.

OPERATING LOSS. Consolidated operating losses arising from paging operations
amounted to $6,000 in the first quarter of 2000, compared to $1.2 million in the
same period in 1999. Operating losses in the first quarter of 1999 were
adversely affected by Vienna Paging whose operations were disposed of later in
1999.

41
<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 unconsolidated paging joint ventures, which are recorded
under the equity method (in thousands):

<TABLE>
<CAPTION>
% CHANGE
PAGING--UNCONSOLIDATED 2000 1999 2000 TO 1999
- ---------------------- -------- -------- ------------
<S> <C> <C> <C>
Revenues.................................................... $2,237 $3,827 (42%)
Operating income (loss)..................................... $ (225) $ 276 N/M
Net income (loss)........................................... $ (508) $ 231 N/M
Equity in income (losses) of joint ventures................. $ (345) $ 162 N/M
</TABLE>

EQUITY IN INCOME (LOSSES) OF JOINT VENTURES. The Communications Group's share
of losses from equity investments in paging ventures amounted to $345,000 in the
first quarter of 2000 compared to income of $162,000 in the same period in 1999
and related primarily to the operations of Mobile Telecom in Moscow.

Mobile Telecom generated revenues of $2.0 million during the first quarter of
2000, a decrease of $1.4 million compared to the same period in 1999, as the
venture continued to experience the effects of strong competition from the
wireless telephony sector. As a result of decreased revenues, the venture
reported a first quarter net loss of $228,000 compared to a first quarter 1999
net income of $178,000.

During 1998 the majority of the Communications Group's equity investments were
written down to zero and since the Communications Group no longer funds their
operations, the results of these ventures are no longer reported.

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 losses for the segment headquarters (in
thousands):

<TABLE>
<CAPTION>
% CHANGE
2000 1999 2000 TO 1999
-------- -------- ------------
<S> <C> <C> <C>
Revenues.................................................... $ 679 $ 227 199%
Operating loss.............................................. $(12,519) $(6,486) 93%
</TABLE>

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

OPERATING LOSS. Operating losses for the first three months of 2000 amounted to
$12.5 million, a 93% increase on 1999 first quarter operating losses of
$6.5 million. Increased operating losses were principally 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 $6.3 million, and to the revision of the
amortization life of goodwill in July 1999 from 25 years to 10 years which
increased amortization from $910,000 in 1999 to $2.0 million in 2000.

42
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
FOREIGN CURRENCY LOSS AND MINORITY INTEREST

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

<TABLE>
<CAPTION>
% CHANGE
2000 1999 2000 TO 1999
-------- -------- ------------
<S> <C> <C> <C>
Foreign currency loss....................................... $(478) $(508) (6)%
Minority interest........................................... $(638) $ 293 N/M
</TABLE>

Foreign currency losses for the first quarter of 2000 amounted to $478,000,
compared to $508,000 in the first quarter 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 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 quarter 2000 foreign currency loss was due primarily to the fluctuation of
the U.S. dollar against local currencies in Germany and Hungary.

Minority interest represents the allocation of losses 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 for the three months ended
March 31, 2000 and 1999:

<TABLE>
<CAPTION>
MARCH 31,
-------------------
JOINT VENTURE/SUBSIDIARY OWNERSHIP % 2000 1999
- ------------------------ ----------- -------- --------
<S> <C> <C> <C>
WIRELESS TELECOMMUNICATIONS
Ningbo Ya Mei Telecommunications Co., Ltd.
(Ningbo City, China)...................................... 70% D E
Ningbo Ya Lian Telecommunications Co., Ltd.
(Ningbo Municipality, China).............................. 70% D P

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% P N/A
</TABLE>

43
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
CHINA TELECOMMUNICATIONS JOINT VENTURE INFORMATION

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
-----------------------------------------------------
NINGBO NINGBO SICHUAN CHONGQING
JV JV II JV JV TOTAL
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Revenues.......................................... $ 988 $ -- $ -- $ 24 $ 1,012
Depreciation and amortization..................... $(608) $ -- $ (16) $ (58) $ (682)
Operating income (loss)........................... $ 293 $(15) $ (83) $(143) $ 52
Net loss.......................................... $(569) $(51) $(317) $(223) $(1,160)
Equity in losses of joint ventures................ $ (16) $ (8) $ (93) $(148) $ (265)
</TABLE>

