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

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 2000

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
--------- ---------

Commission File No. 333-05017

United Australia/Pacific, Inc.
(Exact name of registrant as specified in its charter)

State of Colorado 84-1341958
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

4643 South Ulster Street, #1300
Denver, Colorado 80237
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (303) 770-4001

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 and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

The Company has no publicly-traded shares of capital stock. As of March 26,
2001, the Company had 22,961,728 shares of common stock outstanding.

UNITED AUSTRALIA/PACIFIC, INC.
2000 ANNUAL REPORT ON FORM 10-K

Table of Contents

Page
Number
------

PART I

Item 1. Business.................................................................................... 2

Item 2. Properties.................................................................................. 15

Item 3. Legal Proceedings........................................................................... 15

Item 4. Submission of Matters to a Vote of Security Holders......................................... 15

PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters................... 16

Item 6. Selected Financial Data..................................................................... 17

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations....... 18

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.................................. 24

Item 8. Financial Statements and Supplementary Data................................................. 25

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........ 25

PART III

Item 10. Directors and Executive Officers of the Registrant.......................................... 26

Item 11. Executive Compensation...................................................................... 28

Item 12. Security Ownership of Certain Beneficial Owners and Management.............................. 33

Item 13. Certain Relationships and Related Transactions.............................................. 33

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K............................. 34

PART I

ITEM 1. BUSINESS
- -----------------

(a) GENERAL DEVELOPMENT OF BUSINESS
-------------------------------

United Australia/Pacific, Inc. (the "Company" or "United A/P") is a leading
provider of pay television, telephone and Internet services in Australia and New
Zealand. The Company, a Colorado corporation formed on October 14, 1994, is a
majority owned subsidiary of United Asia/Pacific Communications, Inc. ("UAP"),
which is an indirect wholly owned subsidiary of UnitedGlobalCom, Inc. (together
with all of its subsidiaries other than the Company and its subsidiaries,
"United"). United is a global broadband communications provider of video, voice
and data services with operations in over 26 countries throughout the world. In
addition to the Company, United's operations include its interest in United
Pan-Europe Communications N.V. ("UPC"), one of the largest pay television
operators in Europe, as well as its other investments in Europe, Asia and Latin
America. As of December 31, 2000, United's networks reached almost 22.7 million
homes and served 10.5 million video subscribers, 0.7 million telephone access
lines and 0.5 million broadband data accounts.

In June 1999, we and our subsidiaries contributed our interests in Austar
Entertainment Pty Limited ("Austar"), Saturn Communications Limited ("Saturn")
and XYZ Entertainment Pty Limited ("XYZ Entertainment") to United Austar, Inc.
These interests were then contributed to Austar United Communications Limited,
an Australian corporation ("Austar United"), in exchange for shares in Austar
United. Substantially all of our operations are conducted through Austar United,
one of the fastest growing broadband communications companies in Australia and
New Zealand. Austar United completed its initial public offering in July 1999
(the "Austar United IPO") and is publicly traded on the Australian Stock
Exchange under the symbol "AUN". As of December 31, 2000, we own 72.9% of the
ordinary shares of Austar United. In March 2001, Austar United announced a
A$200.0 ($111.8) million shareholder rights offering. We have committed to
purchase our pro rata share of the shares offered and to purchase all remaining
shares unsubscribed by the other shareholders. If we acquire all of the shares
in the rights offering, our interest in Austar United will increase to
approximately 81.0%.

Austar United's 100% owned operating company, Austar, is the second largest pay
television operator in Australia and the largest operator in the regional
Australia market. Austar's service area comprises approximately 2.1 million
homes outside of the major capital cities and represents one-third of
Australia's total homes. Austar United's 100% owned subsidiary, Austar United
Broadband Pty Limited ("AUB"), established in August 1999, launched a dial-up
Internet service (Austarnet) and a high-speed broadband service (chello
broadband) in Australia in early 2000. AUB also began to offer interactive
television and mobile telephone services in regional Australia in 2000. Austar
United's 50.0% owned subsidiary, XYZ Entertainment, is the exclusive owner
and/or distributor of five key programming channels in Australia to Austar and
Foxtel. These are the two largest pay television operators whose combined
subscriber bases represent approximately 83.0% of all pay television subscribers
in Australia. Austar United's wholly owned subsidiary, Saturn, was merged with
Telstra New Zealand Limited ("Telstra NZ") in April 2000 to form Telstra Saturn
Limited ("TelstraSaturn"). TelstraSaturn is the only provider of integrated
telephone, pay television and Internet services in New Zealand over one network.

ORGANIZATION OF THE COMPANY

The following chart summarizes our organizational structure. The interests
indicated below are summaries of our approximate direct and indirect economic
interests in our principal businesses. Our interest in Austar United may
increase as a result of our standby commitment to purchase all of its shares not
subscribed for in the upcoming rights offering.

***********************************************************
* *
* United Australia/Pacific, Inc. *
* *
***********************************************************
*
100.0% *
***********************************************************
* *
* United Austar, Inc. *
* *
***********************************************************
*
72.9% *
***********************************************************
* *
* Austar United Communications Limited *
* ("Austar United") *
* *
***********************************************************
*
*
********************************************************************************
* Operating System Principal Business Ownership *
* ---------------- ------------------ --------- *
* *
* Austar Regional Australia 100.0% *
* MMDS and DTH multi-channel television *
* systems *
* Austar United *
* Broadband Australia 100.0% *
* Internet, telephone and interactive *
* television *
* *
* TelstraSaturn New Zealand (Wellington/Christchurch) 50.0% *
* Wireline pay television, telephone and *
* Internet systems *
* *
* XYZ Entertainment Australian Programming 50.0% *
* *
********************************************************************************

(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
---------------------------------------------

We operate in the pay television and telecommunications industry. Our reportable
segments are both by line of business (pay television, telephone and
Internet/data) and by the primary countries in which we operate - Australia and
New Zealand. For additional information applicable to this Item, see Note 13 to
the consolidated financial statements contained in Item 14.

OVERVIEW

We believe that we are well-positioned to capitalize on the increasing demand
for pay television, telephone and Internet services in Australia and New
Zealand. As of December 31, 2000, our pay television operating systems had an
aggregate of approximately 2.2 million television homes serviceable and 442,209
subscribers, compared to approximately 2.2 million television homes serviceable
and 398,486 subscribers as of December 31, 1999. During this same period,
programming subscribers of XYZ Entertainment increased to approximately 1.1
million at December 31, 2000 from approximately 0.9 million at December 31,
1999.

While we expect that a substantial portion of our expected growth will come from
the continued development of Austar, we are also anticipating significant growth
by our New Zealand pay television and telecommunications venture which we
believe has attractive growth prospects. With the formation of TelstraSaturn, we
have plans to create a state-of-the-art national broadband network which will
include a submarine fiber backbone linking Auckland, Wellington and
Christchurch.

The following table sets forth certain operating data:

As of December 31, 2000
-----------------------------------------------------------------------------------------------
Homes in Two-way
United A/P System Service Homes Homes Basic Basic
Ownership Ownership Area Passed Passed Subscribers Penetration
---------- --------- ----------- ----------- ----------- ----------- -------------

VIDEO:
Austar............................ 72.9% 100.0% 2,085,000 2,083,108 260,620 421,165 20.2%
TelstraSaturn..................... 36.5% 50.0% 141,000 95,437 95,437 21,044 22.1%
--------- --------- ------- ---------
Total.......................... 2,226,000 2,178,545 356,057 442,209
--------- --------- ------- ---------

DATA:
TelstraSaturn..................... 36.5% 50.0% 141,000 95,437 N/A 45,146 47.3%
Austar United Broadband........... 72.9% 100.0% 2,085,000 1,409,300 N/A 79,663 5.7%
Total.......................... --------- --------- ------- ---------
2,226,000 1,504,737 N/A 124,809
--------- --------- ------- ---------

PROGRAMMING:
XYZ Entertainment (1)............. 36.5% 50.0% N/A N/A N/A 5,457,665 N/A
--------- --------- ------- ---------

Subscribers Lines
United A/P System ------------------------- -------------------------
Ownership Ownership Residential Business Residential Business
---------- --------- ----------- ----------- ----------- -----------
TELEPHONY:
TelstraSaturn..................... 36.5% 50.0% 32,093 1,493 37,723 4,339
Austar United Broadband........... 72.9% 100.0% 7,626 - 7,626 -
Total.......................... --------- --------- ------- ---------
39,719 1,493 45,349 4,339
--------- --------- ------- ---------

As of December 31, 1999
-----------------------------------------------------------------------------------------------
Homes in Two-way
United A/P System Service Homes Homes Basic Basic
Ownership Ownership Area Passed Passed Subscribers Penetration
---------- --------- ----------- ----------- ----------- ----------- -------------
VIDEO:
Austar............................ 69.1% 100.0% 2,085,000 2,083,108 - 381,763 18.3%
Saturn............................ 69.1% 100.0% 141,000 87,029 87,029 16,723 19.2%
--------- --------- ------- ---------
Total.......................... 2,226,000 2,170,137 87,029 398,486
--------- --------- ------- ---------

DATA:
Saturn............................ 69.1% 100.0% 141,000 87,029 N/A 6,772 7.8%
--------- --------- ------- ---------

PROGRAMMING:
XYZ Entertainment (1)............. 34.6% 50.0% N/A N/A N/A 4,670,000 N/A
--------- --------- ------- ---------

(1) This figure represents the total estimated number of channels for which XYZ
Entertainment customers have subscribed.

AUSTAR

Austar is the largest provider of pay television services in regional Australia
with a service area encompassing approximately 2.1 million homes, or
approximately one-third of Australia's total homes. Austar is the only pay
television provider in substantially all of its service areas. As of December
31, 2000, Austar had 421,165 pay television subscribers (20.2% penetration). Due
to the low housing densities that characterize Austar's service area, Austar
primarily employs digital direct-to-home ("DTH") satellite and wireless cable
technologies to deliver its service. These technologies have enabled Austar to
deploy its services quickly.

The following table sets forth the summary operating statistics in Austar's
markets:

As of December 31,
-----------------------------------------------
2000 1999 1998
------------- -------------- -------------

Homes in service area:
Metropolitan homes........................................... 1,527,000 1,527,000 1,527,000
Non-metropolitan homes....................................... 558,000 558,000 558,000
--------- --------- ---------
2,085,000 2,085,000 2,085,000
========= ========= =========

Net annual gain in basic subscribers........................... 39,402 93,042 92,516
Total basic subscribers........................................ 421,165 381,763 288,721

DISTRIBUTION SYSTEMS. Austar uses both digital DTH and wireless cable
distribution technologies for delivery of pay television and data services. At
present, approximately 85.0% of Austar's subscribers are serviced by digital
DTH, while 15.0% receive service via wireless cable. Austar constructs and owns
the microwave multi-point distribution system ("MMDS") transmission facilities
and installs and retains ownership of all customer premises equipment for both
its DTH and wireless cable customers.

In addition to digital DTH and wireless cable, Austar has constructed a cable
network in Darwin, a market containing approximately 29,000 serviceable homes.
Darwin is outside the satellite's footprint and dense vegetation makes wireless
cable service impractical.

PROGRAMMING AND PRICING. Austar offers some of the widest range of programming
available in Australia. Its programming agreements allow Austar to establish
different service levels or tiers at multiple price points. Austar began tiering
its program offerings in October 1998. By tiering its services, Austar permits
its subscribers to select programming that is customized to their interests,
which we believe is a valuable tool in ensuring our product meets customer value
expectations. Tiering also provides customers with a lower-priced basic service
that both enhances sales opportunities for additional services in the future and
helps reduce the level of customer churn.

BASIC PACKAGE:

Channel Programming Genre
------- -----------------

Disney Channel............................... Family entertainment
Sky News..................................... Local and world news
Fox Sports................................... Sports
Fox Sports Two............................... Sports, including Rugby League games
TV-1......................................... General entertainment
Discovery Channel............................ Documentary, adventure, history and lifestyle
Nickelodeon/Nick at Nite..................... Children's and family entertainment
arena........................................ General entertainment
Channel [V].................................. Music video
The Lifestyle Channel........................ Personal and home improvement
thecomedychannel............................. Comedy
The Weather Channel.......................... Weather
CNBC......................................... International financial news
CNN International............................ International news
Sky Racing................................... Live racing
National Geographic (2)...................... Documentary
TCM(1) (3)................................... Library movies
Cartoon Network (2) (3)...................... Cartoons
Music Country................................ Country music videos
TVSN (1)..................................... Shopping
Austar Audio (1)............................. 12 digital radio channels
----------------
(1) Not available to wireless cable subscribers.
(2) Limited viewing hours for wireless cable subscribers.
(3) These two networks share the same channel on digital DTH.

AUSTAR DELUXE(1):

Channel Programming Genre
------- -----------------

Fx (2)....................................... General entertainment
Fox8 (2)..................................... General entertainment
UKTV......................................... English general entertainment
Hallmark..................................... Made for TV movies
ESPN......................................... Sports
C7 Sports.................................... Sports, including Australian Football League
---------
(1) Digital DTH and cable only.
(2) Not available to cable subscribers in Darwin.

MOVIES:

Channel Programming Genre
------- -----------------

Showtime (1)................................. Recent release movies
Encore (1)................................... Library movies
Movie One (2)................................ Recent release movies
Movie Extra (2)(3)........................... Recent release movies
Movie Greats (2)(3).......................... Library movies
---------
(1) Columbia, Universal, Paramount and Fox Studios.
(2) Disney, MGM Warner, Dreamworks and Village Roadshow Studies.
(3) Not available to wireless cable subscribers.

At December 31, 2000, Austar's pricing was:

MMDS DTH
A$ A$
------- -------

Basic Service, including "the Guide"................. 34.25 40.85
Movie Network (1).................................... 12.10 12.10
Showtime and Encore (1).............................. 12.10 12.10
Movie One ........................................... 9.80 -
C7 Sports ........................................... 7.60 -
World Movies (2)..................................... 6.95 6.95
Adults Only (Pay per Night).......................... 6.95 6.95
Main Event (Pay-per-View) (3)........................ varies per event

---------
(1) Subscribers have the choice of either Showtime and Encore or Movie
Network.
(2) Not available to all wireless cable subscribers.
(3) Main Event available to digital DTH subscribers but only certain
events are available to wireless cable subscribers.

PROGRAMMING AGREEMENTS. Austar's programming agreement with Foxtel provides it
with the exclusive rights to distribute Showtime, Encore and TV-1 via digital
DTH and wireless cable throughout Austar's service area until December 2006. In
addition, Austar has an agreement with a News Corporation Limited subsidiary
pursuant to which Austar has the exclusive right to distribute Fox Sports and
Fox Sports Two over the same technologies throughout Austar's service area until
2006. Austar's programming agreement for C7 Sports provides Austar with
non-exclusive Australian Football League ("AFL") coverage. Austar has also
entered into an agreement with C&W Optus that provides Austar with non-exclusive
distribution rights for the three C&W Optus movie channels, Movie Network, Movie
Greats and Movie Extra, until December 2006. Austar has another agreement with
C&W Optus giving it rights to distribute additional C&W Optus programming.

Austar has exclusive rights in its service area to distribute via DTH and
wireless cable five channels of programming supplied by XYZ Entertainment:
Discovery Channel, Nickelodeon, The Lifestyle Channel, Channel [V] and arena.
The Disney Channel is provided to Austar under a licensing agreement that runs
until September 2005. Austar also obtains at competitive price levels additional
programming from a number of independent sources, including Time Warner, ESPN,
Seven Network, National Geographic, Music Country and Sky Racing. The Weather
Channel, the Adults Only channel and certain pay-per-view events are sourced
from entities in which we have an ownership interest.

Austar's rights to distribute certain programming are dependent on its
supplier's ability to provide such programming to Austar. In the event that any
of Austar's programming suppliers are unable to supply programming to Austar, we
are confident that we will be able to secure alternative sources of programming.

MARKETING, BILLING AND CUSTOMER SUPPORT. Austar has focused its marketing and
sales efforts to support a strategy of rapid penetration of its markets.
Austar's comprehensive marketing and sales organization consists of
approximately 220 direct sales representatives and over 480 national customer
service and telemarketing personnel at Austar's National Customer Operations
Center ("NCOC"). These sales channels are supported by an integrated marketing
program of television, radio and print advertising and extensive use of direct
mail.

Austar's 24 offices, located throughout its operating area, serve its customers
in surrounding areas and provide Austar with a local presence. These offices
perform several key functions, including responding to customer inquires,
booking installations, providing customer maintenance services, collecting
subscription fees, liaising with installation contractors and marketing Austar's
services.

Austar uses contractors to install reception equipment at the customer premises.
We believe Austar achieves significant savings through the outsourcing of these
services. Austar has established installation guidelines, quality assurance
standards and training seminars for installation contractors. In addition,
Austar's own installation teams perform quality assurance checks on its
contractors, as well as conduct difficult installations and installations at
multiple dwelling units.

The NCOC, which services all of Austar's subscribers, is a technologically
advanced, scalable, fully integrated subscriber facility that features
sophisticated subscriber management software, an automated response unit and
predictive dialer technology. It also manages Austar's digital virtual private
network. Incoming calls from Austar's service area are directed to the NCOC

where customer service representatives provide sales and service information.
The NCOC's on-site customer service professionals undergo training in all
aspects of customer support to efficiently process installation orders, handle
customer inquiries including programming and technical questions and implement
Austar's customer retention program, which includes contacting customers
immediately after installation to ensure satisfaction and monitoring
cancellation requests.

Billing services are also handled through the NCOC. Austar bills for its
services in advance on a monthly basis. Customers have several methods by which
they can pay including direct debit from their bank account, automatic credit
card billing, by mail or in person at one of Austar's local offices, retail
stores, or at the post office. Austar has implemented a number of procedures for
managing customers with delinquent accounts.

Austar's monthly churn averaged 2.9% during 2000, 2.9% during 1999 and 3.9%
during 1998. Austar believes that this ratio is likely to decline in the future,
although there can be no such assurances. Factors which Austar believes will
contribute to the decline in customer churn include: the continued enhancement
of the price value relationship as more content is added and the existing
content improves, the tiering of services and tailoring packages to customers, a
further reduction in the level of product sampling in a maturing market, the
introduction in 1998 of annual and six-month subscriber contracts and improved
customer communications combined with loyalty programs.

COMPETITION. Austar is the sole provider of pay television services in
substantially all of its service area. Its only major pay television competitor
is Foxtel, which operates a cable system in a segment of Austar's 116,000-home
Gold Coast service area. As of December 31, 2000, Austar had approximately
29,760 subscribers in the Gold Coast. Austar also experiences limited
competition from free-to-air channels.

We do not believe that Austar's market generally has sufficient housing density
to justify the construction of competitive cable systems. The majority of
Austar's market consists of small cities and towns with less than 20,000 homes
and relatively low household densities of 25 to 75 homes per square kilometer as
compared to 100 to 130 homes per square kilometer in Australia's largest cities.
While we believe that household densities could support wireline cable
construction in areas representing approximately 20.0% of Austar's total homes
passed, the small size of these markets reduces the attractiveness of such
construction. Furthermore, Austar holds the exclusive satellite and wireless
cable distribution rights to key sports, movie and other programming for its
service area, thus limiting the programming that a satellite or wireless cable
competitor could offer in Austar's service area.

NEW BUSINESS OPPORTUNITIES. We are pursing new business opportunities in three
main areas (i) provision of high-speed Internet/data services, (ii) provision of
interactive television services and (iii) resale of mobile telephone services.

Austar launched high-speed and traditional Internet access services in markets
in early 2000 using wireless cable technologies and began delivering these
services in some of its operating areas via digital DTH at the end of 2000.
Austar will benefit from United's experience in rolling out Internet/data
services. In particular, Austar intends to use chello broadband, the Internet
portal and content service of United's European subsidiary, UPC, to support the
deployment of its Internet/data offerings to its service area. These high-speed
services provide customers with downstream transmission speeds (from the
Internet to the subscriber) that are much faster than traditional dial-up
modems. We believe that the provision of Internet/data services represents a
significant market opportunity due to the combination of substantial consumer
demand for Internet access, the limited capacity of the public switched
telephone network in regional Australia and the lack of a broadband alternative.
Austar also launched the resale of mobile telephone products in October 2000.

Austar has licensed an operating system for interactive television for digital
set-top boxes with Open TV, Inc. This operating system enables Austar to
introduce an enhanced electronic programming guide, interactive television
applications and transactional services such as home banking and other
electronic commerce. The introduction of these services should continue to help
Austar realize its objectives of increasing revenue and decreasing churn.
Moreover, these services should also generate incremental revenues with minimal
capital expenditures because these applications utilize existing customer
premise equipment.

In December 2000, we opened retail stores in three cities, Maroochydore, Cairns
and Townsville. These stores provide our customers with the opportunity to
experience the latest technology first hand and learn more about our products
and services. Products include interactive television, mobile phones and
Internet services.

MANAGEMENT AND EMPLOYEES. Austar United and its subsidiaries' management include
seven United employees. As of December 31, 2000, Austar United had approximately
1,700 employees. A number of these employees are parties to an "award" governing
the minimum conditions of their employment including probationary periods of
employment, rights upon termination, vacation, overtime and dispute resolution.

TELSTRASATURN

TelstraSaturn is the only provider of integrated telephone, pay television and
Internet services in New Zealand. These services are currently provided in the
greater Wellington area over a hybrid fiber cable ("HFC") network with an
overlay of traditional telephone lines. Service to Christchurch was launched in
early 2001. TelstraSaturn plans to create a state-of-the-art national broadband
network which will include a submarine fiber backbone linking Auckland,
Wellington and Christchurch during the next five years. Austar United owns 50.0%
of TelstraSaturn, a joint venture with Telstra. As of December 31, 2000,
TelstraSaturn's network had 95,437 serviceable homes for pay television,
telephone and data. As of that date, TelstraSaturn had 21,044 cable television
subscribers (22.1% penetration), 32,093 residential telephony customers and
45,146 data subscribers.

TELEPHONE SERVICES. TelstraSaturn offers full-feature local and long distance
telephone services and is the only full service telephone provider competing
with Telecom New Zealand ("Telecom"), the incumbent telephone provider.

