<Page>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

                                   (MARK ONE)

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

     FOR THE PERIOD ENDED SEPTEMBER 30, 2001

                                       OR

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

     FOR THE TRANSITION PERIOD FROM             TO

                         COMMISSION FILE NUMBER 1-5706

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

                      METROMEDIA INTERNATIONAL GROUP, INC.

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

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

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

                                 (201) 531-8000

              (Registrant's telephone number, including area code)

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

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

THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF NOVEMBER 9, 2001 WAS
94,034,947.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.
                                    INDEX TO
                         QUARTERLY REPORT ON FORM 10-Q
                         PART I--FINANCIAL INFORMATION

<Table>
<Caption>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Item 1. Financial Statements (unaudited)

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

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

Item 3. Quantitative and Qualitative Disclosures about
  Market Risk...............................................     69

                      PART II--OTHER INFORMATION

Item 1. Legal Proceedings...................................     71

Item 3. Defaults Upon Senior Securities.....................     75

Item 4. Submission of Matters to a Vote of Security
  Holders...................................................     76

Item 6. Exhibits and Reports on Form 8-K....................     77

Signature...................................................     78
</Table>

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

<Table>
<Caption>
                                                       THREE MONTHS ENDED     NINE MONTHS ENDED
                                                          SEPTEMBER 30,         SEPTEMBER 30,
                                                       -------------------   -------------------
                                                         2001       2000       2001       2000
                                                       --------   --------   --------   --------
<S>                                                    <C>        <C>        <C>        <C>
Revenues:
  Communications Group...............................  $ 34,001   $ 35,469   $ 98,567   $ 99,170
  Snapper............................................    33,737     34,183    133,589    136,983
                                                       --------   --------   --------   --------
                                                         67,738     69,652    232,156    236,153
Cost and expenses:
  Cost of sales and operating
    expenses--Communications Group...................    14,156      9,221     35,165     25,597
  Cost of sales--Snapper.............................    22,044     24,930     84,935     91,845
  Selling, general and administrative................    33,104     35,112    101,017    107,968
  Depreciation and amortization......................    18,016     18,075     55,086     50,341
  (Reduction in estimate of)/asset impairment
    charge...........................................     5,860       (703)     5,860     (4,901)
                                                       --------   --------   --------   --------
Operating loss.......................................   (25,442)   (16,983)   (49,907)   (34,697)
Other income (expense):
  Interest expense...................................    (6,875)    (7,279)   (22,053)   (23,299)
  Interest income....................................       818      1,502      2,651      3,025
  Equity in income (losses) of unconsolidated
    investees........................................       980        197     (4,220)     2,341
  Foreign currency gain (loss).......................      (246)        16       (132)        57
  Gain on disposition of businesses..................        --      2,752         --      2,752
  Other income.......................................       364         --        458      2,500
                                                       --------   --------   --------   --------
Loss before income tax expense and minority
  interest...........................................   (30,401)   (19,795)   (73,203)   (47,321)
Income tax expense...................................    (2,076)    (2,341)    (6,411)    (6,952)
Minority interest....................................      (254)       (67)      (324)    (1,063)
                                                       --------   --------   --------   --------
Net loss.............................................   (32,731)   (22,203)   (79,938)   (55,336)
Cumulative convertible preferred stock dividend
  requirement........................................    (3,752)    (3,752)   (11,256)   (11,256)
                                                       --------   --------   --------   --------
Net loss attributable to common stockholders.........  $(36,483)  $(25,955)  $(91,194)  $(66,592)
                                                       ========   ========   ========   ========
Weighted average number of common shares--Basic......    94,035     94,035     94,035     93,959
                                                       ========   ========   ========   ========
Loss per common share--Basic and Diluted:
  Net loss attributable to common stock
    shareholders.....................................  $  (0.39)  $  (0.28)  $  (0.97)  $  (0.71)
                                                       ========   ========   ========   ========
</Table>

     See accompanying notes to consolidated condensed financial statements.

                                       2
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<Table>
<Caption>
                                                              SEPTEMBER 30,   DECEMBER 31,
                                                                  2001            2000
                                                              -------------   ------------
                                                               (UNAUDITED)
<S>                                                           <C>             <C>
ASSETS:
Current assets:
  Cash and cash equivalents.................................   $    47,329    $    80,236
  Accounts receivable:
    Snapper, net............................................        17,967         23,297
    Communications Group, net...............................        18,774         17,883
    Other, net..............................................           235            764
  Inventories...............................................        66,771         65,029
  Other assets..............................................        15,865         20,078
                                                               -----------    -----------
      Total current assets..................................       166,941        207,287
Investments in and advances to joint ventures:
  Eastern Europe and the republics of the former Soviet
    Union...................................................       105,963        117,908
Property, plant and equipment, net of accumulated
  depreciation..............................................       174,477        180,800
Intangible assets, less accumulated amortization............       194,067        224,819
Other assets................................................         5,089          5,305
                                                               -----------    -----------
      Total assets..........................................   $   646,537    $   736,119
                                                               ===========    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
  Accounts payable..........................................   $    25,577    $    37,361
  Accrued expenses..........................................        74,833         81,514
  Current portion of long-term debt.........................         3,461          4,834
                                                               -----------    -----------
      Total current liabilities.............................       103,871        123,709
Long-term debt..............................................       243,282        230,036
Other long-term liabilities.................................         5,968          5,667
                                                               -----------    -----------
      Total liabilities.....................................       353,121        359,412
                                                               -----------    -----------
Minority interest...........................................        33,121         33,031

Commitments and contingencies
Stockholders' equity:
  7 1/4% Cumulative Convertible Preferred Stock.............       207,000        207,000
  Common Stock, $1.00 par value, authorized 400,000,000
    shares, issued and outstanding 94,034,947 shares at
    September 30, 2001 and December 31, 2000,
    respectively............................................        94,035         94,035
  Paid-in surplus...........................................     1,102,769      1,102,769
  Accumulated deficit.......................................    (1,137,286)    (1,053,596)
  Accumulated other comprehensive loss......................        (6,223)        (6,532)
                                                               -----------    -----------
      Total stockholders' equity............................       260,295        343,676
                                                               -----------    -----------
      Total liabilities and stockholders' equity............   $   646,537    $   736,119
                                                               ===========    ===========
</Table>

     See accompanying notes to consolidated condensed financial statements.

                                       3
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

                                  (UNAUDITED)

<Table>
<Caption>
                                                               NINE MONTHS ENDED
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Operating activities:
  Net loss..................................................  $(79,938)  $(55,336)
Items not requiring cash outlays:
  Equity in (income) losses of unconsolidated investees.....     4,220     (2,341)
  Depreciation and amortization.............................    55,086     50,341
  (Reduction in estimate of)/asset impairment charge........     5,860     (4,901)
  Amortization of debt discount.............................    15,019     13,926
  Gain on settlement of option..............................        --     (2,500)
  Gain on disposition of businesses.........................        --     (2,752)
  Minority interest.........................................       324      1,063
  Other.....................................................     2,082     (1,676)
Changes in:
  Accounts receivable.......................................     5,063      4,355
  Inventories...............................................    (1,525)     2,748
  Other assets and liabilities..............................     4,838      3,643
  Accounts payable and accrued expenses.....................   (18,244)    (6,875)
                                                              --------   --------
    Cash used in operating activities.......................    (7,215)      (305)
                                                              --------   --------
Investing activities:
  Investments in and advances to joint ventures.............    (3,982)    (3,457)
  Distributions from joint ventures.........................     2,674     71,965
  Cash paid for acquisitions and additional equity in
    subsidiaries............................................    (2,066)    (5,377)
  Additions to property, plant and equipment................   (15,497)   (15,723)
  Proceeds from sale of businesses..........................        --        400
  Cash received in settlement of option.....................        --     11,000
                                                              --------   --------
    Cash provided by (used in) investing activities.........   (18,871)    58,808
                                                              --------   --------
Financing activities:
  Payments on debt and capital lease obligations............    (3,532)   (18,194)
  Borrowings on debt........................................       680        746
  Proceeds from issuance of common stock related to
    incentive plans.........................................        --      1,211
  Preferred stock dividends paid............................    (3,752)   (11,256)
  Dividends paid to minority interest in PeterStar..........      (217)    (1,015)
                                                              --------   --------
    Cash used in financing activities.......................    (6,821)   (28,508)
                                                              --------   --------
Net increase (decrease) in cash and cash equivalents........   (32,907)    29,995
Cash and cash equivalents at beginning of period............    80,236     50,985
                                                              --------   --------
Cash and cash equivalents at end of period..................  $ 47,329   $ 80,980
                                                              ========   ========
</Table>

     See accompanying notes to consolidated condensed financial statements.

                                       4
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

            CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY

                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                  (UNAUDITED)
<Table>
<Caption>
                                          7 1/4%
                                        CUMULATIVE
                                       CONVERTIBLE
                                     PREFERRED STOCK          COMMON STOCK                                    ACCUMULATED
                                   --------------------   ---------------------                                  OTHER
                                   NUMBER OF              NUMBER OF                PAID-IN     ACCUMULATED   COMPREHENSIVE
                                    SHARES      AMOUNT      SHARES      AMOUNT     SURPLUS       DEFICIT         LOSS
                                   ---------   --------   ----------   --------   ----------   -----------   -------------
<S>                                <C>         <C>        <C>          <C>        <C>          <C>           <C>
Balances, December 31, 1999......  4,140,000   $207,000   93,284,589   $93,285    $1,102,308   $(1,014,284)     $(3,374)

Net loss.........................        --          --           --        --            --      (55,336)           --

Other comprehensive income, net
  of tax:

Foreign currency translation
  adjustments....................        --          --           --        --            --           --        (1,244)

Minimum pension liability........        --          --           --        --            --           --          (389)

Total comprehensive loss.........

Issuance of stock related to
  incentive plans................        --          --      750,358       750           461           --            --

Dividends on 7 1/4% cumulative
  convertible preferred stock....        --          --           --        --            --      (11,256)           --
                                   ---------   --------   ----------   -------    ----------   -----------      -------

Balances, September 30, 2000.....  4,140,000   $207,000   94,034,947   $94,035    $1,102,769   $(1,080,876)     $(5,007)
                                   =========   ========   ==========   =======    ==========   ===========      =======

Balances, December 31, 2000......  4,140,000   $207,000   94,034,947   $94,035    $1,102,769   $(1,053,596)     $(6,532)

Net loss.........................        --          --           --        --            --      (79,938)           --

Other comprehensive income, net
  of tax:

Foreign currency translation
  adjustments....................        --          --           --        --            --           --           309

Total comprehensive loss.........

Dividends on 7 1/4% cumulative
  convertible preferred stock....        --          --           --        --            --       (3,752)           --
                                   ---------   --------   ----------   -------    ----------   -----------      -------

Balances, September 30, 2001.....  4,140,000   $207,000   94,034,947   $94,035    $1,102,769   $(1,137,286)     $(6,223)
                                   =========   ========   ==========   =======    ==========   ===========      =======

<Caption>

                                       TOTAL
                                   COMPREHENSIVE
                                       LOSS
                                   -------------
<S>                                <C>
Balances, December 31, 1999......    $     --
Net loss.........................     (55,336)
Other comprehensive income, net
  of tax:
Foreign currency translation
  adjustments....................      (1,244)
Minimum pension liability........        (389)
                                     --------
Total comprehensive loss.........    $(56,969)
                                     ========
Issuance of stock related to
  incentive plans................
Dividends on 7 1/4% cumulative
  convertible preferred stock....
Balances, September 30, 2000.....
Balances, December 31, 2000......
                                     $    ---
Net loss.........................     (79,938)
Other comprehensive income, net
  of tax:
Foreign currency translation
  adjustments....................         309
                                     --------
Total comprehensive loss.........    $(79,629)
                                     ========
Dividends on 7 1/4% cumulative
  convertible preferred stock....
Balances, September 30, 2001.....
</Table>

     See accompanying notes to consolidated condensed financial statements.

                                       5
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND LIQUIDITY

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of
Metromedia International Group, Inc. ("MMG" or the "Company") and its
wholly-owned subsidiaries, Metromedia International Telecommunications, Inc.
("MITI"), Snapper Inc. and PLD Telekom Inc. PLD Telekom, MITI and its majority
owned subsidiary, Metromedia China Corporation ("Metromedia China" or "MCC"),
are collectively known as the "Communications Group". All significant
intercompany transactions and accounts have been eliminated.

On November 8, 2000, the Company's Board of Directors authorized management to
evaluate structural alternatives to separate its Snapper, Metromedia China and
radio and cable businesses from its telephony assets. These alternatives may
include sales of certain or all of these assets to third parties or the spin-off
of certain or all of these assets as independent companies to MMG's
stockholders. On March 1, 2001, the Company engaged two independent,
internationally recognized investment banking firms to advise it on these
various alternatives.

Although the Company has engaged in discussions regarding the restructuring with
its and Snapper's banks and bondholders, the Company's Board of Directors has
not approved any definitive transaction. Any final action remains subject to a
number of conditions in addition to final Board of Director approval, including,
for certain possible transactions, obtaining the consent of the Company's and
Snapper's banks, bondholders and shareholders. Although the Company has engaged
in discussions with certain of its bondholders concerning the proposed
restructuring, such bondholders have not as of yet agreed to the terms of any
restructuring by the Company, thereby raising doubt as to the ability of the
Company to consummate the restructuring. As a result, the financial statements
have been prepared assuming the Company continues to operate each of its lines
of business. The Company does not currently believe that any spin-off of its
businesses could be accomplished on a tax-free basis.

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

All of the Communications Group's joint ventures in Eastern Europe and the
republics of the former Soviet Union, other than the businesses of PLD Telekom
and Comstar, a MITI joint venture, report their financial results on a
three-month lag. Therefore, the Communications Group's financial results in
Eastern Europe and the republics of the former Soviet Union for September 30
include the financial results for those joint ventures for the three and nine
months ending June 30. The Company has deferred its decision on reducing or
eliminating the three-month reporting lag for certain of its principal
businesses until it has completed its evaluation of structural alternatives as
noted above.

The accompanying interim consolidated condensed financial statements have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations although the Company believes that the disclosures made are adequate
to make the information presented not misleading. These financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes included in the Company's Annual Report on Form 10-K/A,
Amendment No. 1 for the year ended December 31, 2000. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial position of the Company as of
September 30, 2001, and the results of its operations

                                       6
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

1. BASIS OF PRESENTATION AND LIQUIDITY (CONTINUED)
for the three and nine month periods ended September 30, 2001 and 2000, have
been included. The results of operations for the interim period are not
necessarily indicative of the results which may be realized for the full year.

LIQUIDITY

The Company is a holding company and, accordingly, does not generate cash flows
from operations. The Company believes that its cash on hand will be sufficient
to fund the Company's and its subsidiaries' working capital requirements for the
remainder of the year.

The Communications Group is dependent on the Company for significant capital
infusions to fund its operations and make acquisitions, as well as to fulfill
its commitments to make capital contributions and loans to its joint ventures.
Many of the Communications Group's joint ventures operate or invest in
businesses, such as cable television, fixed telephony and cellular
telecommunications, that are capital intensive and require significant capital
investment in order to construct and develop operating systems and market their
services. To date, such financing requirements have been funded from cash on
hand. The Company currently has approximately $18.5 million of cash on hand, at
headquarters. Future financing requirements of the Communications Group,
including future acquisitions, will depend on available funding from the Company
and on the ability of the Communications Group's joint ventures to generate
positive cash flows, and if necessary, selective dispositions of assets,
alternative sources of funding or non-payment of cash dividends on the Company's
preferred stock.

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

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

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

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

GENERAL

The Communications Group records its investments in other companies and joint
ventures which are less than majority-owned, or which the Company does not
control but in which it exercises significant influence, at cost, net of its
equity in earnings or losses. Advances to the joint ventures under line of

                                       7
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP-EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
credit agreements between the Company or one of its subsidiaries and the joint
ventures are reflected based on amounts recoverable under the credit agreement,
plus accrued interest.

Advances are made to joint ventures and subsidiaries in the form of cash, for
working capital purposes, payment of expenses or capital expenditures, or in the
form of equipment purchased on behalf of the joint ventures or subsidiaries.
Interest rates charged to the joint ventures and subsidiaries range from prime
rate to prime rate plus 6%. The credit agreements generally provide for the
payment of principal and interest from 90% of the joint ventures' and
subsidiaries' available cash flow, as defined, prior to any substantial
distributions of dividends to the joint venture partners. The Communications
Group has entered into charter fund and credit agreements with its joint
ventures and subsidiaries to provide up to $219.3 million in funding of which
$48.4 million in funding obligations remain at September 30, 2001. The
Communications Group's funding commitments are contingent on its approval of the
joint ventures' and subsidiaries' business plans.

2001 IMPAIRMENT CHARGES

A Georgian government-owned telephone operator, GEC, indicated during the third
quarter of 2001, its intention to offer services competing with those of Telecom
Georgia. GEC had previously utilized Telecom Georgia to process a significant
portion of its telephony traffic. GEC also obtained funding to procure telephony
equipment enabling it to provide such services. The Communications Group
believes that when GEC becomes fully operational in 2002 it will have a
significant competitive advantage over Telecom Georgia due to its customer base,
brand, country-wide and last mile capability. The Communications Group performed
an analysis of the likely adverse impact of GEC on Telecom Georgia's operations
and concluded that it would be other than temporary. As a result the
Communications Group in the third quarter of 2001 recorded an impairment charge
of $7.0 million against the goodwill related to the investment in Telecom
Georgia.

In the third quarter of 2001, a gain of $1.2 million was realized representing
recoveries on an equipment payment guarantee, arising from loan repayments made
by one of the Communications Group's joint ventures in 2001. During 1999, the
Company had recorded an impairment charge of $4.3 million relating to this loan
guarantee.

2000 IMPAIRMENT CHARGES

Certain of the Company's joint ventures have continued to incur operating
losses. In 2000, the long-lived assets and investments in these businesses were
evaluated to determine whether any impairment existed. The Company's assessment
was based on whether the estimated undiscounted future cash flows of the
businesses over the estimated lives of the related assets were sufficient to
recover the recorded carrying values. Where such cash flows were insufficient to
recover the recorded carrying values, the Company utilized a discounted cash
flow model or then current purchase and sale negotiations to estimate the fair
value of assets and investments and recorded an impairment charge to adjust the
carrying values to estimated fair value. As a result of this evaluation, the
Company recorded a non-cash impairment charge on three of its joint ventures of
$9.4 million in 2000.

1999 RESTRUCTURING AND IMPAIRMENT CHARGES

Shortly after completing its September 30, 1999 acquisition of PLD Telekom, the
Company began identifying synergies and redundancies between its MITI and PLD
Telekom subsidiaries. The Company's efforts were directed toward streamlining
its operations. Following the review of its operations, the Communications Group
made significant reductions in its projected overhead costs for

                                       8
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP-EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
2000 by closing its offices in Stamford, Connecticut and London, England,
consolidating its executive offices in New York, New York, consolidating its
operational headquarters in Vienna, Austria and consolidating its two Moscow
offices into one. As part of this streamlining of its operations, the Company
announced an employee headcount reduction. Employees impacted by the
restructuring were notified in December 1999 and in almost all cases were
terminated effective December 31, 1999. The total number of U.S. domestic and
expatriate employees separated was approximately 60. In addition, there were
reductions in locally hired foreign staff. In 1999 the Company recorded a charge
of $8.4 million in connection with this restructuring.

Following is a rollforward of the activity and balances of the restructuring
reserve account from December 31, 1999 to September 30, 2001 (in thousands):

<Table>
<Caption>
                                    DECEMBER 31,                            DECEMBER 31,              SEPTEMBER 30,
TYPE OF COST                            1999       PAYMENTS   ADJUSTMENTS       2000       PAYMENTS       2001
------------                        ------------   --------   -----------   ------------   --------   -------------
<S>                                 <C>            <C>        <C>           <C>            <C>        <C>
Employee separations..............     $5,872      $(3,953)      $(676)        $1,243       $(253)       $  990
Facility closings.................      1,456       (1,123)       (147)           186          25           211
                                       ------      -------       -----         ------       -----        ------
                                       $7,328      $(5,076)      $(823)        $1,429       $(228)       $1,201
                                       ======      =======       =====         ======       =====        ======
</Table>

Adjustments are primarily due to actual employee termination costs being lower
than originally estimated. The restructuring accrual is included in accrued
expenses in the accompanying balance sheets at September 30, 2001 and
December 31, 2000.

EQUITY METHOD INVESTMENT INFORMATION

At September 30, 2001 and December 31, 2000, the Communications Group's
unconsolidated investments in and advances to joint ventures in Eastern Europe
and the republics of the former Soviet

                                       9
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP-EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
Union, at cost, net of adjustments for its equity in earnings or losses,
impairment charges, and distributions were as follows (in thousands):

<Table>
<Caption>
                                                                                          YEAR
                                                                                       OPERATIONS
NAME                                                 2001      2000     OWNERSHIP %   COMMENCED(1)
----                                               --------   -------   -----------   ------------
<S>                                                <C>        <C>       <C>           <C>
WIRELESS TELEPHONY
BELCEL, Belarus..................................  $ 3,682    $ 4,093       50%           1999
Tyumenruskom, Russia (2).........................       --       (289)      46%           1999
Magticom, Georgia................................   22,884     19,148       35%           1997
                                                   -------    -------
                                                    26,566     22,952
                                                   -------    -------
FIXED TELEPHONY
Comstar (3)......................................   56,713     61,007       50%           2000
MTR-Sviaz, Russia (2)............................    1,550      1,973       49%           1999
Telecom Georgia, Georgia.........................    2,668      2,802       30%           1994
Caspian American Telecom, Azerbaijan (2).........       --         --       37%           1999
                                                   -------    -------
                                                    60,931     65,782
                                                   -------    -------
CABLE TELEVISION
Sun TV, Chisinau, Moldova (4)....................       --      2,907       91%           1994
Kosmos TV, Moscow, Russia........................    5,761      5,471       50%           1992
Baltcom TV, Riga, Latvia.........................    2,240      4,645       50%           1992
Kamalak TV, Tashkent, Uzbekistan.................    1,237      2,623       50%           1993
Cosmos TV, Minsk, Belarus........................    1,829      2,195       50%           1996
Alma TV, Almaty, Kazakhstan......................    4,069      5,467       50%           1995
Teleplus, St. Petersburg, Russia (2).............      160        (31)      45%           1998
                                                   -------    -------
                                                    15,296     23,277
                                                   -------    -------
</Table>

                                       10
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

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

<Table>
<Caption>
                                                                                         YEAR
                                                                                      OPERATIONS
NAME                                               2001       2000     OWNERSHIP %   COMMENCED(1)
----                                             --------   --------   -----------   ------------
<S>                                              <C>        <C>        <C>           <C>
PAGING
Kamalak Paging, Tashkent, Uzbekistan...........       332      1,263         50%         1993
Mobile Telecom, Russia(2)(5)...................        --        500         50%         1998
Baltcom Plus, Latvia(2)........................        --         --         50%         1995
Paging One, Georgia(2).........................        --         --         45%         1994
PT Page, St. Petersburg, Russia(2).............        --         --         40%         1995
Paging Ajara, Batumi, Georgia(2)...............        --         --         35%         1997
Kazpage, Kazakhstan(2)(6)......................        --         --      26-41%         1997
Alma Page, Almaty, Kazakhstan(2)...............        --         --         50%         1995
                                                 --------   --------
                                                      332      1,763
                                                 --------   --------
RADIO BROADCASTING
AS Trio LSL, Estonia(7)........................       977      1,318         50%         1997
                                                 --------   --------
                                                      977      1,318
                                                 --------   --------
PRE-OPERATIONAL(8)
Other..........................................     1,861      2,816
                                                 --------   --------
                                                    1,861      2,816
                                                 --------   --------
Total..........................................  $105,963   $117,908
                                                 ========   ========
</Table>

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

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

(2) Investment balance reflects write down of investment and, except for
    Tyumenruskom, MTR-Sviaz and Teleplus results of operations are no longer
    reported.

(3) In December 2000, the Company purchased its 50% interest in Comstar for
    $61.4 million of which approximately $44.0 million was allocated to goodwill
    and intangibles based upon the purchase price allocation.

(4) The Communications Group increased its ownership in Sun TV to 91% in the
    fourth quarter of 2000. The results of operations have been consolidated
    since the first quarter of 2001.

(5) The Company purchased its 50% interest in Mobile Telecom and a related pager
    distribution company in June 1998 for $7.5 million plus two potential
    earnout payments to be made in 2000 and 2001. The Company has not made any
    earnout payments, based on the operational results of the ventures.

(6) The Communications Group is currently negotiating to dispose of its
    interests in Kazpage, which is comprised of a service entity and 10 paging
    joint ventures that provide services in Kazakhstan. The Communications
    Group's current interests in the joint venture range from 26% to 41% and its
    interest in the service entity is 51%.

(7) The Company acquired an additional 1.24% of AS Trio LSL in the third quarter
    of 2001.

(8) At September 30, 2001 and December 31, 2000, amounts disbursed for proposed
    joint ventures and pre-operational joint ventures are included in
    pre-operational joint ventures.

                                       11
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

2. COMMUNICATIONS GROUP-EASTERN EUROPE AND THE REPUBLICS OF THE FORMER SOVIET
UNION (CONTINUED)
Summarized combined balance sheet financial information of unconsolidated joint
ventures as of September 30, 2001 and December 31, 2000, and combined statement
of operations financial information for the nine months ended September 30, 2001
and 2000 of the Company's joint ventures accounted for under the equity method
that have commenced operations as of the dates indicated are as follows (in
thousands):

COMBINED INFORMATION OF UNCONSOLIDATED JOINT VENTURES

COMBINED BALANCE SHEETS

<Table>
<Caption>
                                                      SEPTEMBER 30,   DECEMBER 31,
                                                          2001            2000
                                                      -------------   ------------
<S>                                                   <C>             <C>
Assets:
  Current assets....................................    $ 39,890        $ 51,356
  Investments in systems and equipment..............     157,396         157,084
  Other assets......................................       4,972           1,179
                                                        --------        --------
    Total assets....................................    $202,258        $209,619
                                                        ========        ========
Liabilities and Joint Ventures' Equity:
  Current liabilities...............................    $ 62,750        $ 66,056
  Amounts payable under credit facilities...........      75,578          93,229
  Other long-term liabilities.......................      24,748          28,189
                                                        --------        --------
                                                         163,076         187,474
  Joint ventures' equity............................      39,182          22,145
                                                        --------        --------
    Total liabilities and joint ventures' equity....    $202,258        $209,619
                                                        ========        ========
</Table>

COMBINED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                          NINE MONTHS ENDED
                                                            SEPTEMBER 30,
                                                      -------------------------
                                                         2001          2000
                                                      ----------   ------------
<S>                                                   <C>          <C>
Revenues............................................   $122,613      $101,840
Costs and Expenses:
  Cost of sales and operating expenses..............     50,338        28,640
  Selling, general and administrative...............     36,252        37,678
  Depreciation and amortization.....................     25,941        26,682
                                                       --------      --------
    Total expenses..................................    112,531        93,000
                                                       --------      --------
Operating income....................................     10,082         8,840
Interest expense....................................     (7,192)      (14,577)
Other income (expense)..............................     (1,377)        1,380
Foreign currency transactions.......................     (2,288)       (2,062)
                                                       --------      --------
  Net loss..........................................   $   (775)     $ (6,419)
                                                       ========      ========
</Table>

For the nine months ended September 30, 2001 and 2000 the results of operations
presented above are before the elimination of intercompany interest. Financial
information for joint ventures which are not yet operational is not included in
the above summary.