OVERVIEW. The Company's investments in telecommunications joint ventures in
China were made through its majority-owned subsidiary, Asian American
Telecommunications Corporation. These joint ventures supported the construction
and development of telephony networks by China United Telecommunications
Incorporated, a Chinese telecommunications operator known as China Unicom.
Because legal restrictions in China prohibit direct foreign investment and
operating participation in domestic telephone companies, the company's joint
ventures were limited to providing financing and consulting services to China
Unicom under contracts. By the terms of these contracts and in return for
services rendered, the joint ventures were to receive payments from China Unicom
based on the cash flows generated by China Unicom's network businesses. This
arrangement, known as a sino-sino-foreign joint venture cooperation, was
commonly accepted at the time the Company's joint ventures were formed and was
applied in numerous other foreign-invested relationships with China Unicom.
Since the arrangement specifically limited the joint ventures' participation in
and control over China Unicom's actual business operations, Asian American
Telecommunications accounted for its sino-sino-foreign joint venture investments
under the equity method. The Company invested in four Chinese telecommunications
joint ventures in this fashion--two in Ningbo Municipality, one in Sichuan
Province and one in Chongqing City.

Beginning in mid-1998, the Chinese government unofficially began reconsidering
the advisability of continuing the sino-sino-foreign joint venture cooperation
arrangements undertaken by China Unicom. At that time, more than forty such
cooperation contracts had been established with foreign-invested joint ventures
covering China Unicom's operations in various parts of China. By mid-1999, the
government reached the conclusion that China Unicom's sino-sino-foreign
cooperation framework was in conflict with China's basic telecommunications
regulatory policies and should henceforth cease. China Unicom was instructed to
terminate or very substantially restructure all of its sino-sino-foreign joint
venture cooperation contracts.

In July 1999, Ningbo Ya Mei Telecommunications, Ltd., one of the Company's two
telecommunications joint ventures in Ningbo Municipality, China, received a
written notice from China Unicom stating that the Chinese government had
directed China Unicom to terminate further cooperation with Ningbo Ya Mei. China
Unicom subsequently informed the Company that the notification also applies to
the Company's other telecommunications joint venture in Ningbo Municipality. In
subsequent notifications from China Unicom to the Company's joint ventures,
China Unicom stated its intention to terminate all cooperation contracts with
sino-sino-foreign joint ventures in China, pursuant to an August 30, 1999
mandate from the Chinese Ministry of Information Industry. In its notifications,
China Unicom requested that negotiations begin regarding a suitable settlement
of the matter and other matters related to the winding up of the Company's joint
ventures cooperation agreements with China Unicom as a result of the Ministry of
Information Industry notice. With the issuance of these notifications, China
Unicom ceased further performance under its cooperation contracts with the
Company's joint

44
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
ventures. However, China Unicom did make distribution of amounts owed to the
Company's Ningbo Ya Mei joint venture for the first half of 1999 according to
the terms of the cooperation contract. The Company, through its four joint
ventures, entered into negotiations with China Unicom in September 1999 to reach
suitable terms for termination of the cooperation contracts.

On November 6, 1999, the Company's four Chinese joint ventures engaged in
projects with China Unicom each entered into non-binding letters of intent with
China Unicom which set forth certain terms for termination of their cooperation
arrangements with China Unicom. On December 3, 1999, legally binding settlement
contracts incorporating substantially the terms set forth in the November
letters of intent were executed between China Unicom and the four joint
ventures, thereby terminating the joint ventures' further cooperation with China
Unicom. Under the terms of the settlement contracts, the four joint ventures
will each receive cash amounts in RMB from China Unicom in full and final
payment for the termination of their cooperation contracts with China Unicom.
Upon receipt of this payment, China Unicom and the joint ventures will waive all
of their respective relevant rights against the other party with respect to the
cooperative arrangements. In addition, all assets pertinent to China Unicom's
networks that are currently held by the joint ventures will be unconditionally
transferred to China Unicom. China Unicom effected payment to the joint ventures
of the amounts prescribed in the settlement contracts on December 10, 1999.
Subsequently and prior to the end of 1999, the boards of directors of the four
joint ventures each passed formal resolutions to commence dissolution of the
joint ventures. The Company expects such dissolution to be completed for all
four joint ventures by mid-2000.