Residential Services:
---------------------
Local access
Domestic and international long distance
Full suite of switch-based features (e.g., voicemail, call waiting, last
number dialed, etc.)
Traditional dial-up Internet access
High speed cable modem service

Business Services:
------------------
Local access
Domestic and international long distance service
Full suite of switch-based features
Centrex services
High speed cable modem service
Data services

TelstraSaturn has an interconnect agreement with Telcom, pursuant to which the
parties permit calls originating on one party's system to be terminated on the
other system.

PAY TELEVISION SERVICES. TelstraSaturn's programming strategy is to offer a wide
variety of high-quality channels at competitive prices. TelstraSaturn provides
its customers both pay television and free-to-air channels and is currently
offering a single tier of service consisting of 28 channels. TelstraSaturn's
standard pay television package currently consists of the following channels:

Channel Programming Genre
------- -----------------

TVI, TV2, TV3, TV4.................................. General entertainment (retransmitted)
BBC World........................................... World news
CNBC................................................ World financial news
CNN International................................... World news
MCM................................................. Music video
Channel V........................................... Music video
Discovery........................................... Science and nature
National Geographic................................. Culture and nature
Animal Planet....................................... Animal entertainment
TCM................................................. Classic movies
Cartoon Network..................................... Children's cartoon programming
Trackside........................................... TAB racing
Kidzone............................................. Local children's programming
Weather Channel..................................... Live weather from NZ MetService
Program Guide....................................... Programming line-up
FTV................................................. Fashion TV
Music Country....................................... Country music video
Elijah Television................................... Non-denominational religious programming
Worldnet............................................ U.S. information service news and science
TelstraSaturn SportsNet............................. Local/international sports
TelstraSaturn Home Cinema Preview Channel........... Pay-per-view movie previews
TelstraSaturn Montage Channel....................... A montage of TelstraSaturn's channels
TelstraSaturn on Screen Guide....................... An on-screen channel guide
Prime Channel....................................... General entertainment (retransmitted)
BBC World Service................................... BBC world service radio

In addition, TelstraSaturn offers 21 channels of pay-per-view movies pursuant to
distribution agreements with Hollywood Studios, including Warner Bros.,
Twentieth Century Fox, Universal Studios and Columbia TriStar. Eighteen of these
channels, branded "Saturn Home Cinema," feature general new release and library
movies with programming provided by four leading Hollywood studios. The most
popular movies are scheduled as "near video on demand" with frequent starting
times (generally every 15 or 30 minutes) over multiple channels. The three
remaining channels are adult movie channels and are available to hotels and
motels only. The pay-per-view movies are priced comparable to home video rental
rates. TelstraSaturn has been achieving pay-per-view buy rates of 100%, i.e. an
average of at least one pay-per-view buy per subscriber per month. TelstraSaturn
is exploring the possibility of expanding its pay-per-view offerings to include
sporting events and adult movies for its residential customers.

TelstraSaturn is currently negotiating with a number of programming providers to
expand its channel offerings. TelstraSaturn believes that its relationship with
Austar United provides it with a competitive advantage in obtaining a wide array
of quality programming at attractive prices.

INTERNET/DATA SERVICES. Currently, TelstraSaturn offers both traditional dial-up
and high speed cable modem-based Internet access to its business and residential
customers via Paradise. It also provides a platform for other ISPs to offer
Internet/data services. We believe that the provision of Internet/data services
represents significant revenue potential. TelstraSaturn is able to offer these
Internet/data services as part of a more attractive bundle of services for its
customers. This increases both the take-up rate for all of TelstraSaturn's
services and the take-up rate for second phone lines, thereby generating
incremental revenue. It also ensures that its customers will use TelstraSaturn's
telephone network for their data traffic.

PRICING. With its unique bundle of services, TelstraSaturn can offer a number of
attractive multiple service bundles, ranging from an entry level package of

cable television service, plus local telephone access and free local calls, for
NZ$49.90 per month to a package of two telephone lines (free local calls), cable
television service and unlimited internet usage for NZ$99.95 per month.
TelstraSaturn is able to offer a savings of 20.0% based on a customer buying the
services separately from multiple providers. These bundles are proving a very
effective means to drive penetration and increase revenue per home. Sky TV
("Sky"), TelstraSaturn's primary competitor, charges subscribers a monthly rate
of approximately NZ$42.20 for five channels of UHF programming with a one-time
installation fee of NZ$25.00 per subscriber. Sky's digital satellite service is
NZ$35.92 per month and has an installation fee of NZ$199.00.

MARKETING; CUSTOMER SUPPORT. TelstraSaturn's marketing strategy uses promotion
techniques proven in existing subscription television markets such as the U.S.
and Europe, including direct sales campaigns (door-to-door selling), direct mail
and telemarketing supported by a mass media brand awareness program.
TelstraSaturn already enjoys very high and positive brand awareness in the
market. There is considerable interest in purchasing its products and services.
Direct sales have proven to be the most effective technique in other new build
markets, particularly in areas where pay television is in its introductory
stage. Each of these techniques aims to communicate the selling points of the
telephone service, cable television and internet services and in particular the
advantages of purchasing multiple services from one provider. Homes are released
for marketing on a node by node basis as construction is completed, which allows
for a very targeted marketing program tailored to the unique demographic profile
of the territory and enables TelstraSaturn to capitalize on the product
awareness resulting from its construction efforts. TelstraSaturn's sales
strategy is designed to include an emphasis on the bundled offering and to
capitalize on the value, quality and customer service advantages associated with
a one-stop service provider. Customer service centers are located in Wellington
and Christchurch. The call management technology employed by TelstraSaturn is
scaleable and can be configured to support a national network expansion. In
addition, TelstraSaturn is currently developing a sophisticated marketing
database to assist the sales force in a targeted sales approach in future
marketing campaigns.

COMPETITION. TelstraSaturn's major telephone competitor is Telecom, New
Zealand's largest telecommunications service provider with nearly a 100% share
of local loop revenues, 75.0% of national and international toll revenues and
60.0% of cellular revenues. During 1996 and 1997, Telecom constructed an HFC
network to 70,000 homes in various parts of New Zealand and began offering a pay
television service. In 1998, Telecom discontinued its pay television service and
Telecom now appears to be pursuing an asymmetrical digital subscriber line
("ADSL") strategy for high speed internet access.

There are currently four broadcast networks in New Zealand as well as several
other free-to-air regional channels. The largest provider of subscription
television services in New Zealand is Sky, which operates a five-channel
encrypted UHF subscription television service and has recently launched a
20-channel digital satellite service. Sky offers a popular sports channel on an
exclusive basis. Telecom has entered into a resale agreement with Sky and is
currently experimenting with a bundled product in competition to TelstraSaturn.
This is currently available on a very limited basis. TelstraSaturn has entered
into a similar resale agreement with Sky but has not offered this product as the
returns are unattractive.

MANAGEMENT AND EMPLOYEES. United has appointed two of its employees to
management positions at TelstraSaturn. As of December 3l, 2000, TelstraSaturn
had approximately 790 full-time employees. Substantially all of TelstraSaturn's
employees are employed under individual employment contracts.

XYZ ENTERTAINMENT

Austar United and Foxtel each own 50.0% of XYZ Entertainment, a programming
venture that purchases, produces, edits, packages and transmits programming for
the Australian pay television market. XYZ Entertainment currently supplies five
channels of programming (the "XYZ Channels") in key genres to Austar and Foxtel,
Australia's two largest pay television operators, for distribution to their
subscribers. XYZ Entertainment collects a monthly fee per subscriber. As of
December 31, 2000, XYZ Entertainment provided programming for 1,091,533
subscribers.

Each of the XYZ Channels is separately managed as to product design and content
strategy by Austar United or one of XYZ Entertainment's licensors or joint
venture partners. The channels are:

Channel Programming Genre
------- -----------------

arena........................................ Drama, comedy, general entertainment,
programming and library movies
Channel [V].................................. Music video with local presenters
Discovery Channel............................ Documentary, adventure, history and lifestyle
The Lifestyle Channel........................ Personal and home improvements
Nickelodeon/Nick at Nite..................... Children's educational, entertainment and
cartoons/family-oriented drama and
entertainment
MusicMAX..................................... Music videos

MARKETING AND DISTRIBUTION. XYZ Entertainment's goal is to acquire quality
programming that will engender viewer loyalty. XYZ Entertainment focuses its
marketing efforts on creating, building and supporting channel identification
and brand awareness. The XYZ Channels also work closely with their distributors
on cooperative marketing efforts.

XYZ Entertainment has granted a subsidiary of Austar United the exclusive right
to distribute the XYZ Channels. This subsidiary in turn distributes them to
Austar and Foxtel pursuant to contracts with terms ranging from eight to 25
years for delivery through DTH, wireless cable and cable to their respective
subscribers bases. As a result, the XYZ Channels are available to the majority
of Australia's approximately six million television households. In particular,
the cable carriage agreement with Foxtel, which expires in 2020, requires Foxtel
to carry the XYZ Channels on its basic package and provides for minimum
subscriber guarantees. C&W Optus also has an agreement for the DTH and wireless
cable distribution of the XYZ Channels outside of Austar's service area,
although C&W Optus has not committed to a commercial roll-out of DTH or wireless
cable services.

PRODUCTION AND ACQUISITION OF PROGRAMMING. XYZ Entertainment produces or
licenses programming from a wide array of suppliers for its channels. As the
first Australian pay television programming provider, XYZ Entertainment has long
standing relationships with international content providers, as well as
Australian programming producers and on-air personalities. We believe that this
provides XYZ Entertainment with a significant competitive advantage in acquiring
and producing new programming for the Australian pay television market.

In July 1995, XYZ Entertainment and Discovery Asia executed a 12-year exclusive
carriage agreement whereby a localized version of the Discovery Channel replaced
the existing documentary channel developed by XYZ Entertainment. We believe that
this arrangement allows XYZ Entertainment to offer subscribers higher quality
programming at a lower cost to XYZ Entertainment.

XYZ Entertainment and Nickelodeon, a division of Viacom, have established a
50/50 Australian joint venture that produces and distributes an Australian
version of Nickelodeon/Nick at Nite, which began distribution in October 1995.
This channel contains both locally produced and internationally-sourced
programming. XYZ Entertainment pays the joint venture a monthly per subscriber
license distribution fee and profits of the joint venture are shared equally by
Nickelodeon and XYZ Entertainment.

Since March 1997, XYZ Entertainment has produced a music video channel, Channel
[V]. Under a long term agreement with Channel [V] Music Networks, a joint
venture between Star TV and several record companies including BMG, EMI, Sony
and Warner Music, XYZ Entertainment can use the Channel [V] trademark,
promotional materials and management and has access to Channel [V]'s favorable
record programming arrangements. A significant portion of the content for
Channel [V] is produced locally, some of which is distributed internationally to
other Channel [V] Music Network channels.

XYZ Entertainment produces promotional materials and acquires programming for
arena and The Lifestyle Channel at prices its management considers to be
favorable. XYZ Entertainment is pursuing supply agreements and potential joint
venture arrangements with a number of other international programming suppliers.
We believe there is a sufficient supply of programming available to XYZ
Entertainment at competitive rates.

EMPLOYEES. As of December 31, 2000, XYZ Entertainment had approximately 100
employees.

OTHER INTERESTS

Main Event Television (formerly Content Co.) was established in August 1998 as a
joint venture among Austar (33.3%), Optus (33.3%) and Foxtel (33.3%). Main Event
Television produces Adults Only, a pay-per-night adult channel, and Main Event,
a pay-per-view event channel, for the joint venture parties.

The Weather Channel Australia Pty Limited (formerly Weather 21), 100% owned by
Austar United, is a Sydney-based company which produces The Weather Channel in
its own production studio. The Weather Channel, launched in January 1999,
provides 24-hour weather coverage and is currently offered exclusively to Austar
subscribers in the basic package.

In January 2000, AUB acquired a 50.0% interest in Massive Media Pty Limited
("Massive Media"). Massive Media owns 100% of Massive Interactive Pty Limited,
an Internet development company, and 75.0% of Massive Technologies Pty Limited,
a software company focused on Internet applications development.

In April 2000, Saturn purchased Paradise Net Limited, an ISP that has 33,000
subscribers, primarily residential, throughout New Zealand. Paradise Net Limited
was subsequently merged into TelstraSaturn.

In April 2000, AUB purchased Artson Pty Limited, an ISP that does business under
the name "OntheNet" and has approximately 6,000 subscribers on the Gold Coast in
Queensland, Australia.

In June 2000, AUB acquired certain assets of Ultranet, an ISP that has
approximately 5,000 subscribers in the Townsville area.

In October 2000, AUB acquired certain assets of eisa Limited, a Melbourne based
ISP. These assets include approximately 49,100 subscribers in metropolitan and
regional Australia.

In October 2000, Austar United acquired a 51.2% interest in TVSN. TVSN is a
retailer of merchandise over both the pay television and Internet platforms in
Australia and New Zealand. TVSN produces all of its content from its production
studio in Sydney.

After a decision in February 2000 by the Australian Communications Authority
("ACA") to allow the conversion of licenses, Austar United paid A$43.1 ($24.9)
million to convert its five year apparatus licenses to fifteen year spectrum
licenses.

In November 2000, Austar United purchased certain spectrum rights from
Television and Radio Broadcasting Services Pty Limited ("TARBS"). This spectrum
will give Austar United bandwidth in several cities (Sydney, Melbourne,
Brisbane, Camberra, Adelaide and Perth) suitable for high speed broadband data,
video (including interactive television) and ultimately voice telephony and
potentially Voice over Internet Provider ("IP") technology.

TECHNOLOGIES EMPLOYED BY THE COMPANY

We currently use three principal transmission technologies in the deployment of
our pay television services in Australia and New Zealand. These technologies are
as follows: (i) DTH satellite broadcast services, (ii) MMDS or wireless cable
and (iii) wireline cable or CATV, the technology with which pay television
services are most frequently delivered in the United States. We have carefully
evaluated the characteristics of the markets in which we are currently operating
or planning to operate pay television systems and have chosen what we believe to
be the most appropriate transmission technology for each. While these
transmission technologies are, in general, similar with respect to picture
quality, all such technologies offer improved picture quality compared to what
has historically been offered by over-the-air broadcasters.

DTH transmits encoded signals directly from a satellite to a subscriber's
premises, where it is decoded. Currently in Australia, all DTH subscription
television services are transmitted via the Optus Network Satellite using High
Performance Beams ("HP Beams") covering certain geographic areas (commonly
referred to as a satellite "footprint"). All of Austar's franchise areas are
within the Optus Network Satellite footprint. Since this signal will be
transmitted at a high power level and frequency utilizing MPEG II digital
technology, its reception can be accomplished with a relatively small (26-35
inch) dish mounted on a rooftop or in the yard for the households located within
the innermost satellite transmission footprint and with a slightly larger (35-47
inch) dish for the households located outside the innermost footprint. Austar is
using DTH transmission technology for homes in its MMDS markets that are not
reachable by its MMDS signals as well as for homes in its franchise areas where
household densities do not support the construction of MMDS systems.

MMDS is a microwave distribution system for which frequency bands are utilized
for transmission of the programming services. MMDS signals originate from a
head-end facility, which receives satellite-delivered programming services and
delivers such programming via an encoded microwave signal from transmitters
located on a tower or on top of a building to a small receiving antenna located
at a subscriber's premises, where the microwave signals are decoded. MMDS
transmission requires a clear line-of-sight because microwave frequencies will
not pass through obstructions; however, many signal blockages can be overcome
through the use of low power signal repeaters which retransmit an otherwise
blocked signal over a limited area. The initial construction costs of MMDS
generally are significantly lower than a wireline cable or DTH system. We are
using MMDS transmission technology in Australia, where housing density and
topography make MMDS the most cost effective technology.

A wireline cable television system is a network of coaxial or fiber-optic
transmission cables through which programming is transmitted to a subscriber's
premises from the system's head-end facility, which receives satellite and
tape-delivered programming. Wireline cable television offers a wide bandwidth
that generally allows the transmission of a larger number of channels than MMDS.
When constructed with a HFC network, as we are doing in New Zealand, the
system's infrastructure can be used to deliver telephone and data services. The
primary disadvantages of a wireline cable network are the higher costs of
construction, especially in areas of low housing density, and the length of time
required to construct the network. We are constructing wireline cable systems in
New Zealand and, due to topography and housing densities, are constructing a
wireline cable system in one market in Australia.

REGULATION

AUSTRALIA. The provision of subscription television services in Australia is
regulated by the Australian federal government under various Commonwealth
statutes. In addition, State and Territory laws, including environmental and
consumer contract legislation, may impact the construction and maintenance of a
transmission system for subscription television services, the content of those
services, as well as on various aspects of the subscription television business
itself.

The Australia Broadcasting Services Act of 1992 ("BSA") regulates the ownership
and operation of all categories of television and radio services in Australia
including wireline cable, DTH, MMDS or any other means of transmission. The BSA
regulates subscription television broadcasting services by requiring each
service to have an individual license. Companies associated with Austar hold
approximately 150 television broadcasting licenses. Each license is issued
subject to certain conditions. The government may vary or revoke license
conditions or may, by written notice, specify additional conditions.

Foreign ownership of "company interests" of pay television broadcasting licenses
is limited to 20.0% by a single foreign person and an aggregate of 35.0% by all
foreign persons. The BSA licenses used for distributing Austar's pay television
services are held by Australian companies for the purposes of the BSA.

EMPLOYEES

The Company has no employees. Certain management, technical, administrative,
accounting, tax, legal, financial reporting and other services for the Company
are currently provided by United and UAP pursuant to the terms of a management
agreement. In addition, United supplies certain employees to Austar United,
Austar, AUB and TelstraSaturn pursuant to a secondment agreement. See Item 13
"Certain Relationships and Related Transactions."

(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
----------------------------------------------------------------------------

For information applicable to this Item, see the notes to the consolidated
financial statements contained in Item 14.

ITEM 2. PROPERTIES
- -------------------

Our executive offices are located in Denver, Colorado, in space leased by United
and provided to the Company through the UAP Management Agreement as described in
Item 13 "Certain Relationships and Related Transactions." In management's
opinion, these facilities are sufficient to meet the current and foreseeable
future needs of its operating companies.

Austar United and Austar lease office space in Sydney for administrative offices
and Austar has established four regional offices in leased space in certain
areas where it has launched service. Austar also leases locations for smaller
local offices in most of its markets to handle local customer maintenance,
marketing and installation, however, a number of these sites have been closed in
the past year. In addition, Austar leases facilities to house the head-end
facility and transmitter tower in each of its markets. The NCOC is located in
leased facilities in the Gold Coast. Generally, these Austar facilities are
leased with terms of three to six years, with renewal options in many instances.
Austar believes that its leased facilities are sufficient for its foreseeable
needs and that it has access to a sufficient supply of additional facilities in
its various markets, should it require more space.

In the fourth quarter of 2000, Austar agreed to enter into an agreement to lease
premises being built on the Gold Coast subject to certain conditions. The
premises will provide facilities for all customer service and technical and
administrative staff currently located on the Gold Coast. It is anticipated the
premises will be ready for use in 2002.

ITEM 3. LEGAL PROCEEDINGS
- --------------------------

We are not a party to any material legal proceedings, nor are we currently aware
of any threatened material legal proceedings. From time to time, we may become
involved in litigation relating to claims arising from operations in the normal
course of business.

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

No matters have been submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 2000.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
- --------------------------------------------------------------------------------

The common stock of the Company is not publicly traded. The Company has paid no
cash dividends since formation. The Company is a holding company with no
independent operations of its own and, as such, its ability to pay cash
dividends is dependent upon distributions from its operating companies. Such
distributions are limited by contractual or other obligations of such operating
companies and by the Company's bond indentures. In addition, the ability of the
operating companies to distribute funds may be limited by the current or future
regulations of the countries in which they are located.

Austar United's ordinary shares are traded on the Australian Stock Exchange
under the symbol "AUN". The following table shows the range of high and low
sales prices reported on the Australian Stock Exchange, since Austar United's
IPO in July 1999.
High Low
---- ---
Year ended December 31, 1999:
Third Quarter (from July 1999)........................ A$5.510 A$4.460
Fourth Quarter........................................ A$6.700 A$4.350
Year ended December 31, 2000:
First Quarter......................................... A$9.900 A$5.523
Second Quarter........................................ A$8.500 A$4.850
Third Quarter......................................... A$6.550 A$3.900
Fourth Quarter........................................ A$4.800 A$1.590

ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------

The following selected consolidated financial data as of and for the years ended
December 31, 2000, 1999, 1998, 1997 and 1996 have been derived from the
Company's audited consolidated financial statements. The data set forth below is
qualified by reference to and should be read in conjunction with the Company's
audited consolidated financial statements including the notes and Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

For the Years Ended December 31,
---------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
(In thousands, except share and per share amounts)

Statement of Operations Data:
Revenue.................................................... $ 177,313 $ 151,722 $ 89,819 $ 68,961 $ 24,977
Operating expense.......................................... (155,716) (118,731) (71,149) (52,703) (22,865)
Selling, general and administrative expense................ (77,709) (76,348) (55,434) (53,312) (34,041)
Depreciation and amortization.............................. (105,899) (104,720) (97,140) (80,802) (36,269)
---------- ---------- ---------- ---------- ----------
Operating loss........................................... (162,011) (148,077) (133,904) (117,856) (68,198)
Gain on issuance of common equity securities
by subsidiary............................................. 61,172 248,758 - - -
Interest income............................................ 15,481 6,253 207 1,569 5,544
Interest expense........................................... (80,303) (69,470) (56,705) (43,994) (22,194)
Other income (expense), net................................ 3,042 (7,936) (5,590) (6,385) 90
Income tax benefit (expense)............................... 727 (993) - - -
Minority interest in subsidiary............................ 58,559 18,407 - 1,018 2,186
Share in results of affiliated companies, net.............. (18,068) (6,351) (10,299) (2,408) (5,414)
---------- ---------- ---------- ---------- ----------
Net (loss) income ......................................... $ (121,401) $ 40,591 $ (206,291) $(168,056) $ (87,986)
========== ========== ========== ========== ==========
Basic net (loss) income per common share................... $ (6.59) $ 2.28 $ (14.02) $ (12.12) $ (6.44)
========== ========== ========== ========== ==========
Basic weighted-average number of shares outstanding........ 18,426,187 17,810,254 14,718,857 13,864,941 13,670,832
========== ========== ========== ========== ==========
Diluted net (loss) income per common share................. $ (6.59) $ 2.23 $ (14.02) $ (12.12) $ (6.44)
========== ========== ========== ========== ==========
Diluted weighted-average number of shares outstanding. 18,426,187 18,199,726 14,718,857 13,864,941 13,670,832
========== ========== ========== ========== ==========
Other Data:
Operating loss............................................. $ (162,011) $ (148,077) $ (133,904) $ (117,856) $ (68,198)
Depreciation and amortization............................ 105,899 104,720 97,140 80,802 36,269
Non-cash stock-based compensation........................ 9,439 22,540 - - -
----------- ---------- ---------- ---------- ----------
Consolidated Adjusted EBITDA (1)......................... $ (46,673) $ (20,817) $ (36,764) $ (37,054) $ (31,929)
=========== ========== ========== ========== ==========

- -------------
(1) "Adjusted EBITDA" represents net operating earnings before depreciation,
amortization and stock-based compensation charges. Industry analysts
generally consider Adjusted EBITDA to be a helpful way to measure the
performance of cable television operations and communications companies.
Adjusted EBITDA should not, however, be considered a replacement for net
income, cash flows or for any other measure of performance or liquidity
under U.S. GAAP, or as an indicator of a company's operating performance.
The Company's presentation of Adjusted EBITDA may not be comparable to
statistics with a similar name reported by other companies. Not all
companies and analysts calculate EBITDA in the same manner.

