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

                                    FORM 10-K

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

                      For the year ended December 31, 1999

                                       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 No. 333-05017

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

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

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

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



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X   No
                     ---    ---
Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The Company has no  publicly-trading  shares of capital  stock.  As of March 24,
2000, the Company had 17,810,299 shares of common stock outstanding.


<PAGE>
<TABLE>
<CAPTION>
                                           UNITED AUSTRALIA/PACIFIC, INC.
                                          1999 ANNUAL REPORT ON FORM 10-K

                                                 Table of Contents


                                                                                                                 Page
                                                                                                                Number
                                                                                                                ------

                                                      PART I
<S>           <C>                                                                                                <C>
Item 1.       Business....................................................................................         2

Item 2.       Properties..................................................................................        14

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

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

                                                      PART II

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

Item 6.       Selected Financial Data.....................................................................        16

Item 7.       Management's Discussion and Analysis of Financial Condition and Results of Operations.......        17

Item 7A.      Quantitative and Qualitative Disclosures About Market Risk..................................        23

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

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

                                                      PART III

Item 10.      Directors and Executive Officers of the Registrant..........................................        49

Item 11.      Executive Compensation......................................................................        51

Item 12.      Security Ownership of Certain Beneficial Owners and Management..............................        57

Item 13.      Certain Relationships and Related Transactions..............................................        57

                                                      PART IV

Item 14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K.............................        58
</TABLE>



<PAGE>

                                     PART I

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

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

United  Australia/Pacific,  Inc. (the "Company" or "United A/P") (formerly known
as UIH Australia/Pacific, Inc.) is a leading provider of pay television services
in Australia and pay television and telecommunications  services in New Zealand.
We own 75.4% of the  ordinary  shares of Austar  United  Communications  Limited
("Austar United"), which completed its initial public offering on the Australian
Stock Exchange in July 1999 (the "Austar United IPO").  Substantially all of our
operations are conducted through Austar United.

Through  our  Australian  operating  company  Austar  Entertainment  Pty Limited
("Austar"),  we are the second largest pay television  operator in Australia and
the largest operator in its market of regional Australia.  Austar's service area
comprises  approximately  2.1 million homes outside of the major capital  cities
and represents one-third of Australia's total homes. Austar United's 50.0% owned
XYZ  Entertainment  Pty Limited ("XYZ  Entertainment")  is the  exclusive  owner
and/or  distributor of five key programming  channels in Australia to Austar and
Foxtel.  These are the two  largest  pay  television  operators  whose  combined
subscriber bases represent approximately 80.0% of all pay television subscribers
in Australia.  Austar United's  wholly-owned  subsidiary,  Saturn Communications
Limited ("Saturn") is the only provider of integrated telephone,  pay television
and Internet services in New Zealand over one network.  In February 2000, Austar
United agreed to form a 50/50 joint venture  between  Saturn and the New Zealand
operations    of    Telstra    Corporation    Limited,    Australia's    leading
telecommunications  company.  The joint  venture will be called  Telstra  Saturn
Limited ("TSL").

We  are  a  Colorado  corporation  and a  majority-owned  subsidiary  of  United
Asia/Pacific  Communications,  Inc. ("UAP")  (formerly known as UIH Asia/Pacific
Communications,   Inc.),  which  is  an  indirect  wholly-owned   subsidiary  of
UnitedGlobalCom,  Inc.  (together  with all of its  subsidiaries  other than the
Company and its subsidiaries,  "United") (formerly known as United International
Holdings,  Inc.). We were formed on October 14, 1994.  Immediately  prior to the
May 1996  offering of our 14.0%  senior  discount  notes due 2006 (the "May 1996
Notes"), certain subsidiaries of United that held interests in Australia and New
Zealand  were merged  with and into the  Company.  The  Company,  through  these
predecessors,  commenced  operations  in  January  1994  when  United  began its
development-related activities in the Asia/Pacific region.

HISTORY OF ACQUISITIONS

In 1994,  we  acquired,  through  directly and  indirectly  held  interests,  an
effective  50.0% economic  interest in Austar.  In December 1995, we acquired an
additional  interest from other  shareholders of Austar,  thereby increasing our
total  economic  interest  in  Austar  to  90.0%.  In May  1996,  as a result of
additional equity  contributions,  our economic interest in Austar was increased
to 94.0%,  which was  subsequently  increased  to 96.0%.  In  October  1996,  we
acquired the remaining 4.0% economic  interest in Austar.  In July 1998,  Austar
acquired certain  Australian pay television  assets of East Coast Television Pty
Limited ("ECT"), an affiliate of Century Communications Corporation ("Century"),
for $6.2 million of United's  newly-created Series B Convertible Preferred Stock
("Series B Preferred Stock").  ECT's subscription  television  business includes
subscribers  and certain  microwave  multi-point  distribution  system  ("MMDS")
licenses and transmission  equipment  serving the areas in and around Newcastle,
Gossford, Wollongong and Tasmania.

In July 1994,  we acquired a 50.0%  interest in Saturn,  which at the time owned
only a small cable  television  system outside of  Wellington.  In July 1996, we
acquired the remaining  50.0% interest in Saturn in exchange for a 2.6% interest
in the Company,  which was  exchanged for a 2.0% interest in UAP in May 1997. In
July 1997,  SaskTel  Holdings (New Zealand) Inc.  ("SaskTel")  purchased a 35.0%
equity interest in Saturn by investing  approximately  New Zealand  $("NZ$")29.9
($19.6)  million for its shares (the "Saturn  Transaction").  In July 1999, this
35.0% was repurchased  from SaskTel in exchange for 13,659,594  shares in Austar
United in connection with the Austar United IPO. In February 2000, Austar United
agreed to form TSL, a 50/50  joint  venture  between  Saturn and the New Zealand
operations of Telstra.

In  October  1994,  the  Company  and  Century  formed XYZ  Entertainment,  each
retaining a 50.0%  interest.  In June 1995,  the Company and Century  formed the
50/50 joint venture Century United Programming  Ventures Pty Limited ("CUPV") to
hold our respective investments in XYZ Entertainment. In September 1995, a 50.0%
interest in XYZ  Entertainment  was sold to a third party,  thereby diluting our

                                       2
<PAGE>

indirect  interest in XYZ Entertainment to 25.0%. In September 1998, we acquired
the assets in CUPV held by Century,  thereby increasing our indirect interest in
XYZ Entertainment to 50.0%.

In June 1999, we  contributed  our interests in Austar,  XYZ  Entertainment  and
Saturn to Austar United in exchange for new shares issued by Austar  United.  On
July 27,  1999,  Austar  United  successfully  completed  the Austar  United IPO
selling 103.5 million shares on the Australian Stock Exchange, raising gross and
net  proceeds  in  Australian  dollars  ("A$")4.70  ($3.03) per share of A$486.5
($313.6) million and A$453.6 ($292.8) million, respectively. Austar United's IPO
reduced  our  ownership  interest in Austar  United  from 100% to  approximately
75.5%. Subsequent stock option exercises reduced our ownership interest to 75.4%
as of  December  31,  1999.  Including  all  vested  stock  options  granted  to
employees,  our ownership  interest in Austar United on a fully diluted basis is
approximately 73.7% at December 31, 1999.

RELATIONSHIP WITH UNITED

We are an  indirect,  wholly-owned  subsidiary  of  United,  a global  broadband
communications  provider of video,  voice and data services  with  operations in
over 20 countries  throughout  the world.  In addition to the Company,  United's
operations  include  its  interest  in  United  Pan-Europe  Communications  N.V.
("UPC"),  one of the largest pay television  operators in Europe, as well as its
other  investments in Europe,  Asia and Latin America.  As of December 31, 1999,
United's networks reached almost 17.0 million homes and served 7.2 million video
subscribers,  0.3 million  telephony access lines and 0.1 million broadband data
accounts.

ORGANIZATION OF COMPANY

The following  chart  summarizes  our  organizational  structure.  The interests
indicated  below are summaries of our approximate  direct and indirect  economic
interests in our principal businesses.

          ***********************************************************
          *                                                         *
          *               United Australia/Pacific, Inc.            *
          *                                                         *
          ***********************************************************
                                       *
                              75.4%    *
          ***********************************************************
          *                                                         *
          *           Austar United Communications Limited          *
          *                    ("Austar United")                    *
          *                                                         *
          ***********************************************************
                                       *
                                       *
********************************************************************************
* Operating System            Principal Business                     Ownership *
* ----------------            ------------------                     --------- *
*                                                                              *
* Austar               Regional Australia                              100.0%  *
*                      MMDS and DTH multi-channel systems                      *
*                                                                              *
* Saturn               Greater Wellington, New Zealand area            100.0%  *
*                      Wireline Cable/Telephony System                         *
*                                                                              *
* XYZ Entertainment    Australian Programming                           50.0%  *
*                                                                              *
********************************************************************************

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

We  operate  in the  pay  television  and  telecommunications  industry  through
investing in,  acquiring and managing pay television,  telephony and programming
operations. Our reportable segments are both by line of business (pay television
and telephony) and by the primary  countries in which we operate - Australia and
New Zealand.  For  additional  information  applicable to this Item,  see Item 7
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" and Note 14 to the consolidated  financial  statements  contained in
Item 8 "Financial Statements and Supplementary Data."