Each of the Company's China telecommunications joint ventures has stopped its
accounting for its share of the net distributable cash flows under the
cooperation agreements with China Unicom and the amortization of the investment
in the China Unicom projects effective July 1, 1999 based on the termination
notices received from China Unicom.

For the period ended December 31, 1999, the four China telecommunications joint
ventures have performed impairment analyses of their investments in projects
with China Unicom. These analyses were based on the terms of settlement
contracts the joint ventures executed with China Unicom on December 3, 1999. The
joint ventures each received sufficient amounts in their settlements with China
Unicom so as to recover their recorded investment balances as of December 31,
1999. Accordingly, no impairment writedowns were taken by the joint ventures
during 1999.

Through December 3, 1999, the date on which settlement contracts terminated the
joint ventures' further cooperation with China Unicom, the Company continued to
account for its investments in its China telecommunications joint ventures under
the equity method of accounting. The Company has performed an impairment
analysis of its investments in and advances to joint ventures and related
goodwill to determine the amount that these assets have been impaired. The
Company reviewed its investment in these joint ventures for other than temporary
decline. The Company has determined the related goodwill should be considered an
asset to be disposed of and has estimated the fair value less costs to dispose
of its investment and has stopped amortizing the balance. The Company believes
that the termination of the four joint ventures' cooperation agreements with
China Unicom is an event that gives rise to an accounting loss which is
probable. The amount of the non-cash impairment charge is the difference between
the sum of the carrying values of its investments and advances made to joint
ventures plus goodwill less the Company's estimate of the total amount of
compensation it will receive from the four joint ventures through the
dissolution.

The Company will receive substantial portions of the China Unicom settlement
payments to the joint ventures via repayment of advances and distribution of
joint venture assets on dissolution. China Unicom's settlement payments to the
joint ventures were made in RMB. However, the joint ventures'

45
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
formation contracts and loan agreements with Asian American Telecommunications
had been registered with Chinese authorities so as to assure the joint ventures'
ability to convert RMB deposits into foreign exchange for payment to the
Company. Over time, the Company anticipates that it will fully recover its
investments in and advances to the four affected joint ventures, but no
assurances can be made as to the exact timing or amount of such repayments. As
of March 31, 2000, the joint ventures had conveyed to Asian American
Telecommunications in the form of repayment of advances approximately
$45.4 million in U.S. Dollars from the China Unicom settlement. As of March 31,
2000, investments in and advances to these four joint ventures, exclusive of
goodwill, were approximately $24.2 million.

The Company's current estimate of the total amount it will ultimately receive
from the four terminated joint ventures is $90.1 million (at the March 31, 2000
exchange rates) of which $45.4 million has been received. Full distribution of
all expected funds must await the Chinese government's recognition and approval
of the completion of formal dissolution proceedings for the four joint ventures.
This is expected by mid-2000 and the Company anticipates no problems in
ultimately dissolving the joint ventures. However, some variance from the
Company's current estimates of the amounts finally distributed to Asian American
Telecommunications may arise due to settlement of the joint ventures' tax
obligations in China and exchange rate fluctuations. The Company cannot assure
at this time that this variance will not be material.

The currently estimated $90.1 million in total payments from the Company's four
joint ventures that had cooperated with China Unicom is insufficient to fully
recover the goodwill originally recorded in connection with the Company's
investment in these joint ventures. As a result, the Company has recorded a
non-cash impairment charge of $45.7 million in 1999 for the write-off of
goodwill. Further adjustments may be required after receipt of final
distributions from the four terminated 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>
% CHANGE
2000 1999 2000 TO 1999
-------- -------- ------------
<S> <C> <C> <C>
Operating loss.............................................. $(1,905) $(3,547) (46)%
Equity in losses of joint ventures.......................... $ -- $ (265) N/A
Minority interests.......................................... $ 1,457 $ 2,176 (33)%
</TABLE>

OPERATING LOSS. The operating loss decreased $1.6 million to $1.9 million for
the three months ended March 31, 2000 as compared to the same period in 1999.
The decrease in operating loss is principally attributable to the termination of
the Company's joint venture cooperation with China Unicom and the resulting
reduction in overhead costs.