As of December 31,
-----------------------------------------------------------------------
2000 1999 1998 1997 1996
------------ ------------ ------------ ----------- -----------
Balance Sheet Data: (In thousands)

Cash, cash equivalents, restricted cash and
short-term liquid investments.......................... $ 107,094 $ 275,421 $ 944 $ 25,089 $ 37,860
Property, plant and equipment, net...................... $ 124,479 $ 219,394 $ 110,351 $ 183,101 $ 193,170
Total assets............................................ $ 599,251 $ 666,591 $ 216,032 $ 279,032 $ 319,323
Senior discount notes and other long-term debt.......... $ 693,135 $ 669,096 $ 424,726 $ 387,094 $ 250,057
Total liabilities....................................... $ 785,305 $ 747,425 $ 510,661 $ 431,769 $ 315,276
Total stockholders' (deficit) equity.................... $(254,861) $(176,654) $(294,629) $(164,153) $ 4,047

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
- --------------------------------------------------------------------------------

The following discussion and analysis of the Company's financial condition and
results of operations covers the years ended December 31, 2000, 1999 and 1998
and should be read in conjunction with the Company's condensed consolidated
financial statements and related notes thereto included elsewhere herein. Such
consolidated financial statements provide additional information regarding the
Company's financial activities and condition.

We have no employees of our own. UAP, our parent, provides various management,
financial reporting, accounting and other services for us pursuant to the terms
of the UAP Management Agreement. Until June 24, 1999, Austar and Saturn were
also parties to technical service agreements with UAP for which such operating
companies paid to UAP fees based on their respective gross revenues. Effective
June 24, 1999, these technical service agreements with UAP were assigned to
Austar United and a management agreement between United and Austar United was
executed pursuant to which United performs certain technical and consulting
services in return for a monthly fee. See Item 13 "Certain Relationships and
Related Transactions."

Certain statements in this report may constitute "forward-looking statements"
within the meaning of the federal securities laws. Such forward-looking
statements may include, among other things, statements concerning our plans,
objectives and future economic prospects, expectations, beliefs, future plans
and strategies, anticipated events or trends and similar expressions concerning
matters that are not historical facts. 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 entities in which
the Company has interests), 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 other things, changes in
television viewing preferences and habits by subscribers and potential
subscribers, their acceptance of new technology, programming alternatives and
new services offered by the Company, our ability to secure adequate capital to
fund system growth and development, risks inherent in investment and operations
in foreign countries, changes in government regulation, changes in the nature of
key strategic relationships with partners and joint venturers, and other factors
referenced in this report. These forward-looking statements speak only as of the
date of this report, and we expressly disclaim any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement contained
herein, to reflect any change in the Company's expectations with regard thereto,
or any other change in events, conditions or circumstances on which any such
statement is based.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2000, we had invested approximately $535.7 million in our
projects. These fundings do not include amounts contributed by shareholders
other than the Company, proceeds from the Austar United IPO or operating
subsidiary bank borrowings.

As of
December 31,
Sources of Fundings: 2000
-------------
(In thousands)

Senior discount notes proceeds, net of offering costs................................ $244,652
Cash contributions and other equity from parent (1)(2)............................... 283,958
Cash received for interest........................................................... 7,124
--------
Total........................................................................... $535,734
========

As of
December 31,
Uses of Fundings: 2000
-------------
(In thousands)
Austar United (1).................................................................... $418,811
Saturn............................................................................... 44,612
XYZ Entertainment.................................................................... 16,738
Other (2)............................................................................ 55,573
--------
Total........................................................................... $535,734
========

(1) Includes issuance/use of $29.8 million and $6.2 million in United
convertible preferred stock in 1995 and 1998, respectively, to acquire
additional economic interests in Australia.
(2) Includes $17.2 million paid by United to purchase 2.0% of UAP from
Kiwi Cable in December 1999.

As of December 31, 2000, our working capital and projected operating cash flow
are not sufficient to fund our budgeted expenditures and pay interest on our
indebtedness over the next 12 months. Based on current plans, Austar United will
need approximately A$135.5 ($75.7) million, in addition to its $106.2 million of
cash on hand, to continue to fund the operations of its business and cover the
variable capital expenditure cost of getting digital set top boxes and broadband
data equipment into homes and businesses in its market in regional Australia and
New Zealand. In March 2001, Austar United announced a A$200.0 ($111.8) million
pro rata renounceable rights issue which is expected to be completed by the end
of May 2001. United will underwrite the issue and subscribe for its pro rata
entitlement. In addition, United has agreed to acquire any shares not subscribed
to by other shareholders. We believe the proceeds from this offering will be
sufficient for Austar United's funding requirements through 2001. Our senior
discount notes (the "Notes") begin accruing interest on a cash-pay basis May 15,
2001, with the first payment of $34.5 million due November 15, 2001. We are
considering alternatives to payment of this interest, including refinancing of
the Notes. There can be no assurance that we will be successful in obtaining all
or a portion of our anticipated funding needs.

On April 23, 1999, Austar executed a A$400.0 ($262.3) million syndicated senior
secured debt facility (the "Austar Bank Facility") to refinance the existing
bank facility and to fund Austar's subscriber acquisition and working capital
needs. The Austar Bank Facility consists of two sub-facilities: (i) A$200.0
million amortizing term facility ("Tranche 1") and (ii) A$200.0 million cash
advance facility ("Tranche 2"). Tranche 1 was used to refinance the existing
bank facility, and Tranche 2 is available upon the contribution of additional
equity on a 2:1 debt-to-equity basis. The Austar Bank Facility bears interest at
the professional market rate in Australia plus a margin ranging from 1.75% to
2.25% based upon certain debt to cash flow ratios. The average rate incurred on
this facility was 7.4% and 7.6% during the years ended December 31, 2000 and
1999, respectively. The Austar Bank Facility is fully repayable pursuant to an
amortization schedule beginning December 31, 2002 and ending March 31, 2006. As
of December 31, 2000, Austar had drawn A$200.0 million under Tranche 1 and
A$200.0 million under Tranche 2, for a total outstanding balance of A$400.0
($223.5) million.

In September 2000, TelstraSaturn completed a NZ$900.0 ($399.6) million debt
facility agreement (the "TelstraSaturn Bank Facility") to refinance NZ$300.0
($133.2) million of an existing facility, finance capital expenditures to build
the cable network in New Zealand and acquire spectrum and other businesses.
Tranche A of the facility, which totals NZ$380.0 ($168.7) million, is available
immediately. Tranche B of the facility, which totals NZ$520.0 ($230.9) million,
requires an equity contribution from Telstra and Austar United of NZ$0.50
($0.22) for every NZ$1.00 ($0.43) of Tranche B debt drawn. The interest rate on
the facility is a floating rate plus a 1.75% margin. As of December 31, 2000,
the balance on the TelstraSaturn Bank Facility was NZ$320.0 ($142.1) million.

STATEMENTS OF CASH FLOWS

We had cash and cash equivalents of $5.6 million as of December 31, 2000, a
decrease of $0.4 million from $6.0 million as of December 31, 1999. Cash and
cash equivalents as of December 31, 1999 increased $5.8 million from $0.2
million as of December 31, 1998 to $6.0 million as of December 31, 1999.

For the Years Ended December 31,
-----------------------------------------------
2000 1999 1998
------------ ------------ ------------
(In thousands)

Cash flow from operating activities.................................. $ (46,936) $ (18,856) $ (23,842)
Cash flow from investing activities.................................. (172,018) (388,410) (83,181)
Cash flow from financing activities.................................. 229,102 415,089 94,667
Effect of exchange rates on cash..................................... (10,559) (1,976) 193
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents................. (411) 5,847 (12,163)
Cash and cash equivalents at beginning of period..................... 6,028 181 12,344
--------- --------- ---------
Cash and cash equivalents at end of period........................... $ 5,617 $ 6,028 $ 181
========= ========= =========

YEAR ENDED DECEMBER 31, 2000

Cash and cash equivalents decreased $0.4 million from $6.0 million as of
December 31, 1999 to $5.6 million as of December 31, 2000. Principal sources of
cash during the year ended December 31, 2000 included net proceeds from the sale

of short-term liquid investments of $132.0 million, proceeds from the issuance
of common equity securities by a subsidiary of $102.4 million, cash
contributions from parent of $69.4 million, borrowings on bank facilities of
$57.6 million and other sources totaling $6.1 million.

During the year ended December 31, 2000, cash was used principally for capital
expenditures of $113.8 million as Austar continues to expand its business into
the data market, purchase of additional shares in its subsidiary, United Austar,
Inc. for $65.6 million, the funding of operating activities of $46.9 million,
the purchase of spectrum under the agreement with Television and Radio
Broadcasting Services Pty Ltd. ("TARBS") of $63.4 million, the purchase of
additional spectrum and fees to convert five year apparatus license agreements
to fifteen year spectrum licenses of $33.0 million, investments in and advances
to affiliated companies of $16.9 million, new acquisitions of $16.2 million and
other uses totaling $12.1 million, including the effect of exchange rates on
cash of $10.6 million.

YEAR ENDED DECEMBER 31, 1999

Cash and cash equivalents increased $5.8 million from $0.2 million as of
December 31, 1998 to $6.0 million as of December 31, 1999. Principal sources of
cash during the year ended December 31, 1999 included proceeds from the Austar
United IPO of $292.8 million, borrowings on the Austar Bank Facility and the
Saturn Bank Facility of $229.9 million, cash contributions from parent of $29.7
million and other investing and financing sources totaling $1.4 million.

During the year ended December 31, 1999, cash was used principally for net
purchases of short-term liquid investments of $264.7 million, payment of the old
Austar bank facility of $129.1 million, purchases of property, plant and
equipment totaling $117.8 million to continue new subscriber connections at
Austar and the build-out of existing projects, the funding of operating
activities of $18.9 million, deferred financing costs of $8.0 million,
investments in and advances to affiliated companies of $5.2 million and other
uses totaling $4.3 million.

YEAR ENDED DECEMBER 31, 1998

Cash and cash equivalents decreased $12.1 million from $12.3 million as of
December 31, 1997 to $0.2 million as of December 31, 1998. Principal sources of
cash during the year ended December 31, 1998 included cash contributions from
parent of $58.9 million, borrowings on the old Austar bank facility of $39.5
million, net proceeds from the sale of short-term investments of $11.6 million
and other sources totaling $0.3 million.

During the year ended December 31, 1998, cash was used principally for the
purchase of property, plant and equipment totaling $71.5 million to continue new
subscriber connections and the build-out of existing projects, the funding of
operating activities of $23.8 million, investments in affiliated companies and
acquisition of assets of $11.4 million, the deconsolidation of Saturn of $9.9
million, the payment of capital leases and other debt of $3.3 million and other
investing and financing uses of $2.5 million.

RESULTS OF OPERATIONS

EXCHANGE RATES. We translate revenue and expense from our foreign subsidiaries
using the weighted-average exchange rates during the period. These rates and the
spot rates for the end of each period are listed below.

Australian Australian
Dollars Dollars
---------- ----------

For the year ended December 31, 2000........ 1.7361 Spot rate as of December 31, 2000.......... 1.7897
For the year ended December 31, 1999........ 1.5475 Spot rate as of December 31, 1999.......... 1.5244
For the year ended December 31, 1998........ 1.5958 Spot rate as of December 31, 1998.......... 1.6332

REVENUE. Our revenue increased $25.6 million and $61.9 million for the years
ended December 31, 2000 and 1999, respectively, compared to the corresponding
amounts in the prior year as follows:

For the Years Ended December 31,
-----------------------------------------------
2000 1999 1998
------------ ------------ ------------
(In thousands)

Video................................................................ $163,938 $146,881 $89,819
Telephone............................................................ 3,898 4,107 -
Internet/data........................................................ 5,067 - -
Other................................................................ 4,410 734 -
-------- -------- -------
Total revenue..................................................... $177,313 $151,722 $89,819
======== ======== =======

Our revenue increased $25.6 million, or 16.9%, from $151.7 million for the year
ended December 31, 1999 to $177.3 million for the year ended December 31, 2000,
despite a 12.2% devaluation of the Australian dollar to the U.S. dollar from
period to period. This increase was primarily due to Austar's video subscriber
growth (421,165 at December 31, 2000 compared to 381,763 at December 31, 1999).
The average monthly revenue per video subscriber remained flat from an average
per subscriber of A$53.71 ($34.71) for the year ended December 31, 1999 to an
average rate of A$53.68 ($30.92) per subscriber for the year ended December 31,
2000.

Our revenue increased $61.9 million, or 68.9%, from $89.8 million for the year
ended December 31, 1998 to $151.7 million for the year ended December 31, 1999,
including a 3.0% strengthening of the Australian dollar to the U.S. dollar from
period to period. This increase was primarily due to Austar's video subscriber
growth (381,763 at December 31, 1999 compared to 288,721 at December 31, 1998)
and increased average monthly revenue per video subscriber as Austar continues
to expand the content of its television service. The average monthly revenue per
video subscriber increased A$6.71 ($5.26) from an average per subscriber of
A$47.00 ($29.45) for the year ended December 31, 1998 to an average rate of
A$53.71 ($34.71) per subscriber for the year ended December 31, 1999, a 14.3%
increase.

ADJUSTED EBITDA. Adjusted EBITDA loss increased $25.9 million and decreased
$16.0 million for the years ended December 31, 2000 and 1999, respectively,
compared to the corresponding amounts in the prior year as follows:

For the Years Ended December 31,
-----------------------------------------------
2000 1999 1998
------------ ------------ ------------
(In thousands)

Video................................................................ $(12,586) $(10,923) $(27,166)
Telephone............................................................ (3,839) (1,160) -
Internet/data........................................................ (21,007) - -
Other................................................................ (9,241) (8,734) (9,598)
-------- -------- --------
Total Adjusted EBITDA............................................. $(46,673) $(20,817) $(36,764)
======== ======== ========

Our Adjusted EBITDA loss increased by $25.9 million, or 124.5%, from negative
$20.8 million for the year ended December 31, 1999 to negative $46.7 million for
the year ended December 31, 2000. This increase in Adjusted EBITDA loss is
primarily due to Austar United's development and start-up costs associated with
the launch of AUB's Internet business, as well as increased programming costs
payable in U.S. dollars as the Australian dollar continued to weaken during the
year, higher costs for new branding and product launch, higher costs for
marketing and advertising during the Olympics, increased churn following the
Olympics and increased churn from partial absorption of the new Australian goods
and services tax.

Our Adjusted EBITDA loss improved by $16.0 million, or 43.5%, from negative
$36.8 million for the year ended December 31, 1998 to negative $20.8 million for
the year ended December 31, 1999. This improvement in Adjusted EBITDA loss for
the comparable periods from year to year was primarily due to Austar achieving
incremental sales growth while keeping certain costs fixed, such as the NCOC,
corporate management staff and media-related marketing costs.

GAIN ON ISSUANCE OF COMMON EQUITY SECURITIES BY SUBSIDIARY. We recorded a gain
of $61.2 and $248.8 million on the issuance of common equity securities and
restructuring of assets of Austar United for the years ended December 31, 2000
and 1999, respectively.

Restructuring of Assets. In June 1999, the 25.0% interest in XYZ Entertainment
held by UAP was exchanged for an 8.3% ownership interest in United Austar, Inc.,
increasing our interest in XYZ Entertainment to 50.0%. Based on the carrying
value of our investment in United Austar, Inc., we recognized a gain of $22.3
million from the resulting step-up in the carrying amount of our investment in
United Austar, Inc., in accordance with SAB 51.

Initial Public Offering. On July 27, 1999, Austar United successfully completed
the Austar United IPO, selling 103.5 million shares on the Australian Stock
Exchange raising gross and net proceeds at A$4.70 ($3.03) per share of A$486.5
($313.6) million and A$453.6 ($292.8) million, respectively. Based on the
carrying value of our investment in Austar United as of July 27, 1999, we
recognized a gain of $226.5 million from the resulting step-up in the carrying
amount of our investment in Austar United, in accordance with SAB 51. No
deferred taxes were recorded related to this gain due to our intent on holding
our investment in Austar United indefinitely.

March 2000 Offering. On March 29, 2000, Austar United successfully completed a
second offering selling 20.0 million shares on the Australian Stock Exchange
raising gross and net proceeds at A$8.50 ($5.20) per share of A$170.0 ($104.0)
million and A$167.5 ($102.4) million, respectively. Based on the carrying value
of our investment in Austar United as of March 29, 2000, we recognized a gain of
$61.2 million from the resulting step-up in the carrying amount of our
investment in Austar United, in accordance with SAB 51. No deferred taxes were
recorded related to this gain due to our intent on holding our investment in
Austar United indefinitely.

INTEREST INCOME. Interest income increased $9.2 million from $6.3 million for
the year ended December 31, 1999 to $15.5 million for the year ended December
31, 2000. The increase was attributable to the increase in short-term liquid
investment balances due to the equity offerings in 1999 and 2000.

Interest income increased $6.1 million from $0.2 million for the year ended
December 31, 1998 to $6.3 million for the year ended December 31, 1999. This
increase was primarily due to the increase in short-term liquid investment
balances due to the Austar United IPO.

INTEREST EXPENSE. Interest expense increased $10.8 million, or 15.5%, from $69.5
million for the year ended December 31, 1999 to $80.3 million for the year ended
December 31, 2000. This increase was due to interest expense related to the
Austar Bank Facility which was $18.5 million in 2000 compared to $16.4 million
in 1999 and continued accretion on the Notes.

Interest expense increased $12.8 million, or 22.6%, from $56.7 million for the
year ended December 31, 1998 to $69.5 million for the year ended December 31,
1999. This increase was due to interest expense related to the Austar Bank
Facility, which was $16.4 million in 1999 compared to $7.5 million in 1998 and
continued accretion on the Notes.

MINORITY INTEREST IN SUBSIDIARY. The minority interests' share of losses
increased $40.2 million, or 218.5%, from $18.4 million for the year ended
December 31, 1999 to $58.6 million for the year ended December 31, 2000. Austar
United's IPO in July 1999 and second offering in March 2000 reduced our
ownership from 100% to a cumulative 72.9% as of December 31, 2000. For
accounting purposes, we continue to consolidate 100% of the results of
operations of Austar United, then deduct the minority interests' share of losses
before arriving at net income (loss).

SHARE IN RESULTS OF AFFILIATED COMPANIES. Our share in results of affiliated
companies totaled a loss of $18.1 million, $6.4 million and $10.3 million for
the years ended December 31, 2000, 1999 and 1998, respectively, as follows:

For the Years Ended December 31,
-----------------------------------------------
2000 1999 1998
------------ ------------ ------------
(In thousands)

XYZ Entertainment (1)................................................ $ 7,049 $ (27) $ 55
TelstraSaturn/Saturn (2) (3)......................................... (24,503) (6,324) (10,354)
Other................................................................ (614) - -
-------- -------- --------
Total share in results of affiliated companies... ................. $(18,068) $ (6,351) $(10,299)
======== ======== ========

(1) In September 1998, UAP acquired an additional 25.0% interest in XYZ
Entertainment, which was exchanged for an 8.3% direct ownership
interest in United Austar, Inc. in June 1999, increasing our ownership
to 50.0%.
(2) Effective January 1, 1998, we discontinued consolidating the results
of operations of Saturn and returned to the equity method of
accounting due to certain minority shareholder's rights. Effective
August 1, 1999, we increased our ownership interest in Saturn to 100%
and began consolidating its results of operations.
(3) On April 6, 2000, Saturn merged with Telstra NZ, a wholly owned
subsidiary of Telstra. We discontinued consolidating the results of
operations of Saturn and returned to the equity method of accounting.

PROVISION FOR LOSSES ON INVESTMENT RELATED COSTS. The provision for losses on
marketable equity securities and investment related costs consists of our
write-off of various non-strategic investments.

SELECTED QUARTERLY FINANCIAL DATA. The following table presents selected
unaudited operating results for each of the last eight quarters through December
31, 2000. The Company believes that all necessary adjustments have been included
in the amounts stated to present fairly the quarterly results when read in
conjuction with the Company's consolidated financial statements and related
notes included elsewhere in this Form 10-K. Results of operations for any
particular quarter are not necessarily indicative of results of operations for a
full year or predictive of future periods.