                                       3
<PAGE>


(c)  NARRATIVE DESCRIPTION OF BUSINESS
     ---------------------------------

OVERVIEW

We believe that we are  well-positioned  to capitalize on the rapidly increasing
demand for pay television  and telephony  services in Australia and New Zealand.
As of December 31, 1999, our pay television  operating  systems had an aggregate
of approximately 2.2 million  television homes serviceable and approximately 0.4
million  subscribers,  compared to  approximately  2.1 million  television homes
serviceable and  approximately  0.3 million  subscribers as of December 31, 1998
(with a substantial  majority of such growth resulting from Austar's expansion).
During this same period,  programming subscribers of XYZ Entertainment increased
to approximately 0.9 million at December 31, 1999 from approximately 0.7 million
at December 31, 1998.

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

The following table sets forth certain unaudited operating data:
<TABLE>
<CAPTION>
                                                                         As of December 31, 1999
                                                 ----------------------------------------------------------------------
                                                                                                                 Net
                                                  Television                    Basic                         Economic
                                                   Homes in       Homes      Subscribers/         Basic       Ownership
                                                 Service Area     Passed        Lines          Penetration    Interest
                                                 ------------    ---------   -------------     ------------   ---------
     <S>                                           <C>           <C>           <C>                <C>           <C>
     Pay television:
       Austar...................................   2,085,000     2,083,108       381,763          18.3%         75.4%
       Saturn...................................     141,000        87,029        16,723          19.2%         75.4%
                                                   ---------     ---------     ---------
          Total.................................   2,226,000     2,170,137       398,486
                                                   ---------     ---------     ---------
     Telephony:
       Saturn...................................     141,000        87,029        24,678          28.4%         75.4%
                                                   ---------     ---------     ---------
     Programming:
       XYZ Entertainment........................         N/A           N/A       934,000 (1)        N/A         37.7%
                                                   ---------     ---------     ---------
     Data:
       Saturn (2)...............................     141,000        87,029         6,772           7.8%         75.4%
                                                   ---------     ----------    ---------

                                                                          As of December 31, 1998
                                                 ----------------------------------------------------------------------
                                                                                                                 Net
                                                  Television                    Basic                         Economic
                                                   Homes in       Homes      Subscribers/        Basic        Ownership
                                                 Service Area     Passed        Lines          Penetration    Interest
                                                 -------------  ----------   -------------     -----------    ---------
     Pay television:
       Austar...................................   2,085,000     2,083,108       288,721          13.9%        100.0%
       Saturn...................................     141,000        41,914         6,010          14.3%         65.0%
                                                   ---------     ---------     ---------
          Total.................................   2,226,000     2,125,022       294,731
                                                   ---------     ---------     ---------
     Telephony:
       Saturn..................................      141,000        37,292         7,360          19.7%         65.0%
                                                   ---------     ---------     ---------
     Programming:
       XYZ Entertainment.......................          N/A           N/A       694,600 (1)        N/A         25.0%
                                                   ---------     ---------     ---------
</TABLE>
     (1)  This  figure  represents  the  total  estimated   subscribers  to  the
          five-channel XYZ Entertainment package.
     (2)  Saturn launched data services in late 1998.


                                       4
<PAGE>


AUSTAR (AUSTRALIA)

Austar is the largest provider of pay television  services in regional Australia
with  a  service  area   encompassing   approximately   2.1  million  homes,  or
approximately  one-third  of  Australia's  total  homes.  Austar is the only pay
television  provider in  substantially  all of its service area.  Due to the low
housing  densities that  characterize  Austar's  service area,  Austar primarily
employs digital direct-to-home ("DTH") satellite and wireless cable technologies
to deliver its service.  These  technologies  have enabled  Austar to deploy its
services quickly and achieve rapid subscriber growth.

As of December 31, 1999,  Austar had launched service in all of its metropolitan
and  non-metropolitan  markets.  The  following  table  sets  forth the  summary
operating statistics in Austar's markets:
<TABLE>
<CAPTION>
                                                                      As of December 31,
                                                      ----------------------------------------------
                                                          1999              1998            1997
                                                      ------------      ------------    ------------
     <S>                                                <C>               <C>             <C>
     Homes in service area:
       Metropolitan homes...........................    1,527,000         1,527,000       1,103,000
       Non-metropolitan homes.......................      558,000           558,000         532,000
                                                        ---------         ---------       ---------
         Total......................................    2,085,000         2,085,000       1,635,000
                                                        =========         =========       =========

     Net annual gain in basic subscribers...........       93,042            92,516          92,758
     Total basic subscribers........................      381,763           288,721         196,205
</TABLE>


DISTRIBUTION   SYSTEMS.   Austar  uses  both  digital  DTH  and  wireless  cable
distribution  technologies in certain cities with more than 20,000 homes. In its
other service areas (except Darwin),  Austar distributes its service exclusively
utilizing digital DTH. At present,  approximately 72.0% of Austar's  subscribers
are serviced by digital DTH,  while 25.0%  receive  service via wireless  cable.
Austar  constructs  and owns the MMDS  transmission  facilities and installs and
retains  ownership  of all  customer  premises  equipment  for  both its DTH and
wireless cable customers.

In addition to digital DTH and wireless  cable,  Austar is  constructing a cable
network in Darwin, a market containing  approximately  29,000 serviceable homes.
Darwin is outside the satellite's  footprint and dense vegetation makes wireless
cable  service  impractical.  As  of  December  31,  1999,  this  system  passed
approximately 23,000 homes and had a penetration rate of approximately 33.3%.

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



                                       5
<PAGE>
<TABLE>
<CAPTION>

Basic Package:

      Channel                                              Programming Genre
      -------                                              -----------------
      <S>                                                  <C>
      Fox Sports...................................        Sports
      Fox Sports Two...............................        Sports, including Rugby League games
      TV-1.........................................        General entertainment
      Discovery Channel............................        Documentary, adventure, history and lifestyle
      Nickelodeon/Nick at Nite.....................        Children's and family entertainment
      arena........................................        General entertainment
      Channel [V]..................................        Music video
      The Lifestyle Channel........................        Personal and home improvement
      thecomedychannel.............................        Comedy
      Weather 21...................................        Weather
      BBC World(1).................................        International news
      CNBC.........................................        International financial news
      CNN International............................        International news
      Sky Racing...................................        Live racing
      National Geographic(2).......................        Documentary
      TNT(1) (3)...................................        Library movies
      Cartoon Network(2) (3).......................        Cartoons
      CMT..........................................        Country music videos
      TVSN(1)......................................        Shopping
      Digital Radio(1).............................        12 digital radio channels

      ---------
      (1) Not available to wireless cable subscribers.
      (2) Limited viewing hours for wireless cable subscribers.
      (3) These two networks share the same channel on digital DTH.


Austar Deluxe(1):

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

      Fx(2)........................................       General entertainment
      Fox8(2)......................................       General entertainment
      UKTV.........................................       English general entertainment
      Hallmark.....................................       Made for TV movies
      ESPN.........................................       Sports
      C7 Sports....................................       Sports, including Australian Football League

      ---------
      (1) Digital DTH and cable only.
      (2) Not available to cable subscribers in Darwin.
</TABLE>



                                       6
<PAGE>
<TABLE>
<CAPTION>

       Movies:

           Channel                                              Programming Genre
           -------                                              -----------------
           <S>                                                  <C>
           Showtime(1)....................................      Recent release movies
           Encore(1)......................................      Library movies
           Movie One(2)...................................      Recent release movies
           Movie Extra(2)(3)..............................      Recent release movies
           Movie Greats(2)(3).............................      Library movies

         ---------
         (1)  Columbia, Universal, Paramount and Fox Studios.
         (2)  Disney, MGM Warner, Dreamworks and Village Roadshow Studies.
         (3)  Not available for wireless cable.
</TABLE>

At December 31, 1999, Austar's pricing was:

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

     Basic Service.................................   31.95      35.95
     Movie Network (1).............................   10.95      10.95
     Showtime and Encore (1).......................   10.95      10.95
     Movie One ....................................    8.95       8.95
     C7 Sports ....................................    6.95       6.95
     World Movies (2)..............................    6.95       6.95
     Adults Only (Pay per Night)...................    6.95       6.95
     Main Event (Pay-per-View) (3).................   varies per event

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

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

Austar  has  exclusive  rights in its  service  area to  distribute  via DTH and
wireless  cable five  channels of  programming  supplied  by XYZ  Entertainment:
Discovery Channel,  Nickelodeon,  The Lifestyle Channel,  Channel [V] and arena.
Austar also obtains at competitive  price levels  additional  programming from a
number of  independent  sources,  including  Time Warner,  ESPN,  Seven Network,
National Geographic, CMT and Sky Racing. Weather 21, the Adults Only channel and
certain  pay-per-view  events  are  sourced  from  entities  in which we have an
interest.

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

MARKETING,  BILLING AND CUSTOMER  SUPPORT.  Austar has focused its marketing and
sales  efforts  to  support a  strategy  of rapid  penetration  of its  markets.
Austar's   comprehensive   marketing   and  sales   organization   consists   of
approximately  250 direct sales  representatives  and over 250 national customer
service and telemarketing  personnel at Austar's  National  Customer  Operations

                                       7
<PAGE>


Center ("NCOC").  These sales channels are supported by an integrated  marketing
program of television,  radio and print  advertising and extensive use of direct
mail.