EQUITY IN LOSSES OF JOINT VENTURES. Equity in losses of the Communications
Group's joint ventures in China are no longer reflected in the Company's
financial results as a result of the joint venture's signing the settlement
agreement with China Unicom on December 3, 1999.

MINORITY INTERESTS. For the three months ended March 31, 2000 and 1999,
minority interests represents the allocation of losses to Metromedia China
Corporation's minority ownership.

INFLATION AND FOREIGN CURRENCY

46
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
affected by the economic crisis remain unclear. The economic crisis has resulted
in a number of defaults by borrowers in Russia and other countries and a reduced
level of financing available to investors in these countries. The devaluation of
many of the currencies in the region has also negatively affected 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 Communications Group expects
that these problems will negatively affect the financial performance of certain
of its cable television, telephony, radio broadcasting and paging ventures.

SNAPPER

The following table sets forth Snapper's results of operations for the three
months ended March 31, 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>
% CHANGE
2000 1999 2000 TO 1999
-------- -------- ------------
<S> <C> <C> <C>
Revenues.................................................... $50,103 $60,034 (17)%
Gross profit................................................ $17,484 $20,093 (13)%
Operating income............................................ $ 4,165 $ 3,319 26 %
</TABLE>

47
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
REVENUES. Snapper's 2000 first quarter sales were $50.1 million as compared to
$60.0 million in 1999. 1999 sales were higher due primarily to a $5.5 million
increase in snowthrower sales due to heavy snow in the Midwest in January of
1999. In 2000, Snapper notified a number of its commissioned distributors and
commissioned agents informing them of 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 should allow it to lower costs and improve gross profit
margins in the future. This announcement had a negative impact on sales during
the first quarter, and it is anticipated to negatively impact sales for the
remainder of 2000.

GROSS PROFIT. Gross profit during 2000 was $17.5 million as compared to
$20.1 million in 1999. The lower gross profit in 2000 was due to lower sales
noted above. However, gross profit margin improved from 33.5% in 1999 to 34.9%
in 2000 due to continuing cost containment programs.

OPERATING INCOME. Operating income of $4.2 million in 2000 as compared to
$3.3 million in 1999 resulted from selling, general and administrative cost
decreases of $3.4 million in 2000 when compared to 1999, partially offset by the
reduced gross profit noted above. The 1999 operating income was negatively
impacted by a $1.8 million judgment issued in March 1999 related to a lawsuit.

CORPORATE HEADQUARTERS

Corporate Headquarters costs reflect the management fee paid to Metromedia
Company under the management agreement, investor relations, legal and other
professional costs, insurance and other corporate costs. The following table
sets forth the operating loss for Corporate Headquarters (in thousands):

<TABLE>
<CAPTION>
% CHANGE
2000 1999 2000 TO 1999
-------- -------- ------------
<S> <C> <C> <C>
Operating loss.............................................. $(1,351) $(1,357) 0%
</TABLE>

OPERATING LOSS. For the three months ended March 31, 2000 and 1999, Corporate
Headquarters had general and administrative expenses of approximately
$1.4 million and $1.4 million, respectively.

MMG CONSOLIDATED

The following table sets forth on a consolidated basis the following items for
the three months ended March 31, 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>
% CHANGE
2000 1999 2000 TO 1999
-------- -------- ------------
<S> <C> <C> <C>
Interest expense............................................ $ (7,928) $ (3,406) 133 %
Interest income............................................. $ 891 $ 1,700 (48)%
Gain on settlement of option................................ $ 2,500 -- N/A
Income tax expense.......................................... $ (2,508) $ (94) N/M
Net loss.................................................... $(16,531) $(11,270) (47)%
</TABLE>

INTEREST EXPENSE. Interest expense increased $4.5 million to $7.9 million for
the three months ended March 31, 2000 when compared to 1999. The increase in
interest was principally due to the $4.5 million of amortization of interest on
the Company's 10 1/2% senior discount notes.

INTEREST INCOME. Interest income decreased $809,000 to $891,000 in 2000 when
compared to 1999, principally from the reduction of funds at Corporate
Headquarters which have been utilized in the operation of the Company.