                                       12
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

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

The following tables represent summary financial information for all operating
entities being grouped as indicated as of and for the nine and three months
ended September 30, 2001 and 2000. For the nine and three months ended
September 30, 2001 and 2000 the results of operations presented below are before
the elimination of intercompany interest (in thousands):

<Table>
<Caption>
                                                               NINE MONTHS ENDED SEPTEMBER 30, 2001
                                              -----------------------------------------------------------------------
                                              WIRELESS      FIXED       CABLE         RADIO
                                              TELEPHONY   TELEPHONY   TELEVISION   BROADCASTING    PAGING     TOTAL
                                              ---------   ---------   ----------   ------------   --------   --------
<S>                                           <C>         <C>         <C>          <C>            <C>        <C>
Revenues....................................   $33,957    $ 69,518      $17,209       $1,269       $  660    $122,613
Depreciation and amortization...............     9,500      11,345        4,964           44           88      25,941
Operating income (loss).....................     8,759       5,205       (4,060)         (24)         202      10,082
Interest expense............................     1,585       1,596        3,783           70          158       7,192
Net income (loss)...........................     6,757       1,775       (8,871)        (111)        (325)       (775)
Assets......................................    67,978     107,037       25,263          256        1,724     202,258
Capital expenditures........................    19,844       5,482        8,061            9           --      33,396
Net investment in joint ventures............    26,566      60,931       15,296          977          332     104,102
Equity in income (losses) of unconsolidated
  investees.................................     3,732       1,136       (8,007)        (414)        (667)     (4,220)
</Table>

<Table>
<Caption>
                                                               NINE MONTHS ENDED SEPTEMBER 30, 2000
                                              -----------------------------------------------------------------------
                                              WIRELESS      FIXED       CABLE         RADIO
                                              TELEPHONY   TELEPHONY   TELEVISION   BROADCASTING    PAGING     TOTAL
                                              ---------   ---------   ----------   ------------   --------   --------
<S>                                           <C>         <C>         <C>          <C>            <C>        <C>
Revenues....................................   $51,598    $ 20,738      $22,311       $1,312       $5,881    $101,840
Depreciation and amortization...............    14,251       4,676        7,100          126          529      26,682
Operating income (loss).....................    12,275      (1,956)        (433)        (224)        (822)      8,840
Interest expense............................     7,513       2,295        4,578           38          153      14,577
Net income (loss)...........................     7,228      (4,938)      (6,809)        (311)      (1,589)     (6,419)
Assets......................................   105,601      32,729       29,752          511        2,149     170,742
Capital expenditures........................    22,442       1,240        5,240           10          550      29,482
Net investment in joint ventures............    26,983      10,707       26,827        1,119        6,955      72,591
Equity in income (losses) of unconsolidated
  investees.................................     8,999      (2,234)      (2,146)        (473)      (1,122)      3,024
</Table>

<Table>
<Caption>
                                                               THREE MONTHS ENDED SEPTEMBER 30, 2001
                                              -----------------------------------------------------------------------
                                              WIRELESS      FIXED       CABLE         RADIO
                                              TELEPHONY   TELEPHONY   TELEVISION   BROADCASTING    PAGING     TOTAL
                                              ---------   ---------   ----------   ------------   --------   --------
<S>                                           <C>         <C>         <C>          <C>            <C>        <C>
Revenues....................................   $11,646    $ 23,395      $ 6,040       $  373       $  115    $ 41,569
Depreciation and amortization...............     3,399       3,787        1,773           15           28       9,002
Operating income (loss).....................     3,523       1,998       (1,243)         (33)         158       4,403
Interest expense............................       443         487        1,067           18          158       2,173
Net income (loss)...........................     3,166         612       (1,924)         (83)        (227)      1,544
Equity in income (losses) of unconsolidated
  investees.................................     1,647         602       (1,126)         (74)         (69)        980
</Table>

<Table>
<Caption>
                                                               THREE MONTHS ENDED SEPTEMBER 30, 2000
                                              -----------------------------------------------------------------------
                                              WIRELESS      FIXED       CABLE         RADIO
                                              TELEPHONY   TELEPHONY   TELEVISION   BROADCASTING    PAGING     TOTAL
                                              ---------   ---------   ----------   ------------   --------   --------
<S>                                           <C>         <C>         <C>          <C>            <C>        <C>
Revenues....................................   $17,105    $  6,495      $ 6,868       $  463       $1,505    $ 32,436
Depreciation and amortization...............     5,308       1,689        2,255           26          180       9,458
Operating income (loss).....................     2,651        (342)      (1,123)         (34)         219       1,371
Interest expense............................     2,407       1,413        1,650           12           52       5,534
Net income (loss)...........................     2,477      (1,850)      (2,984)         (57)         (53)     (2,467)
Equity in income (losses) of unconsolidated
  investees.................................     2,000        (276)      (1,334)         (47)          (1)        342
</Table>

                                       13
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. COMMUNICATIONS GROUP--CHINA

The Company has made intercompany loans to Metromedia China under a credit
agreement, and Metromedia China has used the proceeds of these loans to fund its
operations and investments in China. At September 30, 2001, MCC owed
$11.6 million under this credit agreement (including accrued interest).

In May 1999, MCC's wholly-owned subsidiary, Asian American Telecommunications
("AAT"), entered into a joint venture agreement with All Warehouse Commodity
Electronic Commerce Information Development Co., Ltd. ("All Warehouse"), a
Chinese trading company, to form Huaxia Metromedia Information Technology
Co., Ltd. ("Huaxia"). Huaxia was licensed as a sino-foreign joint venture
company in July 1999 and at its formation, AAT owned a 49% equity interest in
this joint venture.

On September 20, 2000, the Chinese government approved a revised joint venture
contract and articles of association for Huaxia whereby AAT's ownership interest
in the joint venture was increased to 98%. On April 10, 2001, the Chinese
government approved new articles of association of Huaxia pursuant to which
Huaxia became a wholly foreign-owned enterprise in China and AAT obtained 100%
ownership. Huaxia is licensed to provide software and technical services
supporting the operation of electronic commerce computer information systems for
China-based corporate clients.

The terms under which Huaxia is licensed require a total investment of
$10.0 million, of which $5.0 million must be in the form of registered capital
contributions. The registered capital contributions must be made within three
years. As of September 30, 2001, AAT had made $2.1 million of its scheduled
registered capital investment. MCC accounted for Huaxia as an equity method
investment until assuming 98% ownership and control of the venture on
September 20, 2000. The Company consolidated the results of operations of Huaxia
subsequent to September 30, 2000.

On July 24, 2000, MCC purchased an 80% interest in Twin Poplars LLC, a Delaware
limited liability company, for $300,000 and obtained options to acquire the
remaining 20% equity interest for $75,000. On August 31, 2000, the Company
exercised its option to acquire an additional 10% equity interest in Twin
Poplars, at which time Twin Poplars owned a 97% registered capital interest in
Beijing 66cities.com Company, Limited ("66cities JV"), a Chinese-foreign equity
joint venture established to engage in information content provision and
e-commerce-related services in China. Twin Poplars operates as a holding company
for 66cities JV and has no operations or assets other than its interests in this
venture.

As of September 30, 2001, MCC had advanced $2.1 million to Twin Poplars, all of
which was invested in or advanced to 66cities JV.

By virtue of its ownership interest in Twin Poplars, as of September 30, 2001
MCC owns an indirect 87% interest in 66cities JV. The approved total investment
level for 66cities JV is $2.5 million of which $1.8 million must be in the form
of registered capital. As of September 30, 2001, Twin Poplars had invested all
its $1.8 million registered capital and advanced $302,000 to 66cities JV.

On March 20, 2001, MCC completed registration and establishment of Clarity Data
Systems Co., Ltd. ("Clarity"), a wholly foreign owned enterprise of MCC in
China. The approved total investment level for Clarity is $5.0 million of which
$2.5 million must be in the form of registered capital. The Company invested an
initial amount of $375,000 of Clarity's registered capital on April 4, 2001. As
of September 30, 2001, MCC had made $475,000 of its required registered capital
investment in Clarity.

                                       14
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

3. COMMUNICATIONS GROUP--CHINA (CONTINUED)
Clarity's approved scope of business is to provide database management and
related application services and software. It focuses on direct marketers and
retailers selling to China's consumer markets, offering customer relationship
management applications and services. As of September 30, 2001, Clarity had
conducted no material business operations.

On June 5, 2001, MCC completed registration and establishment of Metromedia
Health Information Systems Co., Ltd. ("MHIS"), a wholly foreign owned enterprise
of MCC in China. The approved total investment level for MHIS is $5.0 million of
which $2.5 million must be in the form of registered capital. The Company
invested an initial amount of $375,000 of MHIS's registered capital on July 13,
2001.

MHIS's approved scope of business is to provide database management and related
application services and software. It will focus on information technology
services and products useful to development of technology needed by Chinese
health care providers, community health networks and general health care
sectors.

4. EARNINGS PER SHARE OF COMMON STOCK

Basic earnings per share excludes all dilutive securities. It is based upon the
weighted average number of common shares outstanding during the period. Diluted
earnings per share reflects the potential dilution that would occur if
securities exercisable for or convertible into common stock were exercised or
converted into common stock. In calculating diluted earnings per share, no
potential shares of common stock are included in the computation if they would
have an antidilutive effect on earnings per share. For the three and nine months
ended September 30, 2001 and 2000 the Company had not included diluted earnings
per share since the calculation is antidilutive.

The Company had potentially dilutive shares of common stock of 24,565,202 and
26,770,045, at September 30, 2001 and 2000, respectively.

5. INVESTMENT IN RDM

On August 29, 1997, RDM Sports Group, Inc. and certain of its affiliates filed
voluntary petitions for relief under chapter 11 of the Bankruptcy Code. At the
time of the filings, the Company owned 39% of the outstanding common stock of
RDM Sports Group, Inc. In addition, during the chapter 11 case the Company
honored a $15.0 million guaranty obligation to RDM's prepetition senior secured
lender, and, as a result, the Company has asserted a subrogation claim in that
amount (together with interest and other amounts owing in respect thereof) in
the RDM chapter 11 case. On February 19, 1998, the Bankruptcy Court ordered the
appointment of a chapter 11 trustee. On July 18, 2000, the Bankruptcy Court
confirmed the Second Amended and Restated Joint Chapter 11 Plan of Liquidation
for RDM Sports Group, Inc. and Related Debtor Entities (the "Plan"). Under the
Plan the Company's 39% equity interest will likely be cancelled by operation of
the Plan. The treatment of the aforementioned subrogation claim under the Plan
remains subject to the bankruptcy-related proceedings described below.

On August 19, 1998, a purported class action lawsuit, THEOHAROUS V. FONG, ET
AL., Civ. No. 1:98CV2366, was filed in United States District Court for the
Northern District of Georgia. On October 19, 1998, a second purported class
action lawsuit with substantially the same allegations, SCHUETTE V. FONG, ET
AL., Civ. No. 1:98CV3034, was filed in United States District Court for the
Northern District of Georgia.

                                       15
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENT IN RDM (CONTINUED)
On June 7, 1999, plaintiffs in each of these lawsuits filed amended complaints.
The amended complaints alleged that certain officers, directors and shareholders
of RDM, including the Company and current and former officers of the Company who
served as directors of RDM, were liable under federal securities laws for
misrepresenting and failing to disclose information regarding RDM's alleged
financial condition during the period between November 7, 1995 and August 22,
1997, the date on which RDM disclosed that its management had discussed the
possibility of filing for bankruptcy. The amended complaints also alleged that
the defendants, including the Company and current and former officers of the
Company who served as directors of RDM, were secondarily liable as controlling
persons of RDM. In an opinion dated March 10, 2000, the court dismissed these
actions in their entirety. On April 7, 2000, plaintiffs in each of these actions
filed notices of appeal to the United States Court of Appeals for the Eleventh
Circuit. The Eleventh Circuit heard oral arguments on March 20, 2001. In
July 2001, the Eleventh Circuit affirmed the court's decision dismissing these
actions.

On December 30, 1998, the chapter 11 trustee of RDM brought an adversary
proceeding in the bankruptcy of RDM, HAYS, ET AL. V. FONG, ET AL., Adv. Proc.
No. 98-1128, in the United States Bankruptcy Court, Northern District of Georgia
(the "D and O Proceeding"), alleging that current and former officers of the
Company, while serving as directors on the board of RDM, breached fiduciary
duties allegedly owed to RDM's shareholders and creditors in connection with the
bankruptcy of RDM. On January 25, 1999, the plaintiff filed a first amended
complaint. The official committee of unsecured creditors of RDM moved to proceed
as co-plaintiff or to intervene in this proceeding, and the official committee
of bondholders of RDM moved to intervene in or join the proceeding. On
February 26, 1999, the court entered an order staying all activity in this
proceeding pending the court's ruling on these motions. Plaintiffs in this
adversary proceeding seek the following relief against the current and former
officers of the Company who served as directors of RDM: actual damages in an
amount to be proven at trial, reasonable attorney's fees and expenses, and such
other and further relief as the court deems just and proper.

On February 16, 1999, the creditors' committee brought an adversary proceeding,
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF RDM SPORTS GROUP, INC. AND
RELATED DEBTORS V. METROMEDIA INTERNATIONAL GROUP INC., Adv. Proc. No. 99-1023,
seeking in the alternative to recharacterize as contributions to equity a
secured claim in the amount of $15.0 million made by the Company arising out of
the Company's financing of RDM, or to equitably subordinate such claim made by
the Company against RDM and other debtors in the bankruptcy proceeding. On
March 3, 1999, the bondholders' committee brought an adversary proceeding, THE
OFFICIAL COMMITTEE OF BONDHOLDERS OF RDM SPORTS GROUP, INC. V. METROMEDIA
INTERNATIONAL GROUP, INC., Adv. Proc. No. 99-1029 (Adv. Proc. No. 99-1023 and
Adv. Proc. No. 99-1029 are collectively referred to as the "Equitable
Subordination Proceedings"), with substantially the same allegations as the
above proceeding. Plaintiffs filed amended complaints in the Equitable
Subordination Proceedings on August 18, 2000. In the amended complaints,
plaintiffs seek equitable and injunctive relief as described above and damages
in an unspecified amount and such other and further relief as the court deems
just and proper.

On July 17, 2000, the bankruptcy court approved the Plan. Upon the Plan's
effective date, the creditors' committee and the bondholders' committee
dissolved, and the right to continue the adversary proceedings described above
fell to the Plan's "liquidating agent," the former chapter 11 trustee. The Plan
also provided that, if the liquidating agent chose to pursue the adversary
proceedings, he should consolidate them.

                                       16
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENT IN RDM (CONTINUED)
On August 18, 2000, the liquidating agent filed first amended complaints in the
Equitable Subordination Proceedings. In October 2000, the bankruptcy court
approved a consent order, signed by the parties, staying all activity in these
proceedings pending the bankruptcy court's ruling on an anticipated motion by
the liquidating agent to consolidate the adversary proceedings. On January 31,
2001, the liquidating agent made motions (a) to lift the stay in the D and O
Proceeding, (b) to consolidate the D and O Proceeding and the Equitable
Subordination Proceedings and another adversary proceeding--HAYS, ET AL. V.
EQUITEX, ET AL., Adv. Proc. No. 00-1065--which does not involve the Company or
any of its current or former officers or directors, and (c) for leave to file an
amended consolidated complaint. On March 14, 2001, the liquidating agent's
motion to consolidate the various proceedings was denied. On March 22, 2001, the
liquidating agent filed a lien avoidance action against the Company, HAYS, ET AL
V. METROMEDIA INTERNATIONAL GROUP, INC., ET AL., Adv. Proc. No. 01-1026 (the
"Lien Avoidance Action"). On May 7, 2001, the Company filed a motion to dismiss
the Equitable Subordination Proceedings. Also on May 7, 2001, the Company filed
a motion seeking to have the D and O Proceeding and the Equitable Subordination
Proceedings withdrawn from the United States Bankruptcy Court, Northern District
of Georgia to the United States District Court, Northern District of Georgia. On
June 15, 2001, a motion to dismiss the Lien Avoidance Action was filed. On
July 9, 2001, a motion to dismiss the D and O Proceeding was filed.

On October 2, 2001, the liquidating agent filed an action--HAYS, ET AL. V. FONG,
ET AL., Adv. Proc. No. 01-1075 (the "Andersen Proceeding")--which names, among
others, the Company as well as current and former officers of the Company. The
suit seeks the Court's approval of a settlement of claims reached between the
liquidating agent and Arthur Andersen, LLP. In the suit, the liquidating agent
makes no claim for monetary damages, but does seek to bar the Company from
bringing claims against Arthur Andersen, LLP, including claims for indemnity or
contribution, if the Company is found liable in any of the suits involving RDM's
bankruptcy. A settlement of this action was approved by the court on
October 30, 2001. Under the terms of the settlement, any judgment entered
against the Company in which the Company is found to be entitled by law to a
judgment reduction, will be reduced by the greater of Arthur Andersen's
proportionate liability or Arthur Andersen's settlement payment. In addition,
Arthur Andersen and the Company are barred from asserting claims against one
another relating to RDM.

On October 19, 2001, the liquidating agent filed a motion seeking, among other
things, approval of a compromise and settlement of a lawsuit pending against the
General Electric Company ("General Electric") in the United States District
Court for the Northern District of Illinois. Neither the Company, nor any of the
current or former officers of the Company, are parties to that suit. The
liquidating agent and General Electric have agreed to settle the suit by the
payment by General Electric of $18.5 million. In his motion seeking approval of
the settlement, the liquidating agent does not contest that the Company has a
valid lien in the liquidating agent's claim against General Electric. In his
motion the liquidating agent states that, pursuant to Section 4.3.2(b) of the
Plan, he is required to deposit up to $15.0 million of proceeds from the
liquidation of collateral in which the Company claims an interest, pending
determination of issues relating to its claims and liens that are disputed. The
liquidating agent thus requests authority, in accordance with the provisions of
the Plan, to use $15.0 million of the proceeds from the settlement of the claims
against General Electric to fund the escrow account required for the benefit of
the Company. The liquidating agent notes in his motion that this funding will
moot the Lien Avoidance Action. A determination of whether any of these funds
will actually be paid to the Company is contingent upon the resolution of the
Equitable Subordination

                                       17
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENT IN RDM (CONTINUED)
Proceedings. Other than the Lien Avoidance Action, the liquidating agent's
settlement with General Electric does not affect any of the other RDM-related
proceedings, including the D and O Proceeding.

On October 22, 2001, the United States District Court for the Northern District
of Georgia granted the Company's motion for leave to withdraw the reference in
the D and O Proceeding and the Equitable Subordination Proceedings. On
October 24, 2001, the district court vacated its decision. As a result, motions
to dismiss in those proceedings are still pending before the bankruptcy court.

The Company believes that it has meritorious defenses and plans to defend
vigorously these actions. Due to the status of these proceedings, the Company
cannot evaluate the likelihood of an unfavorable outcome or estimate the likely
amount or range of possible loss, if any. Accordingly, the Company has not
recorded any liability in connection with these adversary proceedings.

6. BUSINESS SEGMENT DATA

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

The Communications Group has operations in Eastern Europe and the republics of
the former Soviet Union and China. Operations in Eastern Europe and the
republics of the former Soviet Union provide the following services:
(i) wireless telephony; (ii) fixed telephony; (iii) cable television;
(iv) radio broadcasting; and (v) paging. The Communications Group is developing
e-commerce business opportunities in China and currently owns controlling
interests in certain Chinese software services and information services joint
ventures.

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

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

The Company's segment information is set forth as of and for the nine months
ended September 30, 2001 and 2000 in the following tables (in thousands):

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

6. BUSINESS SEGMENT DATA (CONTINUED)

                      NINE MONTHS ENDED SEPTEMBER 30, 2001
                                 (IN THOUSANDS)
<Table>
<Caption>
                                                            COMMUNICATIONS GROUP EASTERN EUROPE AND
                                                            THE REPUBLICS OF THE FORMER SOVIET UNION
                                     --------------------------------------------------------------------------------------
                                     WIRELESS      FIXED       CABLE         RADIO                    SEGMENT
                                     TELEPHONY   TELEPHONY   TELEVISION   BROADCASTING    PAGING    HEADQUARTERS    TOTAL
                                     ---------   ---------   ----------   ------------   --------   ------------   --------
<S>                                  <C>         <C>         <C>          <C>            <C>        <C>            <C>
COMBINED
Revenues...........................   $42,868    $136,452     $26,654       $11,942       $ 983       $  1,849     $220,748
Depreciation and amortization......    12,912      24,588       9,197         1,484         115         28,414       76,710
Operating income (loss)............     5,350      13,756      (5,567)         (493)         20        (50,512)     (37,446)
CONSOLIDATED
Revenues...........................   $ 8,911    $ 66,934     $ 9,445       $10,673       $ 323       $  1,849     $ 98,135
Gross profit.......................
Depreciation and amortization......     3,412      13,243       4,233         1,440          27         28,414       50,769
Asset impairment charge............        --          --          --            --          --          5,860        5,860
Operating income (loss)............    (3,409)      8,551      (1,507)         (469)       (182)       (50,512)     (47,528)
UNCONSOLIDATED JOINT VENTURES
Revenues...........................   $33,957    $ 69,518     $17,209       $ 1,269       $ 660       $     --     $122,613
Depreciation and amortization......     9,500      11,345       4,964            44          88             --       25,941
Operating income (loss)............     8,759       5,205      (4,060)          (24)        202             --       10,082
Net income (loss)..................     6,757       1,775      (8,871)         (111)       (325)            --         (775)
Equity in income (losses) of
  unconsolidated investees.........     3,732       1,136      (8,007)         (414)       (667)            --       (4,220)
Foreign currency loss..............                                                                                    (132)
Minority interest..................                                                                                    (421)
Interest expense...................
Interest income....................
Other income.......................
Income tax expense.................
Net loss...........................
Capital expenditures...............                                                                                  13,908
Assets at September 30, 2001.......                                                                                 508,051

<Caption>

                                     COMMUNICATIONS                CORPORATE
                                       GROUP-CHINA     SNAPPER    HEADQUARTERS   CONSOLIDATED
                                     ---------------   --------   ------------   ------------
<S>                                  <C>               <C>        <C>            <C>
COMBINED
Revenues...........................
Depreciation and amortization......
Operating income (loss)............
CONSOLIDATED
Revenues...........................      $   432       $133,589     $    --        $232,156
Gross profit.......................                      48,654
Depreciation and amortization......          306          3,963          48          55,086
Asset impairment charge............           --             --          --           5,860
Operating income (loss)............       (4,014)         8,236      (6,601)        (49,907)
UNCONSOLIDATED JOINT VENTURES
Revenues...........................
Depreciation and amortization......
Operating income (loss)............
Net income (loss)..................
Equity in income (losses) of
  unconsolidated investees.........           --             --          --          (4,220)
Foreign currency loss..............           --             --          --            (132)
Minority interest..................           97             --          --            (324)
Interest expense...................                                                 (22,053)
Interest income....................                                                   2,651
Other income.......................                                                     458
Income tax expense.................                                                  (6,411)
                                                                                   --------
Net loss...........................                                                $(79,938)
                                                                                   ========
Capital expenditures...............          425          1,164          --        $ 15,497
Assets at September 30, 2001.......        2,259        115,112      21,115        $646,537
</Table>

                                       19
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)

                      NINE MONTHS ENDED SEPTEMBER 30, 2000
                                 (IN THOUSANDS)
<Table>
<Caption>
                                                            COMMUNICATIONS GROUP EASTERN EUROPE AND
                                                            THE REPUBLICS OF THE FORMER SOVIET UNION
                                         ------------------------------------------------------------------------------
                                                                               RADIO                SEGMENT
                                         WIRELESS      FIXED       CABLE       BROAD-                HEAD-
                                         TELEPHONY   TELEPHONY   TELEVISION   CASTING     PAGING    QUARTERS    TOTAL
                                         ---------   ---------   ----------   --------   --------   --------   --------
<S>                                      <C>         <C>         <C>          <C>        <C>        <C>        <C>
COMBINED
Revenues...............................   $61,990     $87,470     $28,732     $13,056    $ 7,364    $ 2,258    $200,870
Depreciation and amortization..........    18,092      16,949      10,027       1,008        749     25,642      72,467
Operating income (loss)................     9,558      12,553      (1,154)       (590)      (545)   (42,262)    (22,440)
CONSOLIDATED
Revenues...............................   $10,392     $66,732     $ 6,421     $11,744    $ 1,483    $ 2,258    $ 99,030
Gross profit...........................
Depreciation and amortization..........     3,841      12,273       2,927         882        220     25,642      45,785
Reduction in estimate of restructuring
  and asset impairment charge..........        --          --          --          --         --       (823)       (823)
Operating income (loss)................    (2,717)     14,509        (721)       (366)       277    (42,262)    (31,280)
UNCONSOLIDATED JOINT VENTURES
Revenues...............................   $51,598     $20,738     $22,311     $ 1,312    $ 5,881    $    --    $101,840
Depreciation and amortization..........    14,251       4,676       7,100         126        529         --      26,682
Operating income (loss)................    12,275      (1,956)       (433)       (224)      (822)        --       8,840
Net income (loss)......................     7,228      (4,938)     (6,809)       (311)    (1,589)        --      (6,419)
Equity in income (losses) of
  unconsolidated investees.............     8,999      (2,234)     (2,146)       (473)    (1,122)        --       3,024
Gain on disposition of business........                                                                           2,752
Foreign currency gain..................                                                                              57
Minority interest......................                                                                          (2,860)
Interest expense.......................
Interest income........................
Other income...........................
Income tax expense.....................
Net loss...............................
Capital expenditures...................                                                                          12,995
Assets at December 31, 2000............                                                                         552,311

<Caption>

                                         COMMUNICATIONS                CORPORATE
                                          GROUP--CHINA     SNAPPER    HEADQUARTERS   CONSOLIDATED
                                         ---------------   --------   ------------   ------------
<S>                                      <C>               <C>        <C>            <C>
COMBINED
Revenues...............................
Depreciation and amortization..........
Operating income (loss)................
CONSOLIDATED
Revenues...............................      $   140       $136,983     $    --        $236,153
Gross profit...........................                      45,138
Depreciation and amortization..........          180          4,326          50          50,341
Reduction in estimate of restructuring
  and asset impairment charge..........       (4,078)            --          --          (4,901)
Operating income (loss)................         (374)         1,418      (4,461)        (34,697)
UNCONSOLIDATED JOINT VENTURES
Revenues...............................      $    --
Depreciation and amortization..........           38
Operating income (loss)................         (683)
Net income (loss)......................         (683)
Equity in income (losses) of
  unconsolidated investees.............         (683)            --          --           2,341
Gain on disposition of business........           --             --          --           2,752
Foreign currency gain..................           --             --          --              57
Minority interest......................        1,797             --          --          (1,063)
Interest expense.......................                                                 (23,299)
Interest income........................                                                   3,025
Other income...........................                                                   2,500
Income tax expense.....................                                                  (6,952)
                                                                                       --------
Net loss...............................                                                $(55,336)
                                                                                       ========
Capital expenditures...................          211          2,517          --        $ 15,723
Assets at December 31, 2000............        2,412        121,313      60,083        $736,119
</Table>

                                       20
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

6. BUSINESS SEGMENT DATA (CONTINUED)

Information about the Communications Group's operations by geographic location
for the nine months ended September 30, 2001 and 2000 and as of September 30,
2001 and December 31, 2000 is as follows (in thousands):

<Table>
<Caption>
                                                             REVENUES               ASSETS
                                                        -------------------   -------------------
COUNTRY                                                   2001       2000       2001       2000
-------                                                 --------   --------   --------   --------
<S>                                                     <C>        <C>        <C>        <C>
Azerbaijan............................................  $    --    $    --    $     27   $     27
Belarus...............................................      319        319       5,906      6,850
Bulgaria..............................................       21         --         276        352
Cyprus................................................       --         --          11         26
Czech Republic........................................      780      1,200       2,032      2,367
Estonia...............................................      323        376         999      1,520
Finland...............................................       95         --       1,546         --
Georgia...............................................    1,632        157      30,508     28,535
Germany...............................................       --        305          --         --
Hungary...............................................    2,677      4,565       5,594      4,595
Kazakhstan............................................    8,911     10,391      51,538     56,796
Krgyzstan.............................................      413        178       1,604      1,794
Latvia................................................      284        374       2,675      5,199
Lithuania.............................................      747        994       1,059      1,391
Moldova...............................................    1,384         --       3,028      2,907
People's Republic of China............................      432        140       2,259      2,412
Romania...............................................    4,636      4,950      10,618     10,444
Russia................................................   74,290     72,589     286,832    303,355
Ukraine...............................................       --        699          --        688
United Kingdom........................................      186         --          47         12
United States (1).....................................    1,437      1,933     102,183    121,567
Uzbekistan............................................       --         --       1,568      3,886
                                                        -------    -------    --------   --------
                                                        $98,567    $99,170    $510,310   $554,723
                                                        =======    =======    ========   ========
</Table>

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

(1) Assets include goodwill of $98.9 million, and $112.0 million at
    September 30, 2001 and December 31, 2000, respectively.