Austar's 25 offices,  located throughout its operating area, serve its customers
in  surrounding  areas and provide Austar with a local  presence.  These offices
perform  several key  functions,  including  responding  to  customer  inquires,
booking  installations,  providing  customer  maintenance  services,  collecting
subscription fees, liaising with installation contractors and marketing Austar's
services.

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

The NCOC,  which  services  all of Austar's  subscribers,  is a  technologically
advanced,   scalable,   fully  integrated   subscriber  facility  that  features
sophisticated  subscriber  management  software,  an automated response unit and
predictive dialer  technology.  It also manages Austar's digital virtual private
network.  Incoming  calls from  Austar's  service  area are directed to the NCOC
where customer service  representatives  provide sales and service  information.
The NCOC's  on-site  customer  service  professionals  undergo  training  in all
aspects of customer support to efficiently process installation  orders,  handle
customer inquiries  including  programming and technical questions and implement
Austar's  customer  retention  program,   which  includes  contacting  customers
immediately   after   installation   to  ensure   satisfaction   and  monitoring
cancellation requests.

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

Austar's  monthly  churn  averaged  2.9% during 1999,  3.9% during 1998 and 4.2%
during 1997. Austar believes that this ratio is likely to continue to decline in
the future,  although  there can be no such  assurances.  Factors  which  Austar
believes will contribute to the decline in customer churn include: the continued
enhancement  of the price value  relationship  as more  content is added and the
existing  content  improves,  the tiering of services and tailoring  packages to
customers,  a further  reduction in the level of product  sampling in a maturing
market,  the introduction in 1998 of annual and six-month  subscriber  contracts
and improved customer communications combined with loyalty programs.

COMPETITION.  Austar  is  the  sole  provider  of  pay  television  services  in
substantially all of its service area. Its only major pay television  competitor
is Foxtel,  which operates a cable system in a segment of Austar's  116,000-home
Gold Coast  service  area.  As of December  31, 1999,  Austar had  approximately
24,200  subscribers  in  the  Gold  Coast.   Austar  also  experiences   limited
competition from free-to-air channels.

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

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

Austar launched  high-speed and traditional  Internet access services in markets
in early 2000. These services were delivered using both digital DTH and wireless
cable technologies.  Austar will benefit from United's experience in rolling out
Internet/data  services. In particular,  Austar intends to use chello broadband,
UPC's  Internet  portal and content  service,  to support the  deployment of its

                                       8
<PAGE>


Internet/data  offerings to its service  area.  Austar's  initial tests of these
high-speed services provided customers with downstream transmission speeds (from
the Internet to the subscriber) that were much faster than  traditional  dial-up
modems.  We believe that the provision of  Internet/data  services  represents a
significant  market  opportunity due to the combination of substantial  consumer
demand  for  Internet  access,  the  limited  capacity  of the  public  switched
telephone network in regional Australia and the lack of a broadband alternative.

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

Austar is also currently  evaluating mobile technology resale  opportunities for
Austar.

MANAGEMENT  AND  EMPLOYEES.  Austar's  senior  management  includes  five United
employees.  As of December 31, 1999, Austar had  approximately  1,008 employees.
Substantially all of Austar's  employees are parties to an "award" governing the
minimum  conditions  of  their  employment  including  probationary  periods  of
employment, rights upon termination, vacation, overtime and dispute resolution.

SATURN (NEW ZEALAND)

Saturn is the only provider of integrated telephone, pay television and Internet
services in New Zealand.  These  services are currently  provided in the greater
Wellington  area over a hybrid  fiber cable  ("HFC")  network with an overlay of
traditional  telephone lines. Austar United owns 100% of Saturn,  which launched
pay  television  service  in  1996  on the  initial  portions  of  its  network.
Wellington, which encompasses 141,000 homes, is New Zealand's capital and second
largest city. As of December 31, 1999,  Saturn's network had 87,029  serviceable
homes for pay television, telephony and data. As of that date, Saturn had 16,723
cable  television  subscribers  (19.2%  penetration),   24,678  residential  and
business telephone lines (28.4% penetration) and 6,772 Internet/data subscribers
(7.8% penetration).

In April 1998, Saturn launched a bundle of telephony and pay television services
to both  residential  and  business  markets,  including  enhanced  switch-based
services. In mid-1998,  Saturn launched  Internet/data services via cable modems
to the business  market and began  offering  residential  dial-up  Internet/data
services in November  1998.  Saturn plans to expand into other major New Zealand
markets.

In  February  2000,  Austar  United  agreed to form TSL, a 50/50  joint  venture
between  Saturn  and  Telstra's  New  Zealand  operation.  TSL plans to create a
state-of-the-art national broadband network which will include a submarine fiber
backbone  linking  Auckland,  Wellington and  Christchurch  during the next five
years.

TELEPHONY SERVICES. Saturn offers full-feature local and long distance telephony
service and is the only full service telephony  provider  competing with Telecom
New Zealand ("Telecom"), the incumbent telephony provider.

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

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

                                       9
<PAGE>


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

PAY  TELEVISION  SERVICES.  Saturn's  programming  strategy  is to  offer a wide
variety of  high-quality  channels at competitive  prices.  Saturn  provides its
customers  both pay  television and  free-to-air  channels.  Saturn is currently
offering a single tier of service  consisting of 30 channels.  Saturn's standard
pay television package currently consists of the following channels:
<TABLE>
<CAPTION>

      Channel                                        Programming Genre
      -------                                        -----------------
      <S>                                            <C>
      TVI, TV2, TV3, TV4....................         General entertainment (retransmitted)
      ONTV .................................         Saturn community channel
      BBC World.............................         World news
      CNBC .................................         World financial news
      CNN International.....................         World news
      MCM...................................         Music video
      Discovery.............................         Science and nature
      National Geographic...................         Culture and nature
      Animal Planet.........................         Animal entertainment
      TNT  .................................         Classic movies
      Cartoon Network.......................         Children's cartoon programming
      Trackside.............................         TAB racing
      Kidzone...............................         Local children's programming
      Weather Channel.......................         Live weather from NZ MetService
      Program Guide.........................         Programming line-up
      FTV  .................................         Fashion TV
      CMTV .................................         Country music video
      Elijah Television.....................         Non-denominational religious programming
      Worldnet..............................         U.S. information service news and science
      Saturn SportsNet......................         Local/international sports
      The Golf Channel......................         24 hours of golf events/news
      Saturn Showcase.......................         Saturn programming channels (split screen)
      Saturn Home Cinema Preview Channel....         Pay-per-view movie previews
      Saturn Montage Channel................         A montage of Saturn's channels
      Saturn on Screen Guide................         An on-screen channel guide
      Prime Channel.........................         General entertainment (retransmitted)
      BBC World Service.....................         BBC World Service radio
</TABLE>

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

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

INTERNET/DATA  SERVICES.  Currently,  Saturn offers both traditional dial-up and
high speed cable  modem-based  Internet  access to its business and  residential
customers.  Saturn provides a platform for ISPs to offer Internet/data  services

                                       10
<PAGE>


to both Saturn  subscribers and  non-subscribers  in the Wellington  region.  We
believe that the  provision of  Internet/data  services  represents  significant
revenue  potential.  Saturn receives a monthly fee for reselling Internet access
from ISPs and is also able to offer  these  Internet/data  services as part of a
more attractive bundle of services for Saturn customers. This increases both the
take-up rate for all of Saturn's  services and the take-up rate for second phone
lines,  thereby generating  incremental revenue for Saturn. It also ensures that
Saturn's  customers will use Saturn's  telephony network for their data traffic.
Approximately  35.0% of Saturn's new  customers  subscribe  to an  Internet/data
services package.

PRICING.  With its  unique  bundle  of  services,  Saturn  can offer a number of
attractive  multiple  service  bundles,  ranging from an entry level  package of
cable television service,  plus local telephone access and free local calls, for
NZ$29.95 per month to a package of two telephone lines (free local calls), cable
television service and unlimited  Internet usage for NZ$99.95 per month.  Saturn
is able to offer a savings  of 30.0%  based on a customer  buying  the  services
separately from multiple  providers.  These bundles are proving a very effective
means to drive  penetration  and  increase  revenue  per home.  Sky TV  ("Sky"),
Saturn's primary competitor, charges subscribers a monthly rate of approximately
NZ$56 for five channels of UHF programming  with a one-time  installation fee of
NZ$29 per subscriber.  Sky's digital satellite service is more expensive and has
an  installation  fee of NZ$350.  Saturn's  residential  and business  telephony
services are priced 10.0% to 15.0% below  Telecom's  standard  rates even though
Telecom is offering range discounts. We believe that Saturn's Internet rates are
some of the most price competitive in the country.

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

COMPETITION.  Saturn's  major  telephony  competitor  is Telecom,  New Zealand's
largest  telecommunications  service  provider with nearly a 100% share of local
loop revenues,  75.0% of national and  international  toll revenues and 90.0% of
cellular revenues.  During 1996 and 1997, Telecom  constructed an HFC network to
70,000  homes in  various  parts of New  Zealand  and  began  offering  a pay TV
service.  In 1998,  Telecom  discontinued its pay television service and Telecom
now appears to be pursuing an  asymmetrical  digital  subscriber  line  ("ADSL")
strategy for high speed Internet access.