Statement of Operations Data (Unaudited):
Revenue............................................................... $ 46,344 $ 42,547 $ 43,913 $ 44,509
========== ========== ========== ==========
Operating loss........................................................ $ (36,795) $ (33,810) $ (39,474) $ (51,932)
========== ========== ========== ==========
Net income (loss)..................................................... $ 19,447 $ (43,373) $ (49,103) $ (48,372)
========== ========== ========== ==========

Net income (loss) per common share:
Basic net income (loss)............................................ 1.09 (2.44) (2.76) (2.39)
========== ========== ========== ==========
Diluted net income (loss).......................................... 1.06 (2.44) (2.76) (2.39)
========== ========== ========== ==========

Weighted average number of common shares outstanding:

Basic ............................................................. 17,810,299 17,810,299 17,810,299 20,253,766
========== ========== ========== ==========
Diluted............................................................ 18,298,249 17,810,299 17,810,299 20,253,766
========== ========== ========== ==========

For the Three Months Ended
-----------------------------------------------------
March 31, June 30, September 30, December 31,
2000 2000 2000 2000
---------- ---------- ------------- ------------
(In thousands)
Statement of Operations Data (Unaudited):
Revenue............................................................... $ 30,432 $ 34,388 $ 41,745 $ 45,157
========== ========== ========== ==========
Operating loss........................................................ $ (28,944) $ (45,742) $ (28,158) $ (45,233)
========== ========== ========== ==========
Net (loss) income..................................................... $ (47,535) $ (52,269) $ 185,420 $ (45,025)
========== ========== ========== ==========
Net (loss) income per common share:
Basic net (loss) income............................................ (2.67) (2.93) 10.41 (2.53)
========== ========== ========= ==========
Diluted net (loss) income.......................................... (2.67) (2.93) 10.13 (2.53)
========== ========== ========= ==========

Weighted average number of common shares outstanding:
Basic ............................................................. 17,810,249 17,810,249 17,810,249 17,810,270
========== ========== ========== ==========
Diluted............................................................ 17,810,249 17,810,249 18,298,249 17,810,270
========== ========== ========== ==========

NEW ACCOUNTING PRINCIPLES. The Financial Accounting Standards Board ("FASB")
recently issued Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS 133"), which requires
that companies recognize all derivatives as either assets or liabilities in the
balance sheet at fair value. Under SFAS 133, accounting for changes in fair
market value of a derivative depends on its intended use and designation. In
June 1999, the FASB approved Statement of Financial Accounting Standards No.
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133 ("SFAS 137"). SFAS 137 amended the
effective date of SFAS 133, which is effective for the Company's first quarter
2001. The adoption does not have a material effect on the Company's results of
operation.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------

INVESTMENT PORTFOLIO

We do not use derivative financial instruments in our non-trading investment
portfolio. We place our cash and cash equivalent investments in highly liquid
instruments that meet high credit quality standards with original maturities at
the date of purchase of less than three months. Also, our short-term investments
are placed in liquid instruments that meet high credit quality standards with
original maturities at the date of purchase of between three and twelve months.
Credit exposure is limited to any one issue, issuer or type of instrument. These
investments are subject to interest rate risk and will fall in value if market
interest rates increase, however, we do not expect any material loss with
respect to our investment portfolio.

IMPACT OF FOREIGN CURRENCY RATE CHANGES

We are exposed to foreign exchange rate fluctuations related to the operating
subsidiaries' monetary assets and liabilities and the financial results of
foreign subsidiaries when their respective financial statements are translated
into U.S. dollars during consolidation. Our exposure to foreign exchange rate
fluctuations also arises from intercompany charges such as the cost of
equipment, management fees and certain other charges. These intercompany
accounts are predominantly denominated in the functional currency of the foreign
subsidiary.

Our operating companies' monetary assets and liabilities are subject to foreign
currency exchange risk as certain equipment purchases and payments for certain
operating expenses, such as programming expenses, are denominated in currencies
other than their own functional currency. In addition, certain of our operating
companies have notes payable and notes receivable which are denominated in a
currency other than their own functional currency. Foreign currency rate changes
also affect our share in results of our unconsolidated affiliates.

In general, we and our operating companies do not execute hedge transactions to
reduce our exposure to foreign currency exchange rate risk. Accordingly, we may
experience economic loss and a negative impact on earnings and equity with
respect to our holdings solely as a result of foreign currency exchange rate
fluctuations.

The countries in which our operating companies now conduct business generally do
not restrict the removal or conversion of local or foreign currency, however,
there is no assurance this situation will continue. We may also acquire
interests in companies that operate in countries where the removal or conversion
of currency is restricted.

INTEREST RATE SENSITIVITY

The table below provides information about our primary debt obligations. The
information is presented in U.S. dollar equivalents, which is our reporting
currency. The instrument's actual cash flows are denominated in both U.S.
dollars (the Notes) and Australian dollars (Austar Bank Facility).

As of December 31, 2000
-----------------------------
Book Value Fair Value
---------- ----------
(U.S. dollars, in thousands, except interest rates)

Long-term and short-term debt:
Fixed rate USD denominated Notes...................... $466,241 $320,365
Average interest rate............................... 14.0% 24.5%
Variable rate A$ denominated Austar Bank Facility..... $223,501 $223,501
Average interest rate............................... 7.4% 7.4%

The table below presents principal cash flows and related weighted-average
interest rates by expected maturity dates for our debt obligations. The
information is presented in U.S. dollar equivalents, which is our reporting
currency. The instrument's actual cash flows are denominated in both U.S.
dollars (the Notes) and Australian dollars (Austar Bank Facility).

As of December 31, 2000
------------------------------------------------------------------------------
2001 2002 2003 2004 2005 Thereafter Total
------- -------- -------- -------- -------- ----------- ----------
(U.S. dollars, in thousands)

Long-term and short-term debt:
Fixed rate USD denominated Notes.......... $ - $ - $ - $ - $ - $466,241 $466,241
Variable rate A$ denominated
Austar Bank Facility................... $ - $7,177 $39,474 $63,057 $75,873 $ 37,920 $223,501

We use interest rate swap agreements from time to time, to manage interest rate
risk on our floating rate debt facilities. Interest rate swaps are entered into
depending on our assessment of the market, and generally are used to convert the
floating rate debt to fixed rate debt. Interest differentials paid or received
under these swap agreements are recognized over the life of the contracts as
adjustments to the effective yield of the underlying debt, and related amounts
payable to, or receivable from, the counterparties are included in the
consolidated balance sheet.

Currently, we have four interest rate swaps to manage interest rate exposure on
the Austar Bank Facility. Two of these swap agreements expire in 2002 and
effectively convert an aggregate principal amount of A$50.0 ($27.9) million of
variable rate, long-term debt into fixed rate borrowings. The other two swap
agreements expire in 2004 and convert an aggregate principal amount of A$100.0
($55.9) million of variable rate, long-term debt into fixed rate borrowings. As
of December 31, 2000, the weighted-average fixed rate under these agreements was
5.7% compared to a weighted-average variable rate of 8.5%.

Fair values of the interest rate swap agreements are based on the estimated
amounts that we would receive or pay to terminate the agreements at the
reporting date, taking into account current interest rates and the current
creditworthiness of the counterparties.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------

The consolidated financial statements of the Company and the financial statement
schedules required by Regulation S-X are filed under Item 14 "Exhibits,
Financial Statement Schedules and Reports on Form 8-K."

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- -------------------------------------------------------------------------

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------

The directors and executive officers of the Company and their ages, along with
their respective position with the Company as of March 1, 2001 are set forth
below. All officers are appointed for an indefinite term serving at the pleasure
of the Board. The number of members on the Company's Board is currently fixed at
two.

Name Age Position
---- --- --------

Gene W. Schneider 74 Chairman of the Board
Michael T. Fries 38 Director, President and Chief Executive Officer
John C. Porter 43 Chief Executive Officer - Austar United
Jonathan G. Morphett 42 Chief Financial Officer - Austar United
Bruce M. Mann 45 Managing Director - Austar

GENE W. SCHNEIDER has served as Chairman of the Board for the Company and UAP
since their respective formation dates. He has also been Chairman of the Board
of Directors of United since its inception in May 1989. Mr. Schneider has also
served as United's Chief Executive Officer since October 1995 and served as its
President from October 1997 until he relinquished the title in September 1998.
Since June 1999, Mr. Schneider has served as a director of Austar United. Mr.
Schneider served as a member of the Supervisory Board of UPC from July 1995
until February 1999, when he became an advisor to the Supervisory Board. From
May 1989 to November 1991, Mr. Schneider served as Chairman of United Artists
Entertainment Company, then the third largest cable television company and the
largest theater owner in the world. He was a founder of United Cable Television
Corporation in the early 1950's and, as its Chairman and Chief Executive
Officer, helped build United Cable into the eighth-largest multiple system
operator in the United States prior to its merger with United Artists in 1989.
He has been active in cable television affairs and has served on the Board of
the National Cable Television Association ("NCTA"), and on numerous committees
and special projects thereof, since the NCTA's inception in the early 1950's.
Mr. Schneider is one of the original inductees into the NCTA's Cable Television
Pioneers. Mr. Schneider is an advisor to the Supervisory Board of chello
broadband N.V. and the Chairman of the Board of Advance Display Technologies,
Inc.

MICHAEL T. FRIES has served as a director of the Company and UAP since November
1996. He also serves as the Company's President and Chief Executive Officer. He
became a director of United in November 1999 and has also served as President
and Chief Operating Officer of United since September 1998. Mr. Fries has served
as a member of the UPC Supervisory Board since September 1998 and as Chairman of
the UPC Supervisory Board since February 1999. He has also served as President
and Chief Executive Officer of UAP since June 1995 and December 1995,
respectively, and Executive Chairman of Austar United since June 1999. In
addition, since September 1998, Mr. Fries has served as the President of United
Latin America, Inc. ("ULA"), a wholly owned subsidiary of United. In January
2000, he became a member of the chello broadband N.V. Supervisory Board and in
November 2000, a member of the Priority Telecom N.V. Supervisory Board. From
March 1990 to June 1995, Mr. Fries served as Senior Vice President, Development,
in which capacity he was responsible for managing United's acquisitions and new
business development activities, including United's expansion into the
Asia/Pacific, Latin America and European markets.

JOHN C. PORTER has served as the Chief Executive Officer and a director of
Austar United since June 1999 and served as the Managing Director of Austar from
July 1997 to December 1999. In these positions, Mr. Porter is the senior
operating liaison for telecommunications projects in the Asia/Pacific region.
From January 1997 to August 1999, Mr. Porter also served as the Chief Operating
Officer of UAP. From 1995 until January 1997, he served as the Chief Operating
Officer for Austar, where he was responsible for the design and deployment of
Austar's multi-channel/multi-point distribution system/satellite/cable
television network. Prior to joining Austar, Mr. Porter served as President of
the Ohio Division of Time Warner, Inc., which had over 250,000 cable customers.

JONATHAN G. MORPHETT has served as Chief Financial Officer for Austar United
since August 2000. Mr. Morphett is responsible for the financial operations of
Austar United. Immediately prior to joining Austar United, Mr. Morphett served
as the Managing Director, Corporate Finance, for Morgan Stanley Dean Witter
("Morgan Stanley") in Sydney where he was a key player in establishing a full
service investment bank in Australia. Previously, he worked for thirteen years
in Morgan Stanley's New York office. Mr. Morphett has extensive experience in
debt and equity financing transactions, mergers and acquisitions and corporate
structuring. He has worked primarily in the telecommunications and energy
sector.

BRUCE M. MANN has served as Managing Director of Austar since January 2000. In
this position, Mr. Mann has profit and loss and operational responsibility for
Austar's more than 400,000 pay television customers as well as operational
responsibility for the Company's mobile telephony and data businesses. From
April 1995 to December 1999, Mr. Mann served as Austar's Executive Director of
Marketing and Programming where he had responsibility for the group's consumer
marketing and sales efforts as well as its programming function. Additionally,
Mr. Mann has served as a director of XYZ Entertainment since 1997. From 1994
until joining Austar, Mr. Mann served as President, National Division, of Cross
Country Wireless, Inc., a U.S. provider of wireless multi-channel television
services where he had operational and profit and loss responsibility for Cross
Country's MMDS joint venture with Heartland Communications. From 1991 to 1994,
Mr. Mann served as Vice President-Marketing of Washington Redskins/Jack Kent
Cooke Stadium, Inc., and was responsible for its sports and entertainment
related promotion, advertising and marketing.

No family relationships exist between any named executive officer or director of
the Company.

During the past five years, none of the above directors and executive officers
of the Company has had any involvement in such legal proceedings as would be
material to an evaluation of his ability or integrity.

SENIOR MANAGEMENT. The following lists other officers who are not executive
officers of the Company but who make significant contributions to the Company
and its subsidiaries.

JAMES R. CLARK became a Vice President of the Company and UAP in August 1999. He
is also a Vice President of ULA, a position he has held since June 1999. Mr.
Clark has served as Vice President of Regional Operations for United since May
1999, where he oversees all operations in Asia/Pacific and Latin America. Prior
to his current positions, he served as the Regional Manager of Austar from 1997
to May 1999. From January 1996 to 1997, he served as Satellite Operations
Manager at Austar, where he was responsible for launching direct broadcast
satellite service in rural Australia. Prior to joining Austar, from 1990 to
1995, Mr. Clark served as Regional Vice President for The Disney Channel where
he managed sales and marketing in eight mid-west states, serving over 1,000,000
subscribers.

VALERIE L. COVER has served as Controller for the Company since its formation in
October 1994 and for UAP since January 1997. Ms. Cover is responsible for the
accounting, financial reporting and information technology functions of the
Company. She has served as Controller of United since October 1990 and as a Vice
President of United since December 1996. Prior to joining United, she was the
Director of Corporate Accounting at United Artists from May 1989 until October
1990 and Manager of Financial Reporting at United Cable from June 1986 until May
1989.

KEVIN M. ONG has served as Vice President of the Company since May 1996. Mr. Ong
is responsible for the finance operations of the Company. He also serves as
Regional Vice-President of Finance for United. Prior to joining United, Mr. Ong
served in various financial and senior management positions with U.S. and
international cable television operators. From 1988 to 1994, Mr. Ong served as a
Director with Jones Intercable, Inc. and the Treasurer of Jones International
Limited, where he was responsible for financial operations and various
accounting functions.

ELLEN P. SPANGLER has served as Vice President and Secretary of the Company
since July 1997. Ms. Spangler is responsible for the legal operations of the
Company. Ms. Spangler has also served as Senior Vice President of Business and
Legal Affairs and Secretary of United since December 1996. In February 1999, she
became a member of the Supervisory Board for UPC. Prior to assuming her current
position, from February 1991 to December 1996, Ms. Spangler served as Vice
President of United where her responsibilities included business and legal
affairs, programming and assisting on development projects.

FREDERICK G. WESTERMAN III became Vice President and Treasurer of the Company
and UAP in August 1999. His responsibilities include oversight and planning of
the Company's financial and treasury operations. He has also served as United's
Chief Financial Officer since June 1999. From December 1997 to June 1999, Mr.
Westerman served as Treasurer for EchoStar Communications Corporation where he
was responsible for corporate finance, treasury operations, risk management,
corporate budgeting and investor relations. From June 1993 to September 1997, he
served as Vice President of Equity Research for UBS Securities LLC (a subsidiary
of Union Bank of Switzerland) where he was responsible for primary research
coverage of cable television and satellite communications and secondary coverage
of media and entertainment.

ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------

All of the officers of the Company are employed by United, the indirect 100%
stockholder of the Company. The Company pays no separate compensation to these
officers; however, the Company and United Management, Inc. ("United
Management"), an indirect wholly owned subsidiary of United, are parties to a
Management Agreement, pursuant to which the Company pays United Management a
management fee for certain services provided to the Company. Effective March 31,
1997, United Management assigned its rights and obligations under the Management
Agreement to UAP in the UAP Management Agreement. United Management and UAP also
became parties to a similar management agreement (the "United Management
Agreement") effective March 31, 1997.

Certain members of senior management of Austar United are U.S. expatriates who
are employed by United and have been seconded to the respective operating
companies. Austar United reimburses United for compensation paid to these
employees. Gene W. Schneider, the Company's Chairman, is also the Chairman and
Chief Executive Officer of United and spends only a portion of his time on
matters pertaining to the Company and its operations. Michael T. Fries, the
Company's President and Chief Executive Officer, is also an officer and employee
of United and spends only a portion of his time on matters pertaining to the
Company and its operations. The services of Messrs. Schneider and Fries are
provided to the Company pursuant to the United Management Agreement. While the
Company and its operating companies do not reimburse United directly for a
specified portion of the compensation United pays to Messrs. Schneider and
Fries, UAP pays a management fee to United under the United Management Agreement
for certain services, including those of Messrs. Schneider and Fries, performed
on behalf of the Company.

SUMMARY COMPENSATION TABLE
- --------------------------

The following table sets forth the aggregate annual compensation paid during the
fiscal years ended December 31, 2000, 1999 and 1998 to the Company's Chief
Executive Officer and each of the four most highly compensated executive
officers whose annual salary and bonus exceeded $100,000 for the year ended
December 31, 2000. In addition, the information in this section reflects
compensation received by the named executive officers for all services performed
for the Company, United, Austar United and their respective affiliates:

Compensation Table
---------------------------------------------------------------------------------------
Long-Term
Compensation
Annual Compensation Awards
----------------------------------------------------- --------------
Other Securities
Annual Underlying All Other
Year Salary Bonus Compensation(1) Options (#)(2) Compensation
------- ---------- ------------ --------------- -------------- ------------

Gene W. Schneider 2000 $558,413 $ - $ - 1,600,000(3) $6,371(4)
Chairman of the Board 1999 $498,548 $ - $ - 2,568,839(5) $6,155(4)
Chief Executive Officer, United 1998 $450,000 $ - $ 5,793(6) 762,500(7) $5,512(4)

Michael T. Fries 2000 $448,173 $ - $ 2,714(6) 1,200,000(8) $6,371(4)
President and Chief Executive Officer 1999 $332,365 $ - $ 4,497(6) 6,204,285(9) $6,155(4)
President and Chief Operating Officer, 1998 $300,000 $275,000(10) $31,041(11) 725,000(12) $5,632(4)
United

John C. Porter 2000 $266,290 $ 31,125 $97,071(13) 50,000(14) $6,371(15)
Chief Executive Officer, Austar United 1999 $252,500 $ 32,226 $25,723(16) 4,880,850(17) $5,952(15)
(from June 1999) 1998 $245,913 $ 30,000 $60,081(18) 50,000(19) $5,632(15)
Chief Operating Officer, UAP
(until August 1999)

Jonathan G. Morphett 2000 $ 65,385(20) $ - $18,412(21) 1,000,000(22) $1,586(23)
Chief Financial Officer, Austar United

Bruce M. Mann 2000 $209,231 $ 24,900 $30,408(24) 525,000(25) $5,959(26)
Executive Director, Austar 1999 $200,000 $ 26,445 $18,188(27) 3,158,197(28) $5,620(26)
1998 $181,457 $ 41,470 $21,839(29) 40,000(30) $5,296(26)

(1) With respect to U.S. employees on foreign assignment, the Company tax
equalizes them for taxes due at the foreign location and in the U.S. Where
such tax equalization results in a net payment by the Company for the
employee in a particular year, it will be included in "other annual
compensation" and the benefit will be so noted in a footnote for such
employee.
(2) The number of securities underlying options have been adjusted to reflect
United's 2-for-1 stock split on November 30, 1999, the relinquishment of
options under UAP's phantom stock option plan in exchange for options under
Austar United Executive Share Option Plan (the "Austar United Plan") in
July 1999 and UPC's 3-for-1 stock split on March 20, 2000.
(3) Pursuant to the ULA Phantom Stock Option Plan (the "ULA Plan"), Mr.
Schneider was granted phantom options based on 100,000 shares of ULA Class
A common stock on December 6, 2000. Also includes options to acquire
1,500,000 shares of United Class A common stock. The Board of Directors
approved this grant subject to shares becoming available under United's
1993 Employee Stock Option Plan ("United's Employee Plan") upon stockholder
approval. Such approval will be sought at United's next annual meeting.
(4) Amounts consist of matching employer contributions made by United under
United's employee 401(k) plan of $5,100, $4,800 and $4,800 for the years
ended December 31, 2000, 1999 and 1998, respectively, with the remainder
consisting of term life insurance premiums paid by United for such
officer's benefit.
(5) Pursuant to United's Employee Plan, Mr. Schneider was granted options to
acquire 290,523 shares of United Class A common stock on December 17, 1999.
Pursuant to the Austar United Plan, Mr. Schneider was granted options to
acquire 2,153,316 ordinary shares of Austar United on July 20, 1999.
Pursuant to the chello broadband Phantom Stock Option Plan (the "chello
Plan"), Mr. Schneider was granted phantom options based on 125,000 ordinary
shares of chello broadband, an indirect subsidiary of United, on June 11,
1999.
(6) Represents the value of personal use of United's airplane.
(7) Pursuant to United's Employee Plan, Mr. Schneider was granted options to
acquire 200,000 shares of United Class A common stock on October 8, 1998.
Pursuant to the UPC Phantom Stock Option Plan (the "UPC Phantom Plan"), Mr.
Schneider was granted phantom options based on 562,500 ordinary shares A of
UPC on September 24, 1998.
(8) Pursuant to the ULA Plan, Mr. Fries was granted phantom options based on
200,000 shares of ULA Class A common stock on December 6, 2000. Also
includes options to acquire 1,000,000 shares of United Class A common
stock. The Board of Directors approved this grant subject to shares
becoming available under United's Employee Plan upon stockholder approval.
Such approval will be sought at United's next annual meeting.
(9) Pursuant to United's Employee Plan, Mr. Fries was granted options to
acquire 100,000 shares of United Class A common stock on December 17, 1999.
Pursuant to the Austar United Plan, Mr. Fries was granted options to
acquire 6,029,285 ordinary shares of Austar United on July 20, 1999.
Pursuant to the chello Plan, Mr. Fries was granted phantom options based on
75,000 ordinary shares of chello broadband on June 11, 1999.
(10) Includes a $25,000 moving allowance when Mr. Fries was relocated from the
Company's Australia offices back to its principal office in Denver,
Colorado.
(11) Represents payments for living expense, including rent, relating to foreign
assignment of $30,824, and $217 which represents the value of personal use
of United's airplane.
(12) Pursuant to United's Employee Plan, Mr. Fries was granted options to
acquire 200,000 shares of United Class A common stock on September 18,
1998. Pursuant to the UPC Phantom Plan, Mr. Fries was granted phantom
options based on 225,000 ordinary shares A of UPC on September 24, 1998.
Pursuant to the ULA Plan, Mr. Fries was granted phantom options based on
300,000 shares of ULA Class A common stock on September 18, 1998.
(13) Represents payments related to foreign assignment consisting of housing
allowance of $32,020, home leave airfare of $27,430 and other payments of
$37,621, including car allowance, cost of living adjustment, dependent
education and tax preparation.
(14) Pursuant to United's Employee Plan, Mr. Porter was granted options to
acquire 50,000 shares of United Class A common stock on December 6, 2000.
(15) Amounts consist of matching employer contributions made by United under
United's employee 401 (k) plan of $5,100, $4,800 and $4,800 for the years
ended December 31, 2000, 1999 and 1998, respectively, with the remainder
consisting of term life insurance premiums paid by United for such
officer's benefit.
(16) Represents payments related to foreign assignment of $25,723 including
housing allowance and cost of living adjustment.
(17) Pursuant to the Austar United Plan, Mr. Porter was granted options to
acquire 4,880,850 ordinary shares of Austar United on July 20, 1999.
(18) Represents payments related to foreign assignment consisting of housing
allowance of $46,834 and cost of living adjustment of $13,247.
(19) Pursuant to United's Employee Plan, Mr. Porter was granted options to
acquire 50,000 shares of United Class A common stock on December 18, 1998.
(20) Mr. Morphett commenced his employment with Austar United in August 2000.
Accordingly, the salary information included in the table represents only
five months of employment.