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

7. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION

ACCOUNTS RECEIVABLE

The total allowance for doubtful accounts at September 30, 2001 and
December 31, 2000 was $5.4 million and $3.9 million, respectively.

                                       21
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

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

Inventories consist of the following as of September 30, 2001 and December 31,
2000 (in thousands):

<Table>
<Caption>
                                                              2001       2000
                                                            --------   --------
<S>                                                         <C>        <C>
Lawn and garden equipment:
  Raw materials...........................................  $ 6,825    $ 8,665
  Finished goods..........................................   55,889     52,294
                                                            -------    -------
                                                             62,714     60,959
Less: LIFO reserve........................................       --         --
                                                            -------    -------
                                                             62,714     60,959
                                                            -------    -------

Communications Group:
  Paging..................................................       --        131
  Telephony...............................................    2,963      3,029
  Cable...................................................    1,094        910
                                                            -------    -------
                                                              4,057      4,070
                                                            -------    -------
                                                            $66,771    $65,029
                                                            =======    =======
</Table>

LONG-TERM DEBT

At September 30, 2001, Snapper was not in compliance with all financial
covenants under its loan and security agreement. On November 13, 2001 the
lenders under the loan and security agreement waived any event of default
arising from such noncompliance.

The Company's 10 1/2% senior discount notes are classified as non-current
liabilities. It is a default under the indenture governing such senior discount
notes if certain indebtedness (including the indebtedness of Snapper under its
loan and security agreement) is accelerated prior to its stated maturity. In the
event of a default under the indenture the senior discount notes may be
accelerated.

FLOOR PLAN FINANCING

On March 15, 2001, Snapper received written notice from the financial
institution that provides Snapper's dealers with floor plan financing, advising
that it considered Snapper and the Company to be in default under the terms of
the floor plan financing agreements as a result of claimed material adverse
changes in their respective financial conditions. The financial institution also
claimed that Snapper had defaulted under its agreement by failing to provide
collateral to the financial institution, notwithstanding the fact that the
agreement does not require the provision of collateral. The notice further
advised that the financing relationship would be terminated as of June 13, 2001.
Snapper and the Company disagreed with the basis for this action taken by the
financial institution. On June 13, 2001, Snapper and the Company received
written notice from the financial institution noting the financial institution
would honor the remaining term of the agreement. The agreement expires
December 31, 2001.

On August 24, 2001, Snapper signed a three-year agreement with Textron Financial
Corporation ("Textron"), whereby Textron will make available floor plan
financing to the dealers of Snapper's

                                       22
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

7. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION (CONTINUED)
products. Under the terms of the agreement, a default in payment by a dealer is
typically nonrecourse to the Company. However, Textron can require Snapper to
repurchase any new, used or demonstrator equipment recovered from the dealer, if
the dealer defaults and the inventory cannot be sold to another dealer. In
addition to the repurchase obligation, Snapper also has an option whereby it
could agree to indemnify Textron for floor plan financing Textron provides to
dealers who do not meet Textron's credit requirements. These dealers would be
indemnified on a dealer-by-dealer basis at Snapper's discretion. Snapper's
maximum exposure under this voluntary indemnification plan is $4.0 million.

In connection with the agreement, Snapper has provided a $100,000 deposit that
Textron will hold in an interest-bearing account for one year. At the end of the
one-year period, if Snapper is in full compliance with all terms and conditions
under the agreement, Textron will refund the $100,000 deposit with interest.

The agreement requires that Snapper maintain certain covenants. These covenants
include: (i) Snapper shall maintain unused availability under its bank line of
credit of at least $3.0 million at the end of each quarter, (ii) Snapper must
maintain full compliance with all terms and conditions under its bank line of
credit or receive waivers for any non-compliance, (iii) Snapper must maintain
tangible shareholder's equity (as defined in the agreement) of at least
$16.0 million on a quarterly basis and (iv) Snapper must maintain certain
financial ratios (as defined in the agreement) to be calculated on an annual
basis. If Snapper violates the covenants described in items (i) or (iv), then
Snapper would be required to provide Textron with a $2.5 million letter of
credit, which would remain in place until subsequent quarterly or annual audited
financial statements shows that Snapper is again in compliance. If Snapper
violates the tangible shareholder's equity covenant described in (iii) above,
then Snapper would be required to provide Textron with a $3.5 million letter of
credit, separate and distinct from the $2.5 million letter of credit described
above. This letter of credit would remain in place until subsequent quarterly or
annual audited financial statements shows that Snapper is again in compliance.

It is Snapper's intent to switch all of its dealers from the original floor plan
financing agreement provider to Textron by December 31, 2001. As of
September 30, 2001, Textron had provided no floor plan financing, and Snapper
had not agreed to indemnify any dealer financing.

MINORITY INTEREST

As a result of minority interest shareholders' equity interests being reduced to
zero in the first quarter of 2001, the Company is now including losses allocable
to minority shareholders in its consolidated statements of operations.

7 1/4% CUMULATIVE CONVERTIBLE PREFERRED STOCK

The Company elected not to declare a dividend on its 7 1/4% cumulative
convertible preferred stock for the quarterly dividend periods ending on
June 15, 2001 and September 15, 2001. As of September 30, 2001, total dividends
in arrears are $7.5 million or $1.81 per preferred share.

INTEREST EXPENSE

Interest expense includes amortization of debt discount of $15.0 million and
$13.9 million for the nine months ended September 30, 2001 and 2000,
respectively.

                                       23
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

7. OTHER CONSOLIDATED CONDENSED FINANCIAL STATEMENT INFORMATION (CONTINUED)
GAIN ON SALE OF BUSINESS

During the nine months ended September 30, 2000, the Communications Group
disposed of the operation of News Talk Radio, its radio operation in Germany,
for $400,000 and generated a gain of $2.8 million primarily from the settlement
of accrued liabilities without a cash payment.

OTHER INCOME

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

8. CONTINGENCIES

RISKS ASSOCIATED WITH THE COMMUNICATIONS GROUP'S INVESTMENTS

The ability of the Communications Group and its joint ventures and subsidiaries
to establish and maintain profitable operations is subject to, among other
things, significant political, economic and social risks inherent in doing
business in emerging markets such as Eastern Europe, the republics of the former
Soviet Union and China. These include, among other things, matters arising out
of competition, relationships with local partners, corporate governance of the
operating ventures, government policies, economic conditions, imposition of or
changes in government regulations or policies (including licensing requirements
and laws restricting foreign ownership), compliance with and renewal of
licenses, imposition of or changes to taxes or other similar charges by
government bodies, exchange rate fluctuations and controls, civil disturbances,
deprivation or unenforceability of contractual rights, and taking of property
without fair compensation. These and other risks associated with the Company are
discussed more fully in the Company's Annual Report on Form 10-K/A Amendment
No. 1 "Item 1--Business--Risks Associated with the Company."

Caspian American Telecom Limited's ("CAT") license expired according to its
terms on July 27, 2001 and, although the license has not yet been renewed, the
venture is negotiating a renewal of the license with the Ministry of
Communications of Azerbaijan. While the negotiations are ongoing, CAT continues
to operate its business. However, if the license is not renewed, or is renewed
on terms materially different than the previous license, the operations of CAT
may be required to cease or be materially restricted, leading to a materially
adverse impact on the venture's results, although the Company does not believe
that such an event would have a materially adverse effect on its results of
operations or financial position.

Issues have recently been raised about the Company's control of Roscomm Limited,
a company through which the Company owns a 10% stake in Teleport-TP, and about
Roscomm's ownership interest in Teleport-TP. The Company believes that it
retains the right to control Roscomm Limited (in which it holds an indirect
majority interest) and that Roscomm continues to control its 10% stake in
Teleport-TP; the Company believes that it has strong legal positions in relation
to those issues. There can be no assurances, however, that these issues will be
resolved quickly or in the Company's favor, or that these issues will not have
an impact on the Company's ability to control Teleport-TP.

The Communications Group's strategy is to minimize its foreign currency risk. To
the extent possible, the Communications Group bills and collects all revenues in
U.S. dollars or an equivalent local currency amount adjusted on a monthly basis
for exchange rate fluctuations. The Communications

                                       24
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

8. CONTINGENCIES (CONTINUED)
Group's subsidiaries and joint ventures are generally permitted to maintain U.S.
dollar accounts to service their U.S. dollar denominated debt and current
account obligations, thereby reducing foreign currency risk. As the
Communications Group's subsidiaries and joint ventures expand their operations
and become more dependent on local currency based transactions, the
Communications Group expects that its foreign currency exposure will increase.

RISKS ASSOCIATED WITH THE COMPANY'S CHINA E-COMMERCE INVESTMENTS

All of the Company's China-based business units operate pursuant to business
licenses issued by the Chinese government. A condition of each license is that
the business unit must comply with all Chinese regulations, both as presently
formulated and as may be issued in the future. Such regulations may prohibit
certain business activities and may limit foreign investment in Chinese
enterprises engaged in certain business activities. The Company believes that
the current and intended business activities of all of its China-based business
units comply with currently published regulations, and that the current extent
of the Company's foreign ownership in these units is similarly permitted. Future
changes to or domestic interpretations of the regulations could, however, limit
business activity or the Company's ownership interests or both.

Chinese regulation of business activities involving use of the Internet and
provision of information content or services via the Internet or similar
networks are under active development. Regulations addressing the extent of
direct foreign investment permitted in Chinese business units engaged in these
activities could, if promulgated in the most severe form, require the Company to
limit its equity participation in current investments or limit the scale of such
participation in future investments.

Regulations governing the permitted scope and nature of commercial transactions
via electronic networks and systems (e-commerce) could limit the extent or
profitability of the Company's current or anticipated investments. Regulations
limiting dissemination of information for political, social or security reasons
could impose added operating expense burdens on the Company's current or
anticipated investments.

This uncertainty regarding future Chinese regulations is applicable to all of
the Company's current and planned activities in China. The Company believes that
its current China investments are in compliance with all currently published
Chinese regulations and further believes that future regulatory developments in
China will not unduly limit these investments or other planned business
activities. However, there can be no assurance at this time that all such
activities will be permitted or be economically feasible under future Chinese
regulatory regimes and, therefore, the Company's investments in China or future
profitability of these investments could be jeopardized.

The Company's Huaxia, Clarity and MHIS business units in China are licensed to
develop and sell software and provide technical services relating to operation
of electronic commerce computer information systems for China-based corporate
clients. Computer and software products and services, such as offered by these
business units, are subject to regulatory regimes different from those applied
to telecommunications, Internet and information service operations in China. The
Company expects that a significant portion of these business units' planned
future revenues will, however, derive from additional lines of businesses in
China that may be subject to Internet, e-commerce or information service
regulatory regimes and, therefore, the potential scale of such revenues could be
limited by future regulatory developments in those areas. The Company believes
that its equity interest in these business units are not viewed under current
Chinese regulation as foreign equity investment in

                                       25
<Page>
                      METROMEDIA INTERNATIONAL GROUP, INC.

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

8. CONTINGENCIES (CONTINUED)
telecommunications operations, Internet services or any other line of business
restricted from foreign investment, and the Company does not anticipate that the
extent of its equity investment in these business units will be challenged by
future Chinese regulation.

The Company's indirect ownership interest in 66cities JV entails certain risks
resulting both from regulatory uncertainty and the generally sensitive nature of
any publishing related activities within China. 66cities JV provides support
services to Chinese publishers and offers information content via the Internet
on the website it supports. With respect to current regulatory prohibitions
against foreign investment in publishing businesses in China, the Company
believes that 66cities JV would not be deemed to be operating a publishing
business, since it is providing content and services to licensed Chinese
publisher clients under contract for fixed fees. In addition, during the
start-up phase, 66cities JV is also providing administrative services of
billings and collections on behalf of the Chinese publisher, for which it is
being reimbursed. The current contract expired on June 30, 2001, and the Company
signed a new technical service agreement with Chinese publishers on
September 1, 2001. The term of this agreement is three years. Regulatory action
that alters, revokes or limits the clients' publishing rights or the clients'
contracts with 66cities JV could significantly impact 66cities JV's current
principal revenue stream. Since 66cities JV does not itself actually publish the
content it develops, the Chinese publishing clients' revocation of existing
service contracts with 66cities JV could have significant adverse financial
impact on the joint venture. With respect to Internet-related operations,
66cities JV could be required in the future to adjust its web hosting and
Internet content provision support arrangements to comply with new regulatory
developments, and such adjustment could adversely affect 66cities JV's overall
costs of operation.

LITIGATION

During February 2001, four separate but very similar lawsuits were filed by the
Company's stockholders against the Company's current and former officers and
directors seeking, among other things, to compel the disposition of
Snapper, Inc. On November 2, 2001, the actions were consolidated as IN RE
METROMEDIA INTERNATIONAL GROUP, INC. SHAREHOLDERS LITIGATION, Consolidated C.A.
No. 18678. Pursuant to the consolidation order, the complaint which was
previously filed in BARBERIS V. KLUGE, C.A. No. 18678 was designated as the
operative complaint. The defendants have not yet answered, moved to dismiss or
otherwise pleaded in response to the complaint.

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

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

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

RECENT DEVELOPMENTS

On November 8, 2000, the Company's Board of Directors authorized management to
evaluate structural alternatives to separate its Snapper, Metromedia China
Corporation and radio and cable businesses from its telephony assets as a means
to maximize stockholder value. These alternatives may include sales of certain
or all of these assets to third parties or the spin-off of certain or all of
these assets as independent companies to MMG's stockholders. On March 1, 2001,
the Company engaged Salomon Smith Barney and ING Barings, two independent,
internationally recognized investment banking firms, to advise it on the various
alternatives.

Although the Company has engaged in discussions regarding the restructuring with
its and Snapper's banks and bondholders, the Company's Board of Directors has
not approved any definitive transaction. Any final action remains subject to a
number of conditions in addition to final Board of Director approval, including,
for certain possible transactions, obtaining the consent of the Company's and
Snapper's banks, bondholders and shareholders. Although the Company has engaged
in discussions with certain of its bondholders concerning the proposed
restructuring, such bondholders have not as of yet agreed to the terms of any
restructuring by the Company, thereby raising doubt as to the ability of the
Company to consummate the restructuring. As a result, all information in this
Quarterly Report has been prepared assuming the Company continues to operate
each of its lines of businesses. The Company does not currently believe that any
spin-off of its businesses could be accomplished on a tax-free basis.

During February 2001, four separate but very similar lawsuits were filed by the
Company's stockholders against the Company's current and former officers and
directors seeking, among other things, to compel the disposition of
Snapper, Inc. The Company has not yet filed an answer in these lawsuits and does
not anticipate being required to do so until such time as the lawsuits are
consolidated. See Part II, Item 1 "Legal Proceedings".

During December 2000, the Company received four separate proposals from the
Company's stockholders for inclusion in the Company's Proxy Statement with
respect to the Company's 2001 Annual Meeting of Stockholders (the "Annual
Meeting"). With respect to one of the four proposals, the Company sought the
concurrence of the Securities and Exchange Commission's Division of Corporation
Finance, that the Division would not recommend that the Commission take
enforcement action against the Company in the event that the Company chose to
exclude such proposal from its 2001 Proxy Statement. On March 27, 2001, the
Division of Corporation Finance notified the Company that it would not recommend
to the Commission that it take enforcement action against the Company if the
Company chooses to omit such proposal from its Proxy Statement. See Part II,
Item 4 "Submission of Matters to a Vote of Security Holders."

Elliot Associates, L.P. and Elliott International, L.P., stockholders of the
Company (the "Nominating Stockholders"), nominated two individuals to stand for
election to the Company's Board of Directors at the Annual Meeting. In
June 2001 the Nominating Stockholders commenced an action against the Company
pursuant to Section 211 of the Delaware General Corporation Law seeking to
compel the Company to hold its annual shareholder meeting. The Nominating
Stockholders solicited proxies in support of their director nominees, and the
Company solicited proxies in support of its nominees. On October 9, 2001, the
Company held its annual shareholder meeting. At the Annual Meeting, the
Company's stockholders re-elected the Company's nominees to the Board of
Directors. See Part II, Item 4 "Submission of Matters to a Vote of Security
Holders."

                                       27
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
GENERAL

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

COMMUNICATIONS GROUP

OVERVIEW

The Communications Group has operations in Eastern Europe and the republics of
the former Soviet Union and e-commerce related businesses in China. Operations
in Eastern Europe and the republics of the former Soviet Union provide the
following services: (i) wireless telephony; (ii) fixed telephony; (iii) cable
television; (iv) radio broadcasting; and (v) paging.

The Company continues to focus its growth strategy on opportunities in
communications businesses. The constantly changing technologies involved in the
Communications Group's telephony and cable businesses continue to provide the
Company with new opportunities.

2000 IMPAIRMENT CHARGE

Certain of the Company's joint ventures have continued to incur operating
losses. In 2000, the long-lived assets and investments in these businesses were
evaluated to determine whether any impairment existed. The Company's assessment
was based on whether the estimated undiscounted future cash flows of the
businesses over the estimated lives of the related assets were sufficient to
recover the recorded carrying values. Where such cash flows were insufficient to
recover the recorded carrying value, the Company utilized a discounted cash flow
model or then current purchase and sale negotiations to estimate the fair value
of assets and investments and recorded an impairment charge to adjust the
carrying values to estimated fair value. As a result of this evaluation, the
Company recorded a non-cash impairment charge for three joint ventures of
$9.4 million in 2000.

1999 RESTRUCTURING CHARGES

Shortly after completing its September 30, 1999 acquisition of PLD Telekom, the
Company began identifying synergies and redundancies between its MITI and PLD
Telekom subsidiaries. The Company's efforts were directed toward streamlining
its operations. Following the review of its operations, the Communications Group
made significant reductions in its overhead costs for 2000 by closing its
offices in Stamford, Connecticut and London, England, consolidating its
executive offices in New York, New York, consolidating its operational
headquarters in Vienna, Austria and consolidating its two Moscow offices into
one. As part of this streamlining of its operations, the Company announced an
employee headcount reduction. Employees impacted by the restructuring were
notified in December 1999 and in almost all cases were terminated effective
December 31, 1999. The total number of U.S. domestic and expatriate employees
separated was approximately 60. In addition, there were reductions in locally
hired staff. In 1999 the Company recorded a charge of $8.4 million in connection
with this restructuring.

                                       28
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
Following is a rollforward of the activity and balances of the restructuring
reserve account from December 31, 1999 to September 30, 2001 (in thousands):

<Table>
<Caption>
                                    DECEMBER 31,                            DECEMBER 31,              SEPTEMBER 30,
TYPE OF COST                            1999       PAYMENTS   ADJUSTMENTS       2000       PAYMENTS       2001
------------                        ------------   --------   -----------   ------------   --------   -------------
<S>                                 <C>            <C>        <C>           <C>            <C>        <C>
Employee separations..............     $5,872      $(3,953)      $(676)        $1,243       $(253)       $  990
Facility closings.................      1,456       (1,123)       (147)           186          25           211
                                       ------      -------       -----         ------       -----        ------
                                       $7,328      $(5,076)      $(823)        $1,429       $(228)       $1,201
                                       ======      =======       =====         ======       =====        ======
</Table>

Adjustments are primarily due to actual employee termination costs being lower
than originally estimated.

JOINT VENTURE OWNERSHIP STRUCTURES

The following table summarizes the Communications Group's joint ventures and
subsidiaries at   September 30, 2001 and the Communications Group's ownership in
each company:

<Table>
<Caption>
                                                                COMPANY
JOINT VENTURE (1)                                             OWNERSHIP %
-----------------                                             -----------
<S>                                                           <C>
WIRELESS TELEPHONY
ALTEL (Kazakhstan) (2)......................................        50%
BELCEL (Belarus)............................................        50%
Tyumenruskom (Tyumen, Russia)...............................        46%
Magticom (Tbilisi, Georgia).................................        35%
Gorizont-RT (Sakha) (3).....................................        25%

FIXED AND OTHER TELEPHONY
Baltic Communications Limited (St. Petersburg, Russia)
  (2).......................................................       100%
CPY Yellow Pages (St. Petersburg, Russia) (2)...............       100%
Cardlink ZAO (Moscow, Russia) (2)...........................       100%
PeterStar (St. Petersburg, Russia) (2)......................        71%
Teleport-TP (Moscow, Russia) (2)(4).........................        56%
Comstar ZAO (Moscow, Russia) (5)............................        50%
MTR-Sviaz (Moscow, Russia) (4)..............................        49%
Caspian American Telecommunications (Azerbaijan) (6)........        37%
Spectrum (Kazakhstan) (6)(18)...............................        33%
Telecom Georgia (Tbilisi, Georgia)..........................        30%

INTERNET SERVICES
Clarity Data Systems Co., Ltd. (Beijing, China) (2) (7).....        58%
Huaxia Metromedia Information Technology Co., Ltd. (Beijing,
  China) (2) (7)............................................        58%
Metromedia Health Information Systems Co., Ltd. (China) (2)
  (7).......................................................        58%
66cities.com Co., Ltd. (Beijing, China) (2) (7).............        50%
</Table>

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

<Table>
<Caption>
                                                                COMPANY
JOINT VENTURE (1)                                             OWNERSHIP %
-----------------                                             -----------
<S>                                                           <C>
CABLE TELEVISION
Romsat Cable TV (Bucharest, Romania) (2)....................       100%
Sun TV (Chisinau, Moldova) (2) (8)..........................        91%
Ayety TV (Tbilisi, Georgia) (2) (9).........................        85%
ATK (Archangelsk, Russia) (2)...............................        81%
Viginta (Vilnius, Lithuania) (2)............................        55%
Ala TV (Bishkek, Kyrgyzstan) (2)............................        53%
Kosmos TV (Moscow, Russia)..................................        50%
Baltcom TV (Riga, Latvia)...................................        50%
Kamalak TV (Tashkent, Uzbekistan)...........................        50%
Alma TV (Almaty, Kazakhstan)................................        50%
Cosmos TV (Minsk, Belarus)..................................        50%
Teleplus (St. Petersburg, Russia) (10)......................        45%

RADIO BROADCASTING
Radio Juventus (Budapest, Hungary) (2)......................       100%
Metroradio (Bulgaria) (2)(11)...............................       100%
Oy Metromedia (Finland) (2)(12).............................       100%
Radio Katusha (St. Petersburg, Russia) (2) (13).............        96%
Country Radio (Prague, Czech Republic) (2)..................        85%
SAC (Moscow, Russia) (2)....................................        83%
Radio One (Prague, Czech Republic) (2)......................        80%
Radio Skonto (Riga, Latvia) (2).............................        55%
Radio Georgia (Tbilisi, Georgia) (2) (13)...................        51%
AS Trio LSL (Estonia) (13)..................................        50%

PAGING
Baltcom Paging (Estonia) (2) (14)...........................        85%
CNM (Romania) (15)..........................................        54%
Eurodevelopment (Ukraine) (6)...............................        51%
Alma Page (Almaty and Ust-Kamenogorsk, Kazakhstan) (6)......        50%
Mobile Telecom (Russia) (6) (16)............................        50%
Kamalak Paging (Tashkent, Samarkand, Bukhara and Andijan,
  Uzbekistan)...............................................        50%
Baltcom Plus (Latvia) (6)...................................        50%
Paging One (Tbilisi, Georgia) (6)...........................        45%
PT Page (St. Petersburg, Russia) (6) (10)...................        40%
Paging Ajara (Batumi, Georgia) (6)..........................        35%
Kazpage (Kazakhstan) (6) (17)...............................     26-41%
</Table>

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

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

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

(3) The Communications Group is selling its 25% interest to one of the other
    partners in the venture.