There are currently  four  broadcast  networks in New Zealand as well as several
other  free-to-air  regional  channels.  The largest  provider  of  subscription
television  services  in New  Zealand  is Sky,  which  operates  a  five-channel
encrypted  UHF  subscription  television  service  and has  recently  launched a
20-channel  digital  satellite  service.  Although  Sky offers a popular  sports
channel on an exclusive basis, we believe Sky does not currently offer value and
programming diversity or television/telephony bundling that Saturn offers.

MANAGEMENT  AND  EMPLOYEES.  United  has  appointed  four  of its  employees  to
management  positions at Saturn,  including Saturn's chief executive officer. As
of December 3l, 1999, Saturn had approximately 260 employees.  Substantially all
of Saturn's employees are parties to a collective  employment contract governing
certain  conditions  of  their  employment  including  probationary  periods  of
employment,  termination,  redundancy,  overtime,  holidays,  leave and  dispute
resolution.

                                       11

<PAGE>


XYZ ENTERTAINMENT (AUSTRALIAN PROGRAMMING)

Austar  United and Foxtel  each own 50.0% of XYZ  Entertainment,  a  programming
venture that purchases,  produces, edits, packages and transmits programming for
the Australian pay television market. XYZ Entertainment  currently supplies five
channels of programming (the "XYZ Channels") in key genres to Austar and Foxtel,
Australia's  two largest pay television  operators,  for  distribution  to their
subscribers.  XYZ  Entertainment  collects a monthly fee per  subscriber.  As of
December 31, 1999, XYZ  Entertainment  provided  programming  for  approximately
934,000 subscribers.

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

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

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

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

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

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

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

Since March 1997, XYZ Entertainment has produced a music video channel,  Channel
[V].  Under a long term  agreement  with  Channel  [V] Music  Networks,  a joint
venture  between Star TV and several record  companies  including BMG, EMI, Sony

                                       12
<PAGE>


and  Warner  Music,  XYZ  Entertainment  can  use  the  Channel  [V]  trademark,
promotional  materials and management and has access to Channel [V]'s  favorable
record  programming  arrangements.  A  significant  portion of the  content  for
Channel [V] is produced locally, some of which is distributed internationally to
other Channel [V] Music Network channels.

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

EMPLOYEES.   As of December 31, 1999, XYZ Entertainment had 85 employees.

AUSTRALIA:  OTHER PROGRAMMING INTERESTS

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

Weather 21, 100% owned by Austar United, is a Sydney-based  public relations and
media company which produces  Weather 21 in its own production  studio.  Weather
21, launched in January 1999, provides 24 hour weather coverage and is currently
offered exclusively to Austar subscribers in the basic package.

AUSTRALIA:  MOBILE WIRELESS DATA - UNITED WIRELESS PTY LIMITED

Austar United owns United  Wireless,  which operates a nationally  linked public
packet-switched  mobile  wireless  data network in  Australia.  United  Wireless
primarily targets the transportation industry, which uses its services for fleet
management requirements, and the utility, fire and vending industries, which use
its services for fixed telemetry  applications,  including remote monitoring and
reading of meters, fire panels, vending machines and other similar applications.

Telstra  is the  only  other  operator  of a  packet-switched  data  network  in
Australia,  offering the DataTAC  network.  DataTAC focuses on electronic  funds
transfer at point of sales  ("EFTPOS") as its core business and does not compete
with  United  Wireless  in its core  transportation  market or in its  telemetry
markets.

TECHNOLOGIES EMPLOYED BY THE COMPANY

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

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

DTH  transmits  encoded  signals  directly  from a satellite  to a  subscriber's
premises,  where it is decoded.  Currently in  Australia,  all DTH  subscription
television  services are transmitted via the Optus Network  Satellite using High

                                       13
<PAGE>


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

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

REGULATION

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

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

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

EMPLOYEES

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

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

For  information  applicable  to this  Item,  see the notes to the  consolidated
financial statements contained in Item 8 "Financial Statements and Supplementary
Data."

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

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

Austar  leases  office  space in Sydney for its  administrative  offices and has
established  four regional offices in leased space in certain areas where it has
launched service. Austar also leases locations for smaller local offices in most

                                       14
<PAGE>


of its markets to handle local customer maintenance, marketing and installation.
In  addition,  Austar  leases  facilities  to house the  head-end  facility  and
transmitter  tower  in each  of its  markets.  The  NCOC is  located  in  leased
facilities in the Gold Coast. Generally, these Austar facilities are leased with
terms of three to six years,  with  renewal  options in many  instances.  Austar
believes that its leased facilities are sufficient for its foreseeable needs and
that it has  access to a  sufficient  supply  of  additional  facilities  in its
various markets, should it require more space.

Saturn owns a headend/switching and operations facility in Petone, located north
of  Wellington.  Saturn  also leases  office and  warehouse  facilities  for its
headquarters  in  Petone.  This lease  expires  in 2001 with a six-year  renewal
option; however, there are plans to move in May 2000.

XYZ Entertainment  currently uses a portion of Foxtel's broadcasting  facilities
located in Sydney.  XYZ Entertainment  pays its proportionate  share of Foxtel's
leasing costs (based on space utilized).  We believe this arrangement results in
operational  cost  savings.  XYZ  Entertainment   believes  its  facilities  are
sufficient for the foreseeable future.

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

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

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

On August 27, 1999, the sole stockholder of the Company approved an amendment to
the Company's articles of incorporation to change the name of the corporation to
United Australia/Pacific, Inc.


                                       15
<PAGE>
                                     PART II

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

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

Austar  United's  ordinary  shares are traded on the  Australian  Stock Exchange
under the symbol  "AUN."  The  following  table  shows the range of high and low
sales prices reported on the Australian Stock Exchange since Austar United's IPO
in July 1999:

                                                            High           Low
                                                           -----         -------
Year ended December 31, 1999:
  Third Quarter (from July 1999).........................  A$5.51        A$4.46
  Fourth Quarter.........................................  A$6.70        A$4.35

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

The following selected consolidated financial data as of and for the years ended
December  31,  1999,  1998,  1997,  1996 and 1995  have  been  derived  from the
Company's audited consolidated financial statements. The data set forth below is
qualified by reference to and should be read in  conjunction  with the Company's
audited  consolidated  financial  statements  including  the  notes  and  Item 7
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."
<TABLE>
<CAPTION>
                                                                              For the Years Ended December 31,
                                                            -------------------------------------------------------------------
                                                                1999          1998         1997          1996         1995
                                                            ------------- ------------- ------------ ------------- -------------
Statement of Operations Data:                                        (In thousands, except share and per share amounts)
  <S>                                                        <C>           <C>          <C>           <C>          <C>
  Revenue.................................................   $  150,752    $   89,819   $   68,961    $   24,977   $    1,883
  System operating expense................................     (112,498)      (71,149)     (52,703)      (22,865)      (3,230)
  System selling, general and administrative expense......      (49,501)      (49,738)     (50,006)      (32,665)      (2,482)
  Corporate general and administrative expense............      (26,847)       (5,696)      (3,306)       (1,376)        (920)
  Depreciation and amortization...........................     (104,720)      (97,140)     (80,802)      (36,269)      (1,003)
  Gain on issuance of common equity securities
    by subsidiary.........................................      248,361             -            -             -            -
  Interest expense and other, net.........................      (72,146)      (62,088)     (48,810)      (16,560)       4,898
  Share in results of affiliated companies, net...........      (11,614)      (10,299)      (2,408)       (5,414)     (16,379)
  Minority interest in subsidiary.........................       13,609             -        1,018         2,186            -
                                                             ----------    ----------   ----------    ----------   ----------
  Net income (loss).......................................   $   35,396    $ (206,291)  $ (168,056)   $  (87,986)  $  (17,233)
                                                             ==========    ==========   ==========    ==========   ==========
  Basic net income (loss) per common share................   $     1.99    $   (14.02)  $   (12.12)   $    (6.44)  $    (1.28)
                                                             ==========    ==========   ==========    ==========   ==========
  Basic weighted-average number of shares outstanding....    17,810,254    14,718,857   13,864,941    13,670,832   13,504,453
                                                             ==========    ==========   ==========    ==========   ==========
  Diluted net income (loss) per common share..............   $     1.94    $   (14.02)  $   (12.12)   $    (6.44)  $    (1.28)
                                                             ==========    ==========   ==========    ==========   ==========
  Diluted weighted-average number of shares outstanding...   18,199,726    14,718,857   13,864,941    13,670,832   13,504,453
                                                             ==========    ==========   ==========    ==========   ==========
Other Data:
  Capital expenditures....................................   $  117,819    $   71,466   $  101,135    $  187,100   $    7,648


                                                                                      As of December 31,
                                                            -------------------------------------------------------------------
                                                                1999          1998         1997          1996         1995
                                                            ------------- ------------- ------------ ------------- ------------
Balance Sheet Data:                                                                    (In thousands)
  Cash, cash equivalents, restricted cash and
    short-term liquid investments.........................   $  275,421    $      944   $   25,089    $   37,860   $    8,730
  Property, plant and equipment, net......................   $  219,394    $  110,351   $  183,101    $  193,170   $   27,630
  Total assets............................................   $  666,591    $  216,032   $  279,032    $  319,323   $   99,295
  Senior discount notes and other long-term debt..........   $  669,096    $  424,726   $  387,094    $  250,057   $      742
  Total liabilities.......................................   $  747,425    $  510,661   $  431,769    $  315,276   $   21,714
  Total stockholders' (deficit) equity....................   $ (154,904)   $ (294,629)  $ (164,153)   $    4,047   $   75,066

</TABLE>


                                       16
<PAGE>


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

The following  discussion and analysis of the Company's  financial condition and
results of operations  covers the years ended  December 31, 1999,  1998 and 1997
and should be read in  conjunction  with the  Company's  condensed  consolidated
financial  statements and related notes thereto included elsewhere herein.  Such
consolidated  financial statements provide additional  information regarding the
Company's financial activities and condition.