(21) Represents payments related to foreign assignment of $18,412, including
housing allowance, cost of living adjustment, car allowance, dependent
education and tax preparation.
(22) Pursuant to the Austar United Plan, Mr. Morphett was granted options to
acquire 1,000,000 ordinary shares of Austar United on December 20, 2000.
(23) Amount consists of matching employer contributions made by United under
United's employee 401(k) plan of $1,385 for the year ended December 31,
2000 with the remainder consisting of term life insurance premiums paid by
United for such officer's benefit.
(24) Represents payments related to foreign assignment of $30,408, including
housing allowance, car allowance, cost of living adjustment, home leave
airfare and tax preparation.
(25) Pursuant to United's Employee Plan, Mr. Mann was granted options to acquire
25,000 shares of United Class A common stock on December 6, 2000. Pursuant
to the Austar United Plan, Mr. Mann was granted options to acquire 500,000
ordinary shares of Austar United on December 20, 2000.
(26) Amount consists of matching employer contributions made by United under
United's employee 401(k) plan of $4,688, $4,468 and $4,464 for the years
ended December 31, 2000, 1999 and 1998, respectively, with the remainder
consisting of term life insurance premiums paid by United for such
officer's benefit.
(27) Represents payments related to foreign assignment of $18,188, including
housing allowance and cost of living adjustment.
(28) Pursuant to the Austar United Plan, Mr. Mann was granted options to acquire
3,158,197 ordinary shares of Austar United on July 20, 1999.
(29) Represents payments related to foreign assignment of $21,839, including
housing allowance and cost of living adjustment.
(30) Pursuant to United's Employee Plan, Mr. Mann was granted options to acquire
40,000 shares of United Class A common stock on December 18, 1998.

OPTION GRANTS TABLE
- -------------------

Messrs. Schneider, Fries, Porter, Morphett and Mann, as employees of United,
have been granted options to acquire stock of United and/or its subsidiaries.
The following table sets forth information concerning options to purchase shares
of United Class A common stock, ULA common stock and ordinary shares of Austar
United granted to these named executives during 2000. The Company has not
granted any options to acquire its stock.

Option Grants in the Year Ended December 31, 2000(1)
--------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rate
of Stock Price Appreciation
Individual Grants for Option Term (2)
---------------------------------------------------------------- ----------------------------------
Number of Percentage of
Securities Total Options Market
Underlying Granted to Price
Options Employees in Exercise on Grant Expiration
Granted (#) Fiscal Year Price ($/Sh) Date ($/Sh) Date 0% ($) 5% ($) 10% ($)
----------- ------------ ------------ ----------- ---------- --------- ----------- -----------

Gene W. Schneider
United Class A Common Stock.. 1,500,000(3)(6) 39.5% $14.8125 $14.8125(3) 12/06/10 - $13,973,252 $35,410,965
ULA Common Stock............. 100,000(4) 15.9% $19.2300 $19.2300(5) 12/06/10 - $ 1,209,364 $ 3,064,767
Michael T. Fries
United Class A Common Stock.. 1,000,000(3)(6) 26.4% $14.8125 $14.8125(3) 12/06/10 - $ 9,315,502 $23,607,310
ULA Common Stock............. 200,000(4) 31.7% $19.2300 $19.2300(5) 12/06/10 - $ 2,418,729 $ 6,129,534
John C. Porter
United Class A Common Stock.. 50,000(6) 1.3% $14.8125 $14.8125 12/06/10 - $ 465,775 $ 1,180,366
Jonathan G. Morphett
Austar United Shares......... 1,000,000 33.7% A$ 1.7500 A$ 2.3520(7) 12/20/10 $602,000 $ 2,081,160 $ 4,350,482
Bruce M. Mann
United Class A Common Stock.. 25,000(6) 0.7% $14.8125 $14.8125 12/06/10 - $ 232,888 $ 590,183
Austar United Shares......... 500,000 16.8% A$ 1.7500 A$ 2.3520(7) 12/20/10 $301,000 $ 1,040,580 $ 2,175,241

(1) Except as otherwise noted, all stock options granted during Fiscal 2000
vest in 48 equal monthly increments following the date of grant. Vesting of
the options granted would be accelerated upon a change of control of United
as defined in the respective options plans.
(2) The potential gains shown are net of the option exercise price and do not
include the effect of any taxes associated with exercise. The amounts shown
are for the assumed rates of appreciation only, do not constitute
projections of future stock price performance, and may not necessarily be
realized. Actual gains, if any, on stock option exercises depend on the
future performance of the underlying securities of the respective options,
continued employment of the optionee through the term of the options, and
other factors.

(3) On December 6, 2000, United's Board of Directors approved option grants to
Messrs. Schneider and Fries for shares of Class A common stock of United
with an exercise price of $14.8125. Such grants are subject to shares
becoming available under United's Employee Plan upon stockholder approval
at which time the option grants will be effective. For purposes of this
table, the options are treated as if granted on December 6, 2000 and are
included for purposes of determining the percentage amounts of the total
option grants for all the named executive officers. Assuming stockholder
approval is received, the grants will become effective in 2001.
(4) Upon exercise, ULA may pay these phantom options in cash, shares of Class A
common stock of United or, if publicly traded, its shares of Class A common
stock.
(5) Market price based on fair market value of ULA shares of common stock as
determined by its board of directors at the time of grant.
(6) United Class A common stock options granted in Fiscal 2000 vest as to 1/8th
of the shares six months after the grant date and thereafter in 42 equal
monthly increments.
(7) The price per share on December 31, 2000 in U.S. dollars is $1.21 and has
been determined based on the exchange rate of 1.7897 on December 31, 2000.

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION TABLE
- ------------------------------------------------------------

The following table sets forth information concerning the exercise of options
and concerning unexercised options held by each of the executive officers named
in the Summary Compensation Table above as of December 31, 2000.

Aggregated Option Exercises in Year Ended December 31, 2000 and Period-End Option Values
----------------------------------------------------------------------------------------

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at FY-End(#)(1) Options at FY-End($)(2)
Shares Acquired Value ---------------------------- ----------------------------
on Exercise(#) Realized($) Exerciseable Unexerciseable Exerciseable Unexerciseable
--------------- ----------- ------------ -------------- ------------ --------------

Gene W. Schneider
United Class A Common Stock - - 753,421 1,741,666 $5,655,015 $ 847,959
UPC Shares (4)................... - - 515,625 46,875 $4,532,045 $ 412,004
Austar United Shares............. - - 1,635,345 517,971 A$ 588,724 A$ 186,470
ULA Common Stock (5)............. - - 109,375 115,625 $1,637,344 $ 233,906
chello Shares (6)................ - - 46,875 78,125 euro558,964 euro931,606

Michael T. Fries
United Class A Common Stock 140,792(7) $5,060,616(7) 326,708 1,162,500(3) $2,414,690 $ 738,281
UPC Shares (4)................... - - 121,875 103,125 $1,043,989 $ 883,375
Austar United Shares............. - - 4,578,964 1,450,321 A$1,648,427 A$ 522,115
ULA Common Stock (5)............. - $1,665,625 6,250 331,250 $ 64,063 $1,345,313
chello Shares (6)................ - $ 654,425 9,275 46,875 euro110,600 euro558,964

John C. Porter
United Class A Common Stock 13,543 $ 628,391 3,125 75,000 $ 26,367 $ 210,938
Austar United Shares............. - - 3,772,590 828,260 A$1,358,132 A$ 298,174

Jonathan G. Morphett
Austar United Shares............. - - 83,333 916,667 A$ 34,167 A$ 375,833

Bruce M. Mann
United Class A Common Stock - - 20,000 45,000 $ 168,750 $ 168,750
Austar United Shares............. - - 2,554,473 1,103,724 A$ 919,610 A$ 422,341

(1) The number of securities underlying options have been adjusted to reflect
United's 2-for-1 stock split on November 30, 1999, the relinquishment of
options under UAP's phantom stock option plan in exchange for options under
the Austar United Plan in July 1999, and UPC's 3-for-1 stock split on March
20, 2000.
(2) The value of the options reported above is based on the following December
31, 2000 closing prices: $13.625 per share of United's Class A common stock
as reported by NASDAQ; $10.50 per UPC ordinary A share (in the form of
American depositary shares) as reported by NASDAQ; and A$2.16 (US$1.21
based on a 1.7897 conversion rate on December 31, 2000) per Austar United
ordinary share as reported by the Australian Stock Exchange Limited. In
addition, the exercise prices for UPC options have been converted from euro
to U.S. dollars based on a conversion rate of 1.0611 on December 31, 2000.
The value for the phantom options of ULA is based on the fair market value
of $19.23 per share as determined by the Board of United at or prior to
December 31, 2000, and the value for the options of chello broadband is
based on the fair market value of euro21.00 per share (US$19.79 based on a
conversion rate of 1.0611 on December 31, 2000) as determined by the
Supervisory Board of chello broadband.

(3) Includes an option for 1,500,000 shares of United's Class A common stock
with respect to Mr. Schneider and an option for 1,000,000 shares of
United's Class A common stock with respect to Mr. Fries that United's Board
of Directors approved on December 6, 2000 subject to shares becoming
available under United's Employee Plan upon stockholder approval. For
purposes of this table, the options are treated as if granted on December
6, 2000, although these grants are not effective until stockholder approval
is received.
(4) Represents the number of shares underlying phantom stock options, which UPC
may pay in cash or shares of Class A common stock of United or ordinary
shares A of UPC, at its election upon exercise thereof.
(5) Represents the number of shares underlying phantom stock options, which ULA
may pay in cash or shares of Class A common stock of United or, if publicly
traded, shares of ULA, at its election upon exercise thereof.
(6) Represents the number of shares underlying phantom stock options, which
chello broadband may pay in cash or shares of Class A common stock of
United, ordinary shares A of UPC or, if publicly traded, ordinary shares of
chello broadband, at its election upon exercise thereof.
(7) Represents options exercised by the Fries Family Partnership LLLP, of which
the general partner is a trust and the trustee of the trust may be replaced
at Mr. Fries' option.

AGREEMENTS WITH EMPLOYEES

Many of the employees serving as senior management in the Company's operating
companies are parties to employment agreements typically with terms of three to
five years. The agreements generally provide for a specified base salary as well
as a bonus set at a specified percentage of the base salary, which bonus is
based on the performance of the respective company and employee and subject to
approval by senior management. The employment agreements generally provide for
cost of living differentials, relocation and moving expenses, automobile
allowances and income tax equalization payments, if necessary, to keep the
employee's tax liability the same as it would be in the United States.

Of the persons identified in the Summary Compensation Table, Messrs. Porter,
Morphett and Mann have such an employment agreement with United. The agreements
with Mr. Porter, Mr. Morphett and Mr. Mann terminate on May 30, 2003, July 30,
2004 and March 20, 2003, respectively. These employment agreements provide for
an annual base salary of $277,750 for Mr. Porter, $200,000 for Mr. Morphett and
$220,000 for Mr. Mann and eligibility for an annual bonus of up to a fixed
percentage of the base salary, based on the performance of their respective
entities as well as the individual's performance and subject to approval by
senior management. All are entitled to participate in United's employee benefits
and salaries, each of which are subject to periodic review.

COMPENSATION OF DIRECTORS

All of the directors of the Company are also directors or officers of United,
UAP and/or officers of the Company. They receive no separate cash compensation
for serving as directors of the Company. The Company, however, reimburses all of
its directors for travel and out-of-pocket expenses in connection with their
attendance at Board meetings.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Board of Directors has no separate Compensation Committee as the
Company currently does not have any employees. United's Compensation Committee,
none of the members of which are employees or executive officers of the Company,
determines the compensation of the Company's executive officers in their
capacity as employees of United. Directors or executive officers of the Company
may serve on the Boards of Directors of Austar, TelstraSaturn and XYZ
Entertainment and as part of their duties may determine the compensation of
those operating companies' employees. None of the employees of such operating
companies, however, are directors of the Company.

LIMITATION OF LIABILITY AND INDEMNIFICATION

The Company's Articles of Incorporation eliminate the personal liability of its
directors to the Company and its stockholders for monetary damages for breach of
the directors' fiduciary duties in certain circumstances. The Company's Articles
of Incorporation and Bylaws provide that the Company shall indemnify its
officers and directors to the fullest extent permitted by law. The Company
believes that such indemnification covers at least negligence and gross
negligence on the part of indemnified parties.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------

As of March 1, 2001, UAP owned 22,961,678 shares of the Company, evidencing over
99.9% of all outstanding common stock. Such percentage is based on 22,961,728
shares of the Company's common stock issued and outstanding on March 1, 2001.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------

RELATIONSHIP WITH UAP AND UNITED

The Company is currently a direct, majority owned subsidiary of UAP, which is an
indirect, wholly owned subsidiary of United. The Company's operations to date
have been funded by capital contributions from United and UAP, proceeds from the
Notes, minority shareholder contributions, subsidiary bank debt and proceeds
from the Austar United IPO and the second offering in March 2000.

The Company and UAP are parties to the UAP Management Agreement pursuant to
which UAP agreed to continue to perform certain administrative, accounting,
financial reporting and other services, including providing office space, for
the Company, which has no separate employees of its own. Pursuant to the UAP
Management Agreement, the management fee was 0.75 million for the first year of
such agreement (beginning May 1, 1996), and it increases on each anniversary
date of the UAP Management Agreement by 8.0% per year. The management fee for
the first year of the UAP Management Agreement was calculated based on an
estimate of staff hours to accomplish the various administrative, accounting,
financial reporting and other services to be provided to the Company under the
UAP Management Agreement. The percentage those hours constituted of the
respective employees' annual work hours was then multiplied by the employment
cost to United for such employees.

Effective June 24, 1999, United and Austar United executed a management services
agreement pursuant to which United performs certain technical and consulting
services in return for a monthly management fee. The monthly fee payable by
Austar United to United in 1999 is $0.2 million per month. This amount may be
adjusted before January 1 of each year by the board of directors of United but
may not increase by more than 15.0% in any one year. This agreement also
requires that Austar United reimburse United for all direct and other expenses
reasonably incurred by United on behalf of Austar United. The agreement will
continue through December 31, 2010.

TAX SHARING AGREEMENT

The Company is included as a member of United's consolidated tax return and is a
member of the United consolidated group (as long as non-United ownership of the
Company does not exceed 20.0%). United and the Company are parties to a tax
sharing agreement that defines the parties' rights and obligations with respect
to tax liabilities and benefits relating to the Company and its operations as
part of the consolidated group of United. In general, United is responsible for
filing consolidated tax returns and paying the associated taxes and the Company
will reimburse United for the portion of the tax cost relating to the Company
and its operations.

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) Index to Financial Statements

Page
Number
------

UNITED AUSTRALIA/PACIFIC, INC.
Report of Independent Public Accountants................................................................. F-1
Consolidated Balance Sheets as of December 31, 2000 and 1999............................................. F-2
Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years Ended
December 31, 2000, 1999 and 1998....................................................................... F-3
Consolidated Statements of Stockholders' Deficit for the Years Ended December 31, 2000,
1999 and 1998.......................................................................................... F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998............... F-5
Notes to Consolidated Financial Statements............................................................... F-7

UNITED AUSTRALIA/PACIFIC, INC.
Report of Independent Public Accountants (Parent only)................................................... F-23
Schedule I - Condensed Financial Information of the Registrant (Parent only)............................. F-24
Schedule II - Valuation and Qualifying Accounts.......................................................... F-27

(b) Reports on Form 8-K filed during the quarter:

Date of Filing Date of Event Item Reported
-------------- ------------- -------------
December 12, 2000 November 30, 2000 Item 5 - Acquired spectrum
rights

3.1 Articles of Incorporation of the Company, as amended. (1)

3.2 Articles of Amendment to Articles of Incorporation of the
Company. (2)

3.3 By-Laws of the Company. (1)

4.1 The Article of Incorporation, as amended, and the By-Laws of
the Company are included as Exhibits 3.1 - 3.3.

4.2 The Indenture dated as of May 14, 1996, between the Company
and American Bank National Association (now known as Firstar
Bank of Minnesota N.A. (the "Trustee")) (the "1996
Indenture"). (3)

4.3 Supplemental Indenture dated as of June 30, 1997 between the
Company and Trustee with respect to the 1996 Indenture (4).

4.4 Supplemental Indenture dated as of July 20, 1999, between the
Company and Trustee with respect to the 1996 Indenture. (5)

4.5 The Indenture dated as of September 23, 1997, between the
Company and Trustee (the "1997 Indenture"). (6)

4.6 Supplemental Indenture dated as of July 20, 1999, between the
Company and Trustee with respect to the 1997 Indenture. (5)

4.7 Form of Warrant Agreement dated as of November 15, 1997,
between the Company and Trustee. (6)

10.1 A$400,000,000 Syndicated Senior Secured Debt Facility
Agreement dated April 23, 1999, among Austar, Chase Securities
Australia Limited, the Guarantors named therein and the
financial institutions named therein. (7)

10.2 XYZ Shareholders Agreement dated September 6, 1995, among
Century United Programming Ventures Pty Limited ("CUPV"),
Foxtel Management Pty Limited ("Foxtel"), XYZ Entertainment,
Century United Programming Ventures ("CPVC") and the Company.
(1)

10.3 Shareholders Deed dated June 30, 1995, among Century
Communications Corporation, CPVC, United, the Company and
CUPV. (1)

10.4 Channel Supply Agreement dated June 30, 1995, among XYZ
Entertainment, CUPV and East Coast Pay Television Pty Limited
("ECT"). (1)

10.5 Management Agreement dated May 1, 1996, between United
Management and the Company. (1)

10.6 Tax Allocation Agreement dated May 8, 1996, among United, UAP
and the Company. (1)

10.7 Management Services Agreement dated June 24, 1999, between
United International Holdings, Inc. doing business as
UnitedGlobalCom, Inc. ("United") and Austar United. (2)

10.8 Registration Rights Agreement dated June 16, 1999 between
Austar United and UIH Austar, Inc. (now known as United
Austar, Inc.) (2)

10.9 Master Seconded Employee Services Agreement dated June 16,
1999, between United and Austar United. (2)

10.10 General Agreement dated June 16, 1999 between United and
Austar United. (2)

10.11 Shareholders Agreement dated April 6, 2000, among Telstra
Corporation Limited ("TCL"), Telstra Holdings Pty Limited
("THPL"), Austar United, Saturn Holdings Company Pty Limited
("Saturn NZ") and Saturn. (8)

10.12 Merger Agreement dated April 6, 2000, between THPL and Saturn.
(8)

10.13 Warranty Agreement dated April 6, 2000, between TCL and AUCL.
(8)

10.14 Offer to Acquire Shares dated April 6, 2000, between Saturn
and THPL. (8)

10.15 TARB's Acquisition Agreement. (9)

10.16 *1993 Stock Option Plan of United, effective June 1, 1993.
(10)

10.17 *UPC Phantom Stock Option Plan, effective March 20, 1998. (11)

10.18 *Austar United Communications Executive Share Option Plan,
effective June 1999.

10.19 *ULA Phantom Stock Option Plan, effective June 6, 1997. (12)

10.20 *chello broadband Phantom Stock Option Plan, effective June
19, 1998. (13)

10.21 Executive Service Agreement, effective June 1, 2000, among
United, Austar United and John Porter.

10.22 Executive Service Agreement, effective August 21, 2000, among
United, Austar United and Jonathan Morphett.

10.23 Executive Service Agreement, effective March 20, 2000, among
United, Austar United and Bruce Mann.

12.1 Statement re: Ratio of Earnings to Fixed Charges.

21.1 List of Subsidiaries.

23.1 Consent of Independent Public Accountants--Arthur Andersen LLP
(United Australia/Pacific, Inc.).

24.1 Power of Attorney.

- ---------------------
* Management compensation plan.

(1) Incorporated by reference from the Company's Registration Statement on Form
S-4 filed on May 31, 1996 (SEC File No. 333-05017).
(2) Incorporated by reference from the Company's Form 10-K for the period ended
December 31, 1999, filed on March 30, 2000 (SEC File No. 333-05017).
(3) Incorporated by reference from the Form 10-K of United for the year ended
February 29, 1996 (SEC File No. 0-21974).
(4) Incorporated by reference from the Company's Form 10-Q for the quarter
ended June 30, 1997, filed on August 14, 1997 (SEC File No. 333-05017).
(5) Incorporated by reference from the Company's Report on Form 8-K, filed on
July 28, 1999 (SEC File No. 333-05017).
(6) Incorporated by reference from the Company's Registration Statement on Form
S-4 Exchange Offer, filed on November 6, 1997 (SEC File No. 333-39707).
(7) Incorporated by reference from the Form 10-K of United for the ten months
ended December 31, 1998 (File No. 0-21974).
(8) Incorporated by reference from the Company's Form 10-Q for the quarter
ended March 31, 2000, filed on May 15, 2000 (SEC File No. 333-05017).
(9) Incorporated by reference from the Company's Form 10-Q for the quarter
ended September 30, 2000, filed on November 14, 2000 (SEC File No.
333-05017).
(10) Incorporated by reference from Amendment No. 1 to United's Registration
Statement on Form S-1 filed on June 23, 1993 (SEC File No. 33-61376).
(11) Incorporated by reference from UPC's Form S-1 Registration Statement filed
on November 24, 1998 (SEC File No. 333-67895).
(12) Incorporated by reference from United's Form 10-K for the year ended
December 31, 2000, filed on April 2, 2001 (SEC File No. 0-21974).
(13) Incorporated by reference from UPC's Form 10-K for the year ended December
31, 2000, filed on April 2, 2001 (SEC File No. 000-25365).

(d) Separate Financial Statements and Related Schedules.
See Index to Financial Statements in (a) above.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Denver,
State of Colorado, on this 2nd day of April 2001.