                                       30
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS (CONTINUED)
(4) The Company's interests in Teleport-TP and MTR-Sviaz are held through its
    wholly-owned subsidiary Technocom Limited.

(5) The Communications Group acquired a 50% stake in Comstar in December 2000.

(6) Results of operations are no longer reported.

(7) The Communications Group's majority-owned subsidiary Metromedia China
    Corporation owns 100% of Huaxia. Metromedia China currently owns 90% of Twin
    Poplars LLC with an option to acquire the remaining 10%, and Twin Poplars
    owns 97% of 66cities JV. Metromedia China Corporation owns 100% of Clarity
    and MHIS.

(8) The Communications Group increased its ownership interest in Sun TV to 91%
    in 2000. The results of this venture have been consolidated since the first
    quarter of 2001.

(9) During the quarter ended September 30, 2000, the Communications Group
    increased its ownership interest in Ayety TV to 85%. The results of this
    venture have been consolidated since the fourth quarter of 2000.

(10) The Communications Group has signed an agreement to dispose of 11% of PT
    Page, in exchange for an additional 14% of Teleplus. The transaction, which
    is subject to Russian Anti-Monopoly Commission approval, is expected to
    close in 2001.

(11) Metroradio was established by the Communications Group in 1999 and acquired
    radio broadcasting licenses in November 2000. Its results have been
    consolidated since the second quarter of 2001.

(12) The Communications Group agreed to acquire a 90% interest in Oy Metromedia
    Finland in November 2000 for $680,000 conditioned on the reconfirmation of
    its licenses, which was received in February 2001. Oy Metromedia operates
    two radio stations in Finland. The results for this venture have been
    consolidated in the second quarter of 2001. The remaining 10% was acquired
    in June 2001, including the repayment of the minority shareholder's loan due
    from Oy Metromedia, for $303,000.

(13) Radio Katusha includes two radio stations operating in St. Petersburg,
    Russia. AS Trio LSL operates six radio stations in various cities throughout
    Estonia. Radio Georgia has two radio stations operating in Georgia. On
    December 14, 2000, the Communications Group acquired an additional 21% of
    Radio Katusha for $500,000.

(14) The Communications Group sold its interest in Baltcom Paging in
    October 2001.

(15) The Communications Group is commencing liquidation procedures for CNM.

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

(17) The Communications Group is currently negotiating to dispose of its
    interests in Kazpage, which is comprised of a service entity and 10 paging
    joint ventures that provide services in Kazakhstan. The Communications
    Group's current interests in the joint venture range from 26% to 41% and its
    interest in the service entity is 51%.

(18) The Communications Group is currently negotiating the disposition of its
    interest in Spectrum.

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

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

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

CERTAIN DISPOSITIONS OF ASSETS AND OTHER COMPANY INFORMATION

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

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

The following table sets forth operating results for the three and nine months
ended September 30, 2001 and 2000 for the Company's Communications Group and
Snapper:

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

                              SEGMENT INFORMATION

                     THREE MONTHS ENDED SEPTEMBER 30, 2001
                                 (IN THOUSANDS)
                               SEE NOTES 1 AND 2
<Table>
<Caption>
                                                          COMMUNICATIONS GROUP--EASTERN EUROPE AND
                                                          THE REPUBLICS OF THE FORMER SOVIET UNION
                                     ----------------------------------------------------------------------------------
                                                                                                    SEGMENT
                                     WIRELESS      FIXED       CABLE         RADIO                   HEAD-
                                     TELEPHONY   TELEPHONY   TELEVISION   BROADCASTING    PAGING    QUARTERS    TOTAL
                                     ---------   ---------   ----------   ------------   --------   --------   --------
<S>                                  <C>         <C>         <C>          <C>            <C>        <C>        <C>
COMBINED
Revenues...........................   $14,563     $46,581     $ 9,280        $3,886       $ 224     $   847    $ 75,381
Depreciation and amortization......     4,508       8,211       2,910           608          34       9,454      25,725
Operating income (loss)............     2,321       3,721      (1,168)         (434)         50     (20,623)    (16,133)
CONSOLIDATED
Revenues...........................   $ 2,917     $23,186     $ 3,240        $3,513       $ 109     $   847    $ 33,812
Gross profit.......................
Depreciation and amortization......     1,109       4,424       1,137           593           6       9,454      16,723
Asset impairment charge............        --          --          --            --          --       5,860       5,860
Operating loss.....................    (1,202)      1,723          75          (401)       (108)    (20,623)    (20,536)
UNCONSOLIDATED JOINT VENTURES
Revenues...........................   $11,646     $23,395     $ 6,040        $  373       $ 115     $    --    $ 41,569
Depreciation and amortization......     3,399       3,787       1,773            15          28          --       9,002
Operating income (loss)............     3,523       1,998      (1,243)          (33)        158          --       4,403
Net income (loss)..................     3,166         612      (1,924)          (83)       (227)         --       1,544
Equity in income (losses) of
  unconsolidated investees
  (note 2).........................     1,647         602      (1,126)          (74)        (69)         --         980
Foreign currency loss..............                                                                                (246)
Minority interest..................                                                                                (248)
Interest expense...................
Interest income....................
Other income.......................
Income tax expense.................
Net loss...........................

<Caption>

                                     COMMUNICATIONS                CORPORATE
                                      GROUP--CHINA     SNAPPER    HEADQUARTERS   CONSOLIDATED
                                     ---------------   --------   ------------   ------------
<S>                                  <C>               <C>        <C>            <C>
COMBINED
Revenues...........................
Depreciation and amortization......
Operating income (loss)............
CONSOLIDATED
Revenues...........................      $   189       $33,737      $    --        $ 67,738
Gross profit.......................                     11,693
Depreciation and amortization......           45         1,232           16          18,016
Asset impairment charge............           --            --           --           5,860
Operating loss.....................       (1,531)       (1,513)      (1,862)        (25,442)
UNCONSOLIDATED JOINT VENTURES
Revenues...........................
Depreciation and amortization......
Operating income (loss)............
Net income (loss)..................
Equity in income (losses) of
  unconsolidated investees
  (note 2).........................           --            --           --             980
Foreign currency loss..............           --            --           --            (246)
Minority interest..................           (6)           --           --            (254)
Interest expense...................                                                  (6,875)
Interest income....................                                                     818
Other income.......................                                                     364
Income tax expense.................                                                  (2,076)
                                                                                   --------
Net loss...........................                                                $(32,731)
                                                                                   ========
</Table>

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

Note 1: The Company evaluates the performance of its operating segments based on
earnings before interest, taxes, depreciation, and amortization. The above
segment information and the discussion of the Company's operating segments is
based on operating income (loss) which includes depreciation and amortization.
In addition, the Company evaluates the performance of the Communications Group's
operating segment in Eastern Europe and the republics of the former Soviet Union
on a combined basis. The Company is providing as supplemental information an
analysis of combined revenues and operating income (loss) for its consolidated
and unconsolidated joint ventures in Eastern Europe and the republics of the
former Soviet Union.

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

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

                              SEGMENT INFORMATION
                     THREE MONTHS ENDED SEPTEMBER 30, 2000
                                 (IN THOUSANDS)
<Table>
<Caption>
                                                          COMMUNICATIONS GROUP--EASTERN EUROPE AND
                                                          THE REPUBLICS OF THE FORMER SOVIET UNION
                                     ----------------------------------------------------------------------------------
                                                                                                    SEGMENT
                                     WIRELESS      FIXED       CABLE         RADIO                   HEAD-
                                     TELEPHONY   TELEPHONY   TELEVISION   BROADCASTING    PAGING    QUARTERS    TOTAL
                                     ---------   ---------   ----------   ------------   --------   --------   --------
<S>                                  <C>         <C>         <C>          <C>            <C>        <C>        <C>
COMBINED
Revenues...........................   $20,615     $30,827     $ 9,773        $4,333      $ 1,944    $   273    $ 67,765
Depreciation and amortization......     6,582       5,945       3,790           331          255      9,226      26,129
Operating income (loss)............     1,808       5,463      (1,516)            2          747    (13,811)     (7,307)
CONSOLIDATED
Revenues...........................   $ 3,510     $24,332     $ 2,905        $3,870      $   439    $   273    $ 35,329
Gross profit.......................
Depreciation and amortization......     1,274       4,256       1,535           305           75      9,226      16,671
Reduction in estimate of
  restructuring and asset
  impairment charge................        --          --          --            --           --       (609)       (609)
Operating income (loss)............      (843)      5,805        (393)           36          528    (13,811)     (8,678)
UNCONSOLIDATED JOINT VENTURES
Revenues...........................   $17,105     $ 6,495     $ 6,868        $  463      $ 1,505    $    --    $ 32,436
Depreciation and amortization......     5,308       1,689       2,255            26          180         --       9,458
Operating income (loss)............     2,651        (342)     (1,123)          (34)         219         --       1,371
Net income (loss)..................     2,477      (1,850)     (2,984)          (57)         (53)        --      (2,467)
Equity in income (losses) of
  unconsolidated investees.........     2,000        (276)     (1,334)          (47)          (1)        --         342
Gain on disposition of business....                                                                               2,752
Foreign currency gain..............                                                                                  16
Minority interest..................                                                                                (609)
Interest expense...................
Interest income....................
Income tax expense.................
Net loss...........................

<Caption>

                                     COMMUNICATIONS                CORPORATE
                                      GROUP--CHINA     SNAPPER    HEADQUARTERS   CONSOLIDATED
                                     ---------------   --------   ------------   ------------
<S>                                  <C>               <C>        <C>            <C>
COMBINED
Revenues...........................
Depreciation and amortization......
Operating income (loss)............
CONSOLIDATED
Revenues...........................      $   140       $34,183      $    --        $ 69,652
Gross profit.......................                      9,253
Depreciation and amortization......           78         1,311           15          18,075
Reduction in estimate of
  restructuring and asset
  impairment charge................          (94)           --           --            (703)
Operating income (loss)............         (791)       (6,110)      (1,404)        (16,983)
UNCONSOLIDATED JOINT VENTURES
Revenues...........................      $    --
Depreciation and amortization......           13
Operating income (loss)............         (143)
Net income (loss)..................         (145)
Equity in income (losses) of
  unconsolidated investees.........         (145)           --           --             197
Gain on disposition of business....           --            --           --           2,752
Foreign currency gain..............           --            --           --              16
Minority interest..................          542            --           --             (67)
Interest expense...................                                                  (7,279)
Interest income....................                                                   1,502
Income tax expense.................                                                  (2,341)
                                                                                   --------
Net loss...........................                                                $(22,203)
                                                                                   ========
</Table>

                                       34
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
                              SEGMENT INFORMATION
                      NINE MONTHS ENDED SEPTEMBER 30, 2001
                                 (IN THOUSANDS)
<Table>
<Caption>
                                                         COMMUNICATIONS GROUP--EASTERN EUROPE AND
                                                         THE REPUBLICS OF THE FORMER SOVIET UNION
                                    ----------------------------------------------------------------------------------
                                                                                                   SEGMENT
                                    WIRELESS      FIXED       CABLE         RADIO                   HEAD-
                                    TELEPHONY   TELEPHONY   TELEVISION   BROADCASTING    PAGING    QUARTERS    TOTAL
                                    ---------   ---------   ----------   ------------   --------   --------   --------
<S>                                 <C>         <C>         <C>          <C>            <C>        <C>        <C>
COMBINED
Revenues..........................   $42,868    $136,452     $26,654       $11,942       $ 983     $ 1,849    $220,748
Depreciation and amortization.....    12,912      24,588       9,197         1,484         115      28,414      76,710
Operating income (loss)...........     5,350      13,756      (5,567)         (493)         20     (50,512)    (37,446)

CONSOLIDATED
Revenues..........................   $ 8,911    $ 66,934     $ 9,445       $10,673       $ 323     $ 1,849    $ 98,135
Gross profit......................
Depreciation and amortization.....     3,412      13,243       4,233         1,440          27      28,414      50,769
Asset impairment charge...........        --          --          --            --          --       5,860       5,860
Operating income (loss)...........    (3,409)      8,551      (1,507)         (469)       (182)    (50,512)    (47,528)

UNCONSOLIDATED JOINT VENTURES
Revenues..........................   $33,957    $ 69,518     $17,209       $ 1,269       $ 660     $    --    $122,613
Depreciation and amortization.....     9,500      11,345       4,964            44          88          --      25,941
Operating income (loss)...........     8,759       5,205      (4,060)          (24)        202          --      10,082
Net income (loss).................     6,757       1,775      (8,871)         (111)       (325)         --        (775)
Equity in income (losses) of
  unconsolidated investees........     3,732       1,136      (8,007)         (414)       (667)         --      (4,220)
Foreign currency loss.............                                                                                 132
Minority interest.................                                                                                (421)
Interest expense..................
Interest income...................
Other income......................
Income tax expense................
Net loss..........................

<Caption>

                                    COMMUNICATIONS                CORPORATE
                                     GROUP--CHINA     SNAPPER    HEADQUARTERS   CONSOLIDATED
                                    ---------------   --------   ------------   ------------
<S>                                 <C>               <C>        <C>            <C>
COMBINED
Revenues..........................
Depreciation and amortization.....
Operating income (loss)...........
CONSOLIDATED
Revenues..........................      $   432       $133,589     $     --       $232,156
Gross profit......................                      48,654
Depreciation and amortization.....          306          3,963           48         55,086
Asset impairment charge...........           --             --           --          5,860
Operating income (loss)...........       (4,014)         8,236       (6,601)       (49,907)
UNCONSOLIDATED JOINT VENTURES
Revenues..........................
Depreciation and amortization.....
Operating income (loss)...........
Net income (loss).................
Equity in income (losses) of
  unconsolidated investees........           --             --           --         (4,220)
Foreign currency loss.............           --             --           --           (132)
Minority interest.................           97             --           --           (324)
Interest expense..................                                                 (22,053)
Interest income...................                                                   2,651
Other income......................                                                     458
Income tax expense................                                                  (6,411)
                                                                                  --------
Net loss..........................                                                $(79,938)
                                                                                  ========
</Table>

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

                              SEGMENT INFORMATION
                      NINE MONTHS ENDED SEPTEMBER 30, 2000
                                 (IN THOUSANDS)
<Table>
<Caption>
                                                        COMMUNICATIONS GROUP--EASTERN EUROPE AND
                                                        THE REPUBLICS OF THE FORMER SOVIET UNION
                                   -----------------------------------------------------------------------------------
                                                                                                  SEGMENT
                                   WIRELESS      FIXED       CABLE         RADIO                   HEAD-
                                   TELEPHONY   TELEPHONY   TELEVISION   BROADCASTING    PAGING    QUARTERS     TOTAL
                                   ---------   ---------   ----------   ------------   --------   --------   ---------
<S>                                <C>         <C>         <C>          <C>            <C>        <C>        <C>
COMBINED
Revenues.........................   $61,990     $87,470     $28,732       $13,056      $ 7,364    $ 2,258    $ 200,870
Depreciation and amortization....    18,092      16,949      10,027         1,008          749     25,642       72,467
Operating income (loss)..........     9,558      12,553      (1,154)         (590)        (545)   (42,262)     (22,440)
CONSOLIDATED
Revenues.........................   $10,392     $66,732     $ 6,421       $11,744      $ 1,483    $ 2,258    $  99,030
Gross profit.....................
Depreciation and amortization....     3,841      12,273       2,927           882          220     25,642       45,785
Reduction in estimate of
  restructuring and asset
  impairment charge..............        --          --          --            --           --       (823)        (823)
Operating income (loss)..........    (2,717)     14,509        (721)         (366)         277    (42,262)     (31,280)
UNCONSOLIDATED JOINT VENTURES
Revenues.........................   $51,598     $20,738     $22,311       $ 1,312      $ 5,881    $    --    $ 101,840
Depreciation and amortization....    14,251       4,676       7,100           126          529         --       26,682
Operating income (loss)..........    12,275      (1,956)       (433)         (224)        (822)        --        8,840
Net income (loss)................     7,228      (4,938)     (6,809)         (311)      (1,589)        --       (6,419)
Equity in income (losses) of
  unconsolidated investees.......     8,999      (2,234)     (2,146)         (473)      (1,122)        --        3,024
Gain on disposition of
  business.......................                                                                                2,752
Foreign currency gain............                                                                                   57
Minority interest................                                                                               (2,860)
Interest expense.................
Interest income..................
Other income.....................
Income tax expense...............
Net loss.........................

<Caption>

                                   COMMUNICATIONS                CORPORATE
                                    GROUP--CHINA     SNAPPER    HEADQUARTERS   CONSOLIDATED
                                   ---------------   --------   ------------   ------------
<S>                                <C>               <C>        <C>            <C>
COMBINED
Revenues.........................
Depreciation and amortization....
Operating income (loss)..........
CONSOLIDATED
Revenues.........................      $   140       $136,983     $    --       $ 236,153
Gross profit.....................                      45,138
Depreciation and amortization....          180          4,326          50          50,341
Reduction in estimate of
  restructuring and asset
  impairment charge..............       (4,078)            --          --          (4,901)
Operating income (loss)..........         (374)         1,418      (4,461)        (34,697)
UNCONSOLIDATED JOINT VENTURES
Revenues.........................      $    --
Depreciation and amortization....           38
Operating income (loss)..........         (683)
Net income (loss)................         (683)
Equity in income (losses) of
  unconsolidated investees.......         (683)            --          --           2,341
Gain on disposition of
  business.......................           --             --          --           2,752
Foreign currency gain............           --             --          --              57
Minority interest................        1,797             --          --          (1,063)
Interest expense.................                                                 (23,299)
Interest income..................                                                   3,025
Other income.....................                                                   2,500
Income tax expense...............                                                  (6,952)
                                                                                ---------
Net loss.........................                                               $ (55,336)
                                                                                =========
</Table>

                                       36
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS--THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE
  MONTHS ENDED SEPTEMBER 30, 2000, AND NINE MONTHS ENDED SEPTEMBER 30, 2001
  COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2000

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

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

Operations in Eastern Europe and the republics of the former Soviet Union
provide the following services: (i) wireless telephony; (ii) fixed telephony;
(iii) cable television; (iv) radio broadcasting; and (v) paging. Certain of the
Communications Group's ventures pay management fees to their shareholders. The
figures presented for the ventures reflect all payments of such fees (i.e.
management fees are included in operating expenses, the same as other expenses
of the ventures). Certain of the Communications Group's investments have been
written down to zero. If the Communications Group is no longer funding their
operations, the results of these ventures have not been reported.

WIRELESS TELEPHONY

The following sets forth the names of the Communications Group's wireless
telephony ventures, its ownership percentage as of September 30, 2001 and
accounting treatment as of and for the three and nine months ended
September 30, 2001 and 2000:

<Table>
<Caption>
                                                                               SEPTEMBER 30,
                                                                            -------------------
VENTURE                                                       OWNERSHIP %     2001       2000
-------                                                       -----------   --------   --------
<S>                                                           <C>           <C>        <C>
ALTEL (Almaty, Kazakhstan)..................................      50%         C           C
BELCEL (Minsk, Belarus).....................................      50%         E           E
Tyumenruskom (Tyumen, Russia)...............................      46%         E           E
Magticom (Tbilisi, Georgia).................................      35%         E           E
Baltcom* GSM (Latvia).......................................      22%        N/A          E
</Table>

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

*--In October 2000, the Communications Group sold its indirect 22% interest.

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

<Table>
<Caption>
                                                    THREE MONTHS ENDED               NINE MONTHS ENDED
                                                      SEPTEMBER 30,                    SEPTEMBER 30,
                                              ------------------------------   ------------------------------
WIRELESS TELEPHONY--CONSOLIDATED                2001       2000     % CHANGE     2001       2000     % CHANGE
--------------------------------              --------   --------   --------   --------   --------   --------
<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Revenues....................................  $ 2,917     $3,510      (17)%    $ 8,911    $10,392      (14)%
Operating loss..............................  $(1,202)    $ (843)      43%     $(3,409)   $(2,717)      25%
</Table>

REVENUES.  Wireless telephony consolidated revenues for the nine months ended
September 30, 2001 amounted to $8.9 million and were attributable to ALTEL, the
Kazakhstan D-AMPS operator. ALTEL's revenues for the first nine months of 2000
amounted to $10.4 million. ALTEL's 2001 revenues have been adversely affected by
competition from GSM operators and by customer fraud

                                       37
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
problems involving "cloned" cellular telephones. ALTEL has purchased anti-fraud
equipment which is expected to be fully installed by the end of the fourth
quarter of 2001.

Wireless telephony consolidated revenues for the three months ended
September 30, 2001 amounted to $2.9 million compared to $3.5 million for the
same period of 2000.

OPERATING LOSS.  ALTEL generated an operating loss of $3.4 million for the nine
months ended September 30, 2001, compared to an operating loss of $2.7 million
for the corresponding period of 2000. The reduction in revenues due to ALTEL's
fraud problems with customers was partly mitigated by measures taken by venture
management to reduce costs. Continued competition for the remainder of 2001 is
likely to have further adverse effects on the venture's operating results.

Wireless telephony consolidated operating losses for the three months ended
September 30, 2001 amounted to $1.2 million compared to $843,000 for the
corresponding period of 2000.

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

<Table>
<Caption>
                                                  THREE MONTHS ENDED               NINE MONTHS ENDED
                                                    SEPTEMBER 30,                    SEPTEMBER 30,
                                            ------------------------------   ------------------------------
WIRELESS TELEPHONY--UNCONSOLIDATED            2001       2000     % CHANGE     2001       2000     % CHANGE
----------------------------------          --------   --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>
Revenues..................................  $11,646    $17,105      (32)%    $33,957    $51,598      (34)%
Operating income..........................  $ 3,523    $ 2,651       33%     $ 8,759    $12,275      (29)%
Net income................................  $ 3,166    $ 2,477       28%     $ 6,757    $ 7,228       (7)%
Equity in income of joint ventures........  $ 1,647    $ 2,000      (18)%    $ 3,732    $ 8,999      (59)%
</Table>

EQUITY IN INCOME (LOSSES) OF JOINT VENTURES.  Equity in income from investments
in wireless telephony ventures for the nine months ended September 30, 2001
amounted to $3.7 million as compared to $9.0 million for the nine months ended
September 30, 2000. The results for 2001 were primarily attributable to the
Communications Group's GSM wireless operation in Georgia. The results for 2000
were primarily attributable to GSM operations in Latvia and Georgia. The
Communications Group sold its 22% interest of Baltcom GSM, the Latvian GSM
operation, in the third quarter of 2000. Baltcom GSM reported revenues of
$26.6 million and operating income of $4.3 million for the nine months ended
September 30, 2000.

Magticom's 2001 revenues were $25.3 million, a 37% increase on 2000 revenues of
$18.4 million due to strong subscriber growth. Magticom achieved operating
income of $9.4 million in the first nine months of 2001 as compared to
$8.6 million during the first nine months of 2000. Magticom's 2000 results were
positively affected by the settlement and collection of a legal claim of
$1.8 million in the early part of that year. In the remaining part of 2001,
Magticom's operating results may be adversely affected by the competition of two
alternative GSM operations in Georgia.

Other ventures in this category include BELCEL, which operates an NMT 450
wireless network in Belarus, and Tyumenruscom, the D-AMPS operator in Tyumen,
Russia. During the first nine months of 2001, these ventures jointly generated
revenues of $8.7 million and operating losses of $648,000 as compared with
revenues of $6.6 million and operating losses of $666,000 for the nine months
ended September 30, 2000. Both ventures experienced subscriber growth leading to
increased revenues in 2001 compared to the corresponding period in 2000, but
pressure on operating profit margins and higher operating costs caused a lack of
improvement in the first nine months of 2001 operating results as compared with
the prior year.

                                       38
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Equity in income from investments in wireless telephony ventures for the three
months ended September 30, 2001 amounted to $1.6 million, compared to
$2.0 million for the three months ended September 30, 2000. The Communications
Group sold its interest in Baltcom GSM in the third quarter of 2000 and
therefore reported no results for 2001 for that entity. Baltcom GSM reported
revenues of $9.2 million and operating income of $1.6 million for the three
months ended September 30, 2000. In Georgia, for the three months ended
September 30, 2001 Magticom had revenues of $8.6 million and operating income of
$3.4 million as compared with revenues of $5.1 million and operating income of
$1.1 million in the corresponding period of 2000. For the three months ended
September 30, 2001 revenues and operating income for Tyumenruscom and BELCEL
jointly amounted to $3.1 million and $167,000, respectively, compared to
revenues of $3.0 million and operating losses of $76,000 for the corresponding
period of the prior year.

FIXED TELEPHONY

The following sets forth the names of the Communications Group's fixed telephony
ventures, its ownership percentage as of September 30, 2001, and accounting
treatment for the three and nine months ended September 30, 2001 and 2000:

<Table>
<Caption>
                                                                               SEPTEMBER 30,
                                                                            -------------------
VENTURE                                                       OWNERSHIP %     2001       2000
-------                                                       -----------   --------   --------
<S>                                                           <C>           <C>        <C>
Technocom (Moscow, Russia)..................................      100%        C          C
Baltic Communications (St. Petersburg, Russia)..............      100%        C          C
CPY Yellow Pages (St. Petersburg, Russia)...................      100%        C          C
PeterStar (St. Petersburg, Russia)..........................       71%        C          C
Comstar* (Moscow, Russia)...................................       50%        E          N/A
Instaphone*** (Kazakhstan)..................................       50%        N/A        E
MTR Sviaz (Moscow, Russia)..................................       49%        E          E
Caspian American Telecommunication** (Azerbaijan)...........       38%        E          E
Spectrum** (Kazakhstan).....................................       33%        E          E
Telecom Georgia (Tbilisi, Georgia)..........................       30%        E          E
</Table>

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

*--Acquired in December 2000.

**--Results not reported.

***--Disposed of in September 2001.

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

<Table>
<Caption>
                                                  THREE MONTHS ENDED               NINE MONTHS ENDED
                                                    SEPTEMBER 30,                    SEPTEMBER 30,
                                            ------------------------------   ------------------------------
FIXED TELEPHONY--CONSOLIDATED                 2001       2000     % CHANGE     2001       2000     % CHANGE
-----------------------------               --------   --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>
Revenues..................................  $23,186    $24,332       (5)%    $66,934    $66,732       --
Operating income..........................  $ 1,723    $ 5,805      (70)%    $ 8,551    $14,509      (41)%
</Table>

REVENUES.  Fixed telephony consolidated revenues for the nine months ended
September 30, 2001 amounted to $66.9 million as compared with $66.7 million for
the corresponding period of the previous year. The results of operations were
primarily attributable to PeterStar and Technocom.