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

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

INTRODUCTION

As of December 31, 1999,  through  Austar United we held (i) an effective  75.4%
economic  interest in Austar,  (ii) a 75.4% interest in Saturn and (iii) a 37.7%
interest in XYZ  Entertainment.  We decreased our interest in Austar United from
100% to approximately  75.5% in connection with the July 1999 Austar United IPO.
Subsequent stock option exercises reduced our ownership  interest to 75.4% as of
December  31,  1999  (73.7%  on a fully  diluted  basis  after  vested  employee
options).

Immediately  prior to the Austar United IPO,  Austar  United  issued  13,659,574
shares of Austar United to SaskTel for SaskTel's 35.0% interest in Saturn.  As a
result,  Saturn has been  consolidated  in our  financial  statements  effective
August 1, 1999. We previously consolidated the operations of Saturn from July 1,
1996  through  January  1,  1998.  Prior  to that  time,  we  accounted  for our
investment in Saturn under the equity method. We discontinued  consolidating the
results of  operations of Saturn  effective  January 1, 1998 and returned to the
equity  method of  accounting  through  July 1999 to comply  with the  consensus
guidance of the Emerging Issues Task Force regarding Issue 96-16 ("EITF 96-16"),
and related rules of the SEC, because SaskTel had participating approval or veto
rights with respect to certain  significant  decisions of Saturn in the ordinary
course of business.

UAP,   the   Company's   parent,   provides   various   management,   technical,
administrative,  accounting,  financial reporting, tax, legal and other services
for the Company pursuant to the terms of a management  agreement between UAP and
the   Company.   Effective   June  24,   1999,   UAP  assigned  its  rights  and
responsibilities  under the various  technical  assistance  agreements  with the
operating  systems to Austar  United.  See Item 13  "Certain  Relationships  and
Related Transactions."


                                       17
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1999,  we had invested  approximately  $491.4  million in our
projects.  These fundings do not include  amounts  contributed  by  shareholders
other  than  the  Company,  proceeds  from the  Australian  IPO,  the  operating
subsidiary  bank  borrowings or amounts  contributed  in either cash or stock to
acquire additional economic interests.
<TABLE>
<CAPTION>

                                                                          As of
                                                                       December 31,
     Sources of Fundings:                                                 1999
                                                                       -------------
                                                                       (In thousands)
     <S>                                                                 <C>
     Senior discount notes proceeds, net of offering costs............   $244,652
     Cash contributions and other equity from parent (1)(2)(3)........    239,648
     Cash received for interest.......................................      7,063
                                                                         --------
          Total.......................................................   $491,363
                                                                         ========

                                                                          As of
                                                                       December 31,
     Uses of Fundings:                                                    1999
                                                                       -------------
                                                                       (In thousands)

     Austar (1).......................................................   $349,429
     Saturn...........................................................     44,612
     XYZ Entertainment (2)............................................     41,553
     Other (3)........................................................     55,769
                                                                         --------
          Total.......................................................   $491,363
                                                                         ========
</TABLE>
     (1)  Includes  issuance/use  of $29.8  million  and $6.2  million in United
          convertible preferred stock in 1995 and 1998, respectively, to acquire
          additional economic interests in Australia.
     (2)  Includes the non-cash  contribution  from UAP of $25.1  million for an
          additional 25.0% interest in XYZ Entertainment.
     (3)  Includes  $17.2  million  paid by United to purchase  2.0% of UAP from
          Kiwi Cable in December 1999.

We are responsible for our  proportionate  share of capital  requirements of the
operating companies. We have funded our proportionate share to date with capital
contributions by United through UAP and proceeds from private debt offerings and
have  reduced  our  proportionate  share to date with  subsidiary  bank debt and
strategic  partner  contributions.  We do not  expect to  contribute  additional
capital  to  Austar   United  for  its  on-going   operating   and   development
requirements,  as future funding will come from the Australian IPO proceeds, the
New Austar Bank Facility, the Saturn Bank Facility and operating cash flow.

We  had  $275.4  million  of  cash,  cash  equivalents  and  short-term   liquid
investments  on hand as of December 31, 1999. On July 27, 1999, we  successfully
completed the Austar United IPO selling 103.5 million  shares on the  Australian
Stock  Exchange,  raising gross and net proceeds at A$4.70  ($3.03) per share of
A$486.5  ($313.6)  million and A$453.6  ($292.8)  million,  respectively.  These
proceeds,  in addition to borrowing capacity on the New Austar Bank Facility and
Saturn Bank  Facility,  will be used to expand Austar  United's  customer  base,
complete  the  build-out  of its  network and  introduce  new  services  such as
telephony and Internet/data.

STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31, 1999

Cash and cash  equivalents  increased  $5.8  million  from  $0.2  million  as of
December 31, 1998 to $6.0 million as of December 31, 1999.  Principal sources of
cash during the year ended  December 31, 1999 included  proceeds from the Austar
United IPO of $292.8 million, borrowings on the New Austar Bank Facility and the
Saturn Bank Facility of $229.9 million,  cash contributions from parent of $29.7
million and other investing and financing sources totaling $3.1 million.

During the year ended December 31, 1999, cash was used principally for purchases
of short-term liquid  investments of $266.4 million,  payment of the Austar Bank
Facility of $129.1 million,  purchases of property, plant and equipment totaling
$117.8  million  to  continue  new  subscriber  connections  at  Austar  and the
build-out of existing  projects,  the funding of operating  activities  of $18.9
million,  deferred financing costs of $8.0 million,  investments in and advances
to affiliated companies of $5.2 million and other uses totaling $4.3 million.

                                       18
<PAGE>


YEAR ENDED DECEMBER 31, 1998

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

During the year ended  December  31,  1998,  cash was used  principally  for the
purchase of property, plant and equipment totaling $71.5 million to continue new
subscriber  connections and the build-out of existing  projects,  the funding of
operating  activities of $23.8 million,  investments in affiliated companies and
acquisition of assets of $11.4 million,  the  deconsolidation  of Saturn of $9.9
million,  the payment of capital leases and other debt of $3.3 million and other
investing and financing uses of $3.2 million.

YEAR ENDED DECEMBER 31, 1997

Cash and cash  equivalents  decreased  $6.9  million  from  $19.2  million as of
December 31, 1996 to $12.3 million as of December 31, 1997. Principal sources of
cash during the year ended  December 31, 1997 included  borrowings on the Austar
Bank  Facility  of  $85.2  million,  gross  proceeds  from the  issuance  of the
September  1997 Notes of $29.9  million,  the  purchase  of a 35.0%  interest in
Saturn by SaskTel for $19.6  million,  borrowings  from parent of $10.0 million,
cash  contributions  from parent of $7.9 million and net  proceeds  from the net
decrease in short-term investments of $6.3 million.

During the year ended  December  31,  1997,  cash was used  principally  for the
purchase of  property,  plant and  equipment  of $101.1  million to continue the
build-out of existing projects,  primarily at Austar, a decrease in construction
payables of $29.6  million,  investments  in our  affiliated  companies  of $3.3
million,  deferred  financing costs and other uses totaling $6.9 million and the
funding of operating activities of $24.9 million during the year.

RESULTS OF OPERATIONS

SELECTED SYSTEM  OPERATING  DATA. The following  table displays  selected system
operating data in Austar's local currency and U.S. dollar:
<TABLE>
<CAPTION>
                                                                For the Years Ended December 31,
                                                            -----------------------------------------
                                                                1999          1998          1997
                                                            ------------- ------------- -------------
                                                                          (In thousands)
     <S>                                                      <C>           <C>           <C>
     Austar (A$):
       Revenue.........................................       220,493       136,072        86,470
       Adjusted EBITDA (1).............................       (11,946)      (37,981)      (26,027)

     Austar (US$):
       Revenue.........................................       142,452        85,199        63,848
       Adjusted EBITDA (1).............................        (7,687)      (23,129)      (19,220)

</TABLE>

     (1)  "Adjusted   EBITDA"   represents   net   operating   earnings   before
          depreciation,   amortization,   non-cash  general  and  administrative
          expense  allocated from parent and stock-based  compensation  charges.
          Industry analysts  generally  consider Adjusted EBITDA to be a helpful
          way to measure the  performance  of cable  television  operations  and
          communications  companies.  We believe Adjusted EBITDA helps investors
          to assess  the cash flow from  operations  from  period to period  and
          thus, to value our business.  Adjusted EBITDA should not, however,  be
          considered a replacement  for net income,  cash flows or for any other
          measure  of  performance  or  liquidity  under  U.S.  GAAP,  or  as an
          indicator of a company's  operating  performance.  Our presentation of
          Adjusted  EBITDA may not be comparable  to  statistics  with a similar
          name  reported by other  companies.  Not all  companies  and  analysts
          calculate EBITDA in the same manner.