United Australia/Pacific, Inc.
a Colorado corporation

By: /s/ Valerie L. Cover
-----------------------------------
Valerie L. Cover
Controller

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this Report to be signed by the following persons in the
capacities and on the dates indicated.

Title of Position
Signature Held With the Registrant Date
--------- ------------------------ ----

/s/ VALERIE L. COVER Controller April 2, 2001
- ------------------------------- (Principal Accounting Officer)
Valerie L. Cover

* Director, President and April 2, 2001
- ------------------------------ Chief Operating Officer
Michael T. Fries

* Chairman of the Board April 2, 2001
- ------------------------------
Gene W. Schneider

/s/ FREDERICK G. WESTERMAN III Vice President/Treasurer April 2, 2001
- ------------------------------- (Chief Financial Officer)
Frederick G. Westerman III

* By: /s/ VALERIE L. COVER
- ------------------------------
Valerie L. Cover
Attorney-in-fact

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To United Australia/Pacific, Inc.:

We have audited the accompanying consolidated balance sheets of United
Australia/Pacific, Inc. (a Colorado corporation and majority owned subsidiary of
United Asia/Pacific Communications, Inc.) and subsidiaries as of December 31,
2000 and 1999 and the related consolidated statements of operations and
comprehensive (loss) income, stockholders' deficit and cash flows for each of
the three years in the period ended December 31, 2000. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of United
Australia/Pacific, Inc. and subsidiaries as of December 31, 2000 and 1999, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States.

ARTHUR ANDERSEN LLP

Denver, Colorado
March 30, 2001

F-1

UNITED AUSTRALIA/PACIFIC, INC.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands, except share and per share amounts)

As of December 31,
-----------------------
2000 1999
----------- -----------

ASSETS
Current assets:
Cash and cash equivalents............................................................................. $ 5,617 $ 6,028
Short-term liquid investments......................................................................... 101,477 269,393
Subscriber receivables, net........................................................................... 8,969 8,177
Related party receivables............................................................................. 3,095 1,645
Other receivables..................................................................................... 2,255 6,196
Inventory............................................................................................. 12,151 14,193
Prepaids and other current assets..................................................................... 10,697 5,146
-------- --------
Total current assets............................................................................. 144,261 310,778
Investments in and advances to affiliated companies, accounted for under the equity
method, net............................................................................................ 64,991 28,546
Property, plant and equipment, net of accumulated depreciation of $294,935 and $261,891, respectively... 124,479 219,394
Goodwill and other intangible assets, net of accumulated amortization of $20,088 and
$23,536, respectively ................................................................................. 254,387 91,346
Deferred financing costs, net of accumulated amortization of $6,826 and $4,427, respectively............ 10,846 16,377
Other non-current assets, net........................................................................... 287 150
-------- --------
Total assets..................................................................................... $599,251 $666,591
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable...................................................................................... $ 5,554 $ 16,463
Accrued liabilities................................................................................... 41,325 32,151
Accrued liabilities - spectrum licenses............................................................... 16,763 -
Construction payables................................................................................. - 4,370
Current portion of due to parent...................................................................... 18,583 12,754
Current portion of other long-term debt............................................................... 1,366 1,500
-------- --------
Total current liabilities........................................................................ 83,591 67,238
Due to parent........................................................................................... 8,068 9,621
Senior discount notes................................................................................... 466,241 407,945
Other long-term debt.................................................................................... 226,894 261,151
Deferred tax liability.................................................................................. 67 1,014
Other long-term liabilities............................................................................. 444 456
-------- --------
Total liabilities................................................................................ 785,305 747,425
-------- --------
Minority interest in subsidiary......................................................................... 68,807 95,820
-------- --------
Stockholders' deficit:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding............ - -
Common stock, $0.01 par value, 30,000,000 shares authorized, 22,961,728 and 17,810,299
shares issued and outstanding, respectively.......................................................... 230 178
Additional paid-in capital............................................................................ 371,498 305,100
Deferred compensation................................................................................. (8,904) (18,343)
Accumulated deficit................................................................................... (562,050) (440,649)
Other cumulative comprehensive loss................................................................... (55,635) (22,940)
-------- --------
Total stockholders' deficit...................................................................... (254,861) (176,654)
-------- --------
Commitments and contingencies (Notes 14 and 15)
Total liabilities and stockholders' deficit...................................................... $599,251 $666,591
======== ========

The accompanying notes are an integral part of these consolidated financial statements.

F-2

UNITED AUSTRALIA/PACIFIC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(Stated in thousands, except share and per share amounts)

For the Years Ended
December 31,
--------------------------------------------
2000 1999 1998
------------ ------------ ------------

Revenue.............................................................................. $ 177,313 $ 151,722 $ 89,819

Operating expense, including related party expense of $2,414, $4,381 and $4,124,
respectively........................................................................ (155,716) (118,731) (71,149)
Selling, general and administrative expense, including management fees and
allocated expense from related party of $995, $21,767 and $5,475, respectively...... (77,709) (76,348) (55,434)
Depreciation and amortization........................................................ (105,899) (104,720) (97,140)
---------- ---------- ----------
Operating loss................................................................ (162,011) (148,077) (133,904)

Gain on issuance of common equity securities by subsidiary........................... 61,172 248,758 -
Gain on sale of assets............................................................... 9,874 - -
Interest income...................................................................... 15,481 6,253 207
Interest expense, including related party expense of $0, $0 and $1,079,
respectively........................................................................ (80,303) (69,470) (56,705)
Provision for losses on investment related costs..................................... (938) (4,949) (4,462)
Other expense, net................................................................... (5,894) (2,987) (1,128)
---------- ---------- ----------
(Loss) income before income taxes and other items............................. (162,619) 29,528 (195,992)

Income tax benefit (expense) ........................................................ 727 (993) -
Minority interest in subsidiaries.................................................... 58,559 18,407 -
Share in results of affiliated companies, net........................................ (18,068) (6,351) (10,299)
---------- ---------- ----------
Net (loss) income ........................................................... $ (121,401) $ 40,591 $ (206,291)
========== ========== ==========
Foreign currency translation adjustments............................................. $ (32,695) $ 6,251 $ (227)
---------- ---------- ----------
Comprehensive (loss) income................................................... $ (154,096) $ 46,842 $ (206,518)
========== ========== ==========
Net (loss) income per common share:
Basic net (loss) income....................................................... $ (6.59) $ 2.28 $ (14.02)
========== ========== ==========
Diluted net (loss) income..................................................... $ (6.59) $ 2.23 $ (14.02)
========== ========== ==========
Weighted-average number of common shares outstanding:
Basic......................................................................... 18,426,187 17,810,254 14,718,857
========== ========== ==========
Diluted....................................................................... 18,426,187 18,199,726 14,718,857
========== ========== ==========

The accompanying notes are an integral part of these consolidated financial statements.

F-3

UNITED AUSTRALIA/PACIFIC, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Stated in thousands, except share amounts)

Other
Cumulative
Common Stock Additional Comprehensive
-------------------- Paid-In Deferred Accumulated Income
Shares Amount Capital Compensation Deficit (Loss)(1) Total
---------- -------- ---------- ------------ ----------- ------------- ---------

Balances, December 31, 1997............. 13,864,941 $ 139 $139,621 $ - $(274,949) $(28,964) $(164,153)

Issuance of capital stock to parent
related to cumulative capital
contributions.......................... 3,945,308 39 (39) - - - -

Cash contributions from parent.......... - - 58,947 - - - 58,947

Non-cash contributions from parent...... - - 17,095 - - - 17,095

Net loss................................ - - - - (206,291) - (206,291)

Change in cumulative translation
adjustments............................ - - - - - (227) (227)
---------- ----- -------- -------- --------- -------- ---------
Balances, December 31, 1998............. 17,810,249 178 215,624 - (481,240) (29,191) (294,629)

Warrants exercised...................... 50 - 1 - - - 1

Cash contributions from parent.......... - - 29,659 - - - 29,659

Non-cash contributions from parent...... - - 20,449 - - - 20,449

Equity transactions of subsidiary....... - - 40,883 (40,883) - - -

Amortization of deferred compensation... - - (1,516) 22,540 - - 21,024

Net income.............................. - - - - 40,591 - 40,591

Change in cumulative translation
adjustments............................ - - - - - 6,251 6,251
---------- ----- -------- -------- --------- -------- ---------
Balances, December 31, 1999............. 17,810,299 178 305,100 (18,343) (440,649) (22,940) (176,654)

Issuance of capital stock to parent for
capital contributions.................. 5,151,429 52 (52) - - -

Cash contributions from parent.......... - - 69,382 - - - 69,382

Amortization of deferred compensation... - - (2,932) 9,439 - - 6,507

Net loss................................ - - - - (121,401) - (121,401)

Change in cumulative translation
adjustments............................ - - - - - (32,695) (32,695)
---------- ----- -------- -------- --------- -------- ---------
Balances, December 31, 2000............. 22,961,728 $ 230 $371,498 $ (8,904) $(562,050) $(55,635) $(254,861)
========== ===== ======== ======== ========= ======== =========

(1) Represents foreign currency translation adjustments only.

The accompanying notes are an integral part of these consolidated financial statements.

F-4

UNITED AUSTRALIA/PACIFIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands)

For the Years Ended December 31,
------------------------------------------
2000 1999 1998
---------- ---------- ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income....................................................................... $ (121,401) $ 40,591 $(206,291)
Adjustments to reconcile net (loss) income to net cash flows from operating
activities:
Gain on issuance of common equity securities by subsidiary........................... (61,172) (248,758) -
Gain on sale of assets............................................................... (9,874) - -
Share in results of affiliated companies, net........................................ 18,068 6,351 10,299
Minority interest in subsidiaries.................................................... (58,559) (18,407) -
Depreciation and amortization........................................................ 105,899 104,720 97,140
Allocation of expense accounted for as capital contributions by parent............... - 3,216 4,622
Stock-based compensation expense..................................................... 9,439 22,540 -
Provision for losses on marketable equity securities and investment related costs.... 938 4,949 4,462
Accretion of interest on senior notes and amortization of deferred financing costs... 61,831 56,069 49,508
Increase in receivables, net......................................................... (5,394) (1,107) (2,757)
Increase in other assets............................................................. (8,399) (4,890) (5,719)
Increase in accounts payable, accrued liabilities and other.......................... 21,688 15,870 24,894
---------- --------- ---------
Net cash flows from operating activities................................................ (46,936) (18,856) (23,842)
---------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term liquid investments............................................... (1,583,260) (266,378) (763)
Sale of short-term liquid investments................................................... 1,715,260 1,676 12,325
Investments in and advances to affiliated companies..................................... (16,859) (5,177) (11,389)
Purchase of additional shares in subsidiary............................................. (65,601) - -
(Deconsolidation) consolidation of New Zealand subsidiary............................... (52) 613 (9,881)
New acquisitions, net of cash acquired.................................................. (16,168) - -
Dividends received from affiliate....................................................... 5,464 - -
Capital expenditures.................................................................... (113,786) (117,819) (71,466)
Spectrum license fees................................................................... (96,422) - -
Other................................................................................... (594) (1,325) (2,007)
---------- --------- ---------
Net cash flows from investing activities................................................ (172,018) (388,410) (83,181)
---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash contributed from parent............................................................ 69,382 29,659 58,947
Proceeds from issuance of common equity securities by subsidiary, net................... 102,403 292,784 -
Proceeds from issuance of common stock in connection with subsidiary option plan........ 631 807 -
Warrants exercised...................................................................... - 1 -
Borrowings on the Austar Bank Facility and Saturn Bank Facility......................... 57,587 229,928 39,519
Payment of the old Austar Bank Facility................................................. - (129,149) -
Deferred financing costs and other...................................................... (24) (8,014) (473)
Payment of capital leases and other debt, net........................................... (877) (927) (3,326)
---------- --------- ---------
Net cash flows from financing activities................................................ 229,102 415,089 94,667
---------- --------- ---------
EFFECT OF EXCHANGE RATES ON CASH........................................................ (10,559) (1,976) 193
---------- --------- ---------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........................................ (411) 5,847 (12,163)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.......................................... 6,028 181 12,344
---------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................................ $ 5,617 $ 6,028 $ 181
========== ========= =========

The accompanying notes are an integral part of these consolidated financial statements.

F-5

UNITED AUSTRALIA/PACIFIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands)

For the Years Ended December 31,
------------------------------------------
2000 1999 1998
---------- ---------- ----------

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash capital contributions from parent.............................................. $ - $ 17,233 $ 12,473
========== ========= =========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest.................................................................. $ 17,582 $ 11,977 $ 5,323
========== ========= =========
Cash received for interest.............................................................. $ 17,906 $ 2,747 $ 144
========== ========= =========
DECONSOLIDATION (2000 and 1998)/CONSOLIDATION (1999) OF NEW ZEALAND SUBSIDIARY:
Working capital......................................................................... $ (7,319) $ 10,162 $ 4,159
Property, plant and equipment........................................................... 93,202 (80,656) (26,484)
(Record) eliminate investment in Saturn................................................. (62,857) 21,974 -
Goodwill and other assets............................................................... 35,451 (5,737) (2,805)
Notes payable and other debt............................................................ (58,529) 54,870 3,833
Minority interest....................................................................... - - 11,416
---------- --------- ---------
Cash (relinquished) received............................................................ $ (52) $ 613 $ (9,881)
========== ========= =========
PURCHASE OF ADDITIONAL SHARES IN SUBSIDIARY:
Goodwill................................................................................ $ (49,042) $ - $ -
Investment in net assets................................................................ (16,559) - -
---------- --------- ---------
Cash paid............................................................................... $ (65,601) $ - $ -
========== ========= =========
AGREEMENT WITH TVSN:
Working capital......................................................................... $ 521 $ - $ -
Property, plant and equipment........................................................... (4,111) - -
Goodwill................................................................................ (36,225) - -
Notes payable and other debt............................................................ 13,239 - -
Minority interest....................................................................... 18,142 - -
Gain on sale of assets.................................................................. 9,874 - -
---------- --------- ---------
Cash received........................................................................... $ 1,440 $ - $ -
========== ========= =========

The accompanying notes are an integral part of these consolidated financial statements.

F-6

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF OPERATIONS

United Australia/Pacific, Inc. (the "Company" or "United A/P") a majority owned
subsidiary of United Asia/Pacific Communications, Inc. ("UAP") which is in turn
an indirect wholly owned subsidiary of UnitedGlobalCom, Inc. ("United") was
formed on October 14, 1994, for the purpose of developing, acquiring and
managing foreign pay television, programming and telephony operations.

The following chart presents a summary of the Company's ownership structure and
its significant investments in pay television, programming and telephony
operations as of December 31, 2000.

***********************************************************
* *
* United *
* *
***********************************************************
*
100% *
***********************************************************
* *
* United International Properties, Inc. ("UIPI") *
* *
***********************************************************
*
100% *
***********************************************************
* *
* UAP *
* *
***********************************************************
*
100% *
***********************************************************
* *
* The Company *
* *
***********************************************************
*
100% *
***********************************************************
* *
* United Austar, Inc. *
* *
***********************************************************
*
72.9% *
***********************************************************
* Austar United Communications Limited *
* ("Austar United") *
* *
***********************************************************
*
*
***********************************************************
* *
*Australia: *
* Austar Entertainment Pty Limited ("Austar") 100.0% *
* Austar United Broadband Pty Limited ("AUB") 100.0% *
* XYZ Entertainment Pty Limited ("XYZ *
* Entertainment") 50.0% *
*New Zealand: *
* Telstra Saturn Limited ("TelstraSaturn") 50.0% *
* *
***********************************************************

As of December 31, 2000, the Company's working capital and projected operating
cash flow are not sufficient to fund its budgeted expenditures and pay interest
on its indebtedness over the next 12 months. Based on current plans, Austar
United will need approximately A$135.5 ($75.7) million, in addition to its
$106.2 million of cash on hand, to continue to fund the operations of its
business and cover the variable capital expenditure cost of getting digital set
top boxes and broadband data equipment into homes and businesses in its market
in regional Australia and New Zealand. In March 2001, Austar United announced a
A$200.0 ($111.8) million pro rata renounceable rights issue which is expected to
be completed no later than the end of May 2001. United will underwrite the issue
and subscribe for its pro rata entitlement. In addition, United has agreed to
acquire any shares not subscribed to by other shareholders. The Company believes
the proceeds from this offering will be sufficient for Austar United's funding
requirements through 2001. The Company's senior discount notes (the "Notes")

F-7

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

begin accruing interest on a cash-pay basis May 15, 2001, with the first payment
of $34.5 million due November 15, 2001. The Company is considering alternatives
to payment of this interest, including refinancing of the Notes. There can be no
assurance that the Company will be successful in obtaining all or a portion of
its anticipated funding needs.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States ("U.S. GAAP") requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the
Company and all subsidiaries where the Company exercises a controlling financial
interest through the ownership of a majority voting interest. The Company
consolidated the operations of its New Zealand subsidiary, Saturn, from July 1,
1996 through December 31, 1998. During the first seven months of 1999, the
Company accounted for its investment in Saturn under the equity method in order
to comply with the consensus guidance of the Emerging Issues Task Force
regarding Issue 96-16 ("EITF 96-16"), and related rules of the Securities and
Exchange Commission ("SEC"), because the minority shareholder of Saturn
("SaskTel") had participating approval or veto rights with respect to certain
significant decisions of Saturn in the ordinary course of business. Immediately
prior to Austar United's initial public offering ("Austar United IPO"), Austar
United issued 13,659,574 shares of Austar United to SaskTel for their 35.0%
interest in Saturn and began consolidating Saturn's results effective August 1,
1999. Effective April 1, 2000, the Company again discontinued consolidating the
results of Saturn due to the formation of TelstraSaturn, a 50/50 joint venture,
which is accounted for under the equity method. All significant intercompany
accounts and transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS AND SHORT-TERM LIQUID INVESTMENTS

Cash and cash equivalents include cash and investments with original maturities
of less than three months. Short-term liquid investments include certificates of
deposit, commercial paper and government securities which have original
maturities greater than three months but less than twelve months. Short-term
liquid investments are classified as available-for-sale and are reported at fair
market value.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out basis) or
market.

INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES, ACCOUNTED FOR UNDER THE
EQUITY METHOd

For those investments in unconsolidated subsidiaries and companies in which the
Company's voting interest is 20.0% to 50.0%, the Company's investments are held
through a combination of voting common stock, preferred stock, debentures or
convertible debt and/or the Company exerts significant influence through board
representation and management authority, the equity method of accounting is
used. Under this method, the investment, originally recorded at cost, is
adjusted to recognize the Company's proportionate share of net earnings or
losses of the affiliate, limited to the extent of the Company's investment in
and advances to the affiliate, including any debt guarantees or other funding
commitments. The Company's proportionate share of net earnings or losses of
affiliates includes the amortization of the excess of its cost over its
proportionate interest in each affiliate's net tangible assets.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost. Additions, replacements,
installation costs and major improvements are capitalized, and costs for normal
repair and maintenance of property, plant and equipment are charged to expense
as incurred. Upon disconnection of a microwave multi-point distribution system
("MMDS") or direct-to-home ("DTH") subscriber, the remaining book value of the
subscriber equipment, excluding converters which are recovered upon
disconnection, and the unamortized portion of capitalized labor are written off
and accounted for as additional depreciation expense. Depreciation is calculated
using the straight-line method over the estimated economic life of the asset.

F-8

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The economic lives of property, plant and equipment at acquisition are as
follows:

Subscriber premises equipment and converters.......... 3-10 years
MMDS/DTH distribution facilities...................... 5-10 years
Cable distribution networks........................... 5-10 years
Office equipment, furniture and fixtures.............. 3-10 years
Buildings and leasehold improvements.................. 3-10 years
Other................................................. 3-10 years

GOODWILL AND OTHER INTANGIBLE ASSETS

The excess of investments in consolidated subsidiaries over the net tangible
asset value at acquisition is amortized using the straight-line method over 15
years. The acquisition of MMDS licenses has been recorded at fair market value,
and amortization expense is computed using the straight-line method over the
term of the license, up to a maximum of 15 years. Spectrum license fees are
amortized over the term of the license, up to a maximum of 15 years.

RECOVERABILITY OF TANGIBLE AND INTANGIBLE ASSETS

The Company evaluates the carrying value of all long-lived tangible and
intangible assets whenever events or circumstances indicate the carrying value
of assets may exceed their recoverable amounts. An impairment loss is recognized
when the estimated future cash flows (undiscounted and without interest)
expected to result from the use of an asset are less than the carrying amount of
the asset. Measurement of an impairment loss is based on fair value of the asset
if the asset is expected to be held and used, which would generally be computed
using discounted cash flows. Measurement of an impairment loss for an asset held
for sale would be based on fair market value less estimated costs to sell.

DEFERRED FINANCING COSTS

Costs to obtain debt financing are capitalized and amortized over the life of
the debt facility using the effective interest method.

SUBSCRIBER PREPAYMENTS AND DEPOSITS

Payments received in advance for pay television services are deferred and
recognized as revenue when the associated services are provided. Deposits are
recorded as a liability upon receipt and refunded to the subscriber upon
disconnection.

REVENUE RECOGNITION

Revenue is primarily derived from the sale of pay television, telephone and
Internet data services to subscribers and is recognized in the period the
related services are provided. Initial installation fees are recognized as
revenue in the period in which the installation occurs, to the extent
installation fees are equal to or less than direct selling costs, which are
expensed. To the extent installation fees exceed direct selling costs, the
excess fees are deferred and amortized over the average contract period. All
installation fees and related costs with respect to reconnections and
disconnections are recognized in the period in which the reconnection or
disconnection occurs because reconnection fees are charged at a level equal to
or less than related reconnection costs.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of subscriber receivables. Concentrations of
credit risk with respect to subscriber receivables are limited due to the large
number of customers comprising the Company's customer base.

STOCK-BASED COMPENSATION

Stock-based compensation is recognized using the intrinsic value method for the
Austar United Plan, which results in compensation expense for the difference
between the grant price and the fair market value of the ordinary shares of
Austar United on the initial public offering date of July 27, 1999 for options
granted prior to July 27, 1999.

STAFF ACCOUNTING BULLETIN NO. 51 ("SAB 51") ACCOUNTING POLICY

Gains realized as a result of stock issuances by the Company's subsidiaries are
recorded in the statement of operations, except for any transactions which must
be credited directly to equity in accordance with the provisions of SAB 51.