48
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
INCOME TAX EXPENSE. For the three months ended March 31, 2000 and 1999, the
income tax benefit that would have resulted from applying the federal statutory
rate of 35% was $4.9 million and $3.9 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 and 1999 reflects foreign taxes in excess of the federal credit.

NET LOSS INCLUDING GAIN ON SETTLEMENT OF OPTION. Net loss increased to
$16.5 million for the three months ended March 31, 2000 from $11.3 million for
the three months ended March 31, 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 $4.5 million principally from the amortization
of interest on the Company's 10 1/2% senior discount notes and increased income
tax expense of $2.4 million. Included in net loss is a gain of $2.5 million
which represents the gain on the settlement on an option agreement in connection
with a cancelled private placement.

LIQUIDITY AND CAPITAL RESOURCES

THE COMPANY

OVERVIEW. The Company is a holding company and, accordingly, does not generate
cash flows from operations. 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 capital requirements of the Communications Group, including
future acquisitions, will 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. 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. In addition to funding the cash requirements of the Communications
Group, the Company has periodically funded the short-term working capital needs
of Snapper. 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.

In addition to financing its communications businesses, 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 in addition to its cash on hand, 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. The indenture for the senior discount notes permits the Company to
finance the development of its communications operations. 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.

49
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

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.

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 March 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 the 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,

50
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
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.

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 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 repaid 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.

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 PLD

51
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
Telekom's joint venture partner in its subsidiary PeterStar. The aggregate
consideration for the options was $8.5 million and they 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 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 March 31, 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 $47.7 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

52
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
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.

It is anticipated that as a consequence of the merger, the overall corporate
overhead of the Communications Group will be significantly reduced, with the
resulting more limited corporate function being funded as described elsewhere in
this section.

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; it was so obligated in the past,
but all such 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 commitment upcoming
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 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

53
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
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 Communication 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 expense subject to concurrence
with Caspian American's business plans. The Communications Group was obligated
to contribute approximately $5.0 million in equity to Omni-Metromedia and to
lend up to $36.5 million subject to concurrence with Caspian American's business
plan.

As part of the original transaction, the Communications Group has 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

54
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
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 called and paid during 1999.

As part of its ongoing strategic review, in late 1999 the Company reevaluated
the operations of CAT in order to ascertain the requirement to account for
impairment losses. In view of the low quantity of potential customers in the
region in which the business operate and limited scope for growth, it was
determined that an impairment loss of $9.9 million was required in 1999 relating
to the Company's investment in CAT. 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 system 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.

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 scope for improvement.

COMMUNICATIONS GROUP--CHINA

The Company anticipates that it will fully recover its remaining investments in
and advances to the four affected joint ventures. As of March 31, 2000, the
joint ventures had conveyed to Asian American Telecommunications in the form of
repayment of advances approximately $45.4 million in U.S. Dollars from the China
Unicom settlement. As of March 31, 2000, investments in and advances to these
four joint ventures, exclusive of goodwill, were approximately $24.2 million.

55
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
expected by mid-2000 and the Company anticipates no problems in ultimately
dissolving the joint ventures. However, some variance from the Company's current
estimates of the amounts finally distributed to Asian American
Telecommunications may arise due to settlement of the joint ventures' tax
obligations in China. The Company cannot assure at this time that this variance
will not be material or that the RMB to U.S. Dollar exchange rate will not
change.

The currently estimated $90.1 million in total payments from the Company's four
joint ventures that had cooperated with China Unicom is insufficient to fully
recover the goodwill originally recorded in connection with the Company's
investment in these joint ventures. As a result, the Company has recorded a
non-cash impairment charge of $45.7 million in 1999 for the write-off of
goodwill. Further adjustments may be required after receipt of final
distributions from the four terminated joint ventures.

Metromedia International Group and Metromedia International
Telecommunications, Inc. 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 March 31, 2000,
Metromedia China owed $61.0 million under this credit agreement (including
accrued interest).

The total amount to be invested in Huaxia JV is $25.0 million with registered
capital contributions from its shareholders amounting to $10.0 million. Asian
American Telecommunications will make registered capital contributions of
$4.9 million and All Warehouse will contribute $5.1 million. The remaining
investment in Huaxia JV will be in the form of up to $15.0 million of loans from
Asian American Telecommunications. As of December 31, 1999, AAT has made
$980,000 of its scheduled registered capital investment. Ownership in Huaxia JV
is 49% by Asian American Telecommunications and 51% by All Warehouse.