                                       19
<PAGE>


EXCHANGE RATES. We translate  revenue and expense from our foreign  subsidiaries
using the weighted-average  exchange rates during the period.  However, for ease
of  presentation,  the spot  rates are shown  below for the  Australian  and New
Zealand dollar per one U.S. dollar.

                                             Australian    New Zealand
                                               Dollars       Dollars
                                             ------------  -----------
     December 31, 1999.....................     1.5244       1.9124
     December 31, 1998.....................     1.6332       1.8939
     December 31, 1997.....................     1.5378       1.7161

REVENUE.  Our revenue  increased  $60.9  million and $20.9 million for the years
ended December 31, 1999 and 1998,  respectively,  compared to the  corresponding
amounts in the prior year as follows:
<TABLE>
<CAPTION>
                                                                   For the Years Ended December 31,
                                                              ------------------------------------------
                                                                  1999          1998           1997
                                                              ------------- -------------- -------------
                                                                            (In thousands)
     <S>                                                         <C>           <C>            <C>
     Australia.............................................      $144,632      $ 86,408       $64,370
     New Zealand...........................................         6,120             -           473
     Other.................................................             -         3,411         4,118
                                                                 --------      --------      --------
        Total revenue......................................      $150,752      $ 89,819      $ 68,961
                                                                 ========      ========      ========
</TABLE>


AUSTAR

Revenue for Austar increased $57.3 million, or 67.3%, from $85.2 million for the
year ended  December 31, 1998 to $142.5  million for the year ended December 31,
1999,  including  a  positive  impact  of  $4.3  million  due to  exchange  rate
fluctuations.  On a functional currency basis, Austar's revenue increased A$84.4
million,  from A$136.1  million for the year ended  December 31, 1998 to A$220.5
million for the year ended  December 31, 1999, a 62.0%  increase.  This increase
was primarily due to subscriber growth (381,763 at December 31, 1999 compared to
288,721  at  December  31,  1998) and  increased  average  monthly  revenue  per
subscriber as Austar continues to expand the content of its television  service.
The average  monthly  revenue per  subscriber  increased  A$6.71 ($4.40) from an
average per subscriber of A$47.00  ($30.83) for the year ended December 31, 1998
to an average of A$53.71 ($35.23) per subscriber for the year ended December 31,
1999, a 14.3% increase.

Revenue for Austar increased $21.4 million, or 33.5%, from $63.8 million for the
year ended  December 31, 1997 to $85.2  million for the year ended  December 31,
1998,  despite  a  negative  impact  of  $15.0  million  due  to  exchange  rate
fluctuations.  On a functional currency basis, Austar's revenue increased A$49.6
million,  from A$86.5  million for the year ended  December  31, 1997 to A$136.1
million for the year ended  December 31, 1998, a 57.3%  increase.  This increase
was primarily due to subscriber growth (288,721 at December 31, 1998 compared to
196,205 at December 31, 1997) as Austar continues to roll-out its services.

ADJUSTED  EBITDA.  Adjusted EBITDA  increased $20.1 million and $3.9 million for
the years  ended  December  31,  1999 and 1998,  respectively,  compared  to the
corresponding amounts in the prior year as follows:
<TABLE>
<CAPTION>
                                                                   For the Years Ended December 31,
                                                              ------------------------------------------
                                                                  1999          1998           1997
                                                              ------------- -------------- -------------
                                                                            (In thousands)
     <S>                                                         <C>           <C>            <C>
     Australia.............................................      $ (4,742)     $ (27,065)     $ (24,082)
     New Zealand...........................................        (2,125)             -         (6,688)
     Other.................................................          (169)          (101)          (254)
                                                                 --------      ---------      ---------
        Total Adjusted EBITDA..............................      $ (7,036)     $ (27,166)     $ (31,024)
                                                                 ========      =========      =========

</TABLE>



                                       20

<PAGE>

AUSTAR

Austar's Adjusted EBITDA loss improved by $15.4 million, or 66.7%, from negative
$23.1 million for the year ended  December 31, 1998 to negative $7.7 million for
the year ended  December 31, 1999,  including a negative  impact of $0.2 million
due to exchange rate  fluctuations.  On a functional  currency  basis,  Austar's
Adjusted EBITDA loss improved by A$26.1 million from negative A$38.0 million for
the year ended  December 31, 1998 to negative  A$11.9 million for the year ended
December 31, 1999, a 68.7% improvement. This improvement in Adjusted EBITDA loss
for comparable  periods from year to year was primarily due to Austar  achieving
incremental  sales growth while keeping  certain costs fixed,  such as the NCOC,
corporate management staff and media-related marketing costs.

Austar's  Adjusted EBITDA loss increased $3.9 million,  or 20.3%,  from negative
$19.2 million for the year ended December 31, 1997 to negative $23.1 million for
the year ended  December 31, 1998,  including a positive  impact of $4.8 million
due to exchange rate  fluctuations.  On a functional  currency  basis,  Austar's
Adjusted  EBITDA loss increased  A$12.0 million from negative A$26.0 million for
the year ended  December 31, 1997 to negative  A$38.0 million for the year ended
December 31, 1998, a 46.2% increase.  Although revenue increased compared to the
same  periods in the prior year,  increases  in  operating  expense and selling,
general and administrative expense outpaced the revenue increase,  primarily due
to higher  short-term  programming  costs in connection with the receivership of
Australis,  Austar's previous programming supplier,  and the subsequent May 1998
joint venture with Optus  Vision,  as well as increases in salaries and benefits
for additional personnel necessary to support the growth of Austar's NCOC.

CORPORATE  GENERAL  AND  ADMINISTRATIVE   EXPENSE.  Our  corporate  general  and
administrative expense increased $21.1 million, or 370.2%, from $5.7 million for
the year ended  December 31, 1998 to $26.8  million for the year ended  December
31, 1999. This increase was primarily attributable to a stock-based compensation
charge of $22.5  million from the Austar United Plan for the twelve months ended
December 31, 1999. There was no stock-based compensation charge in 1998.

Our corporate  general and  administrative  expense  increased $2.4 million,  or
72.7%,  from $3.3  million for the year ended  December 31, 1997 to $5.7 million
for the year ended  December 31, 1998.  This  increase was  primarily  due to an
increase in the  allocation  of United's  corporate  general and  administrative
expenses to us, based on increased activity at the operating system level.

DEPRECIATION AND AMORTIZATION.  Depreciation and amortization  expense increased
$7.6 million and $16.3  million for the years ended  December 31, 1999 and 1998,
respectively, compared to the corresponding amounts in the prior years.
<TABLE>
<CAPTION>
                                                                   For the Years Ended December 31,
                                                              ------------------------------------------
                                                                  1999          1998           1997
                                                              ------------- -------------- -------------
                                                                            (In thousands)
     <S>                                                         <C>           <C>            <C>
     Austar................................................      $ 97,620      $ 95,403         $ 76,913
     Saturn................................................         5,266             -            2,033
     Other.................................................         1,834         1,737            1,856
                                                                 --------      --------         --------
        Total depreciation and amortization................      $104,720      $ 97,140         $ 80,802
                                                                 ========      ========         ========
</TABLE>

AUSTAR

Depreciation  and  amortization  expense for Austar  increased $2.2 million,  or
2.3%,  from $95.4 million for the year ended  December 31, 1998 to $97.6 million
for the year ended  December  31,  1999,  including  a  negative  impact of $2.8
million due to exchange  rate  fluctuations.  On a  functional  currency  basis,
Austar's  depreciation and amortization  expense  increased A$3.9 million,  from
A$143.0  million for the year ended December 31, 1998 to A$146.9 million for the
year ended December 31, 1999, a 2.7% increase.

Depreciation  and amortization  expense for Austar  increased $18.5 million,  or
24.1% from $76.9  million for the year ended  December 31, 1997 to $95.4 million
for the year ended  December  31,  1998,  including  a positive  impact of $15.2
million due to exchange  rate  fluctuations.  On a  functional  currency  basis,
Austar's  depreciation and amortization  expense increased A$43.4 million,  from
A$99.6 million for the year ended  December 31, 1997 to A$143.0  million for the
year ended December 31, 1998, a 43.6% increase.  This increase was primarily due
to the larger fixed asset base due to the  significant  deployment  of operating
assets to meet  subscriber  growth as well as  increases  related to  subscriber
disconnects.

GAIN ON ISSUANCE OF COMMON EQUITY  SECURITIES BY  SUBSIDIARY.  On July 27, 1999,
Austar United successfully completed the Austar United IPO selling 103.5 million
shares on the Australian Stock Exchange raising gross and net proceeds at A$4.70

                                       21
<PAGE>

($3.03) per share of A$486.5  ($313.6)  million and  A$453.6  ($292.8)  million,
respectively.  Based on the carrying value of our investment in Austar United as
of July 27,  1999,  we  recognized a gain of $248.4  million from the  resulting
step-up in the carrying amount of our investment in Austar United, in accordance
with SAB 51. No  deferred  taxes were  recorded  related to this gain due to our
intent on holding our investment in Austar United indefinitely.