In the nine months ended September 30, 2001 PeterStar generated revenues of
$35.7 million, as compared to revenues of $41.4 million generated in the same
period in 2000. The reduction is due primarily to the loss of revenue previously
derived from processing of transit traffic for a certain number of St.
Petersburg's mobile telephony operators.

                                       39
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

In the first nine months of 2001, Technocom generated revenues of $24.6 million
compared to $19.6 million in the same period in 2000. The venture experienced
higher international and long distance traffic volumes in the nine months ended
September 30, 2001, which caused Technocom's revenues to increase compared to
those in 2000.

Fixed telephony consolidated revenues for the three months ended September 30,
2001 amounted to $23.2 million as compared with $24.3 million for the three
months ended September 30, 2000. PeterStar's revenues for the three months ended
September 30, 2001 amounted to $11.9 million as compared to revenues of
$14.5 million generated in the same period in 2000. Technocom's revenues
increased from $8.0 million for the three months ended September 30, 2000 to
$8.7 million in the same period of 2001.

OPERATING INCOME.  During the nine months ended September 30, 2001, fixed
telephony consolidated ventures generated operating income of $8.6 million,
$5.9 million lower than the operating income of $14.5 million generated in the
corresponding period of 2000. PeterStar's operating income for the nine months
ended September 30, 2001 amounted to $8.8 million compared to $14.9 million for
the nine months ended September 30, 2000. PeterStar's 2001 operating income was
adversely affected by the previously mentioned loss of transit traffic derived
from St. Petersburg's mobile telephone operators. Technocom generated an
operating loss of $849,000 during the first nine months of 2001 compared to a
loss of $54,000 in the corresponding period in 2000. The increase in Technocom's
operating loss was due to lower margins realized in processing telephony traffic
in 2001 compared to 2000.

Fixed telephony operating income for the three months ended September 30, 2001
amounted to $1.7 million as compared with $5.8 million during the same period of
2000. PeterStar's operating income for the three months ended September 30, 2001
decreased from $5.3 million for the three months ended September 30, 2000 to
$2.7 million for the three months ended September 30, 2001 for the reasons
discussed above. For the three months ended September 30, 2001, Technocom
generated operating losses of $1.6 million as compared with an operating income
of $454,000 in the corresponding period of 2000 due to a main supplier charging
Technocom in the third quarter on a usage basis as compared to fixed fee basis
in prior periods. In addition, Technocom had adjustments in the third quarter
relating to the write-down of obsolete equipment which adversely affected the
venture's profitability.

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

<Table>
<Caption>
                                                  THREE MONTHS ENDED               NINE MONTHS ENDED
                                                    SEPTEMBER 30,                    SEPTEMBER 30,
                                            ------------------------------   ------------------------------
FIXED TELEPHONY--UNCONSOLIDATED               2001       2000     % CHANGE     2001       2000     % CHANGE
-------------------------------             --------   --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>
Revenues..................................  $23,395    $ 6,495      260%     $69,518    $20,738      235%
Operating income (loss)...................  $ 1,998    $  (342)     N/M      $ 5,205    $(1,956)     N/M
Net income (loss).........................  $   612    $(1,850)     N/M      $ 1,775    $(4,938)     N/M
Equity in income (losses) of joint
  ventures................................  $   602    $  (276)     N/M      $ 1,136    $(2,234)     N/M
</Table>

EQUITY IN INCOME (LOSSES) OF JOINT VENTURES.  The Communications Group's equity
in income from investments in fixed telephony ventures for the nine months ended
September 30, 2001 amounted to $1.1 million for the nine months ended
September 2001 as compared to losses of $2.2 million in the nine months ended
September 30, 2000. These results were attributable mainly to the operations of
Comstar, a Moscow fixed line operator and to Telecom Georgia and MTR Sviaz.

                                       40
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Comstar generated 2001 revenues of $51.0 million and operating income of
$6.6 million as compared to 2000 revenues of $46.6 million and operating income
of $5.0 million. Comstar's results were favorably affected in 2001 by increased
business customer lines as compared with 2000. The Communications Group has been
recording its equity share of Comstar's results since December 1, 2000.

In the first nine months of 2001, Telecom Georgia generated revenues of
$17.6 million compared to revenues of $18.1 million in the first nine months of
2000. Telecom Georgia's operating losses for 2001 amounted to $1.4 million as
compared with $444,000 in the first nine months of the previous year. The
venture experienced no revenue growth for the first nine months of 2001 due to
tariff pressure and local competition which also had an adverse effect on
profitability.

The above results also include those of MTR Sviaz, which operates a Moscow based
telephony network using fiber optic technology. During the nine months ended
September 30, 2001, MTR Sviaz generated revenues of $917,000 and operating
income of $1,000, as compared with revenues of $1.3 million and operating income
of $166,000 for the same period of 2000. The venture's results for the first
nine months of 2001 as compared to the corresponding period of 2000 were
adversely affected by lower levels of telephony traffic.

The results of Caspian American Telecommunications Limited in Azerbaijan for the
first nine months of 2001 have not been reported since the Company has written
down its investment to zero and unless it provides further funding will no
longer record its share of losses. In the fourth quarter of 2000 the Company
adjusted to zero the carrying value of its investment in CAT in view of
continued slow buildup of its customer base. During the first nine months of
2000, CAT generated revenues of $1.4 million and reported operating losses of
$1.7 million.

The Communications Group's equity in income from investments in fixed telephony
ventures for the three months ended September 30, 2001 amounted to $602,000 as
compared to losses of $276,000 during the same period in 2000. Comstar generated
revenues of $17.8 million and operating income of $2.7 million for the three
months ended September 30, 2001, compared to revenues of $16.3 million and
operating income of $2.7 million for the same period of 2000. Despite the
increase in revenues, operating income was unchanged due to downward pressures
on margins during the quarter. Telecom Georgia generated for the three months
ended September 30, 2001 revenues of $5.3 million and operating losses of
$747,000 as compared with revenues of $5.7 million and operating income of
$155,000 for the same period of 2000. For the three months ended September 30,
2000, CAT had revenues of $421,000 and operating losses of $507,000. The results
of operations for CAT have not been reported for 2001.

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

The following sets forth the names of the Communications Group's cable
television ventures, its ownership percentage as of September 30, 2001, and the
accounting treatment for the three and nine months ended September 30, 2001 and
2000:

<Table>
<Caption>
                                                                               SEPTEMBER 30,
                                                                            -------------------
VENTURE                                                       OWNERSHIP %     2001       2000
-------                                                       -----------   --------   --------
<S>                                                           <C>           <C>        <C>
Romsat Cable TV (Bucharest, Romania)........................      100%         C          C
Sun TV (Chisinau, Moldova)..................................       91%         C          E
Ayety TV (Tbilisi, Georgia).................................       85%         C          E
ATK (Archangelsk, Russia)...................................       81%         C          C
Viginta (Vilnius, Lithuania)................................       55%         C          C
Ala TV (Bishkek, Kyrgyzstan)................................       53%         C          C
Kosmos TV (Moscow, Russia)..................................       50%         E          E
Baltcom TV (Riga, Latvia)...................................       50%         E          E
Kamalak TV (Tashkent, Uzbekistan)...........................       50%         E          E
Alma TV (Almaty, Kazakhstan)................................       50%         E          E
Cosmos TV (Minsk, Belarus)..................................       50%         E          E
Teleplus (St. Petersburg, Russia)...........................       45%         E          E
</Table>

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

<Table>
<Caption>
                                                     THREE MONTHS ENDED               NINE MONTHS ENDED
                                                       SEPTEMBER 30,                    SEPTEMBER 30,
                                               ------------------------------   ------------------------------
CABLE TELEVISION--CONSOLIDATED                   2001       2000     % CHANGE     2001       2000     % CHANGE
------------------------------                 --------   --------   --------   --------   --------   --------
<S>                                            <C>        <C>        <C>        <C>        <C>        <C>
Revenues.....................................   $3,240     $2,905       12%     $ 9,445     $6,421       47%
Operating income (loss)......................   $   75     $ (393)     N/M      $(1,507)    $ (721)     109%
</Table>

REVENUES.  Cable television operations generated consolidated revenues of
$9.4 million in the first nine months of 2001, representing a 47% increase on
2000 consolidated revenues of $6.4 million. The majority of consolidated
revenues were attributable to Romsat, Ayety TV, Sun TV, Viginta, and ATK. The
increases in revenues and operating losses were due to the consolidation of
Ayety TV from the fourth quarter of 2000 and of Sun TV from the first quarter of
2001. These ventures' results had been recorded under the equity method in the
first nine months of 2000.

In Romania, Romsat reported revenues of $4.6 million for the nine months ended
September 30, 2001 as compared with $4.5 million in the same period of 2000 due
to increased subscriber numbers.

In Georgia, the Company acquired a majority interest in Ayety TV in the fourth
quarter of 2000. Ayety TV generated revenues of $1.4 million in the nine months
ended September 30, 2001. For the corresponding period of 2000, Ayety TV had
revenues of $1.5 million, which were included in revenues relating to
unconsolidated cable television ventures. Ayety TV's revenues fell in 2001
compared to 2000 due to tariff pressure and lower than expected subscriber
numbers. Sun TV generated revenues of $1.4 million in the nine months ended
September 30,2001 compared to $1.6 million in the corresponding period of 2000,
when the venture's results were included in those of unconsolidated cable
television ventures. Sun TV's revenue in 2001 was adversely affected by limited
market penetration and price competition.

                                       42
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

In Lithuania, Viginta generated revenues of $854,000 in the first nine months of
2001, representing a decrease of 14% from revenues of $994,000 for the nine
months ended September 30, 2000. ATK, with operations in Arkhangelsk, Russia,
reported revenues of $730,000 for the first nine months of 2001, a 3% increase
in revenues for the same period in 2000.

In the three months ended September 30, 2001, cable television operations
generated consolidated revenues of $3.2 million, 12% higher than consolidated
revenues of $2.9 million generated in the corresponding period of 2000. Romsat
generated revenues for the three months ended September 30, 2001 of
$1.6 million, a 30% decrease on revenues of $2.3 million reported during the
same period in 2000. Ayety TV generated third quarter of 2001 revenues of
$545,000 compared to third quarter of 2000 revenues of $498,000. Sun TV reported
revenues of $550,000 for the quarter ended September 30, 2001 compared to
$571,000 for the corresponding period of 2000. For the three months ended
September 30, 2001, Viginta's revenues amounted to $146,000 compared with the
corresponding period in 2000 revenues of $339,000 due to increased competition.
ATK had revenues of $268,000 for the three months ended September 30, 2001,
compared to $226,000 for the same period of 2000.

For the remainder of 2001, the Company expects consolidated revenues arising
from cable operations to grow as a result of the increase in consolidated
ventures, improved programming, network expansion, tariff increases and possible
further acquisitions, but revenues will also continue to be affected by
competition.

OPERATING INCOME (LOSS).  Cable television reported consolidated operating
losses for the first nine months of 2001 of $1.5 million, compared to operating
losses for the nine months ended September 30, 2000 of $721,000. Romsat reported
operating losses for the nine months ended September 30, 2001 of $225,000
compared to income of $179,000 for the same period in 2000, mainly due to
provisions for programming, technical and overhead expenses amounting to
$515,000 in the first quarter of 2001. Ayety TV generated first nine months of
2001 operating losses of $668,000 as compared to $714,000 in the corresponding
prior year period which were included in the results of operations from
unconsolidated ventures. Ayety TV's 2001 results were positively affected by
cost saving measures adopted since the Communications Group acquired a
controlling interest in the venture. Sun TV reported operating income for the
nine months of 2001 of $153,000, as compared with an operating loss of $840,000
in 2000 and due mainly to adjustments relating to overaccrued expenses. Viginta
generated $71,000 of operating income for the nine months ended September 30,
2001 as compared to losses of $267,000 in the corresponding period in 2000, the
improvement being due to cost saving measures. ATK reported nine months ended
September 30, 2001 operating losses of $608,000, as compared to nine months
ended September 30, 2000 operating losses of $331,000. ATK's results were
adversely affected by higher programming costs.

For the three months ended September 30, 2001, cable television consolidated
operating income amounted to $75,000 as compared with an operating loss of
$393,000 for the corresponding period in 2000. Romsat reported operating income
of $30,000 for the three months ended September 30, 2001 as compared with a loss
of $59,000 for the same period of 2000. Viginta reported an operating loss of
$169,000 for the three months ended September 30, 2001 compared to a loss of
$88,000 in the same period of 2000. ATK's operating loss decreased from $134,000
for the three months ended September 30, 2000 to $106,000 in the same period of
2001. Sun TV reported an operating income of $779,000 for the three months ended
September 30, 2001 as compared to an operating loss of $469,000 for the
corresponding prior year period. Ayety TV reported a third quarter 2001
operating loss of $404,000 compared to a third quarter of 2000 operating loss of
$298,000.

                                       43
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
The following table sets forth the revenues, operating loss, net loss and equity
in losses of unconsolidated cable television joint ventures, which are recorded
under the equity method (in thousands):

<Table>
<Caption>
                                                  THREE MONTHS ENDED               NINE MONTHS ENDED
                                                    SEPTEMBER 30,                    SEPTEMBER 30,
                                            ------------------------------   ------------------------------
CABLE TELEVISION--UNCONSOLIDATED              2001       2000     % CHANGE     2001       2000     % CHANGE
--------------------------------            --------   --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>
Revenues..................................  $ 6,040    $ 6,868      (12)%    $17,209    $22,311      (23)%
Operating loss............................  $(1,243)   $(1,123)      11%     $(4,060)   $  (433)     838%
Net loss..................................  $(1,924)   $(2,984)     (36)%    $(8,871)   $(6,809)      30%
Equity in losses of joint ventures........  $(1,126)   $(1,334)     (15)%    $(8,007)   $(2,146)     273%
</Table>

EQUITY IN LOSSES OF JOINT VENTURES.  The Communications Group's share in losses
from equity investments in cable television ventures in the nine months ended
September 30, 2001 amounted to $8.0 million, compared to $2.1 million for the
nine months ended September 30, 2000. The operating results in 2001 for
unconsolidated cable television ventures were mainly attributable to Baltcom TV
in Latvia, Kosmos TV in Moscow and Alma TV in Kazakhstan. Results for the nine
months ended September 30, 2000 also included Ayety TV and Sun TV, which are now
consolidated.

Baltcom TV reported revenues of $5.0 million in the first nine months of 2001, a
5% decrease on the same period in 2000 revenues of $5.3 million due to tariff
competition and lower than expected subscriber growth. The venture reported
operating losses of $1.4 million in the first nine months of 2001 compared to
operating income of $723,000 in the first nine months of 2000. A provision for
sales tax contingencies adversely affected the 2001 operating results.

Kosmos TV's revenues decreased by $284,000 for the nine months ended
September 30, 2001 to $4.1 million from $4.4 million in the same period of 2000
due to the effect of competing services in Moscow. The venture generated
operating losses of $870,000 for the first nine months of 2001 as compared with
operating loss of $43,000 for the same period in 2000. The venture's 2001
operating results were negatively impacted by a write-down of inventory
amounting to $675,000 and the above-mentioned reduction in revenues.

Alma TV's revenues increased from $4.4 million for the nine months ended
September 30, 2000 to $5.3 million for the nine months ended September 30, 2001
due to growth of subscriber numbers and geographic expansion in Kazakhstan. The
venture reported operating losses of $123,000 in the first nine months of 2001,
compared to $768,000 for the corresponding period of 2000.

The Communications Group's share in losses from equity investments in cable
television ventures for the three months ended September 30, 2001 amounted to
$1.1 million, as compared with $1.3 million in the same period of 2000. Baltcom
TV reported operating losses of $445,000 for the three months ended
September 30, 2001, compared to operating income in the same period in 2000 of
$201,000 due to the decrease in revenue. Kosmos TV had operating losses of
$297,000 in the three months ended September 30, 2001 as compared with an
operating loss of $148,000 in the corresponding period of 2000. Alma TV's
operating loss for the three months ended September 30, 2001 amounted to
$573,000 as compared with an operating loss of $896,000 for the same period of
2000.

                                       44
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
RADIO BROADCASTING

The following sets forth the names of the Communications Group's radio
broadcasting ventures, its ownership percentage as of September 30, 2001 and
accounting treatment for the three and nine months ended September 30, 2001 and
2000:

<Table>
<Caption>
                                                                               SEPTEMBER 30,
                                                                            -------------------
VENTURE                                                       OWNERSHIP %     2001       2000
-------                                                       -----------   --------   --------
<S>                                                           <C>           <C>        <C>
Radio Juventus (Budapest, Hungary)..........................      100%        C          C
AB Metromedia Finland Oy (Helsinki, Finland)................      100%        C          N/A
Metroradio EOOD (Sophia, Bulgaria)..........................      100%        C          N/A
Radio Katusha (St. Petersburg, Russia)......................       96%        C          C
Country Radio (Prague, Czech Republic)......................       85%        C          C
SAC (Moscow, Russia)........................................       83%        C          C
Radio One (Prague, Czech Republic)..........................       80%        C          C
Radio Skonto (Riga, Latvia).................................       55%        C          C
Radio Georgia (Tbilisi, Georgia)............................       51%        C          C
Radio Vladivostok* (Vladivostok, Russia)....................       51%        N/A        C
AS Trio LSL ** (Tallinn, Estonia)...........................       50%        E          E
</Table>

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

* --Sold during 2000.

**--Increased ownership percentage to 50.24% in September of 2001.

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

<Table>
<Caption>
                                                    THREE MONTHS ENDED               NINE MONTHS ENDED
                                                      SEPTEMBER 30,                    SEPTEMBER 30,
                                              ------------------------------   ------------------------------
RADIO--CONSOLIDATED                             2001       2000     % CHANGE     2001       2000     % CHANGE
-------------------                           --------   --------   --------   --------   --------   --------
<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Revenues....................................   $3,513     $3,870       (9)%    $10,673    $11,744       (9)%
Operating income (loss).....................   $ (401)    $   36      N/M      $  (469)   $  (366)      28%
</Table>

REVENUES.  Radio operations reported consolidated revenues of $10.7 million in
the first nine months of 2001, representing a 9% decrease compared with the same
period in 2000 revenues of $11.7 million. The majority of revenues were
generated by SAC and Radio Katusha in Russia, and Radio Juventus in Hungary.

In Russia, SAC and Radio Katusha's revenues rose from $3.7 million and
$1.4 million, respectively, for the nine months ended September 30, 2000, to
$5.1 million and $1.5 million, respectively, in the same period of 2001. The
increase was due to growth in the advertising market in Russia primarily during
the first quarter due to seasonality. In Hungary, Radio Juventus for the nine
months ended September 30, 2001 generated revenues of $2.7 million, down 41%
compared with same period of 2000 revenues of $4.6 million. Radio Juventus'
results were adversely affected by competition from national Hungarian radio
networks and the devaluation of the Hungarian forint. With the acquisition of an
additional station in the Miskolc area of Hungary in June 2001 as well as other
possible future acquisitions, the venture's strategy is to increase its market
share. The purchase price was $1.4 million.

Consolidated radio revenues for the three months ended September 30, 2001
amounted to $3.5 million, 9% less than revenues of $3.9 million generated in the
corresponding period of 2000. SAC and Radio Katusha in Russia together generated
revenues of $2.1 million for third quarter of 2001, compared with $1.7 million
in the same period of 2000. In Hungary, Radio Juventus reported revenues of
$893,000 million in the third quarter of 2001 as compared with $1.4 million
during the same period of 2000.

                                       45
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

OPERATING LOSS.  In the nine months ended September 30, 2001, radio operations
generated operating losses of $469,000 compared to operating losses of $366,000
for the same period in 2000. SAC and Radio Katusha together generated operating
income of $2.6 million compared to $1.7 million in the same period of 2000. In
Hungary, Radio Juventus generated operating losses of $678,000 as compared with
operating income of $131,000 during the first nine months of 2000. Radio
Juventus' 2001 operating results were adversely affected by the abovementioned
reduction in revenues and due to the devaluation of local currency. In Finland,
the Communications Group's new station, AB Metromedia Finland Oy, which
commenced operations in 2001, generated operating losses of $926,000 for the
first nine months of 2001 on revenues of $95,000.

The Communications Group's radio businesses generated consolidated operating
losses of $401,000 for the three months ended September 30, 2001, as compared
with income of $36,000 for the three months ended September 30, 2000. SAC and
Radio Katusha reported operating income of $734,000 and $183,000, respectively,
for the three months ended September 30, 2001, compared with operating income of
$589,000 and $17,000 respectively in the corresponding period of 2000. Radio
Juventus had operating losses of $188,000 for the three months ended
September 30, 2001, compared with an operating income of $31,000 during the
corresponding period of 2000. AB Metromedia Finland Oy generated operating
losses of $612,000 for the three months ended September 30, 2001 due to its
start-up phase of operation.

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

<Table>
<Caption>
                                                    THREE MONTHS ENDED               NINE MONTHS ENDED
                                                      SEPTEMBER 30,                    SEPTEMBER 30,
                                              ------------------------------   ------------------------------
RADIO--UNCONSOLIDATED                           2001       2000     % CHANGE     2001       2000     % CHANGE
---------------------                         --------   --------   --------   --------   --------   --------
<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Revenues....................................    $373      $ 463       (19)%     $1,269     $1,312       (3)%
Operating loss..............................    $(33)     $ (34)       (3)%     $  (24)    $ (224)     (89)%
Net loss....................................    $(83)     $ (57)       46%      $ (111)    $ (311)     (64)%
Equity in losses of joint ventures..........    $(74)     $ (47)       57%      $ (414)    $ (473)     (12)%
</Table>

EQUITY IN LOSSES OF JOINT VENTURES.  The Communications Group's share in losses
from equity investments in radio ventures amounted to $414,000 in the nine
months ended September 30, 2001, compared to $473,000 in the nine months ended
September 30, 2000. The 2001 results were attributable to Radio Trio, Estonia,
which generated revenues of $1.3 million during the first nine months of 2001
and 2000. Radio Trio reported 2001 operating losses of $24,000 compared to
losses of $214,000 in 2000. The Communications Group disposed of its interest in
Radio Nika during the third quarter of 2000.

The share in losses for the three months ended September 30, 2001 from equity
investments in radio joint ventures amounted to $74,000, compared to losses of
$47,000 in the same period of 2000. Radio Trio reported operating income of
$33,000 for the three months ended September 30, 2001 compared with operating
losses of $34,000 in the same period of 2000.

PAGING

OVERVIEW.  In 1999, the Communications Group stopped funding most paging
operations and since that time has continued to manage almost all of its paging
ventures on a cash break-even basis. Since 1999, the Communications Group has
managed its paging businesses to levels not requiring significant additional
funding as it continues to review options to maximize the value of its paging
investments. The Company has adjusted to zero the carrying value of its
investments and long-lived assets in all paging operations (except Kamalak
Paging and Baltcom Estonia), and unless it provides future funding, will no
longer record its proportionate share of any future net losses of these
ventures.

                                       46
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
The following sets forth the names of the Communications Group's paging
ventures, its ownership percentage as of September 30, 2001, and the accounting
treatment for the three and nine months ended September 30, 2001 and 2000:

<Table>
<Caption>
                                                                               SEPTEMBER 30,
                                                                            -------------------
VENTURE                                                       OWNERSHIP %     2001       2000
-------                                                       -----------   --------   --------
<S>                                                           <C>           <C>        <C>
Baltcom Paging **** (Tallinn, Estonia)......................        85%       C           C
CNM* (Romania)..............................................        54%       C           C
Eurodevelopment** (Ukraine).................................        51%       E           C
Kamalak Paging (Tashkent, Samarkand, Bukhara and Andijan,
  Uzbekistan)...............................................        50%       E           E
Mobile Telecom** (Russia)...................................        50%       E           E
Baltcom Plus** (Riga, Latvia)*..............................        50%       E           E
Alma Page** (Almaty and Ust-Kamenogorsk, Kazakhstan)*.......        50%       E           E
Paging One** (Tbilisi, Georgia)*............................        45%       E           E
Raduga Poisk*** (Nizhny Novgorod, Russia)...................        45%       N/A         E
Kazpage** (Kazakhstan)*.....................................     26-41%       E           E
PT Page** (St. Petersburg, Russia)*.........................        40%       E           E
Paging Ajara** (Batumi, Georgia)*...........................        35%       E           E
</Table>

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

*--In liquidation.

**--Results not reported.

***--Disposed of in September 2001.

****--Sold in October 2001.

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

(in thousands):

<Table>
<Caption>
                                                    THREE MONTHS ENDED               NINE MONTHS ENDED
                                                      SEPTEMBER 30,                    SEPTEMBER 30,
                                              ------------------------------   ------------------------------
PAGING--CONSOLIDATED                            2001       2000     % CHANGE     2001       2000     % CHANGE
--------------------                          --------   --------   --------   --------   --------   --------
<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Revenues....................................   $ 109       $439       (75)%     $ 323      $1,483      (78)%
Operating income (loss).....................   $(108)      $528       N/M       $(182)     $  277      N/M
</Table>

REVENUES.  The Communications Group's paging ventures generated consolidated
revenues of $323,000 in the first nine months of 2001, as compared with revenues
of $1.5 million for the same period in 2000. The decrease was due primarily to
continued competition from the wireless telephony market and because results for
Eurodevelopment and CNM were no longer reported in 2001. First nine months of
2001 results were entirely attributable to Baltcom Estonia whose revenues
amounted to $323,000 as compared with $376,000 in the corresponding period of
2000. For the first nine months of 2000, Eurodevelopment reported revenues of
$699,000. The long-lived assets of that venture were written off in 1999 and the
Communications Group no longer has input into the management of its operations.
CNM reported first nine months of 2000 revenues of $408,000. That company's
operations are in the process of being liquidated.

Consolidated paging revenues for the three months ended September 30, 2001
amounted to $109,000, representing a 75% decrease compared with paging revenues
during the same period in 2000.

OPERATING INCOME (LOSS).  Consolidated operating losses arising from paging
operations amounted to $182,000 in the first nine months of 2001 and were
primarily attributable to Baltcom Estonia. Operating income in the first nine
months of 2000 of $277,000 was attributable to Eurodevelopment, which generated
operating losses of $54,000, CNM, which had an operating income of $285,000, and
Baltcom Estonia, which reported operating income of $45,000. Baltcom Estonia's
2001 results as

                                       47
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
compared to the corresponding prior year period were adversely affected by
falling margins related to competition from the wireless telephony market. The
venture combined its minimal level of paging activities in 2001 with its call
center services.