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. The 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 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
in China. The Communications Group believes that the fee-for-services
arrangement of Huaxia JV and the lines of business undertaken by the joint
venture do not constitute foreign equity investment in telecommunications
operating companies, and that the regulatory and policy situation and prospects
for Huaxia JV is different from the regulatory and policy situation and
prospects for the Communication Group's joint telecommunications projects with
China Unicom at the equivalent stage in their development.

The Communications Group is currently evaluating other investment opportunities
in China's information industry sector. The Communications Group is actively
negotiating e-commerce and

56
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
Internet ventures with other Chinese enterprises similar to the Huaxia JV.
Chinese regulatory policy currently permits limited foreign participation in
such ventures and trade agreements executed in 1999 between China and World
Trade Organization member countries provide for considerable opening of this
sector over the coming two years.

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 March 31,
2000, Snapper was in compliance with all covenants under the loan and security
agreement.

Snapper expects to sign a $2.5 million term loan in May 2000 with Fleet 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, with the
interest rate at prime plus .25%.

On March 24, 2000, Snapper's leased distribution facility in Greenville, Ohio
was substantially damaged by fire. The fire destroyed approximately
$1.0 million of inventory held for resale. Snapper is adequately insured for the
loss, and does not anticipate any liquidity issues related to the fire.

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 March 31, 2000, noncancelable commitments under these
agreements amounted to approximately $7.8 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 March 31, 2000, there was approximately
$111.1 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.

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

During 1997 and 1998, the Company made several investments in telecommunications
joint ventures in China through its majority-owned subsidiary, Asian American
Telecommunications Corporation. These ventures were terminated in late 1999 and
agreements were entered into in December 1999 terminating the joint ventures'
further cooperation with China Unicom. Under the terms of the settlement
contracts, the four ventures will each receive cash amounts in RMB from China
Unicom in full and final payment for the termination of their cooperation
contracts with China Unicom.

The Company's current estimate of the total amount it will ultimately receive
from the four terminated China joint ventures is $90.1 million (at the
March 31, 2000 exchange rates) of which $45.4 million has been received. Full
distribution of all expected funds must await the Chinese government's
recognition and approval of the completion of formal dissolution proceedings for
the four joint ventures. This is expected by mid-2000 and the Company
anticipates no problems in ultimately dissolving the joint ventures. However,
some variance from the Company's current estimates of the amounts finally
distributed to Asian American Telecommunications may arise due to settlement of
the joint ventures' tax obligations in China and exchange rate fluctuations. The
Company cannot assure that this variance will not be material.

The currently estimated $90.1 million in total payments from the Company's four
joint ventures that had cooperated with China Unicom is insufficient to fully
recover the goodwill originally recorded in connection with the Company's
investment in these joint ventures. As a result, the Company has recorded a
non-cash impairment charge of $45.7 million in 1999 for the write-off of
goodwill. Further adjustments may be required after receipt of final
distributions from the four terminated joint ventures.

58
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)

MMG CONSOLIDATED

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

CASH FLOWS FROM OPERATING ACTIVITIES

Cash used in operations for the three months ended March 31, 2000 was
$11.1 million, an increase in cash used in operations of $2.7 million from the
same period in the prior year.

Losses from operations include significant non-cash items such as depreciation,
amortization, equity in losses of unconsolidated investees, gain on settlement
of option, and losses allocable to minority interests. Non-cash items increased
$13.5 million from $3.6 million to $17.1 million for the three months ended
March 31, 1999 and 2000, respectively. The increase related principally to the
increase in depreciation and amortization expenses. Changes in operating assets
and liabilities decreased cash flows for the three months ended March 31, 2000
by $11.6 million and decreased cash flows by $735,000 for the three months ended
March 31, 1999.

The increase in cash flows used in operating activities for the three months
ended March 31, 2000 reflects an increase in accounts receivable principally
attributable to the operations of Snapper.