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

Interest  income,  including  related party income,  decreased $1.4 million,  or
87.5%,  from $1.6  million for the year ended  December 31, 1997 to $0.2 million
for the year ended December 31, 1998. This decrease was primarily due to reduced
short-term liquid investment  balances related to the funding of our investments
in affiliated companies.

INTEREST EXPENSE. Interest expense,  including related party expense,  increased
$12.8 million, or 22.6%, from $56.7 million for the year ended December 31, 1998
to $69.5  million  for the year ended  December  31,  1999.  This  increase  was
primarily due to interest  expense related to the Austar Bank Facility which was
$7.5 million in 1998 compared to $16.8 million in 1999.

Interest expense,  including related party expense,  increased $12.7 million, or
28.9%,  from $44.0 million for the year ended December 31, 1997 to $56.7 million
for the year ended  December  31,  1998.  This  increase  was  primarily  due to
continued  accretion  on the May 1996 Notes and the 14.0% senior notes issued in
September  1997 (the  "September  1997  Notes")  (collectively,  the "Notes") at
14.75%  during most of 1998  compared to 14.0% for 1997.  In addition,  interest
expense related to the Austar Bank Facility, which was secured in July 1997, was
$7.5 million in 1998 compared to $4.0 million in 1997.

MINORITY  INTEREST IN SUBSIDIARY.  The minority  interests'  share of income was
$13.6 million for  the year ended December 31, 1999.  Austar  United's IPO (July
1999)  reduced our  ownership to 75.4% as of December 31, 1999.  For  accounting
purposes, we continue to consolidate 100% of the results of operations of Austar
United,  then deduct the minority  interests' share of losses before arriving at
net income.

SHARE IN RESULTS OF  AFFILIATED  COMPANIES.  Our share in results of  affiliated
companies  totaled a loss of $11.6  million,  $10.3 million and $2.4 million for
the years ended December 31, 1999, 1998 and 1997, respectively, as follows:
<TABLE>
<CAPTION>
                                                                   For the Years Ended December 31,
                                                              ------------------------------------------
                                                                  1999          1998           1997
                                                              ------------- -------------- -------------
                                                                            (In thousands)
     <S>                                                         <C>           <C>            <C>
     XYZ Entertainment (1).................................      $ (5,290)     $     55       $ (2,408)
     Saturn (2)............................................        (6,324)      (10,354)             -
                                                                 --------      --------       --------
        Total share in results of affiliated companies.....      $(11,614)     $(10,299)      $ (2,408)
                                                                 ========      ========       ========
</TABLE>
     (1)  In September  1998,  we acquired an additional  25.0%  interest in XYZ
          Entertainment, increasing our ownership to 50.0%.
     (2)  Effective  January 1, 1998, we discontinued  consolidating the results
          of  operations  of  Saturn  and  returned  to  the  equity  method  of
          accounting due to certain  minority  shareholder's  rights.  Effective
          August 1, 1999, we increased our ownership  interest in Saturn to 100%
          and began  consolidating  its  results of  operations.

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

NEW ACCOUNTING PRINCIPLES

The Financial  Accounting  Standards Board ("FASB") recently issued Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities" ("SFAS 133"),  which requires that companies  recognize
all  derivatives  as either assets or  liabilities  in the balance sheet at fair
value.  Under  SFAS  133,  accounting  for  changes  in fair  market  value of a
derivative  depends on its intended use and  designation.  SFAS 133 is effective
for  fiscal  years  beginning  after June 15,  2000.  The  Company is  currently
assessing the effect of this new standard.

In December 1999, the staff of the SEC issued Staff Accounting  Bulletin No. 101
("SAB 101") "Views on Selected  Revenue  Recognition  Issues" which provides the
staff's views in applying generally accepted  accounting  principles to selected
revenue  recognition  issues.  SAB 101 is effective  second  quarter  2000.  The
Company is currently assessing the effect of SAB 101.

                                       22
<PAGE>

YEAR 2000 CONVERSION

Our pay television,  programming and telephony  operations are heavily dependent
upon computer systems and other technological  devices with embedded chips. Such
computer systems and other technological devices did not experience any problems
related to  recognizing  dates of January 2000 and  thereafter.  In all material
respects, our pay television systems, telephony systems and programming services
continued to operate during the period December 31, 1999 to March 30, 2000.

YEAR 2000  PROGRAM.  In response to possible  Year 2000  problems,  the Board of
Directors of United established a Task Force to assess the impact that potential
Year 2000 problems might have on company-wide operations,  including the Company
and its operating companies,  and to implement necessary changes to address such
problems.  The Task Force reported  directly to the United Board.  In creating a
program  to  minimize  Year 2000  problems,  the Task Force  identified  certain
critical  operations of our business.  These critical operations were identified
as service delivery  systems,  field and headend  devices,  customer service and
billing systems and corporate  management and  administrative  operations (e.g.,
cash flow,  accounts  payable and  accounts  receivable,  payroll  and  building
operations).

The Task Force established a three-phase  program to address potential Year 2000
problems:

     (a) Identification  Phase: identify and evaluate computer systems and other
         devices (e.g., headend devices, switches and set top boxes) on a system
         by system basis for Year 2000 compliance.

     (b) Implementation Phase: establish a database and evaluate the information
         obtained in the Identification Phase,  determine priorities,  implement
         corrective procedures, define costs and ensure adequate funding.

     (c) Testing  Phase:  test the  corrective  procedures  to  verify  that all
         material compliance problems will operate on and after January 1, 2000,
         and develop, as necessary, contingency plans for material operations.

The Task Force completed these Phases on substantially  all critical  operations
prior  to  year-end  1999.  As a  result,  we  believe  all  material  corporate
operations  are  in  compliance  for  Year  2000  and do  not  require  material
remediation  or  replacement.  During the period  December 31, 1999 to March 30,
2000, our worldwide  operations  continued to function in the ordinary course in
all material  respects.  We experienced no material  business  interruptions  or
material problems with respect to our operations  arising from Year 2000 issues.
We know of no remaining contingencies.

The  independent  consultants  retained  to assist  with our  operations  in New
Zealand completed their work in 1999 as well.

THIRD PARTY  DEPENDENCIES.  Although we believed  our largest Year 2000 risk was
our dependency upon third-party  products, we experienced no Year 2000 issues as
a  result  of  such  dependency.   To  our  knowledge,  no  further  significant
contingencies  exist  based on our  dependency  upon third  party  products.  We
cannot,  however,  give any  assurance  concerning  compliance  of our equipment
because our responses from  third-party  vendors have been limited and cannot be
independently verified.

COSTS OF  COMPLIANCE.  The Task Force is not able to determine  the full cost of
its Year 2000 program and its related impact on our financial condition.  In the
course of our business,  we have made substantial  capital  adjustments over the
past few years in improving  our systems,  primarily for reasons other than Year
2000. Because these upgrades also resulted in Year 2000 compliance,  replacement
and remediation costs have been low. Therefore, the Task Force's estimate of the
cost of the Year 2000 program at $1.5  million  remains  unchanged.  Included in
such costs is approximately  $0.1 million spent on upgrading our billing systems
for Year 2000. The Task Force accelerated  these  expenditures to 1999 to insure
Year 2000  compliance;  otherwise  these  costs  would have been  incurred  over
approximately two to three years.  Such costs do not, however,  include internal
costs because we did not  separately  track the internal  costs incurred for the
Year 2000 program.  The costs incurred for Year 2000  compliance  issues did not
have a material  financial  impact on the Company.  We  anticipate no additional
significant expenditures for the Year 2000 program.

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

INVESTMENT PORTFOLIO

We do not use derivative  financial  instruments in our  non-trading  investment
portfolio.  We place our cash and cash  equivalent  investments in highly liquid
instruments that meet high credit quality standards with original  maturities at
the date of purchase  of less than three  months.  We also place our  short-term
investments in liquid  instruments that meet high credit quality  standards with
original  maturities at the date of purchase of between three and twelve months.
We also limit the amount of credit exposure to any one issue,  issuer or type of
instrument. These investments are subject to interest rate risk and will fall in

                                       23
<PAGE>

value if market interest rates increase,  however, we do not expect any material
loss with respect to our investment portfolio.