F-9

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

INCOME TAXES

The Company accounts for income taxes under the asset and liability method which
requires recognition of deferred tax assets and liabilities for the expected
future income tax consequences of transactions which have been included in the
financial statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax basis of assets, liabilities and loss carryforwards using
enacted tax rates in effect for the year in which the differences are expected
to reverse. Net deferred tax assets are then reduced by a valuation allowance if
management believes it more likely than not that they will not be realized.

BASIC AND DILUTED NET (LOSS) INCOME PER SHARE

Basic net (loss) income per share is determined by dividing net (loss) income
available to common stockholders by the weighted-average number of common shares
outstanding during each period. Diluted net (loss) income per share includes the
effects of potentially issueable common stock, but only if dilutive. The
Company's warrants (see Note 8) are included in the Company's diluted net income
per share amounts for 1999.

FOREIGN OPERATIONS AND FOREIGN EXCHANGE RATE RISK

The functional currency for the Company's foreign operations is the applicable
local currency for each affiliate company. Assets and liabilities of foreign
subsidiaries are translated at exchange rates in effect at period-end, and the
statements of operations and cash flows are translated at the average exchange
rates during the period. Exchange rate fluctuations on translating foreign
currency financial statements into U.S. dollars that result in unrealized gains
or losses are referred to as translation adjustments. Cumulative translation
adjustments are recorded as a separate component of stockholders' deficit and
are included in other cumulative comprehensive (loss) income.

Transactions denominated in currencies other than the local currency are
recorded based on exchange rates at the time such transactions arise. Subsequent
changes in exchange rates result in transaction gains and losses which are
reflected in income as unrealized (based on period-end translations) or realized
upon settlement of the transactions.

Cash flows from the Company's operations in foreign countries are translated
based on their functional currencies. As a result, amounts related to assets and
liabilities reported in the consolidated statements of cash flows will not agree
to changes in the corresponding balances in the consolidated balance sheets. The
effects of exchange rate changes on cash balances held in foreign currencies are
reported as a separate line item below cash flows from financing activities.

Certain of the Company's foreign operating companies have notes payable and
notes receivable that are denominated in a currency other than their own
functional currency. In general, the Company and the operating companies do not
execute hedge transactions to reduce the Company's exposure to foreign currency
exchange rate risks. Accordingly, the Company may experience economic loss and a
negative impact on earnings and equity with respect to its holdings solely as a
result of foreign currency exchange rate fluctuations.

NEW ACCOUNTING PRINCIPLES

The Financial Accounting Standards Board ("FASB") recently issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which requires that companies recognize
all derivatives as either assets or liabilities in the balance sheet at fair
value. Under SFAS 133, accounting for changes in fair market value of a
derivative depends on its intended use and designation. In June 1999, the FASB
approved Statement of Financial Accounting Standard No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133 ("SFAS 137"). SFAS 137 amends the effective date of
SFAS 133, which is effective for the Company's first quarter 2001. The adoption
does not have a material effect on the Company's results of operations.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with the current
year presentation.

F-10

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. ACQUISITIONS AND OTHER

NON-CONSOLIDATED (EQUITY METHOD) ENTITIES

Effective January 20, 2000, AUB acquired a 50.0% interest in Massive Media Pty
Limited ("Massive Media") for A$4.4 ($2.8) million including A$0.6 ($0.4)
million in Austar United shares and A$3.8 ($2.4) million in cash. Massive Media
owns 100% of Massive Interactive Pty Limited, an Internet development company,
and 75.0% of Massive Technologies Pty Limited, a software company focused on
Internet development.

On April 1, 2000, Saturn purchased Paradise Net Limited, an Internet Service
Provider ("ISP") in New Zealand for cash of approximately A$14.6 ($8.4) million,
A$4.9 ($2.8) million of which was funded by Austar United. Paradise Net Limited
was merged into TelstraSaturn along with the rest of Saturn's operations.

On April 6, 2000, Austar United merged Saturn with Telstra NZ, a wholly owned
subsidiary of Telstra, to form a 50/50 joint venture, TelstraSaturn. Telstra is
the largest telecommunications company in Australia. TelstraSaturn offers voice,
data and video to New Zealand's business and residential market.

CONSOLIDATED ENTITIES

On April 27, 2000, AUB purchased Artson Pty Limited, an ISP that does business
under the name "OntheNet" for A$6.0 ($3.5) million in cash. "OntheNet" operates
on the Gold Coast in Queensland, Australia.

On June 27, 2000, AUB acquired the business assets of Ultranet, an ISP in
Australia, for A$1.8 ($1.1) million payable over four months.

On October 6, 2000, Austar United acquired certain assets of eisa Limited, a
Melbourne based ISP, for A$14.3 ($8.4) million.

On October 19, 2000, TVSN Limited ("TVSN") shareholders voted to accept an
alliance between TVSN and Austar United. Austar United received 51.2% of the
shares in TVSN, on a fully diluted basis, in return for procuring its
subsidiaries to carry the TVSN content. For accounting purposes, the Company
recorded this as a partial sale of the assets contributed to TVSN, resulting in
a gain of $9.9 million.

SPECTRUM ACQUISITIONS

In February 2000, Austar United paid A$43.1 ($24.9) million to convert its five
year apparatus licenses to fifteen year spectrum licenses.

In October 2000, the Company was successful in acquiring additional spectrum in
Sydney and Melbourne in an auction conducted by the ACA for A$14.1 ($8.1)
million.

In November 2000, Austar United purchased from Television and Radio Broadcasting
Services Pty Limited ("TARBS") certain spectrum rights for A$140.0 ($80.7)
million in cash, of which A$110.0 ($63.4) million has been paid. The balance due
of A$30.0 ($17.3) million plus interest is payable on or before August 31, 2001.

OTHER

On March 29, 2000, Austar United sold 20.0 million ordinary shares on the
Australian Stock Exchange (the "March 2000 Offering") at Australian dollars
("A$") 8.50 ($5.20) per share for gross and net proceeds of A$170.0 ($104.0)
million and A$167.5 ($102.4) million, respectively. Based on the carrying value
of the Company's investment in Austar United as of March 29, 2000, the Company
recognized a gain of $61.2 million resulting from the step-up in the carrying
amount of the Company's investment in Austar United, in accordance with SAB 51.
No deferred taxes were recorded related to this gain due to the Company's intent
on holding its investment in Austar United indefinitely.

In June 1999, the 25.0% interest in XYZ Entertainment held by UAP was exchanged
for an 8.3% ownership interest in United Austar, Inc. increasing the Company's
interest in XYZ Entertainment to 50.0%. Based on the carrying value of the
Company's investment in United Austar, Inc., the Company recognized a gain of
$22.3 million from the resulting step-up in the carrying amount of its
investment in United Austar, Inc., in accordance with SAB 51.

In June 1999, the Company's interest in Austar, XYZ Entertainment and Saturn
were contributed to Austar United in exchange for new shares issued by Austar
United. On July 27, 1999, Austar United acquired from SaskTel its 35.0% interest
in Saturn in exchange for approximately 13.7 million of Austar United's shares,
thereby increasing Austar United's ownership interest in Saturn from 65.0% to
100%. In addition, Austar United successfully completed the Austar United IPO,
selling 103.5 million shares on the Australian Stock Exchange raising gross and
net proceeds at A$4.70 ($3.03) per share of A$486.5 ($313.6) million and A$453.6

F-11

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

($292.8) million, respectively. Based on the carrying value of the Company's
investment in Austar United as of July 27, 1999, the Company recognized a gain
of $226.5 million from the resulting step-up in the carrying amount of the
Company's investment in Austar United, in accordance with SAB 51. No deferred
taxes were recorded related to this gain due to the Company's intent on holding
its investment in Austar United indefinitely.

The Austar United IPO and concurrent issuances of shares in exchange for
additional assets reduced the Company's ownership interest in Austar United from
91.7% to approximately 69.2%. The Company purchased additional shares in its
subsidiary, United Austar, Inc., from UAP for $65.6 million during the fourth
quarter 2000, bringing the Company's ownership interest in Austar United as of
December 31, 2000 to 72.9%. Including all vested stock options granted to
employees, the Company's ownership interest in Austar United on a fully diluted
basis was approximately 70.4% at December 31, 2000.

4. CASH AND CASH EQUIVALENTS AND SHORT-TERM LIQUID INVESTMENTS

As of December 31, 2000
----------------------------------------------
Cash Short-term
and Cash Liquid
Equivalents Investments Total
------------- ------------- ------------
(In thousands)

Cash.................................................... $5,617 $ - $ 5,617
Certificates of deposit................................. - 101,376 101,376
Government securities................................... - 101 101
------ -------- --------
Total................................................ $5,617 $101,477 $107,094
====== ======== ========

As of December 31, 1999
----------------------------------------------
Cash Short-Term
and Cash Liquid
Equivalents Investments Total
------------- ------------- ------------
(In thousands)

Cash.................................................... $6,028 $ - $ 6,028
Certificates of deposit................................. - 269,043 269,043
Government securities................................... - 350 350
------ -------- --------
Total................................................ $6,028 $269,393 $275,421
====== ======== ========

5. INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES

As of December 31, 2000
--------------------------------------------------------------------------------------
Investments in Cumulative Share Cumulative
and Advances to Dividends in Results of Translation
Affiliated Companies Received Affiliated Companies Adjustments Total
-------------------- ------------ -------------------- ----------- -------
(In thousands)

XYZ Entertainment...... $ 44,306 $(5,464) $(11,515) $(1,387) $25,940
TelstraSaturn.......... 66,629 - (24,503) (5,007) 37,119
Other.................. 2,860 - (614) (314) 1,932
-------- ------- -------- ------- -------
Total............. $113,795 $(5,464) $(36,632) $(6,708) $64,991
======== ======= ======== ======= =======

As of December 31, 1999
--------------------------------------------------------------------------------------
Investments in Cumulative Share Cumulative
and Advances to Dividends in Results of Translation
Affiliated Companies Received Affiliated Companies Adjustments Total
-------------------- ------------ -------------------- ----------- -------
(In thousands)

XYZ Entertainment...... $ 44,306 $ - $(18,564) $ 2,804 $28,546
-------- ------- -------- ------- -------
Total............. $ 44,306 $ - $(18,564) $ 2,804 $28,546
======== ======= ======== ======= =======

F-12

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2000 and 1999, the Company had the following differences
related to the excess of its cost over its proportionate interest in each
affiliate's net tangible assets included in the above table. Such differences
are being amortized over 15 years.

As of December 31, 2000 As of December 31, 1999
--------------------------- ---------------------------
Basis Accumulated Basis Accumulated
Difference Amortization Difference Amortization
------------ -------------- ------------ --------------
(In thousands)

XYZ Entertainment..................................... $22,483 $(3,159) $25,791 $(1,609)
TelstraSaturn......................................... 21,405 (995) - -
------- ------- ------- -------
Total............................................ $43,888 $(4,154) $25,791 $(1,609)
======= ======= ======= =======

TELSTRASATURN

Condensed financial information for TelstraSaturn stated in U.S. dollars is as
follows:

As of December 31,
------------------------
BALANCE SHEET 2000 1999 (1)
----------- -----------
(In thousands)

Current assets........................................... $ 27,282 $ 10,537
Non-current assets....................................... 191,301 99,145
-------- --------
Total assets........................................ $218,583 $109,682
======== ========

Current liabilitites..................................... $ 35,874 $ 34,612
Non-current liabilities.................................. 142,875 58,230
Minority interest........................................ 6,415 6,719
Shareholder's equity..................................... 33,419 10,121
-------- --------
Total liabilities and stockholders' equity.......... $218,583 $109,682
======== ========

For the Years
April 1 to January 1 to Ended December 31,
December 31, March 31, ------------------------
STATEMENT OF OPERATIONS 2000 2000 (1) 1999 (1) 1998 (1)
----------- -------------- ----------- -----------
(In thousands)

Revenue.................................................. $ 64,672 $ 5,293 $ 10,917 $ 1,693
Operating, selling, general and administrative expense... (92,104) (5,949) (17,528) (12,206)
Depreciation and amortization............................ (20,276) (3,068) (7,996) (3,435)
--------- -------- -------- --------
Operating loss...................................... (47,708) (3,724) (14,607) (13,948)
Other.................................................... (1,297) 190 (1,328) (1,293)
-------- -------- -------- --------
Net loss............................................ $(49,005) $ (3,534) $(15,935) $(15,241)
======== ======== ======== ========

(1) Represents condensed financial information for Saturn, prior to the
TelstraSaturn merger.

F-13

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. PROPERTY, PLANT AND EQUIPMENT

As of December 31,
-------------------------
2000 1999
---------- ----------
(In thousands)

Subscriber premises equipment and converters............... $292,213 $276,725
MMDS distribution facilities............................... 60,597 64,373
Cable distribution networks................................ 2,655 91,298
Office equipment, furniture and fixtures................... 25,504 23,111
Buildings and leasehold improvements....................... 5,670 5,645
Other...................................................... 32,775 20,133
-------- --------
419,414 481,285
Accumulated depreciation................................ (294,935) (261,891)
-------- --------
Net property, plant and equipment....................... $124,479 $219,394
======== ========

7. GOODWILL AND OTHER INTANGIBLE ASSETS

As of December 31,
-------------------------
2000 1999
---------- ----------
(In thousands)

Goodwill................................................... $159,920 $104,363
License fees and other intangible assets................... 114,555 10,519
-------- --------
274,475 114,882
Accumulated amortization................................... (20,088) (23,536)
-------- --------
Net goodwill and other intangible assets................ $254,387 $ 91,346
======== ========

8. SENIOR DISCOUNT NOTES

As of December 31,
-------------------------
2000 1999
---------- ----------
(In thousands)

May 1996 Notes............................................. $421,372 $369,111
September 1997 Notes....................................... 44,869 38,834
-------- --------
Total senior notes (the "Notes")........................ $466,241 $407,945
======== ========

THE NOTES

The 14.0% senior notes were issued by the Company in May 1996 and September 1997
at a discount from their principal amount of $488.0 million, resulting in gross
proceeds of $255.0 million. On and after May 15, 2001, cash interest will accrue
and will be payable semi-annually on each May 15 and November 15, commencing
November 15, 2001. The Notes are due May 15, 2006. Effective May 16, 1997, the
interest rate on these notes increased by an additional 0.75% per annum to
14.75%. On October 14, 1998, the Company consummated an equity sale resulting in
gross proceeds to the Company of $70.0 million, reducing the interest rate from
14.75% to 14.0% per annum. Due to the increase in the interest rate effective
May 16, 1997 until consummation of the equity sale, the Notes will accrete to a
principal amount of $492.9 million on May 15, 2001, the date cash interest
begins to accrue. The quoted fair market value of these notes was approximately
$320.4 million and $414.0 million as of December 31, 2000 and 1999,
respectively.

In November 1997, pursuant to the terms of the indentures governing the Notes,
the Company issued warrants to purchase 488,000 shares of its common stock. The
warrants are exercisable through May 15, 2006 at a price of $10.45 per share,
which would result in gross proceeds of $5.1 million upon exercise. The warrants
were valued at $3.7 million and have been reflected as an additional discount to
the Notes on a pro rata basis and as an increase in additional paid-in capital.
Warrants to acquire 50 shares were exercised November 24, 1999. No warrants were
exercised during 2000.
F-14

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. OTHER LONG-TERM DEBT

As of December 31,
-------------------------
2000 1999
---------- ----------
(In thousands)

Austar Bank Facility....................................... $223,501 $202,703
Saturn Bank Facility....................................... - 57,685
Capitalized leases and other............................... 4,759 2,263
-------- ----------
228,260 262,651
Less current portion.................................... (1,366) (1,500)
-------- --------
Total other long-term debt.............................. $226,894 $261,151
======== ========

AUSTAR BANK FACILITY

On April 23, 1999, Austar executed a new A$400.0 million ($262.3 million)
syndicated senior secured debt facility ("Austar Bank Facility") to refinance
the existing bank facility and to fund Austar's subscriber acquisition and
working capital needs. The Austar Bank Facility consists of two sub-facilities:
(i) A$200.0 million amortizing term facility ("Tranche 1") and (ii) A$200.0
million cash advance facility ("Tranche 2"). Tranche 1 was used to refinance the
existing bank facility, and Tranche 2 is available upon the contribution of
additional equity on a 2:1 debt-to-equity basis. The Austar Bank Facility bears
interest at the professional market rate in Australia plus a margin ranging from
1.75% to 2.25% based upon certain debt to cash flow ratios. The average rate
incurred on this facility was 7.4% and 7.6% during the years ended December 31,
2000 and 1999, respectively. The Austar Bank Facility is fully repayable
pursuant to an amortization schedule beginning December 31, 2002 and ending
March 31, 2006. As of December 31, 2000, Austar had drawn A$200.0 million under
Tranche 1 and A$200.0 million under Tranche 2, for a total outstanding balance
of A$400.0 ($223.5) million.

DEBT MATURITIES

The Company's maturities of its other long-term debt are as follows (in
thousands):

Year ended December 31, 2001........................... $ 1,366
Year ended December 31, 2002........................... 8,412
Year ended December 31, 2003........................... 40,264
Year ended December 31, 2004........................... 63,432
Year ended December 31, 2005........................... 76,278
Thereafter............................................. 38,508
--------
$228,260
========
OTHER FINANCIAL INSTRUMENTS

Interest rate swap agreements are used by the Company from time to time, to
manage interest rate risk on its floating rate debt facilities. Interest rate
swaps are entered into depending on the Company's assessment of the market, and
generally are used to convert the floating rate debt to fixed rate debt.
Interest differentials paid or received under these swap agreements are
recognized over the life of the contracts as adjustments to the effective yield
of the underlying debt, and related amounts payable to, or receivable from, the
counterparties are included in the consolidated balance sheets.

Currently, the Company has four interest rate swaps to manage interest rate
exposure on the Austar Bank Facility. Two of these swap agreements expire in
2002 and effectively convert an aggregate principal amount of A$50.0 ($27.9)
million of variable rate, long-term debt into fixed rate borrowings. The other
two swap agreements expire in 2004 and convert an aggregate principal amount of
A$100.0 ($55.9) million of variable rate, long-term debt into fixed rate
borrowings. As of December 31, 2000, the weighted-average fixed rate under these
agreements was 5.7% compared to a weighted-average variable rate of
approximately 8.5%.

Fair values of the interest rate swap agreements are based on the estimated
amounts that the Company would receive or pay to terminate the agreements at the
reporting date, taking into account current interest rates and the current
creditworthiness of the counterparties.

F-15

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. RELATED PARTY

Effective May 1, 1996, the Company and United Management, Inc. ("United
Management"), an indirect wholly owned subsidiary of United, executed a 10-year
management services agreement (the "Management Agreement"), pursuant to which
United Management performs certain administrative, accounting, financial
reporting and other services for the Company, which has no separate employees of
its own. Pursuant to the Management Agreement, the management fee was $0.75
million for the first year of such agreement (beginning May 1, 1996), and it
increases on each anniversary date of the Management Agreement by 8.0% per year.
Effective March 31, 1997, United Management assigned its rights and obligations
under the Management Agreement to UAP, the Company's immediate parent, and
extended the agreement for 20 years from that date (the "UAP Management
Agreement"). In addition, the Company reimburses UAP or United for any
out-of-pocket expenses including travel, lodging and entertainment expenses,
incurred by UAP or United on behalf of the Company. For the years ended December
31, 2000, 1999 and 1998, the Company recorded nil, $3.2 million and $4.6
million, respectively, in corporate general and administrative expense allocated
from United, due to excess expense incurred at United not considered in the
management agreement. For the year ended December 31, 2000, 1999 and 1998, the

Company recorded $1.0 million, $0.9 million and $0.9 million, respectively, in
management fees due from the Company to UAP. The Company also recorded $17.6
million of non-cash stock-based compensation expense related to UAP stock
appreciation rights for the period January 1, 1999 through the Austar United IPO
date. This plan was discontinued in July 1999 upon Austar United's initial
public offering.

Effective June 24, 1999, United and Austar United executed a management services
agreement pursuant to which United performs certain technical and consulting
services in return for a monthly management fee. The monthly fee payable by
Austar United to United in 2000 is $0.2 million per month. This amount may be
adjusted before January 1 of each year by the board of directors of United but
may not increase by more than 15.0% in any one year. This agreement also
requires that Austar United reimburse United for all direct and other expenses
reasonably incurred by United on behalf of Austar United. The agreement will
continue through December 31, 2010.

Austar and Saturn were parties to technical assistance agreements with UAP
whereby such operating companies paid to UAP fees based on their respective
gross revenues. The operating systems reimbursed United for certain direct costs
incurred by United, including salaries and benefits relating to senior
management positions, pursuant to the terms of the technical assistance
agreements. For the years ended December 31, 1999 and 1998, the Company recorded
$3.2 million and $4.1 million, respectively, in related party management fees
under these agreements. Effective June 24, 1999, the rights under these
management fee agreements were assigned to Austar United as part of the
restructuring associated with the Austar United IPO. Accordingly, the related
party management fees recorded for the year ended December 31, 2000 were
eliminated during the Austar United consolidation.

Included in the amount due to parent is the following:

As of December 31,
-------------------------
2000 1999
---------- ----------
(In thousands)

United A/P................................................. $ 2,972 $ 1,977
Austar United technical assistance agreement obligations,
including management fees of $3,600 and $1,200,
respectively.............................................. 9,550 2,874
Austar technical assistance agreement obligations,
including deferred management fees of $8,068 and $9,472,
respectively (1).......................................... 11,830 13,889
Saturn technical assistance agreement obligations,
including deferred management fees of $0 and $149,
respectively.............................................. - 1,820
Other...................................................... 2,299 1,815
------- -------
26,651 22,375
Less current portion.................................. (18,583) (12,754)
------- -------
Total due to parent................................... $ 8,068 $ 9,621
======= =======

(1) Austar United and UAP have the option of converting these management
fees into equity.