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

<Table>
<Caption>
                                                    THREE MONTHS ENDED               NINE MONTHS ENDED
                                                      SEPTEMBER 30,                    SEPTEMBER 30,
                                              ------------------------------   ------------------------------
PAGING--UNCONSOLIDATED                          2001       2000     % CHANGE     2001       2000     % CHANGE
----------------------                        --------   --------   --------   --------   --------   --------
<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Revenues....................................   $ 115      $1,505      (92)%     $ 660     $ 5,881      (89)%
Operating income (loss).....................   $ 158      $  219      (28)%     $ 202     $  (822)     N/M
Net loss....................................   $(227)     $  (53)     328%      $(325)    $(1,589)     (80)%
Equity in income (losses) of joint
  ventures..................................   $ (69)     $   (1)     N/M       $(667)    $(1,122)     (40)%
</Table>

EQUITY IN LOSSES OF JOINT VENTURES.  The Communications Group's share of losses
from equity investments in paging ventures amounted to $667,000 in the first
nine months of 2001 compared to $1.1 million in the same period in 2000.

In Uzbekistan, Kamalak Paging reported revenues of $659,000 for the first nine
months of 2001 as compared with $794,000 for the same period last year. The
venture's revenues were affected by competition from the wireless telephony
sector. Kamalak Paging reported operating income of $202,000 for the first nine
months of 2001, an improvement of $136,000 on first nine months of 2000's
operating losses due to reduced operating costs.

Since the first quarter of 2001 results of Mobile Telecom are no longer
reported. Since the Communications Group wrote down its remaining investment of
$500,000 in the first quarter of 2001 to zero, it does not record its share of
losses. The Communications Group also recorded an impairment charge of
$4.2 million in the fourth quarter of 2000 in relation to this venture. Mobile
Telecom generated revenues of $5.1 million and operating losses of $686,000
during the first nine months of 2000 as the venture continued to experience the
effects of strong competition from the wireless telephony sector.

SEGMENT HEADQUARTERS

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

<Table>
<Caption>
                                               THREE MONTHS ENDED               NINE MONTHS ENDED
                                                 SEPTEMBER 30,                    SEPTEMBER 30,
                                         ------------------------------   ------------------------------
                                           2001       2000     % CHANGE     2001       2000     % CHANGE
                                         --------   --------   --------   --------   --------   --------
<S>                                      <C>        <C>        <C>        <C>        <C>        <C>
Revenues...............................  $    847   $    273     210%     $  1,849   $  2,258     (18)%
Operating loss.........................  $(20,623)  $(13,811)    49%      $(50,512)  $(42,262)     20%
</Table>

REVENUES.  Decreased revenues in the first nine months of 2001 compared to the
same period in the prior year reflected a drop in programming and management fee
revenues from the Communications Group's unconsolidated cable television and
radio businesses, whose revenues dropped in the first half of 2001 as compared
with the corresponding period of 2000.

Revenues for the three months ended September 30, 2001 compared to the same
period in the prior year increased primarily due to the timing and nature of
programming services provided.

                                       48
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

OPERATING LOSS INCLUDING ASSET IMPAIRMENT CHARGE.  Operating losses for the
first nine months of 2001 amounted to $50.5 million, a 20% increase on the first
nine months of 2000 operating losses of $42.3 million. The increase in operating
losses was partially from depreciation and amortization charges of
$28.4 million for the first nine months of 2001 as compared with $25.6 million
for the same period of 2000. The increase in 2001 was due primarily to
amortization of goodwill associated with the acquisition of Comstar in
December 2000.

A Georgian government-owned telephone operator, GEC, indicated during the third
quarter of 2001, its intention to offer services competing with those of Telecom
Georgia. GEC had previously utilized Telecom Georgia to process a significant
portion of its telephony traffic. GEC also obtained funding to procure telephony
equipment enabling it to provide such services. The Communications Group
believes that when GEC becomes fully operational in 2002 it will have a
significant competitive advantage over Telecom Georgia due to its customer base,
brand, country-wide and last mile capability. The Communications Group performed
an analysis of the likely adverse impact of GEC on Telecom Georgia's operations
and concluded that it would be other than temporary. As a result the
Communications Group in the third quarter of 2001 recorded an impairment charge
of $7.0 million against the goodwill related to the investment in Telecom
Georgia.

In addition, in the third quarter of 2001, a gain of $1.2 million was realized
representing recoveries on an equipment payment guarantee, arising from loan
repayments made by one of the Communications Group's joint ventures in 2001.
During 1999, the Company had recorded an impairment charge of $4.3 million
relating to this loan guarantee.

GAIN ON DISPOSITION OF BUSINESSES, FOREIGN CURRENCY GAIN (LOSS) AND MINORITY
  INTEREST

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

<Table>
<Caption>
                                                  THREE MONTHS ENDED               NINE MONTHS ENDED
                                                    SEPTEMBER 30,                    SEPTEMBER 30,
                                            ------------------------------   ------------------------------
                                              2001       2000     % CHANGE     2001       2000     % CHANGE
                                            --------   --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>
Gain (loss) on sale of businesses.........   $  --      $2,752      N/M       $  --     $ 2,752      N/M
Foreign currency gain (loss)..............   $(246)     $   16      N/M       $(132)    $    57      N/M
Minority interest.........................   $(248)     $ (609)     (59)%     $(421)    $(2,860)     (85)%
</Table>

The Communications Group realized a gain on the disposal of businesses amounting
to $2.8 million in the nine months ended September 30, 2000. The gain was
attributable to the sale of NewsTalk Radio, Berlin, in July 2000 and resulted
primarily from the settlement of $2.3 million of liabilities without a cash
payment.

Foreign currency losses for the first nine months of 2001 amounted to $132,000
compared to gains of $57,000 in the first nine months of 2000 and represented
the remeasurement of the ventures' financial statements, in all cases using the
U.S. dollar as the functional currency. U.S. dollar transactions are shown at
their historical value. Monetary assets and liabilities denominated in local
currencies are translated into U.S. dollars at the prevailing period-end
exchange rate. All other assets and liabilities are translated at historical
exchange rates. Results of operations have been translated using the monthly
average exchange rates. The foreign currency gains and losses relate to the
transaction differences resulting from the use of these different rates. The
first nine months of 2000 foreign currency gain amounting to $57,000 resulted
primarily from the fluctuation of the U.S. dollar against the local currency in
Russia. The first nine months of 2001 foreign currency loss of $132,000 was also
due primarily to the fluctuation of the U.S. dollar against the local currency
in Russia.

                                       49
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Minority interest represents the allocation of income or losses by the
Communications Group's majority owned subsidiaries and joint ventures to its
minority ownership interest.

COMMUNICATIONS GROUP--CHINA

The following sets forth the names of the Communications Group's China
investments, its ownership percentage as of September 30, 2001, and the
accounting treatment for the three and nine months ended September 30, 2001 and
2000:

<Table>
<Caption>
                                                                               SEPTEMBER 30,
                                                                            -------------------
JOINT VENTURE/SUBSIDIARY                                      OWNERSHIP %     2001       2000
------------------------                                      -----------   --------   --------
<S>                                                           <C>           <C>        <C>
INTERNET SERVICES--E-COMMERCE
Clarity Data Systems Co., Ltd. (Beijing, China).............      100%         C         N/A
Huaxia Metromedia Information Technology Co., Ltd. (Beijing,
  China)....................................................      100%         C         P
Metromedia Health Information Systems Co., Ltd. (Beijing,
  China)....................................................      100%         C         N/A
66cities.com Co., Ltd. (Beijing, China).....................       87%         C         N/A
</Table>

CHINA E-COMMERCE INVESTMENTS INFORMATION

In May 1999, MCC's wholly-owned subsidiary, AAT, entered into a joint venture
agreement with All Warehouse Commodity Electronic Commerce Information
Development Co., Ltd., a Chinese trading company, to form Huaxia Metromedia
Information Technology Co., Ltd. At time of formation, AAT owned 49% equity
interest in Huaxia. Huaxia was licensed in July 1999 to develop software and
provide technical services supporting the operation of electronic commerce
computer information systems for China-based corporate clients.

Since mid-2000, Huaxia's scope of business activity has broadened to encompass
development and support of general e-commerce and enterprise management
software, aimed principally at Chinese enterprise clients. Huaxia will also
provide the software needed by other of MCC's current and planned
e-commerce-related business units in China. On September 20, 2000, the Chinese
government approved a revised joint venture contract and articles of association
for Huaxia whereby AAT's ownership interest in the joint venture increased to
98%. AAT's only material cost for its increased ownership position in Huaxia was
a corresponding increase in its obligation for future registered capital
contributions. On April 10, 2001, the Chinese government approved new articles
of association of Huaxia pursuant to which Huaxia became a wholly foreign-owned
enterprise in China and ATT obtained 100% ownership. Huaxia JV's business
license remains unchanged as to permitted business activities and capitalization
requirements.

AAT accounted for Huaxia as an equity method investment prior to assuming 98%
ownership and control of the venture on September 20, 2000. For the nine months
ended September 30, 2001, Huaxia had not commenced material operations. The
Company has consolidated the results of operations of Huaxia subsequent to
September 30, 2000.

On July 24, 2000, MCC purchased an 80% interest in Twin Poplars LLC, a Delaware
limited liability company for $300,000 and obtained options to acquire the
remaining 20% equity interest for $75,000. On August 31, 2000, the Company
exercised its option to acquire an additional 10% equity interest in Twin
Poplars, at which time Twin Poplars owned a 97% registered capital interest in
Beijing 66cities.com Company, Limited, a Chinese-foreign equity joint venture
established to engage in information content provision and e-commerce-related
services in China. Twin Poplars operates as a holding company for 66cities JV
and has no operations or assets other than its interests in this venture.

By virtue of its ownership interest in Twin Poplars, as of September 30, 2000
MCC owns an indirect 87% interest in the 66cities JV.

                                       50
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
66cities JV provides information content related services pertinent to
publication of travel and entertainment guides in print and electronic formats.
66cities JV currently supports publication by Chinese interests of the weekly
English-language magazine "City Weekend", distributed in Beijing and Shanghai,
and of various Chinese and English language guides in book format. It also
supports the 66cities.com website, which offers comparable information via the
Internet, hosts links to various Chinese travel and entertainment related
services and offers various travel / entertainment products for sale.

On March 20, 2001, the Company completed registration and establishment of
Clarity. The approved total investment level for Clarity is $5.0 million of
which $2.5 million must be in the form of registered capital. The Company
invested an initial amount of $375,000 of Clarity's registered capital on
April 4, 2001. As of September 30, 2001, MCC had made $475,000 of its registered
capital investment in Clarity.

Clarity's approved scope of business is to provide database management and
related application services and software. It focuses on direct marketers and
retailers selling to China's consumer markets, offering Customer Relationship
Management applications and services. As of September 30, 2001 Clarity had
conducted no material business operations.

On June 5, 2001, MCC completed registration and establishment of Metromedia
Health Information Systems Co., Ltd. ("MHIS"), a wholly foreign owned enterprise
of MCC in China. The approved total investment level for MHIS is $5.0 million of
which $2.5 million must be in the form of registered capital. The Company
invested an initial amount of $375,000 of MHIS's registered capital on July 13,
2001. MHIS's approved scope of business is to provide database management and
related application services and software. It will focus on information
technology services and products useful to development of Chinese health care
providers, community health networks and general health care sectors.

RESULTS OF OPERATIONS

The following tables sets forth revenues, operating loss, equity in losses of
joint ventures and minority interests for the Communications Group's operations
in China (in thousands):

<Table>
<Caption>
                                                     THREE MONTHS ENDED               NINE MONTHS ENDED
                                                       SEPTEMBER 30,                    SEPTEMBER 30,
                                               ------------------------------   ------------------------------
                                                 2001       2000     % CHANGE     2001       2000     % CHANGE
                                               --------   --------   --------   --------   --------   --------
<S>                                            <C>        <C>        <C>        <C>        <C>        <C>
Revenues.....................................  $   189     $  --       N/M      $   432     $   --      N/M
Operating loss...............................  $(1,531)    $(791)       94%     $(4,014)    $ (374)     973%
Equity in losses of joint ventures...........  $    --     $(145)      N/M      $    --     $ (683)     N/M
Minority interests...........................  $    (6)    $ 542       N/M      $    97     $1,797      (95)%
</Table>

REVENUES.  Revenues derive principally from the publishing support service
operations of 66cities JV, reflecting service contract fees.

OPERATING LOSS INCLUDING CHANGE IN ESTIMATE OF ASSET IMPAIRMENT CHARGES.  For
the three and nine months ended September 30, 2001, operating loss was
$1.5 million and $4.0 million, respectively. For the three and nine months ended
September 30, 2000, operating loss was $791,000 and 374,000, respectively. The
principal reason for operating loss in 2000 was the start-up cost associated
with 66cities and HMIT, partially offset by the Company's revised estimate of an
increase in the expected proceeds of $4.6 million in connection with the
dissolution of its previous telecommunications joint ventures in China.
Operating expenses for the three and nine months ended September 30, 2001 were
$1.5 million and $4.3 million, respectively, as compared to $866,000 and
$4.3 million, respectively, for the three and nine months ended September 30,
2000. With the dissolution of its telecommunications joint ventures in 2000, the
Company has substantially reduced its overhead expenses.

                                       51
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

The business license for the AAT Beijing Representative Office expired on
June 5, 2001. AAT Beijing Representative Office was established to support the
Company's former joint venture projects with China Unicom joint ventures. These
joint ventures were dissolved during 2000. The Company has applied to the
appropriate Chinese government agencies to dissolve the AAT Beijing
Representative Office. On July 19, 2001, the Company received the final approval
from Beijing Tax Bureau for the exemption status for its Business Tax and
Corporate Income Tax. The Company had accrued a tax liability associated with
possible taxation of the AAT Beijing Representative Office. This liability of
$1.2 million was reversed as of June 30, 2001 reflecting the immediately
subsequent receipt of tax exemption approvals.

On July 27, 2001, AAT obtained Chinese government approval to close its Beijing
Representative Office and the Company transferred all employees and assets from
the AAT Beijing Representative Office to the MCC Beijing Representative Office.

EQUITY IN LOSSES OF JOINT VENTURES.  For the three and nine months ended
September 30, 2000, the Company has recorded an equity in losses of the
operations of $145,000 and $683,000 which represents the costs for establishing
Huaxia and its technical and operational testing. For the nine months ended
September 30, 2001 the Company's business units in China are all wholly or
majority owned and their results are consolidated.

MINORITY INTERESTS.  As a result of minority interest shareholders' equity
interests being reduced to zero in the first quarter of 2001, the Company is now
including losses allocable to minority shareholders in its consolidated
statements of operations.

INFLATION AND FOREIGN CURRENCY

During 1998, and 1999, a number of emerging market economies suffered
significant economic and financial difficulties resulting in liquidity crises,
devaluation of currencies, higher interest rates and reduced opportunities for
financing. Although the economic climate in Russia improved in 2000 and the
first half of 2001, the long-term prospects for complete recovery for the
economies of Russia and the other republics of the former Soviet Union and
Eastern Europe remain unclear. The economic crisis of 1998 resulted in a number
of defaults by borrowers in Russia and other countries. Although some debt was
rescheduled in 2000, a reduced level of financing remains available to investors
in these countries. The devaluation of many of the currencies in the region in
2000 and the first nine months of 2001 was not as marked as in previous years
but the potential still remains for future negative effect on the U.S. dollar
value of the revenues generated by certain of the Communications Group's joint
ventures and may lead to certain additional restrictions on the convertibility
of certain local currencies. Any such economic difficulties could negatively
impact the financial performance of certain of the Communications Group's cable
television, telephony, radio broadcasting and paging ventures.

Some of the Communications Group's subsidiaries and joint ventures operate in
countries where the inflation rate in the past has been high. For example,
inflation in Russia increased dramatically following the August 1998 financial
crisis and there are increased risks of inflation in Kazakhstan. The inflation
rates in Belarus have been at hyperinflationary levels for some years and as a
result, the currency has essentially lost all intrinsic value. Although the rate
of inflation in 2000 and the first nine months of 2001 has not been as high as
in previous years, the risk of further increases in the future remains possible.

While the Communications Group's subsidiaries and joint ventures attempt to
increase their subscription rates to offset increases in operating costs, there
is no assurance that they will be able to do so. Therefore, operating costs may
rise faster than associated revenue, resulting in a material negative impact on
operating results. The Company itself is generally negatively impacted by

                                       52
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
inflationary increases in salaries, wages, benefits and other administrative
costs, the effects of which to date have not been material to the Company.

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

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

SNAPPER

The following table sets forth Snapper's results of operations for the three and
nine months ended September 30, 2001 and 2000 (in thousands):

<Table>
<Caption>
                                THREE MONTHS ENDED SEPTEMBER 30,     NINE MONTHS ENDED SEPTEMBER 30,
                                ---------------------------------   ---------------------------------
                                  2001        2000      % CHANGE      2001        2000      % CHANGE
                                ---------   ---------   ---------   ---------   ---------   ---------
<S>                             <C>         <C>         <C>         <C>         <C>         <C>
Revenues......................   $33,737     $34,183        (1)%    $133,589    $136,983        (2)%
Gross profit..................   $11,693     $ 9,253        26 %    $ 48,654    $ 45,138         8 %
Operating income (loss).......   $(1,513)    $(6,110)      (75)%    $  8,236    $  1,418       480%
</Table>

REVENUES.  Snapper's sales for the three months ended September 30, 2001 were
$33.7 million as compared to $34.2 million in 2000. Lawn and garden sales in
2001 were $3.5 million lower due to $2.6 million of returns from Wal-Mart, and
utility vehicle sales in the current year were $3.1 million lower due to Snapper
introducing this new product in the third quarter of 2000. The decrease in sales
was partially offset in 2001 by a $3.5 million increase in snowthrower sales due
to low dealer inventories remaining from the previous snow season and a
$2.7 million increase in parts and accessories sales. In 2000, Snapper notified
a number of its commissioned distributors and commissioned agents, that it was
not renewing their contracts, which expired August 31, 2000. Snapper chose not
to renew these contracts in order to give it direct control over these
territories, allowing it to lower costs and improve margins. This decision
negatively affected sales during the third quarter and it negatively impacted
sales for the remainder of 2000. During the third quarter of 2000, Snapper
recorded a $2.7 million reduction of revenue due to its agreement to repurchase
parts and accessories owned by the distributors whose contracts were not
renewed.

Snapper's sales for the nine months ended September 30, 2001 were
$133.6 million as compared to $137.0 million in 2000. In 2001, weak economic
conditions and the decision to reduce dealer inventory levels accounted for
$30.4 million of lower lawn and garden sales to dealers and distributors. Sales
in 2001 were improved by $18.2 million of sales to Wal-Mart, $6.3 million higher
parts and accessories

                                       53
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
sales and $2.5 million higher snowthrower sales. Snapper's decision not to renew
the commissioned distributor and agent contracts discussed above negatively
impacted sales for the first nine months of 2000.

GROSS PROFIT.  Gross profit for the three months ended September 30, 2001 was
$11.7 million as compared to $9.3 million for the same period in 2000. The
higher gross profit in 2001 was due to gross profit percentage improvements in
2001, increasing from 27.1% in 2000 to 34.7% in 2001, due to Snapper cost
containment programs including selling directly to dealers and due to higher
gross profit percentages on parts and accessories sales.

Gross profit for the nine months ended September 30, 2001 was $48.7 million as
compared to $45.1 million for the same period in 2000. The 2001 higher gross
profit was due to the factors noted above.

OPERATING INCOME (LOSS).  Operating loss for the three months ended
September 30, 2001 was $1.5 million as compared to $6.1 million for the same
period in 2000. The decrease in operating loss was due to gross profit margin
percentage improvements as noted above, as well as $1.5 million of additional
expenses in 2000 related to the non-renewal of commissioned distributor and
agent contracts described above.

For the nine months ended September 30, 2001 operating income was $8.2 million
as compared to $1.4 million for the same period in 2000. In 2001 operating
income increased due principally to gross profit margin improvements as noted
above. Operating income in 2000 was negatively impacted by $2.0 million of
additional expenses related to the non-renewal of commissioned distributor and
agent contracts described above.

CORPORATE HEADQUARTERS

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

<Table>
<Caption>
                                   THREE MONTHS ENDED SEPTEMBER 30,     NINE MONTHS ENDED SEPTEMBER 30,
                                   ---------------------------------   ---------------------------------
                                     2001        2000      % CHANGE      2001        2000      % CHANGE
                                   ---------   ---------   ---------   ---------   ---------   ---------
<S>                                <C>         <C>         <C>         <C>         <C>         <C>
Operating loss...................   $(1,862)    $(1,404)      33%       $(6,601)    $(4,461)      48%
</Table>

OPERATING LOSS.  For the three and nine months ended September 30, 2001 and
2000, Corporate Headquarters had general and administrative expenses of
approximately $1.9 million and $6.6 million, and $1.4 million and $4.5 million,
respectively. Corporate headquarters includes general and administrative
expenses. The increase in 2001 is principally related to the costs associated
with the Company's proposed structural reorganization.

MMG CONSOLIDATED

The following table sets forth on a consolidated basis the following items for
the three months and nine months ended September 30, 2001 and 2000 (in
thousands):

<Table>
<Caption>
                                    THREE MONTHS ENDED SEPTEMBER 30,     NINE MONTHS ENDED SEPTEMBER 30,
                                    ---------------------------------   ---------------------------------
                                      2001        2000      % CHANGE      2001        2000      % CHANGE
                                    ---------   ---------   ---------   ---------   ---------   ---------
<S>                                 <C>         <C>         <C>         <C>         <C>         <C>
Interest expense..................  $ (6,875)   $ (7,279)       (6)%    $(22,053)   $(23,299)       (5)%
Interest income...................  $    818    $  1,502       (46)%    $  2,651    $  3,025       (12)%
Other income......................  $    364    $     --       N/M      $    458    $  2,500       (82)%
Income tax expense................  $ (2,076)   $ (2,341)      (11)%    $ (6,411)   $ (6,952)       (8)%
Net loss..........................  $(32,731)   $(22,203)       47 %    $(79,938)   $(55,336)       44 %
</Table>

                                       54
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

INTEREST EXPENSE.  Interest expense increased $404,000 to $6.9 million, and
$1.2 million to $22.1 million, for the three and nine months ended
September 30, 2001, respectively, when compared to 2000. For the three months
ended September 30, 2001 as compared to 2000, the decrease is from lower floor
plan interest at Snapper due to lower customer outstanding balances and lower
interest rates in the current year partially offset by the increase in interest
from the additional accreted interest on the higher outstanding balance on the
Company's 10 1/2% senior notes. For the nine months ended September 30, 2001 as
compared to 2000, the decrease is from lower floor plan interest at Snapper due
to lower customer outstanding balances and lower interest rates in the current
year partially offset by the increase in interest from the additional accreted
interest on the 10 1/2% senior notes as well as higher outstanding principal
balances on Snapper's credit facility in the current year as compared to the
prior year.

INTEREST INCOME.  Interest income decreased $684,000 to $818,000 for the three
months ended September 30, 2001 when compared to 2000, principally from the
reduction of funds at Corporate Headquarters which have been utilized in the
operations of the Company.

Interest income decreased $374,000 to $2.7 million for the nine months ended
September 30, 2001. In 2000 the Company received funds from its China operations
in June of $30.4 million.

INCOME TAX EXPENSE.  For the three and nine months ended September 30, 2001 and
2000, the income tax benefit that would have resulted from applying the federal
statutory rate of 35% was $10.7 million and $25.7 million, $7.0 million and
$16.9 million, respectively. The income tax benefit in 2001 and 2000 was reduced
principally by losses attributable to foreign operations, equity losses in joint
ventures currently not deductible and a 100% valuation allowance on the current
year loss not utilized. The income tax expense in 2001 and 2000 is principally
from income taxes on the Company's PeterStar operations and foreign taxes in
excess of the federal credit.

NET LOSS INCLUDING GAIN ON SETTLEMENT OF OPTION.  Net loss increased to
$32.7 million for the three months ended September 30, 2001 from $22.2 million
for the three months ended September 30, 2000. The increase in net loss includes
an increase in operating loss of $8.5 million. The net loss in 2000 includes a
gain on the disposition of businesses of $2.8 million.

Net loss increased to $79.9 million for the nine months ended September 30, 2001
from $55.3 million for the nine months ended September 30, 2000. The increase in
net loss includes an increase in operating loss of $15.2 million. Depreciation
and amortization increased $4.7 million principally from the operations of the
Communications Group. In addition, the results of operations in 2000 include a
net gain of $4.9 million principally from the change in estimate on the asset
impairment of the Communications Group's operations in China. The net loss in
2001 includes equity in losses from the Communications Group's operations in
Eastern Europe and the former republics of the Soviet Union of $4.2 million as
compared to equity in earnings of $2.3 million in 2000. The results of
operations in 2000 also include a gain of $2.5 million which represents the gain
realized on the buyout of options to acquire an indirect interest in
Telecominvest, a holding company with various telecommunications interests in
northwest Russia and a gain on the disposition of businesses of $2.8 million.

LIQUIDITY AND CAPITAL RESOURCES

THE COMPANY

OVERVIEW. The Company is a holding company and, accordingly, does not generate
cash flows from operations. The Company believes that its cash on hand will be
sufficient to fund the Company's and its subsidiaries' working capital
requirements for the remainder of the year.

The Communications Group is dependent on the Company for significant capital
infusions to fund its operations and make acquisitions, as well as to fulfill
its commitments to make capital contributions

                                       55
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
and loans to its joint ventures. Many of the Communications Group's joint
ventures operate or invest in businesses, such as cable television, fixed
telephony and cellular telecommunications, that are capital intensive and
require significant capital investment in order to construct and develop
operational systems and market their services. To date, such financing
requirements have been funded from cash on hand. The Company currently has
approximately $18.5 million of cash on hand at headquarters. Future financing
requirements of the Communications Group, including future acquisitions, will
depend on available funding from the Company and on the ability of the
Communications Group's joint ventures to generate positive cash flows, and if
necessary, selective disposition of assets, alternative sources of funding or
non-payment of cash dividends on the Company's preferred stock.

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

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

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

The Company expects to generate consolidated net losses for the foreseeable
future as the Communications Group continues to build out and market its
services.

CONVERTIBLE PREFERRED STOCK.  On September 16, 1997 the Company completed a
public offering of 4,140,000 shares of $1.00 par value, 7 1/4% cumulative
convertible preferred stock with a liquidation preference of $50.00 per share,
generating net proceeds of approximately $199.4 million. Dividends on the
preferred stock are cumulative from the date of issuance and payable quarterly,
in arrears, commencing on December 15, 1997. The Company may make any payments
due on the preferred stock, including dividend payments and redemptions (i) in
cash; (ii) through issuance of the Company's common stock or (iii) through a
combination thereof. If the Company were to elect to continue to pay the
dividend in cash, the annual cash requirement would be $15.0 million. Since its
initial dividend payment on December 15, 1997, through March 15, 2001, the
Company had paid its quarterly dividends on the preferred stock in cash. The
Company elected to not declare a dividend for the quarterly dividend periods
ending June 15, 2001 and September 15, 2001. As of September 30, 2001, total
dividends in arrears are $7.5 million. The preferred stock is convertible at the
option of the holder at any time, unless previously redeemed, into the Company's
common stock, at a conversion price of $15.00 per share equivalent to a
conversion rate of 3 1/3 shares of common stock for each share of preferred
stock, subject to adjustment under certain conditions.