CASH FLOWS FROM INVESTING ACTIVITIES

Cash provided by investing activities for the three months ended March 31, 2000
was $25.0 million as compared to cash used in investing activities of
$4.4 million for the three months ended March 31, 1999. The principal components
of investing activities are investments in and advances to joint ventures of
$5.1 million in 1999 and distributions received from joint ventures of
$21.2 million and $2.7 million in 2000 and 1999, respectively. The
Communications Group utilized $2.4 million and $455,000 of funds for
acquisitions during the three months ended March 31, 2000 and 1999,
respectively, and in 2000, cash received of $11.0 million in connection with the
settlement of an option agreement of a cancelled private placement.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash used in financing activities was $1.7 million for the three months ended
March 31, 2000, an increase of $701,000 from the same period in the prior year.
For the three months ended March 31, 2000 the Company used $3.8 million to pay
its preferred stock dividend, and there were $4.7 million of debt payments and
$5.6 million of additions to long-term debt borrowed under the Snapper loan. For
the three months ended March 31, 1999 the Company used $3.8 million to pay its
preferred stock dividend, $5.4 million for debt repayments, and $8.1 million of
additions to long-term debt borrowed under the Snapper loan.

NEW ACCOUNTING DISCLOSURES

ACCOUNTING FOR STOCK OPTIONS

In March 2000, SFAS Interpretation No. 44 "Accounting for Certain Transactions
involving Stock Compensation" ("FIN 44") was issued, an interpretation of APB
Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25"). Among
other issues, FIN 44 clarifies (a) the definition of employee for purposes of
applying APB 25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequences of various modifications
to the terms of a previously fixed stock option or award, and (d) the accounting
for an exchange of stock compensation

59
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
awards in a business combination. FIN 44 is effective July 1, 2000, but certain
conclusions in this Interpretation cover specific events that occur after either
December 15, 1998, or January 12, 2000. The Company has not completed its
evaluation of the impact of FIN 44 on its consolidated financial position and
results of operations.

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. SFAS 133 is 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 the uncertainty surrounding its implementation, which has led to a
Derivatives Implementation Group, the Company has not completed its evaluation
of the impact of SFAS 133 on its consolidated financial position and results of
operations.

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 $10,000. In addition, a 100 basis point
increase in interest rates on Snapper's floor plan financing and dealers would
have resulted in an increase in interest expense of $22,000.

With the exception of certain vendor financing at the operating business level
(approximately $9.0 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
$6.5 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

60
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (CONTINUED)
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 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.

61
<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.

62
<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.

63
<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 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

64
<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 6. EXHIBITS AND REPORTS OF 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

65
<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
</TABLE>

Dated: May 15, 2000

<PAGE>
EXHIBIT 11

METROMEDIA INTERNATIONAL GROUP, INC.
COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Loss per common share--Basic (A):
Net loss.................................................. $(16,531) $(11,270)
Cumulative convertible preferred stock dividend
requirement............................................. (3,752) (3,752)
-------- --------
Net loss attributable to common stock shareholders........ $(20,283) $(15,022)
======== ========
Weighted average common stock shares outstanding during the
period.................................................... 93,807 69,123
======== ========
Loss per common share--Basic:
Net loss attributable to common stock shareholders........ $ (0.22) $ (0.22)
======== ========
</TABLE>

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

(A) In calculating diluted earnings per share, no potential shares of common
stock are to be included in the computation of diluted earnings per share
when a loss from continuing operations available to common stockholders
exists. For the three months ended March 31, 2000 and 1999, the Company had
a loss from continuing operations.

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE CONSOLIDATED
FINANCIAL STATEMENTS FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 63,235
<SECURITIES> 0
<RECEIVABLES> 60,129
<ALLOWANCES> (2,492)
<INVENTORY> 55,420
<CURRENT-ASSETS> 196,663
<PP&E> 225,431
<DEPRECIATION> (37,268)
<TOTAL-ASSETS> 760,195
<CURRENT-LIABILITIES> 133,249
<BONDS> 221,435
0
207,000
<COMMON> 94,024
<OTHER-SE> 64,485
<TOTAL-LIABILITY-AND-EQUITY> 760,195
<SALES> 81,348
<TOTAL-REVENUES> 81,348
<CGS> 40,900
<TOTAL-COSTS> 91,425
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,928
<INCOME-PRETAX> (14,023)
<INCOME-TAX> 2,508
<INCOME-CONTINUING> (16,531)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,531)
<EPS-BASIC> (0.22)
<EPS-DILUTED> (0.22)

</TABLE>