F-16

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. STOCKHOLDERS' DEFICIT

EQUITY TRANSACTIONS OF SUBSIDIARY

Variable plan accounting for stock options and the recognition of deferred
compensation expense by Austar United affect the equity accounts of the Company.
The following represents the effect on additional paid-in capital and deferred
compensation as a result of these equity transactions:

For the Years Ended
December 31,
-------------------------
2000 1999
---------- ----------
(In thousands)

Variable plan accounting for stock options................. $ - $40,883
Deferred compensation expense.............................. - (40,883)
Amortization of deferred compensation...................... 6,507 21,024
------- -------
Total................................................. $ 6,507 $21,024
======= =======

AUSTAR UNITED PLAN

On June 17, 1999, Austar United established a stock option plan (the "Austar
United Plan"). Effective on Austar United's IPO date of July 27, 1999, certain
employees of United and Austar United were granted options under the Austar
United Plan in direct proportion to their previous holding of UAP options under
the UAP Plan along with retroactive vesting through the initial public offering
date to reflect vesting under the UAP Plan. The maximum term of options granted
under the Austar United Plan is ten years. The options vest in equal monthly
increments over the four-year period following the date of grant. Under the
Austar United Plan, options to purchase a total of 28,760,709 shares have been
authorized, of which 1,115,580 were available for grant. The Austar United Plan
was accounted for as a variable plan prior to Austar United's IPO and as a fixed
plan effective July 27, 1999. For the years ended December 31, 2000 and 1999,
$9.4 million and $4.9 million, respectively, of compensation expense was
recognized under this plan in the statement of operations.

For purposes of the pro forma disclosures presented below, Austar United has
computed the fair values of all options granted during the years ended December
31, 2000 and 1999 using the Black-Scholes single-option pricing model and the
following weighted-average assumptions:

As of December 31,
-------------------------
2000 1999
---------- ----------

Risk-free interest rate.................................... 5.27% 5.81%
Expected life.............................................. 7 years 7 years
Expected volatility........................................ 55.48% 40.44%
Expected dividend yield.................................... 0% 0%

The total fair value of options granted was approximately A$5.5 ($3.1) and
A$88.0 ($57.7) million for the years ended December 31, 2000 and 1999,
respectively. These amounts are amortized using the straight-line method over
the vesting period of the options. Cumulative compensation expense recognized in
pro forma net income, with respect to options that are forfeited prior to
vesting, is adjusted as a reduction of pro forma compensation expense in the
period of forfeiture. For the years ended December 31, 2000 and 1999, pro forma
stock-based compensation, net of the effect of forfeitures and net of actual
compensation expense recorded in the consolidated statement of operations was
A$22.0 ($11.5) million and a credit of A$12.1 ($7.9) million, respectively.

F-17

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of stock option activity for the Austar United Plan is as follows:

For the Years Ended December 31,
-------------------------------------------------------------------
2000 1999
--------------------------------- -------------------------------
Number Weighted- Number Weighted-
of Average of Average
Shares Exercise Price Shares Exercise Price
------------- ----------------- ------------- ----------------

Outstanding at beginning of period................. 24,845,031 A$ 2.27 - A$ -
Granted during the period.......................... 2,967,500 A$ 2.33 25,631,736 A$ 2.26
Cancelled during the period........................ (851,652) A$ 4.39 (102,455) A$ 3.75
Exercised during the period........................ (310,330) A$ 3.09 (684,250) A$ 1.83
---------- -------- ---------- --------

Outstanding at end of period....................... 26,650,549 A$ 2.20 24,845,031 A$ 2.27
========== ======== ========== ========

Exercisable at end of period....................... 17,279,095 A$ 2.01 11,564,416 A$ 1.90
========== ======== ========== ========

The combined weighted-average fair values and weighted-average exercise prices
of options are as follows:

For the Years Ended December 31,
----------------------------------------------------------------------------------
2000 1999
--------------------------------------- ---------------------------------------
Number Fair Exercise Number Fair Exercise
Exercise Price of Options Value Price of Options Value Price
- ------------------------------------------ ------------- ---------- ---------- ------------- ---------- ----------

Less than market price.................... 2,627,500 A$ 1.60 A$ 1.75 22,334,236 A$ 3.58 A$ 1.91
Equal to market price..................... 10,000 A$ 3.86 A$ 6.25 3,222,500 A$ 2.47 A$ 4.70
Greater than market price................. 330,000 A$ 3.75 A$ 6.80 75,000 A$ 2.43 A$ 4.70
--------- -------- -------- ---------- -------- --------
Total.................................. 2,967,500 A$ 1.85 A$ 2.33 25,631,736 A$ 3.43 A$ 2.26
========= ======== ======== ========== ======== ========

The following table summarizes information about the Austar United Plan options
outstanding and exercisable at December 31, 2000:

Options Outstanding Options Exercisable
-------------------------------------------------- -----------------------------
Weighted-Average
Remaining Weighted-Average Weighted-Average
Contractual Life Exercise Exercise
Exercise Price Range (Australian dollars) Number (Years) Price Number Price
- ------------------------------------------ ------------- ----------------- ---------------- ------------ ----------------

A$1.75 - A$1.80........................... 23,166,646 8.71 A$ 1.79 16,090,607 A$ 1.80
A$4.70.................................... 3,163,174 8.59 A$ 4.70 1,114,790 A$ 4.70
A$6.25 - A$6.43........................... 250,729 9.30 A$ 6.42 61,875 A$ 6.42
A$7.55 - A$8.28........................... 70,000 9.30 A$ 8.18 11,823 A$ 8.27
---------- ---- -------- --------- --------
Total.................................. 26,650,549 8.70 A$ 2.20 17,279,095 A$ 2.01
========== ==== ======== ========== ========

12. INCOME TAXES

In general, a U.S. corporation may claim a foreign tax credit against its
federal income tax expense for foreign income taxes paid or accrued. Because the
Company must calculate its foreign tax credit separately for dividends received
from each foreign corporation in which the Company owns 10.0% to 50.0% of the
voting stock, and because of certain other limitations, the Company's ability to
claim a foreign tax credit may be limited, particularly with respect to
dividends paid out of earnings subject to a high rate of foreign income tax.
Generally, the Company's ability to claim a foreign tax credit is limited to the
amount of U.S. taxes the Company pays with respect to its foreign source income.

F-18

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In calculating its foreign source income, the Company is required to allocate
interest expense and overhead incurred in the U.S. between its domestic and
foreign activities. Accordingly, to the extent U.S. borrowings are used to
finance equity contributions to its foreign subsidiaries, the Company's ability
to claim a foreign tax credit may be significantly reduced. These limitations
and the inability of the Company to offset losses in one foreign jurisdiction
against income earned in another foreign jurisdiction could result in a high
effective tax rate on the Company's earnings.

The Company is included as a member of United's consolidated tax return and,
after the offering of the May 1996 Notes, remained a member of the United
consolidated group. United and the Company are parties to a tax sharing
agreement that defines the parties' rights and obligations with respect to tax
liabilities and benefits relating to the Company and its operations as part of
the consolidated group of United. In general, United is responsible for filing
consolidated tax returns and paying the associated taxes, and the Company will
reimburse United for the portion of the tax cost relating to the Company and its
operations. For financial reporting purposes, the Company accounts for income
taxes as if it filed separate income tax returns in accordance with the
fundamental provisions of the tax sharing agreement. Any differences in income
tax expense (benefit) allocated to the Company by United in accordance with the
tax sharing agreement and the income tax expense (benefit) will be accounted for
as a deemed capital distribution or contribution. Because the Company holds

certain of its foreign investments through affiliates which hold investments
accounted for under the equity method in foreign corporations, taxable income
(loss) generated does not flow through to the Company for U.S. federal and state
tax purposes even though the Company records its allocable share of affiliate
income (losses) for financial reporting purposes. Accordingly, due to the
indefinite reversal of such amounts in future periods, no deferred tax assets
have been established for tax basis in excess of the Company's book basis
(approximately $23.0 million and $16.0 million as of December 31, 2000 and 1999,
respectively) in investments in affiliated companies who, in turn, have equity
investments in foreign corporations.

The Company's United States tax net operating losses, totaling approximately
$21.6 million at December 31, 2000, expire beginning in 2014 through 2029. The
significant components of the net deferred tax asset are as follows:

As of December 31,
-------------------------
2000 1999
---------- ----------
(In thousands)

Deferred tax assets:
Basis differences in property, plant and equipment........... $ 482 $ 482
Accrued interest expense on the Notes........................ 72,322 52,040
U.S. tax net operating loss carryforward..................... 8,212 8,323
Basis difference in marketable equity securities............. 1,696 1,696
Other........................................................ 839 -
Tax net operating loss carryforward of consolidated foreign
subsidiaries (1)............................................ 69,725 156,470
-------- --------
Gross deferred tax assets...................................... 153,276 219,011
Deferred tax liabilities:
Other........................................................ (67) (1,014)
-------- --------
Gross deferred tax liabilities................................. (67) (1,014)
-------- --------
Valuation allowance for deferred tax assets.................... (153,276) (219,011)
-------- --------
Deferred tax liabilities, net.................................. $ (67) $ (1,014)
======== ========

(1) For Australian income tax purposes, the net operating loss carryforward may
be limited in the event of a change in control of Austar or a change in the
business.
F-19

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The difference between income tax (benefit) expense provided in the financial
statements and the expected income tax (benefit) expense at statutory rates is
reconciled as follows:

For the Years Ended December 31,
---------------------------------------------
2000 1999 1998
------------- --------------- -------------
(In thousands)

Expected income tax (benefit) expense at the U.S. statutory rate of 35.0%......... $(56,917) $ 12,177 $(68,597)
Tax effect of permanent and other differences:
Change in valuation reserve..................................................... 59,234 66,968 64,624
Gain on issuance of common equity securities by subsidiary...................... (23,245) (94,528) -
Non-deductible expenses and other............................................... 16,161 8,603 5,577
International rate differences.................................................. 6,483 3,325 (1,251)
State tax, net of federal (benefit) expense..................................... (4,879) 1,044 (6,189)
Non-deductible interest accretion on the Notes.................................. 1,886 1,693 2,605
Amortization of outside basis differences....................................... 550 788 1,412
Amortization of licenses........................................................ - 923 1,819
-------- -------- --------
Total income tax benefit (expense)................................................ $ (727) $ 993 $ -
======== ======== ========

SEGMENT INFORMATION

The Company's segment information is as follows:

For the Year Ended December 31, 2000 As of December 31, 2000
---------------------------------------------------- -------------------------------------
Internet/ Capital Long-Lived Total
Video Telephone Data Other Total Expenditures Assets(1) Assets
-------- --------- -------- -------- -------- ------------ ----------- --------
(In thousands) (In thousands)

Revenue:
Australia......................... $163,094 $ 732 $ 4,189 $ 4,410 $172,425 $113,786 $124,479 $520,693
New Zealand(2).................... 844 3,166 878 - 4,888 - - -
Other............................. - - - - - - - 78,558
-------- ------- -------- ------- -------- -------- -------- --------
Total........................... $163,938 $ 3,898 $ 5,067 $ 4,410 $177,313 $113,786 $124,479 $599,251
======== ======= ======== ======= ======== ======== ======== ========
Adjusted EBITDA:(3)
Australia......................... $(12,333) $(3,482) $(21,255) $(6,528) $(43,598)
New Zealand(2).................... (253) (357) 248 (1,344) (1,706)
Other............................. - - - (1,369) (1,369)
-------- ------- -------- ------- --------
Total........................... $(12,586) $(3,839) $(21,007) $(9,241) $(46,673)
======== ======= ======== ======= ========

For the Year Ended December 31, 1999 As of December 31, 1999
---------------------------------------------------- -------------------------------------
Internet/ Capital Long-Lived Total
Video Telephone Data Other Total Expenditures Assets(1) Assets
-------- --------- -------- -------- -------- ------------ ----------- --------
(In thousands) (In thousands)
Revenue:
Australia......................... $145,602 $ - $ - $ - $145,602 $ 94,513 $123,617 $563,627
New Zealand(4).................... 1,279 4,107 - 734 6,120 23,306 95,777 76,139
Other............................. - - - - - - - 26,825
-------- ------- -------- ------- -------- -------- -------- --------
Total........................... $146,881 $ 4,107 $ - $ 734 $151,722 $117,819 $219,394 $666,591
======== ======= ======== ======== ======== ======== ======== ========
Adjusted EBITDA:(3)
Australia......................... $(10,005) $ - $ - $(4,381) $(14,386)
New Zealand(4).................... (918) (1,160) - (47) (2,125)
Other............................. - - - (4,306) (4,306)
-------- ------- -------- ------- --------
Total........................... $(10,923) $(1,160) $ - $(8,734) $(20,817)
======== ======= ======== ======= ========

F-20

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Year Ended December 31, 1998 As of December 31, 1998
---------------------------------------------------- -------------------------------------
Internet/ Capital Long-Lived Total
Video Telephone Data Other Total Expenditures Assets(1) Assets
-------- --------- -------- -------- -------- ------------ ----------- --------
(In thousands) (In thousands)
Revenue:
Australia......................... $ 86,408 $ - $ - $ - $ 86,406 $ 71,197 $110,351 $181,169
New Zealand....................... - - - - - - - 23,789
Other............................. 3,411 - - - 3,411 269 - 11,074
-------- ------- -------- ------- -------- -------- -------- --------
Total........................... $ 89,819 $ - $ - $ - $ 89,819 $ 71,466 $110,351 $216,032
======== ======= ======== ======= ======== ======== ======== ========
Adjusted EBITDA:(3)
Australia......................... $(27,065) $ - $ - $(4,124) $(31,189)
New Zealand....................... - - - - -
Other............................. (101) - - (5,474) (5,575)
-------- ------- -------- ------- --------
Total........................... $(27,166) $ - $ - $(9,598) $(36,764)
======== ======= ======== ======= ========

(1) Represents property, plant and equipment, net.
(2) Represents the period from January 1, 2000 through March 31, 2000 when
Saturn was consolidated.
(3) "Adjusted EBITDA" represents net operating earnings before depreciation,
amortization and stock-based compensation charges. Industry analysts
generally consider Adjusted EBITDA to be a helpful way to measure the
performance of cable television operations and communications companies.
Adjusted EBITDA should not, however, be considered a replacement for net
income, cash flows or for any other measure of performance or liquidity
under U.S. GAAP, or as an indicator of a company's operating performance.
The Company's presentation of Adjusted EBITDA may not be comparable to
statistics with a similar name reported by other companies. Not all
companies and analysts calculate EBITDA in the same manner.
(4) Represents the period from August 1, 1999 through December 31, 1999 when
Saturn was consolidated.

Adjusted EBITDA reconciles to the consolidated statement of operations as
follows:

For the Years Ended December 31,
----------------------------------------------
2000 1999 1998
------------- -------------- -------------
(In thousands)

Operating loss............................................... $(162,011) $(148,077) $(133,904)
Depreciation and amortization................................ 105,899 104,720 97,140
Non-cash stock-based compensation expense.................... 9,439 22,540 -
--------- --------- ---------
Consolidated Adjusted EBITDA............................ $ (46,673) $ (20,817) $ (36,764)
========= ========= =========

14. COMMITMENTS

The Company has MMDS and programming license fees and programming commitments
due annually as follows (in thousands):

Year ended December 31, 2001................................. $ 17,771
Year ended December 31, 2002................................. 17,771
Year ended December 31, 2003................................. 17,771
Year ended December 31, 2004................................. 17,771
Year ended December 31, 2005................................. 17,771
Thereafter................................................... 35,543
--------
$124,398
========

The Company has various lease agreements for office space, equipment and
vehicles. Rent expense under these lease agreements totaled $2.1 million, $4.1
million and $2.6 million for the years ended December 31, 2000, 1999 and 1998,
respectively.

F-21

UNITED AUSTRALIA/PACIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has operating lease obligations as follows (in thousands):

Year ended December 31, 2001................................. $ 9,942
Year ended December 31, 2002................................. 8,411
Year ended December 31, 2003................................. 7,991
Year ended December 31, 2004................................. 7,756
Year ended December 31, 2005................................. 8,326
Thereafter................................................... 17,681
--------
$ 60,107
========

The September 1997 five-year agreement with Optus Networks to lease a 54MHz
transponder has been renegotiated under a new agreement to lease an additional
transponder. Satellite fees payable annually are approximately as follow:

Year ended December 31, 2001................................. $ 6,070
Year ended December 31, 2002................................. 7,016
Year ended December 31, 2003................................. 7,711
Year ended December 31, 2004................................. 7,711
Year ended December 31, 2005................................. 7,711
Thereafter................................................... 69,397
--------
$105,616
========

15. CONTINGENCIES

The Company is not a party to any material legal proceedings, nor is it
currently aware of any threatened material legal proceedings. From time to time,
the Company may become involved in litigation relating to claims arising out of
its operations in the normal course of its business.

F-22

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To United Australia/Pacific, Inc.:

We have audited, in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements of United
Australia/Pacific, Inc. included in this Form 10-K and have issued our report
thereon dated March 30, 2001. Our audit was made for the purpose of forming an
opinion on the basic consolidated financial statements taken as a whole. The
following schedule is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic consolidated financial statements as indicated in our
report with respect thereto and, in our opinion, based on our audits, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic consolidated financial statements taken as a
whole.

ARTHUR ANDERSEN LLP

Denver, Colorado
March 30, 2001

F-23

UNITED AUSTRALIA/PACIFIC, INC.
PARENT ONLY
SCHEDULE 1
Condensed Financial Information of the Registrant
(Stated in thousands, except share and per share amounts)

As of December 31,
------------------------------
2000 1999
------------- -------------

ASSETS
Current assets:
Cash and cash equivalents........................................................................ $ 655 $ 298
Short-term liquid investments.................................................................... 201 497
Related party receivables and costs to be reimbursed............................................. 327 327
Other current assets............................................................................. 1 10
-------- --------
Total current assets.......................................................................... 1,184 1,132
Investments in and advances to affiliated companies, accounted for under the
equity method, net............................................................................... 205,782 223,675
Deferred financing costs, net of accumulated amortization of $2,775 and $1,927,
respectively..................................................................................... 7,606 8,461
-------- --------
Total assets.................................................................................. $214,572 $233,268
======== ========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Related party payables........................................................................... $ 2,972 $ 1,977
Accounts payable................................................................................. 220 -
-------- --------
Total current liabilities..................................................................... 3,192 1,977
Senior discount notes.............................................................................. 466,241 407,945
-------- --------
Total liabilities............................................................................. 469,433 409,922

Stockholders' deficit:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and
outstanding.................................................................................... - -
Common stock, $0.01 par value, 30,000,000 shares authorized, 22,961,728 and
17,810,299 shares issued and outstanding, respectively......................................... 230 178
Additional paid-in capital....................................................................... 371,498 305,100
Deferred compensation............................................................................ (8,904) (18,343)
Accumulated deficit.............................................................................. (562,050) (440,649)
Other cumulative comprehensive loss.............................................................. (55,635) (22,940)
-------- --------
Total stockholders' deficit................................................................... (254,861) (176,654)
-------- --------
Total liabilities and stockholders' deficit................................................... $214,572 $233,268
======== ========

F-24

UNITED AUSTRALIA/PACIFIC, INC.
PARENT ONLY
SCHEDULE 1
Condensed Information as to the Operations of the Registrant
(Stated in thousands)

For the Years Ended December 31,
--------------------------------------------------
2000 1999 1998
------------- -------------- -------------

Corporate general and administrative expense, including management
fees to related party of $995, $921 and $853, respectively.................... $ (1,368) $ (4,301) $ (5,689)
--------- --------- ---------
Operating loss............................................................. (1,368) (4,301) (5,689)

Interest income................................................................. 52 40 81
Interest expense................................................................ (59,144) (52,017) (48,108)
Other expense, net.............................................................. 1 (1) (836)
--------- --------- ---------
Loss before other item..................................................... (60,459) (56,279) (54,552)

Share in results of affiliated companies, net................................... (60,942) 96,870 (151,739)
--------- --------- ---------

Net (loss) income.......................................................... $(121,401) $ 40,591 $(206,291)
========= ========= =========

Foreign currency translation adjustments........................................ $ (32,695) $ 6,251 $ (227)
--------- --------- ---------
Comprehensive (loss) income..................................................... $(154,096) $ 46,842 $(206,518)
========= ========= =========

F-25

UNITED AUSTRALIA/PACIFIC, INC.
PARENT ONLY
SCHEDULE 1
Condensed Information as to the Cash Flows of the Registrant
(Stated in thousands)

For the Years Ended
December 31,
----------------------------------------------
2000 1999 1998
------------- ------------- -------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income............................................................... $(121,401) $ 40,591 $(206,291)
Adjustments to reconcile net (loss) income to net cash flows from
operating activities:
Share in results of affiliated companies, net................................ 60,942 (96,870) 151,739
Allocation of expense accounted for as capital contributions by parent....... - 3,216 4,622
Accretion of interest on senior notes and amortization of deferred
financing costs............................................................. 59,144 52,017 48,108
Decrease in related party receivables and other assets....................... 1,011 157 603
Increase in accounts payable, accrued liabilities and other.................. 219 921 2,332
--------- -------- ---------
Net cash flows from operating activities........................................ (85) 32 1,113
--------- -------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term liquid investments....................................... (1,084) - (763)
Sale of short-term liquid investments........................................... 1,379 266 12,325
Investments in and advances to affiliated companies and other investments....... (69,235) (29,659) (72,570)
--------- -------- ---------
Net cash flows from investing activities........................................ (68,940) (29,393) (61,008)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash contributed from parent.................................................... 69,382 29,659 58,947
Deferred financing costs........................................................ - - (7)
--------- -------- ---------
Net cash flows from financing activities........................................ 69,382 29,659 58,940
--------- -------- ---------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................................ 357 298 (955)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.................................. 298 - 955
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD........................................ $ 655 $ 298 $ -
========= ========= =========

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash capital contributions from parent...................................... $ - $ 17,233 $ 12,473
========= ========= =========

F-26

UNITED AUSTRALIA/PACIFIC, INC.
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
(Stated in thousands)

Balance at Write-offs Balance at
Beginning of Charged to and Other End of
Descriptions Period Expense Acquisitions Deductions Period
- ------------------------------------------------------ ------------- ------------- ------------ ---------- ----------

Allowance for doubtful subscriber receivables:
Year ended December 31, 2000........................ $ 823 $3,794 $ 28 $(3,606) $1,039
Year ended December 31, 1999........................ $ - $3,479 $ 83 $(2,739) $ 823
Year ended December 31, 1998........................ $ - $ 876 $ - $ (876) $ -
Allowance for investment in affiliates:
Year ended December 31, 2000........................ $ - $ - $ - $ - $ -
Year ended December 31, 1999........................ $4,384 $ - $ - $(4,384) $ -
Year ended December 31, 1998........................ $ - $4,384 $ - $ - $4,384

F-27