                                       56
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
The preferred stock is redeemable at any time on or after September 15, 2000, in
whole or in part, at the option of the Company, in cash, by delivery of fully
paid and non-assessable shares of the Company's common stock or a combination
thereof, initially at a price of $52.5375 and thereafter at prices declining to
$50.00 per share on or after September 15, 2007, plus in each case all accrued
and unpaid dividends to the redemption date. Upon any change of control, as
defined in the certificate of designation of the preferred stock, each holder of
preferred stock shall, in the event that the market value at such time is less
than the conversion price of $15.00, have a one-time option to convert the
preferred stock into the Company's common stock at a conversion price equal to
the greater of (i) the market value, as of the change of control date, as
defined in the certificate of designation, and (ii) $8.00. In lieu of issuing
shares of the Company's common stock, the Company may, at its option, make a
cash payment equal to the market value of the Company's common stock otherwise
issuable.

SENIOR DISCOUNT NOTES.  In connection with the acquisition of PLD Telekom, the
Company issued $210.6 million in aggregate principal amount at maturity of its
10 1/2% Senior Discount Notes due 2007 (the "Senior Discount Notes") to the
holders of the PLD Telekom's then outstanding 14% senior discount notes due 2004
and 9% convertible subordinated notes due 2006 pursuant to an agreement to
exchange and consent, dated as of May 18, 1999, by and among the Company, PLD
Telekom and such holders.

The terms of the Senior Discount Notes are set forth in an Indenture, dated as
of September 30, 1999, between the Company and U.S. Bank Trust National
Association, as Trustee. The Senior Discount Notes will mature on September 30,
2007. The Senior Discount Notes were issued at a discount to their aggregate
principal amount at maturity and will accrete in value until March 30, 2002 at
the rate of 10 1/2% per year, compounded semi-annually to an aggregate principal
amount at maturity of $210.6 million. The Senior Discount Notes will not accrue
cash interest before March 30, 2002. After this date, the Senior Discount Notes
will pay interest at the rate of 10 1/2% per year, payable semi-annually in cash
and in arrears to the holders of record on March 15 or September 15 immediately
preceding the interest payment date on March 30 and September 30 of each year,
commencing September 30, 2002. The interest on the Senior Discount Notes will be
computed on the basis of a 360-day year comprised of twelve months.

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

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

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

The Indenture for the Senior Discount Notes limits the ability of the Company
and certain of its subsidiaries to, among other things, incur additional
indebtedness or issue capital stock or preferred stock, pay dividends on, and
repurchase or redeem their capital stock or subordinated obligations,

                                       57
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
invest in and sell assets and subsidiary stock, engage in transactions with
affiliates and incur additional liens. The Indenture for the

Senior Discount Notes also limits the ability of the Company to engage in
consolidations, mergers and transfers of substantially all of its assets and
also contains limitations on restrictions on distributions from its
subsidiaries.

The Senior Discount Notes are classified as non-current liabilities. It is a
default under the indenture governing such Senior Discount Notes if certain
indebtedness (including the indebtedness of Snapper under its loan and security
agreement) is accelerated prior to its stated maturity. In the event of a
default under the indenture the Senior Discount Notes may be accelerated.

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

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

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

Until the Communications Group's operations generate positive cash flow, the
Communications Group will require significant capital to fund its operations,
and to make capital contributions and loans to its joint ventures. The
Communications Group relies on the Company to provide the financing for these
activities. The Company believes that as more of the Communications Group's
joint ventures commence operations and reduce their dependence on the
Communications Group for funding, the Communications Group will be able to
finance its own operations and commitments from its operating cash flow and will
be able to attract its own financing from third parties. There can be no
assurance, however, that additional capital in the form of debt or equity will
be available to the Communications Group at all or on terms and conditions that
are acceptable to the Communications Group or the Company, and as a result, the
Communications Group may continue to depend upon the Company for its financing
needs.

Credit agreements between certain of the joint ventures and the Communications
Group are intended to provide such ventures with sufficient funds for operations
and equipment purchases. The credit agreements generally provide for interest to
accrue at rates ranging from the prime rate to the prime rate plus 6% and for
payment of principal and interest from 90% of the joint venture's available cash
flow, as defined, prior to any distributions of dividends to the Communications
Group or its joint venture partners. The credit agreements also often provide
the Communications Group the right to appoint the general director of the joint
venture and the right to approve the annual business plan of the joint venture.
Advances under the credit agreements are made to the joint ventures in the form
of cash for working capital purposes, as direct payment of expenses or
expenditures, or in the form of equipment, at the cost of the equipment plus
cost of shipping. As of September 30, 2001, the Communications Group was
committed to provide funding under various charter fund agreements and credit
lines in an aggregate amount of approximately $219.3 million, of which
$48.4 million remained unfunded. The Communications Group's funding commitments
under a credit agreement are contingent upon its approval of the joint venture's
business plan. To the extent that the Communications Group does not approve a
joint venture's business plan, the Communications Group is not required to
provide funds to the joint venture under the credit line.

                                       58
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

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

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

Beginning in the first quarter of 2001, the mobile operators in St. Petersburg,
which historically accounted for a significant amount of PeterStar's traffic and
revenues, shifted their traffic to a competing network. This move, together with
increased competitive pressures in St. Petersburg, has adversely impacted
PeterStar's revenues and operating income in 2001 and may also impact the level
of dividends and management fees payable by PeterStar to the Company.

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

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

CASPIAN AMERICAN TELECOMMUNICATIONS.  In August 1998, the Communications Group
acquired a 76% interest in Omni-Metromedia Caspian, Ltd., a company that owns
50% of a joint venture in Azerbaijan, Caspian American Telecommunications.
Caspian American has been licensed by the Ministry of Communications of
Azerbaijan to provide high-speed wireless local loop services and digital
switching throughout Azerbaijan. Omni-Metromedia had committed to provide up to
$40.5 million in loans to Caspian American for the funding of equipment
acquisition and operational expenses subject to concurrence with Caspian
American's business plans. At September 30, 2001, $19.0 million of the
commitment remains available to Caspian American subject to concurrence, which
has not yet been provided, with the Caspian American business plan. The
Communications Group was obligated to contribute approximately $5.0 million in
equity to Omni-Metromedia and to lend up to $36.5 million. However, in light of
CAT's poorer than expected performance, and the limited potential to develop its
wireless local loop network without significant alternative sources of
financing, the venture has revised its operating plan to stabilize its
operations and minimize future funding requirements.

As part of the original transaction, the Communications Group sold a 17.1%
participation in the $36.5 million loan commitment to AIG Silk Road Fund, Ltd.,
which requires AIG Silk Road Fund to provide the Communications Group 17.1% of
the funds to be provided under the loan agreement and

                                       59
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
entitles AIG Silk Road Fund to 17.1% of the repayments to the Communications
Group. The Communications Group agreed to repurchase such loan participation
from AIG Silk Road Fund in August 2005 on terms and conditions agreed by the
parties. In addition, the Communications Group provided AIG Silk Road Fund the
right to put its 15.7% ownership interest in Omni-Metromedia to the
Communications Group starting in August 2001 for a price equal to seven times
the EBITDA of Caspian American minus debt, as defined, multiplied by AIG Silk
Road Fund's percentage ownership interest.

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

CAT's license expired according to its terms on July 27, 2001 and, although the
license has not yet been renewed, the venture is negotiating a renewal of the
license with the Ministry of Communications of Azerbaijan. While the
negotiations are ongoing, CAT continues to operate its business. However, if the
license is not renewed, or is renewed on terms materially different than the
previous license, the operations of CAT may be required to cease or be
materially restricted, leading to a materially adverse impact on the venture's
results, although we do not believe that such an event would have a materially
adverse effect on the Company's results of operations or financial position.

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

COMMUNICATIONS GROUP--CHINA

The Company has made inter-company loans to MCC under a credit agreement, and
MCC has used the proceeds of these loans principally to fund its operations and
investments in China. At September 30, 2001, MCC owed $11.6 million under this
credit agreement (including accrued interest).

Huaxia had engaged since its formation in development of online trading software
largely aimed at supporting its Chinese partner's trading activities. Since
mid-2000, its scope of business activity has broadened to encompass development
and support of general e-commerce and enterprise management software, aimed
principally at Chinese enterprise clients. On September 20, 2000, the Chinese
government approved a revised joint venture agreement and articles of
association for Huaxia JV whereby AAT's ownership interest in the joint venture
was increased to 98%. On April 10, 2001, the Chinese government approved new
articles of association of Huaxia pursuant to which Huaxia became a wholly
foreign-owned enterprise and AAT obtained 100% ownership.

                                       60
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Huaxia JV's business license remains unchanged as to permitted business
activities and capitalization requirements.

The terms of Huaxia's license require a total investment of $10.0 million, of
which $5.0 million must be in the form of registered capital contributions from
AAT. The registered capital contributions must be made within three years. As of
September 30, 2001, AAT had contributed $2.1 million of its scheduled registered
capital investment.

Twin Poplars LLC, a U.S. limited liability company registered in Delaware, owns
a 97% registered capital interest in Beijing 66cities.com Company, Limited, a
Chinese-foreign equity joint venture licensed to engage in information content
provision and e-commerce-related services in China. Twin Poplars operates as a
holding company for 66cities JV and has no operations or assets other than its
interests in this venture. As of September 30, 2001, MCC had advanced
$2.1 million to Twin Poplars, all of which was invested in or advanced to
66cities JV.

By virtue of its ownership interest in Twin Poplars, as of September 30, 2001
MCC owns an indirect 87% interest in the 66cities JV. The approved total
investment level for 66cities JV is $2.5 million of which $1.8 million shall be
in the form of registered capital. As of September 30, 2001, Twin Poplars had
invested all its $1.8 million registered capital in and advanced $302,000 to
66cities JV.

66cities JV provides information content related services pertinent to
publication of travel and entertainment guides in print and electronic formats.
66cities JV currently supports publication by Chinese interests of the weekly
English-language magazine "City Weekend", distributed in Beijing and Shanghai,
and of various Chinese and English language guides in book format. It also
operates the 66cities.com website, which offers comparable information via the
Internet, hosts links to various Chinese travel and entertainment related
services and offers various travel/entertainment products for sale.

On March 20, 2001, the Company completed registration and establishment of
Clarity. The approved total investment level for Clarity is $5.0 million of
which $2.5 million must be in the form of registered capital. The Company
invested an initial amount of $375,000 of Clarity's registered capital on
April 4, 2001. As of September 30, 2001, MCC had made $475,000 of its registered
capital investment.

Clarity's approved scope of business is to provide database management and
related application services and software. It focuses on direct marketers and
retailers selling to China's consumer markets, offering Customer Relationship
Management applications and services. As of September 30, 2001 Clarity had
conducted no material business operations.

On June 5, 2001, MCC completed registration and establishment of Metromedia
Health Information Systems Co., Ltd., a wholly foreign owned enterprise of MCC
in China. The approved total investment level for MHIS is $5.0 million of which
$2.5 million must be in the form of registered capital. The Company invested an
initial amount of $375,000 of MHIS's registered capital on July 13, 2001. MHIS's
approved scope of business is to provide database management and related
application services and software. It will focus on information technology
services and products useful to development of Chinese health care providers,
community health networks and general health care sectors.

SNAPPER

Snapper's liquidity is generated from operations and borrowings. On
November 11, 1998, Snapper entered into a loan and security agreement with the
lenders named therein and Fleet Capital Corporation, as agent and as the initial
lender, pursuant to which the lenders agreed to provide Snapper with a
$5.0 million term loan facility and a $55.0 million revolving credit facility,
the proceeds of which were used to refinance Snapper's then outstanding
obligations under its prior revolving credit agreement and will also be used for
working capital purposes. The Snapper loan will mature in

                                       61
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
November 2003 (subject to automatic one-year renewals), and is guaranteed by the
Company up to $10.0 million (increasing to $15.0 million on the occurrence of
specified events). On January 11, 2001, the Snapper Loan Agreement was amended
and the revolving credit facility was increased to $70.0 million. The revolving
credit facility decreased to $66.0 million on March 1, 2001, to $60.0 million on
April 1, 2001 and decreased to $55.0 million on July 1, 2001. As of
September 30, 2001, the Company was not in compliance with all financial
covenants under the amended Loan and Security Agreement. On November 13, 2001,
the lenders under the amended Loan and Security Agreement waived any event of
default arising from such noncompliance.

Interest under the initial and amended Snapper Loan Agreement (the Revolver) is
payable at the Company's option at a rate equal to either (i) the prime rate
plus .25% (from November 11, 1998 through March 31, 2000) or at the prime rate,
the prime rate plus .25 or .5% (from April 1, 2000 through January 10, 2001),
the prime rate plus 1.00% (from January 11, 2001 through June 30, 2001), and at
the prime rate, the prime rate plus .25% or .5% (from July 1, 2001 to the
Snapper Loan Agreement termination date) depending on meeting certain leverage
ratios or (ii) LIBOR (as defined in the Snapper Loan Agreement) plus 3.0% (from
November 11, 1998 through March 31, 2000), LIBOR plus 2.50%, 2.75%, 3.00% or
3.25% (from April 1, 2000 through January 10, 2001), LIBOR plus 3.75% (from
January 11, 2001 through June 30, 2001) and LIBOR plus 2.50%, 2.75%, 3.00% or
3.25% (from July 1, 2001 to the Snapper Loan Agreement termination date)
depending on meeting certain leverage ratios.

Snapper signed a $2.5 million term loan on June 1, 2000 with Fleet Capital
Corporation to fund additional capital expenditures over and above the capital
expenditures Snapper is allowed under its Loan and Security Agreement. Approved
funding was available through March 31, 2001, and is payable in 20 consecutive
quarterly installments beginning October 1, 2000. Snapper received $1.9 million
of funding under this loan.

Interest under the initial and amended Snapper Loan Agreement (the original Term
Loan and the capital expenditure term loan) is payable at the Company's option
at a rate equal to either (i) the prime rate plus .25% (from November 11, 1998
through March 31, 2000) or at the prime rate, the prime rate plus .25% or .5%
from April 1, 2000 to the Snapper Loan Agreement termination date) depending on
meeting certain leverage ratios or (ii) LIBOR (as defined in the Snapper Loan
Agreement) plus 3.00% (from November 11, 1998 through March 31, 2000) or LIBOR
plus 2.50%, 2.75%, 3.00% or 3.25% (from April 1, 2000 to the Snapper Loan
Agreement termination date), depending on Snapper's meeting certain leverage
ratios.

The agreements governing the initial and amended Snapper Loan Agreement contain
standard representations and warranties, covenants, conditions precedent and
events of default, and provide for the grant of a security interest in
substantially all of Snapper's assets other than real property. At
September 30, 2001 and December 31, 2000, Snapper's outstanding liability for
its term loans and line of credit was $43.3 million and $43.6 million,
respectively.

Snapper has entered into various long-term manufacturing and purchase agreements
with certain vendors for the purchase of manufactured products and raw
materials. As of September 30, 2001, noncancelable commitments under these
agreements amounted to approximately $7.1 million.

                                       62
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

Snapper has an agreement with a financial institution which makes available
floor plan financing to dealers of Snapper products. This agreement, which
terminates on December 31, 2001, provides financing for inventories and
accelerates Snapper's cash flow. Under the terms of the agreement, a default in
payment by a dealer is nonrecourse to Snapper. However, the third-party
financial institution can require Snapper to repurchase new and unused
equipment, if the dealer defaults and the inventory is not able to be sold to
another dealer.

On March 15, 2001, Snapper received written notice from the financial
institution that provides Snapper's dealers with floor plan financing, advising
that it considered Snapper and the Company to be in default under the terms of
the floor plan financing agreements as a result of claimed material adverse
changes in their respective financial conditions. The financial institution also
claimed that Snapper had defaulted under its agreement by failing to provide
collateral to the financial institution, notwithstanding the fact that the
agreement does not require the provision of collateral. The notice further
advised that the financing relationship would be terminated as of June 13, 2001.
Snapper and the Company disagreed with the basis for this action taken by the
financial institution. On June 13, 2001, Snapper and the Company received
written notice from the financial institution noting the financial institution
would honor the remaining term of the agreement. The agreement expires
December 31, 2001. At September 30, 2001, there was approximately $46.6 million
outstanding under this floor plan financing agreement. The Company has
guaranteed Snapper's payment obligations under this arrangement.

On August 24, 2001, Snapper signed a three-year agreement with Textron Financial
Corporation ("Textron"), whereby Textron will make available floor plan
financing to the dealers of Snapper's products. Under the terms of the
agreement, a default in payment by a dealer is typically nonrecourse to the
Company. However, Textron can require Snapper to repurchase any new, used or
demonstrator equipment recovered from the dealer, if the dealer defaults and the
inventory cannot be sold to another dealer. In addition to the repurchase
obligation, Snapper also has an option whereby it could agree to indemnify
Textron for floor plan financing Textron provides to dealers who do not meet
Textron's credit requirements. These dealers would be indemnified on a
dealer-by-dealer basis at Snapper's discretion. Snapper's maximum exposure under
this voluntary indemnification plan is $4.0 million.

In connection with the agreement, Snapper has provided a $100,000 deposit that
Textron will hold in an interest-bearing account for one year. At the end of the
one-year period, if Snapper is in full compliance with all terms and conditions
under the agreement, Textron will refund the $100,000 deposit with interest.

The agreement requires that Snapper maintain certain covenants. These covenants
include: (i) Snapper shall maintain unused availability under its bank line of
credit of at least $3.0 million at the end of each quarter, (ii) Snapper must
maintain full compliance with all terms and conditions under its bank line of
credit or receive waivers for any non-compliance, (iii) Snapper must maintain
tangible shareholder's equity (as defined in the agreement) of at least
$16.0 million on a quarterly basis and (iv) Snapper must maintain certain
financial ratios (as defined in the agreement) to be calculated on an annual
basis. If Snapper violates the covenants described in items (i) or (iv), then
Snapper would be required to provide Textron with a $2.5 million letter of
credit, which would remain in place until a subsequent quarterly or annual
audited financial statement shows that Snapper is again in compliance. If
Snapper violates the tangible shareholder's equity covenant described in
(iii) above, then Snapper would be required to provide Textron with a
$3.5 million letter of credit, separate and distinct from the $2.5 million
letter of credit described above. This letter of credit would remain in place
until a subsequent audited quarterly or annual financial statement shows that
Snapper is again in compliance.

                                       63
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
It is Snapper's intent to switch all of its dealers from the original floor plan
financing agreement provider to Textron by December 31, 2001. As of
September 30, 2001, Textron had provided no floor plan financing, and Snapper
had not agreed to indemnify any dealer financing.

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

RISKS ASSOCIATED WITH THE COMPANY

The ability of the Communications Group and its joint ventures to establish and
maintain profitable operations is subject to, among other things, significant
political, economic and social risks inherent in doing business in emerging
markets such as Eastern Europe, republics of the former Soviet Union and China.
These include, among other things, matters arising out of competition,
relationships with local partners, corporate governance of the operating
ventures, government policies, economic conditions, imposition of or changes in
government regulations or policies (including licensing requirements and laws
restricting foreign ownership), compliance with and renewal of licenses,
imposition of or changes to taxes or other similar charges by governmental
bodies, exchange rate fluctuations and controls, civil disturbances, deprivation
or unenforceability of contractual rights, and taking of property without fair
compensation. These and other risks associated with the Company are discussed
more fully in the Company's Annual Report on Form 10-K/A Amendment No. 1 "Item
1--Business--Risks Associated with the Company."

Issues have recently been raised about the Company's control of Roscomm Limited,
a company through which the Company owns a 10% stake in Teleport-TP, and about
Roscomm's ownership interest in Teleport-TP. The Company believes that it
retains the right to control Roscomm Limited (in which it holds an indirect
majority interest) and that Roscomm continues to control its 10% stake in
Teleport-TP; the Company believes that it has strong legal positions in relation
to those issues. There can be no assurances, however, that these issues will be
resolved quickly or in the Company's favor, or that these issues will not have
an impact on the Company's ability to control Teleport-TP.

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

All of the Company's China-based business units operate pursuant to business
licenses issued by the Chinese government. A condition of each business license
is that the business unit shall comply with all Chinese regulations, both as
presently formed and as may be issued in the future. Such regulations may
prohibit certain business activities and may limit foreign investment in Chinese
enterprises engaged in certain business activities. The Company believes that
the current and intended business activities of all of its China-based business
units comply with currently published regulations, and that the current extent
of the Company's foreign ownership in these units is similarly permitted. Future
changes to or domestic interpretations of the regulations could, however, limit
business activity or the Company's ownership interests or both.

                                       64
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Chinese regulation of business activities involving use of the Internet and
provision of information content or services via the Internet or similar
networks are under active development. Regulations addressing the extent of
direct foreign investment permitted in Chinese business units engaged in these
activities could, if promulgated in the most severe form, require the Company to
limit its equity participation in current investments or limit the scale of such
participation in future investments.

Regulations governing the permitted scope and nature of commercial transactions
via electronic networks and systems (e-commerce) could limit the extent or
profitability of the Company's current or anticipated ventures.

Regulations limiting dissemination of information for political, social or
security reasons could impose added operating expense burdens on the Company's
current or anticipated investments.

This uncertainty regarding future Chinese regulations is applicable to all of
the Company's current and planned activities in China. The Company believes that
its current China investments are in compliance with all currently published
Chinese regulations and further believes that future regulatory developments in
China will not unduly limit these ventures or other planned business activities.
However, there can be no assurance at this time that all such activities will be
permitted or be economically feasible under future Chinese regulatory regimes
and, therefore, the Company's investments in China or future profitability of
these investments could be jeopardized.

The Company's Huaxia, Clarity and MHIS business units in China are licensed to
develop and sell software and provide technical services relating to operation
of electronic commerce computer information systems for China-based corporate
clients. Computer and software products and services, such as those offered by
these business units, are subject to regulatory regimes different from those
applied to telecommunications, Internet and information service operations in
China. The Company expects that a significant portion of these business units'
planned future revenues will, however, derive from additional lines of
businesses in China that may be subject to Internet, e-commerce or information
service regulatory regimes and, therefore, the potential scale of such revenues
could be limited by future regulatory developments in those areas. The Company
believes that its equity interests in these business units are not viewed under
current Chinese regulation as foreign equity investment in telecommunications
operations, Internet services, or any other line of business restricted from
foreign investment and the Company does not anticipate that the extent of its
equity investment in these business units will be challenged by future Chinese
regulation.

The Company's investment in 66cities JV entails certain risks resulting both
from regulatory uncertainty and the generally sensitive nature of any publishing
related activities within China. 66cities JV provides support services to
Chinese publishers and offers information content via the Internet on the
website it supports. With respect to current regulatory prohibitions against
foreign investment in publishing businesses in China, the Company believes that
66cities JV would not be deemed to be operating as a publishing business, since
it is providing content and services to licensed Chinese publisher clients under
contract for fixed fees. In addition, during the start-up phase, 66cities JV is
also providing administrative services of billings and collections on behalf of
a Chinese publisher, for which it is being reimbursed. The current contract
expired on June 30, 2001, and the Company signed a new technical service
agreement with Chinese publishers on September 1, 2001. The term of this
agreement is three years. However, regulatory action that alters, revokes or
limits the clients' publishing rights or the clients' contracts with 66cities JV
could significantly impact 66cities JV's current principal revenue stream. Since
66cities JV does not itself actually publish the content it develops, the
Chinese publishing clients' revocation of existing service contracts with
66cities JV could have significant adverse financial impact on the joint
venture. With respect to Internet-related operations, 66cities JV could be
required in the future to adjust its web hosting and Internet content provision
support arrangements to comply with new regulatory developments and such
adjustment could adversely affect 66cities JV's overall costs of operation.

                                       65
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

MMG CONSOLIDATED

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED
  SEPTEMBER 30, 2000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash used in operating activities for the nine months ended September 30, 2001
was $7.2 million, an increase in cash used in operating activities of
$6.9 million from the same period in the prior year.

Losses from operating activities include significant non-cash items such as
depreciation, amortization, equity in income (losses) of investees, gains on
disposition of assets, amortization of interest, and income (loss) allocable to
minority interests. Non-cash items increased $31.4 million from $51.2 million to
$82.6 million for the nine months ended September 30, 2000 and 2001,
respectively. The increase relates principally to an increase in depreciation
and amortization expenses in 2001, losses from equity investments in 2001 as
compared to income from equity investments in 2000 and gains on disposition of
assets in 2000. Changes in operating assets and liabilities decreased cash flows
for the nine months ended September 30, 2001 by $9.9 million and increased cash
flows for the nine months ended September 30, 2000 by $3.9 million.

CASH FLOWS FROM INVESTING ACTIVITIES

Cash used in investing activities for the nine months ended September 30, 2001
was $18.9 million as compared to cash provided by investing activities was
$58.8 million for the nine months ended September 30, 2000. The principal
components of investing activities are investments in and advances to joint
ventures of $4.0 million and $3.5 million in 2001 and 2000, respectively and
distributions received from joint ventures of $2.7 million and $72.0 million in
2001 and 2000, respectively. The Communications Group utilized $2.1 million and
$5.4 million of funds for acquisitions during the nine months ended
September 30, 2001 and 2000, respectively. The principal sources of funds in
2000 were cash received of $11.0 million in connection with the settlement of an
option agreement and distributions received from joint ventures of
$72.0 million, primarily related to the liquidation of the telecommunications
joint ventures in China. In 2001 and 2000, the Company utilized $15.5 million
and $15.7 million, respectively, in additions to property, plant and equipment.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash used in financing activities was $6.8 million and $28.5 million, for the
nine months ended September 30, 2001 and 2000, respectively. For the nine months
ended September 30, 2001 the Company used $3.8 million to pay its preferred
stock dividend, $3.5 million for payment of debt and capital lease obligations
and borrowed $680,000. Funds used in financing activities in 2000 were for the
preferred stock dividend of $11.3 million and payments of debt of
$18.2 million.

NEW ACCOUNTING DISCLOSURES

BUSINESS COMBINATIONS AND GOODWILL AND OTHER INTANGIBLES

In July 2001, Statement of Financial Accounting Standard ("SFAS") No. 141,
"BUSINESS COMBINATIONS" and SFAS No. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS"
were issued. SFAS 141 requires that the purchase method of accounting be used
for all business combinations initiated after June 30, 2001 as well as all
purchase method business combinations completed after June 30, 2001. SFAS 141
also specifies criteria, pursuant to which intangible assets acquired in a
purchase method business combination must meet to be recognized and reported
apart from goodwill, noting that any purchase

                                       66
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
price allocable to an assembled workforce may not be accounted for separately.
SFAS 142 will require that goodwill and intangible assets with indefinite useful
lives no longer be amortized but instead tested for impairment at least annually
in accordance with the provisions of SFAS 142. SFAS 142 will also require that
intangible assets with definite useful lives be amortized over their respective
estimated useful lives to their estimated residual values, and reviewed for
impairment in accordance with SFAS 121, "ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF."

The Company is required to adopt the provisions of SFAS 141 immediately.
Furthermore, any goodwill and any intangible asset determined to have an
indefinite useful life that are acquired in a purchase business combination
completed after June 30, 2001 will not be amortized, but will continue to be
evaluated for impairment in accordance with the appropriate pre-SFAS 142
accounting literature.

Goodwill and intangible assets acquired in business combinations completed
before July 1, 2001 will continue to be amortized as they were prior to the
adoption of SFAS 142.

SFAS 141 will require upon adoption of SFAS 142, that the Company evaluate its
existing intangible assets and goodwill that were acquired in a prior purchase
business combination, and to make any necessary reclassifications in order to
conform with the new criteria in SFAS 141 for recognition apart from goodwill.
Upon adoption of SFAS 142, the Company will be required to reassess the useful
lives and residual values of all intangible assets acquired in purchase business
combinations, and make any necessary amortization period adjustments by the end
of the first interim period after adoption. In addition, to the extent an
intangible asset is identified as having an indefinite useful life, the Company
will be required to test the intangible asset for impairment in accordance with
the provisions of SFAS 142 within the first interim period. Any impairment loss
will be measured as of the date of adoption and recognized as the cumulative
effect of a change in accounting principle in the first interim period.

In connection with the transitional goodwill impairment evaluation, SFAS 142
will require the Company to perform an assessment of whether there is an
indication that goodwill and equity-method goodwill is impaired as of the date
of adoption. To accomplish this the Company must identify its reporting units
and determine the carrying value of each reporting unit by assigning the assets
and liabilities, including the existing goodwill and intangible assets, to those
reporting units as of the date of adoption. The Company will then have up to six
months from the date of adoption to determine the fair value of each reporting
unit and compare it to the reporting unit's carrying amount. To the extent a
reporting unit's carrying amount exceeds its fair value, an indication exists
that the reporting unit's goodwill may be impaired and the Company must perform
the second step of the transitional impairment test. In the second step, the
Company must compare the implied fair value of the reporting unit's goodwill,
determined by allocating the reporting unit's fair value to all of its assets
(recognized and unrecognized) and liabilities in a manner similar to a purchase
price allocation in accordance with SFAS 141, to its carrying amount, both of
which would be measured as of the date of adoption. This second step is required
to be completed as soon as possible, but not later than the end of the year of
adoption. Any transitional impairment loss will be recognized as the cumulative
effect of a change in accounting principle in the Company's statement of
earnings.

And finally, any unamortized negative goodwill and negative equity-method
goodwill existing at the date SFAS 142 is adopted must be written off as the
cumulative effect of a change in accounting principle.

                                       67
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
As of the date of adoption, the Company expects to have unamortized goodwill in
the amount of $121.3 million, and unamortized identifiable intangible assets in
the amount of $63.8 million, all of which will be subject to the transition
provisions of SFAS 141 and 142. Amortization expense related to goodwill was
$16.8 million for the nine months ended September 30, 2001. Because of the
extensive effort needed to comply with adopting SFAS 141 and 142, it is not
practicable to reasonably estimate the impact of adopting these Statements on
the Company's financial statements, including whether any transitional
impairment losses will be required to be recognized as the cumulative effect of
a change in accounting principle.

VENDOR INCOME STATEMENT CHARACTERIZATION OF CONSIDERATION PAID TO A RESELLER OF
  THE VENDOR'S PRODUCTS

The Emerging Issues Task Force (the "EITF") Issue No. 00-25, "Vendor Income
Statement Characterization of Consideration Paid to a Reseller of the Vendor's
Products" states that consideration from a vendor to a reseller of the vendor's
products is presumed to be a reduction of the selling prices of the vendor's
products and, therefore, should be characterized as a reduction of revenue when
recognized in the vendor's income statement. EITF No. 00-25 is to be applied no
later than in annual or interim financial statements for periods beginning after
December 15, 2001. Upon application of EITF No. 00-25, financial statements for
prior periods presented for comparative purposes should be reclassified to
comply with the income statement display requirements. If it is impracticable to
reclassify prior-period financial statements, disclosure should be made of the
reasons why reclassification was not made and the effect of the reclassification
on the current period.

Snapper reimburses a portion of the interest cost of all of its floor plan
dealers in connection with the purchasing of Snapper's lawn and garden equipment
and snowthrowers. The arrangements place a cap on the financing charges incurred
by the retailers that will be reimbursed by Snapper. In addition, certain
customer promotions and advertising reimbursement would be treated as a
reduction of revenue.

Under the guidance provided by EITF No. 00-25, upon adoption Snapper will be
required to reclassify floor plan interest to its dealers and certain customer
promotions and advertising reimbursements as a reduction of revenue. Snapper's
floor plan interest and certain customer promotions and advertising
reimbursements for the nine months ended September 30, 2001 and 2000 were
$5.0 million and $7.4 million, respectively.

ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG--LIVED ASSETS

In September 2001, Statement of Financial Accounting Standard No. 144,
"ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS", was issued.
SFAS No. 144 replaces SFAS No. 121, "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF."

The primary objectives of this project were to develop one accounting model,
based on the framework established in SFAS 121, for long-lived assets to be
disposed of by sale and to address significant implementation issues. The
provisions of SFAS 144 are effective for financial statements issued for fiscal
years beginning after December 15, 2001, and, generally, are to be applied
prospectively. Early application is encouraged.

The accounting model for long-lived assets to be disposed of by sales applies to
all long-lived assets, including discontinued operations, and replaces the
provisions of APB Opinion No. 30, "REPORTING RESULTS OF OPERATIONS--REPORTING
THE EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS", for the disposal of
segments of a business. SFAS 144 requires that those long-lived assets be
measured at the lower of

                                       68
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
carrying amount or fair value less cost to sell, whether reported in continuing
operations or in discontinued operations. Therefore, discontinued operations
will no longer be measured at net realizable value or include amounts for
operating losses that have not yet occurred.

SFAS 144 also broadens the reporting of discontinued operations to include all
components of an entity with operations that can be distinguished from the rest
of the entity and that will be eliminated from the ongoing operations of the
entity in a disposal transaction. The new reporting requirements for
discontinued operations will allow an entity to more clearly communicate in the
financial statements a change in its business that results from a decision to
dispose of operations and, thus, provide users with information needed to better
focus on the ongoing activities of the entity. Management has not yet determined
the impact of SFAS 144 on its financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

With the exception of Snapper and prior to the acquisition of PLD Telekom, the
Company did not have any significant long-term obligations. Since Snapper's bank
debt is a floating rate instrument, its carrying value approximates its fair
value. A 100 basis point increase in the level of interest rates with all other
variables held constant would result in an increase in interest expense of
$31,000. In addition, a 100 basis point increase in interest rates on Snapper's
floor plan financing for dealers would have resulted in an increase in interest
expense of $34,000.

With the exception of Snapper and of certain vendor financing at the operating
business level (approximately $3.3 million in the aggregate), the Company's debt
obligations and those of its operating businesses are fixed rate obligations,
and are therefore not exposed to market risk from changes in interest rates. The
Company does not believe that it is exposed to a material market risk from
changes in interest rates. Furthermore, with the exception of the approximately
$2.9 million in vendor financing which is denominated in Euros, Deutsche Marks
and Dutch Guilders, the Company's long-term debt and that of its operating
businesses are denominated in U.S. dollars. The Company does not believe that
the Communications Group's debt not denominated in U.S. dollars exposes the
Company to a material market risk from changes in foreign exchange rates.

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

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q including, without limitation, statements
under "Legal Proceedings" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Some, but not
necessarily all, of such forward-looking statements can be identified by the use
of forward-looking terminology, such as "believes," "expects," "may," "will,"
"should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involves risks and
uncertainties. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: general economic and business conditions, which will, among other
things, affect demand for the Company's products and services; industry
capacity, which tends to increase during strong years of the business cycle;
changes in public taste and industry trends; demographic changes; competition
from other communications companies, which may affect the Company's ability to
enter into or acquire new joint ventures or to generate revenues; political,
social and economic conditions and changes in laws, rules and regulations or
their administration or interpretation, particularly in Eastern Europe and the
republics of the former Soviet Union, China and selected other emerging markets,
which may affect the Company's results of operations or limit or reduce the
level of the Company's ownership interests in its joint ventures; timely
completion of construction projects for new systems for the joint ventures in
which the Company has invested, which may impact the costs of such projects;
developing legal structures in Eastern Europe and the republics of the former
Soviet Union, China and other selected emerging markets, which may affect the
Company's results of operations; cooperation of local partners for the Company's
communications investments in Eastern Europe and the republics of the former
Soviet Union, China and other selected emerging markets, which may affect the
Company's results of operations; exchange rate fluctuations; license renewals
for the Company's communications investments in Eastern Europe and the republics
of the former Soviet Union, China and other selected emerging markets; the loss
of any significant customers; changes in business strategy or development plans;
quality of management; availability of qualified personnel; changes in or the
failure to comply with government regulations; ability of the Company to
consummate the spin-off or sale of its businesses; obtaining the requisite
consents for any spin-off or sale of the Company's businesses; the timing and
structure of any spin-off or sale of the Company's businesses; the consideration
or values obtained by the Company for any businesses that are spun off or sold;
and other factors referenced herein. Any forward-looking statement speaks only
as of the date on which it is made. New factors emerge from time to time and it
is not possible for the Company to predict which will arise. In addition, the
Company cannot assess the impact of each factor on its business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statement.

                                       70
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                           PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Updated information on litigation and environmental matters subsequent to
December 31, 2000 is as follows:

FUQUA INDUSTRIES, INC. SHAREHOLDER LITIGATION

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

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

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

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

The Company's Directors and Officers insurance carrier for this litigation is
Reliance Insurance Company. On May 29, 2001, Reliance consented to the entry of
an Order of Rehabilitation by the

                                       71
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ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
Commonwealth Court of Pennsylvania. On October 3, 2001, the court ordered
Reliance Insurance Company into liquidation. The current status of Reliance
Insurance Company raises doubt concerning Reliance's ability to reimburse the
Company for any litigation expenses incurred by the Company in connection with
this litigation.

LEGAL PROCEEDINGS IN CONNECTION WITH RDM

On August 29, 1997, RDM Sports Group, Inc. and certain of its affiliates filed
voluntary petitions for relief under chapter 11 of the Bankruptcy Code. At the
time of the filings, the Company owned 39% of the outstanding common stock of
RDM Sports Group, Inc. In addition, during the chapter 11 case the Company
honored a $15.0 million guaranty obligation to RDM's prepetition senior secured
lender, and, as a result, the Company has asserted a subrogation claim in that
amount (together with interest and other amounts owing in respect thereof) in
the RDM chapter 11 case. On February 19, 1998, the Bankruptcy Court ordered the
appointment of a chapter 11 trustee. On July 18, 2000, the Bankruptcy Court
confirmed the Second Amended and Restated Joint Chapter 11 Plan of Liquidation
for RDM Sports Group, Inc. and Related Debtor Entities (the "Plan"). Under the
Plan the Company's 39% equity interest will likely be cancelled by operation of
the Plan. The treatment of the aforementioned subrogation claim under the Plan
remains subject to the bankruptcy-related proceedings described below.

On August 19, 1998, a purported class action lawsuit, THEOHAROUS V. FONG, ET
AL., Civ. No. 1:98CV2366, was filed in United States District Court for the
Northern District of Georgia. On October 19, 1998, a second purported class
action lawsuit with substantially the same allegations, SCHUETTE V. FONG, ET
AL., Civ. No. 1:98CV3034, was filed in United States District Court for the
Northern District of Georgia. On June 7, 1999, plaintiffs in each of these
lawsuits filed amended complaints. The amended complaints alleged that certain
officers, directors and shareholders of RDM, including the Company and current
and former officers of the Company who served as directors of RDM, were liable
under federal securities laws for misrepresenting and failing to disclose
information regarding RDM's alleged financial condition during the period
between November 7, 1995 and August 22, 1997, the date on which RDM disclosed
that its management had discussed the possibility of filing for bankruptcy. The
amended complaints also alleged that the defendants, including the Company and
current and former officers of the Company who served as directors of RDM, were
secondarily liable as controlling persons of RDM. In an opinion dated March 10,
2000, the court dismissed these actions in their entirety. On April 7, 2000,
plaintiffs in each of these actions filed notices of appeal to the United States
Court of Appeals for the Eleventh Circuit. The Eleventh Circuit heard oral
arguments on March 20, 2001. In July 2001, the Eleventh Circuit affirmed the
courts decision dismissing these actions.

On December 30, 1998, the chapter 11 trustee of RDM brought an adversary
proceeding in the bankruptcy of RDM, HAYS, ET AL. V. FONG, ET AL., Adv. Proc.
No. 98-1128, in the United States Bankruptcy Court, Northern District of Georgia
(the "D and O Proceeding"), alleging that current and former officers of the
Company, while serving as directors on the board of RDM, breached fiduciary
duties allegedly owed to RDM's shareholders and creditors in connection with the
bankruptcy of RDM. On January 25, 1999, the plaintiff filed a first amended
complaint. The official committee of unsecured creditors of RDM moved to proceed
as co-plaintiff or to intervene in this proceeding, and the official committee
of bondholders of RDM moved to intervene in or join the proceeding. On
February 26, 1999, the court entered an order staying all activity in this
proceeding pending the court's ruling on these motions. Plaintiffs in this
adversary proceeding seek the following relief against current and former
officers of the Company who served as directors of RDM: actual damages in an
amount to be proven at trial, reasonable attorney's fees and expenses, and such
other and further relief as the court deems just and proper.

                                       72
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ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
On February 16, 1999, the creditors' committee brought an adversary proceeding,
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF RDM SPORTS GROUP, INC. AND
RELATED DEBTORS V. METROMEDIA INTERNATIONAL GROUP INC., Adv. Proc. No. 99-1023,
seeking in the alternative to recharacterize as contributions to equity a
secured claim in the amount of $15.0 million made by the Company arising out of
the Company's financing of RDM, or to equitably subordinate such claim made by
the Company against RDM and other debtors in the bankruptcy proceeding. On
March 3, 1999, the bondholders' committee brought an adversary proceeding, THE
OFFICIAL COMMITTEE OF BONDHOLDERS OF RDM SPORTS GROUP, INC. V. METROMEDIA
INTERNATIONAL GROUP, INC., Adv. Proc. No. 99-1029 (Adv. Proc. No. 99-1023 and
Adv. Proc. No. 99-1029 are collectively referred to as the "Equitable
Subordination Proceedings"), with substantially the same allegations as the
above proceeding. Plaintiffs filed amended complaints in the Equitable
Subordination Proceedings on August 18, 2000. In the amended complaints,
plaintiffs seek equitable and injunctive relief as described above and damages
in an unspecified amount and such other and further relief as the court deems
just and proper.

On July 17, 2000, the bankruptcy court approved the Second Amended and Restated
Joint Chapter 11 Plan of Liquidation for RDM (the "Plan"). Upon the Plan's
effective date, the creditors' committee and the bondholders' committee
dissolved and the right to continue the adversary proceedings described above
fell to the Plan's "liquidating agent," the former chapter 11 trustee. The Plan
also provided that, if the liquidating agent chose to pursue the adversary
proceedings, he should consolidate them.

On August 18, 2000, the liquidating agent filed first amended complaints in the
Equitable Subordination Proceedings. In October 2000, the bankruptcy court
approved a consent order, signed by the parties, staying all activity in these
proceedings pending the bankruptcy court's ruling on an anticipated motion by
the liquidating agent to consolidate the adversary proceedings. On January 31,
2001, the liquidating agent made motions (a) to lift the stay in the D and O
Proceeding, (b) to consolidate the D and O Proceeding and the Equitable
Subordination Proceedings and another adversary proceeding--HAYS, ET AL. V.
EQUITEX, ET AL., Adv. Proc. No. 00-1065--which does not involve the Company or
any of its current or former officers or directors, and (c) for leave to file an
amended consolidated complaint. On March 14, 2001, the liquidating agent's
motion to consolidate the various proceedings was denied. On March 22, 2001, the
liquidating agent filed a lien avoidance action against the Company, HAYES, ET
AL. V. METROMEDIA INTERNATIONAL GROUP, INC., ET AL., Adv. Proc. No. 01-1026 (the
"Lien Avoidance Action"). On May 7, 2001, the Company filed a motion to dismiss
the Equitable Subordination Proceedings. Also on May 7, 2001, the Company filed
a motion seeking to have the D and O Proceeding and the Equitable Subordination
Proceedings withdrawn from the United States Bankruptcy Court, Northern District
of Georgia to the United States District Court, Northern District of Georgia. On
June 15, 2001 a motion to dismiss the Lien Avoidance Action was filed. On
July 9, 2001 a motion to dismiss the D and O Proceeding was filed.

On October 2, 2001, the liquidating agent filed an action--HAYES, ET AL. V.
FONG, ET AL., Adv. Proc. No. 01-1075 (the "Andersen Proceeding")--which names,
among others, the Company as well as current and former officers of the Company.
The suit seeks the Court's approval of a settlement of claims reached between
the liquidating agent and Arthur Andersen, LLP. In the suit, the liquidating
agent makes no claim for monetary damages, but does seek to bar the Company from
bringing claims against Arthur Andersen, LLP, including claims for indemnity or
contribution, if the Company is found liable in any of the suits involving RDM's
bankruptcy. A settlement of this action was approved by the Court on
October 30, 2001. Under the terms of the settlement, any judgment entered
against the Company in which the Company is found to be entitled by law to a
judgment reduction, will be reduced by the greater of Arthur Andersen's
proportionate liability or Arthur Andersen's settlement

                                       73
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ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
payment. In addition, Arthur Andersen and the Company are barred from asserting
claims against one another relating to RDM.

On October 19, 2001, the liquidating agent filed a motion seeking, among other
things, approval of a compromise and settlement of a lawsuit pending against the
General Electric Company ("General Electric") in the United States District
Court for the Northern District of Illinois. Neither the Company, nor any of the
current or former officers of the Company, are parties to that suit. The
liquidating agent and General Electric have agreed to settle the suit by the
payment by General Electric of $18.5 million. In his motion seeking approval of
the settlement, the liquidating agent does not contest that the Company has a
valid lien in the liquidating agent's claim against General Electric. In his
motion the liquidating agent states that, pursuant to Section 4.3.2(b) of the
Plan, he is required to deposit up to $15.0 million of proceeds from the
liquidation of collateral in which the Company claims an interest, pending
determination of issues relating to its claims and liens that are disputed. The
liquidating agent thus requests authority, in accordance with the provisions of
the Plan, to use $15.0 million of the proceeds from the settlement of the claims
against General Electric to fund the escrow account required for the benefit of
the Company. The liquidating agent notes in his motion that this funding will
moot the Lien Avoidance Action. A determination of whether any of these funds
will actually be paid to the Company is contingent upon the resolution of the
Equitable Subordination Proceedings. Other than the Lien Avoidance Action, the
liquidating agent's settlement with General Electric does not affect any of the
other RDM-related proceedings, including the D and O Proceeding.

On October 22, 2001, the United States District Court for the Northern District
of Georgia granted the Company's motion for leave to withdraw the reference in
the D and O Proceeding and the Equitable Subordination Proceedings. On
October 24, 2001, the district court vacated its decision. As a result, the
motions to dismiss in those proceedings are still pending before the bankruptcy
court.

The Company believes that it has meritorious defenses and plans to defend
vigorously these actions. Due to the status of these proceedings, the Company
cannot evaluate the likelihood of an unfavorable outcome or estimate the likely
amount or range of possible loss, if any. Accordingly, the Company has not
recorded any liability in connection with these adversary proceedings.

STOCKHOLDER SECTION 211 ACTION

On June 28, 2001, Elliott Associates, L.P. and Elliott International, L.P. (the
"Elliott Group") commenced an action in the Court of Chancery of the State of
Delaware pursuant to the provisions of Section 211 of the Delaware General
Corporation Law to compel the Company to schedule an annual meeting of
stockholders. On July 23, 2001, the Company publicly announced that it would
hold its annual stockholders meeting on October 12, 2001. The Company, with the
Elliott Group's consent, held its annual meeting on October 9, 2001.

BENNETT, ET AL. V. METROMEDIA INTERNATIONAL GROUP, INC.

BENNETT, ET AL. V. METROMEDIA INTERNATIONAL GROUP, INC., (C.A. No. 18530-NC,
Court of Chancery of Delaware, New Castle County) was filed on November 29, 2000
seeking access to certain corporate books and records under Section 211. The
Company provided access to an agreed upon set of corporate books and records.

BARBERIS V. KLUGE, ET AL.

BARBERIS V. KLUGE, ET AL.  (C.A. No. 18678-NC, Court of Chancery of Delaware,
New Castle County); CRANDON CAPITAL PARTNERS V. KLUGE, ET AL. (C.A.
No. 18681-NC, Court of Chancery of Delaware, New Castle County); KATZ V. KLUGE,
ET AL. (C.A. No. 18691-NC, Court of Chancery of Delaware, New Castle County);
KOTZEN V. KLUGE, ET AL. (C.A. No. 18701-NC, Court of Chancery of Delaware, New
Castle

                                       74
<Page>
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
County). On February 16, 2001, Hercules Barberis, a shareholder of the Company,
commenced a derivative action against certain current and former officers and
directors of the Company, seeking to (a) compel the Company to dispose of its
interest in Snapper, Inc., to (b) enjoin the defendants from pursuing any
going-private transactions, and (c) obtain an accounting. On February 22, 2001,
February 23, 2001 and February 28, 2001, respectively, shareholders Crandon
Capital Partners, Moise and Esther Katz, and Ronda Kotzen each commenced
derivative actions with substantially the same allegations and seeking
substantially the same relief. On November 2, 2001, the actions were
consolidated as IN RE METROMEDIA INTERNATIONAL GROUP, INC. SHAREHOLDERS
LITIGATION, Consolidated C.A. No. 18678. Pursuant to the consolidation order,
the complaint which was previously filed in BARBERIS V. KLUGE, C.A. No. 18678
was designated as the operative complaint. The defendants have not yet answered,
moved to dismiss or otherwise pleaded in response to the complaint.

LEGAL PROCEEDINGS IN CONNECTION WITH FORMER EMPLOYEES

The Company is in litigation and arbitration with two former members of the
Company's management arising out of the termination of their employment with the
Company. The Company believes that such former employees were terminated for
"cause" while the employees assert that their terminations were without cause
and they are therefore entitled to the compensation provided for in their
employment agreements.

INDEMNIFICATION AGREEMENTS

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

At September 30, 2001, Snapper was not in compliance with all financial
covenants under its loan and security agreement ("Loan and Security Agreement").
On November 13, 2001, the lenders of the Loan and Security Agreement waived any
event of default arising from such noncompliance.

                                       75
<Page>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Company's 2001 Annual Meeting of Stockholders held on October 9, 2001,
the stockholders of the Company were asked to consider and vote on the following
matters: (i) the election of three members to the Company's Board of Directors
to serve as Class III Directors for three year terms ending in the year 2004;
(ii) the ratification of the appointment of KPMG LLP as the Company's
independent accountants for the year ending December 31, 2001; (iii) a proposal
submitted by a stockholder of the Company to request that the Board of Directors
amend the Company's certificate of incorporation to allow stockholders of the
Company to take action by written consent and to call special meetings
(Stockholder Proposal No. 1); (iv) a proposal submitted by a stockholder of the
Company to amend the Company's by-laws to limit the number of "inside" directors
on the Board of Directors to one person (Stockholder Proposal No. 2); (v) a
proposal submitted by a stockholder of the Company to urge the Company's Board
of Directors to take the steps necessary to reorganize itself into one class
(Stockholder Proposal No. 3); and (vi) a proposal submitted by a stockholder of
the Company to amend the Company's by-laws to grant certain stockholders the
right to call special meetings (Stockholder Proposal No. 4).

At such meeting, a majority of the Company's stockholders voted to approve the
election of Clark A. Johnson, John S. Chalsty and Silvia Kessel as Class III
Directors for three year terms ending in the year 2004, the ratification of the
appointment of KPMG LLP as the Company's independent accountants for the year
ending December 31, 2001 and to urge the Board of Directors to take the steps
necessary to reorganize itself into one class. A majority of the stockholders
voted against Stockholder Proposals No. 1, 2 and 4.

The following is a summary of the voting results with respect to each of the
proposals:

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

     COMPANY NOMINEES
     Clark A. Johnson                                     36,574,177            363,316
     John S. Chalsty                                      36,364,926            363,929
     Silvia Kessel                                        36,262,821            466,034

     ELLIOTT GROUP NOMINEES
     Robert A.G. Monks                                    33,115,194             47,073
     Robert B. Holmes                                     33,114,757             47,500

<Caption>
                                                                                             BROKER
                                                     VOTES FOR      AGAINST      ABSTAIN    NON-VOTES
                                                     ----------   -----------   ---------   ---------
 2.  Ratification of the Appointment of Independent
<C>  <S>                                             <C>          <C>           <C>         <C>
     Accountants                                     69,499,587       297,421      94,114         --

 3.  Stockholder Proposal No. 1                      32,166,874    37,546,734     342,335         --

 4.  Stockholder Proposal No. 2                      23,928,047    44,915,861   1,211,835         --

 5.  Stockholder Proposal No. 3                      35,443,588    34,352,909     258,443         --

 6.  Stockholder Proposal No. 4                      29,861,712    40,151,149      42,082         --
</Table>

No other matters were submitted to a vote of the Company's stockholders, through
the solicitation of proxies or otherwise, during the third quarter of the year
ending December 31, 2001.

                                       76
<Page>
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K

<Table>
<Caption>
       EXHIBIT
       NUMBER                             DESCRIPTION
---------------------   ------------------------------------------------
<S>                     <C>                                               <C>
 (a)                    Exhibits
 11         *           Computation of Earnings Per Share

 (b)                    Reports on Form 8-K
                        None
</Table>

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

*   Filed herewith

                                       77
<Page>
                                   SIGNATURE

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

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

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

Dated: November 14, 2001
</Table>

                                       78