IMPACT OF FOREIGN CURRENCY RATE CHANGES

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

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

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

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

INTEREST RATE SENSITIVITY

The table below provides  information  about our primary debt  obligations.  The
information  is presented in U.S.  dollar  equivalents,  which is our  reporting
currency.  The  instrument's  actual  cash  flows are  denominated  in both U.S.
dollars  (the Notes),  Australian  dollars  (New Austar Bank  Facility)  and New
Zealand dollars (Saturn Bank Facility).
<TABLE>
<CAPTION>
                                                                             As of December 31, 1999
                                                                          -----------------------------
                                                                          Book Value         Fair Value
                                                                          ----------         ----------
                                                               (U.S. dollars, in thousands, except interest rates)
<S>                                                                       <C>                <C>
Long-term and short-term  debt:
     Fixed rate USD denominated Notes..........................           $407,945           $414,008
       Average interest rate...................................              14.0%              13.7%
     Variable rate NZ$ denominated Saturn Bank Facility........           $ 57,685           $ 57,685
       Average interest rate...................................               8.6%               8.6%
     Variable rate A$ denominated New Austar Bank Facility.....           $202,703           $202,703
       Average interest rate...................................               7.6%               7.6%
</TABLE>

The table  below  presents  principal  cash flows and  related  weighted-average
interest  rates  by  expected  maturity  dates  for our  debt  obligations.  The
information  is presented in U.S.  dollar  equivalents,  which is our  reporting
currency.  The  instrument's  actual  cash  flows are  denominated  in both U.S.
dollars  (the Notes),  Australian  dollars  (New Austar Bank  Facility)  and New
Zealand dollars (Saturn Bank Facility).
<TABLE>
<CAPTION>                                                                  As of December 31, 1999
                                              ------------------------------------------------------------------------------
                                               2000       2001       2002       2003       2004     Thereafter      Total
                                              -------   --------   --------   --------   --------   -----------   ----------
                                                             (U.S. dollars, in thousands, except interest rates)
<S>                                            <C>        <C>       <C>       <C>        <C>         <C>           <C>
Long-term and short-term debt:
  Fixed rate USD denominated Notes......       $  -       $  -      $     -   $     -    $     -     $407,945      $407,945
  Variable rate NZ$ denominated Saturn
    Bank Facility.......................       $  -       $577      $ 4,615   $ 8,307    $11,537     $ 32,649      $ 57,685
  Variable rate A$ denominated New
    Austar Bank Facility................       $  -       $  -      $ 9,184   $50,512    $80,687     $ 62,320      $202,703
</TABLE>

We use interest rate swap  agreements from time to time, to manage interest rate
risk on our floating rate debt facilities.  Interest rate swaps are entered into
depending on our assessment of the market, and generally are used to convert the

                                       24
<PAGE>


floating rate debt to fixed rate debt.  Interest  differentials paid or received
under these swap  agreements  are  recognized  over the life of the contracts as
adjustments to the effective  yield of the underlying  debt, and related amounts
payable  to,  or  receivable  from,  the  counterparties  are  included  in  the
consolidated balance sheet.

Currently,  we have four interest rate swaps to manage interest rate exposure on
the New Austar Bank Facility.  Two of these swap  agreements  expire in 2002 and
effectively  convert an aggregate  principal amount of A$50.0 ($32.8) million of
variable  rate,  long-term debt into fixed rate  borrowings.  The other two swap
agreements  expire in 2004 and convert an aggregate  principal amount of A$100.0
($65.6) million of variable rate, long-term debt into fixed rate borrowings.  As
of December 31, 1999, the weighted-average fixed rate under these agreements was
8.0% compared to a weighted-average  variable rate of 7.6%. As a result of these
swap agreements,  interest  expense was increased by approximately  A$0.9 ($0.6)
million during 1999.

In addition,  we have an interest rate swap to manage our exposure on the Saturn
Bank  Facility  which  effectively  converts an  aggregate  principal  amount of
NZ$60.6  ($31.7)  million  of  variable  rate,  long-term  debt into  fixed rate
borrowings.  The interest rate swap  includes an  increasing  fixed rate with an
additional  margin  which is  expected  to decline  as the debt to EBITDA  ratio
declines.  As of December 31, 1999,  the average  fixed rate under the agreement
was 9.3%  compared to a  weighted-average  variable rate of 8.6%. As a result of
this swap  agreement,  interest  expense was increased by  approximately  NZ$0.4
($0.2) million during 1999.

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

The table below provides  information  about our interest rate swaps.  The table
presents  notional  amounts  and  weighted-average  interest  rates by  expected
(contractual)  maturity  dates.  Notional  amounts  are  used to  calculate  the
contractual  payments to be exchanged  under the contract.  The  information  is
presented in U.S.  dollar  equivalents  (in  thousands),  which is our reporting
currency.  The instrument's  actual cash flows are denominated in Australian and
New Zealand dollars.
<TABLE>
<CAPTION>                                                                    As of December 31, 1999
                                                ------------------------------------------------------------------------------
                                                 2000       2001       2002       2003       2004     Thereafter      Total
                                                -------   --------   --------   --------   --------   -----------   ----------
                                                               (U.S. dollars, in thousands, except interest rates)
<S>                                              <C>        <C>       <C>       <C>        <C>         <C>           <C>
Interest Rate Swaps:
Variable to fixed (New Austar Bank Facility)...  $  -       $  -      $32,800   $  -       $65,600     $     -       $98,400
  Average pay rate %...........................   8.0%       8.0%        8.0%    8.0%         8.0%         8.0%
  Average receive rate %.......................   7.6%       7.6%        7.6%    7.6%         7.6%         7.6%

Variable to fixed (Saturn Bank Facility).......  $  -       $  -      $    -    $  -       $    -       $31,688      $31,688
  Average pay rate %...........................   9.1%      10.2%       10.2%    9.7%         9.9%         9.7%
  Average receive rate %.......................   8.6%       8.6%        8.6%    8.6%         8.6%         8.6%
</TABLE>

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

The consolidated  financial  statements of the Company are filed under this Item
as follows:
<TABLE>
<CAPTION>                                                                                                          Page
                                                                                                                  Number
                                                                                                                  ------
     <S>                                                                                                            <C>
     UNITED AUSTRALIA/PACIFIC, INC.
     Report of Independent Public Accountants.................................................................      26
     Consolidated Balance Sheets as of December 31, 1999 and 1998.............................................      27
     Consolidated Statements of Operations for the Years Ended December 31, 1999, 1998 and 1997...............      28
     Consolidated Statements of Stockholders' Deficit for the Years Ended December 31, 1999,
       1998 and 1997..........................................................................................      29
     Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997...............      30
     Notes to Consolidated Financial Statements...............................................................      32
</TABLE>

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

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

None.
                                       25
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To United Australia/Pacific, Inc.:

We  have  audited  the  accompanying   consolidated  balance  sheets  of  United
Australia/Pacific,  Inc.  (formerly  UIH  Australia/Pacific,  Inc.) (a  Colorado
corporation and majority-owned subsidiary of United Asia/Pacific Communications,
Inc.)  and  subsidiaries  as of  December  31,  1999 and  1998  and the  related
consolidated statements of operations,  stockholders' deficit and cash flows for
the years ended December 31, 1999, 1998 and 1997. These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of United
Australia/Pacific,  Inc. and  subsidiaries as of December 31, 1999 and 1998, and
the  results  of their  operations  and their  cash  flows  for the years  ended
December  31,  1999,  1998 and 1997 in  conformity  with  accounting  principles
generally accepted in the United States.


                               ARTHUR ANDERSEN LLP

Denver, Colorado
March 29, 2000


                                       26
<PAGE>
<TABLE>
<CAPTION>
                                                 UNITED AUSTRALIA/PACIFIC, INC.
                                                  CONSOLIDATED BALANCE SHEETS
                                     (Stated in thousands, except share and per share amounts)
                                                                                                               As of December 31,
                                                                                                           ------------------------
                                                                                                             1999          1998
                                                                                                           ---------     ----------
<S>                                                                                                        <C>           <C>
ASSETS
Current assets:
Cash and cash equivalents................................................................................  $   6,028     $     181
  Short-term liquid investments..........................................................................    269,393           763
  Subscriber receivables, net............................................................................      8,177         6,322
  Related party receivables..............................................................................      1,645           746
  Other receivables......................................................................................      6,196           736
  Inventory..............................................................................................     14,193        12,617
  Prepaids and other current assets......................................................................      5,146         4,615
                                                                                                           ---------     ---------
         Total current assets............................................................................    310,778        25,980
Investments in and advances to affiliated companies, accounted for under the equity method, net..........     28,546        24,597
Property, plant and equipment, net of accumulated depreciation of $261,891 and $147,511, respectively....    219,394       110,351
Goodwill and other intangible assets, net of accumulated amortization of $23,536 and $17,512,
  respectively...........................................................................................     91,346        42,559
Deferred financing costs, net of accumulated amortization of $4,427 and $3,237, respectively.............     16,377        11,675
Other non-current assets, net............................................................................        150           870
                                                                                                           ---------     ---------

          Total assets...................................................................................  $ 666,591     $ 216,032
                                                                                                           =========     =========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable.......................................................................................  $  16,463     $   5,426
  Accrued liabilities....................................................................................     32,151        28,522
  Construction payables..................................................................................      4,370         1,076
  Current portion of due to parent.......................................................................     12,754         3,665
  Current portion of notes payable.......................................................................          -        36,738
  Current portion of other long-term debt................................................................      1,500         2,189
                                                                                                           ---------     ---------
         Total current liabilities.......................................................................     67,238        77,616
Due to parent............................................................................................      9,621         6,578
Senior discount notes....................................................................................    407,945       356,640
Other long-term debt.....................................................................................    261,151        68,086
Deferred tax liability...................................................................................      1,014             -
Other long-term liabilities..............................................................................        456         1,741
                                                                                                           ---------     ---------
         Total liabilities...............................................................................    747,425       510,661
                                                                                                           ---------     ---------
Minority interest in subsidiary..........................................................................     74,070             -
                                                                                                           ---------     ---------
Stockholders' deficit:
  Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding.............          -             -
  Common stock, $0.01 par value, 30,000,000 shares authorized, 17,810,299 and 17,810,249 shares
    issued and outstanding, respectively.................................................................        178           178
  Additional paid-in capital.............................................................................    331,688       215,624
  Deferred compensation..................................................................................    (18,343)            -
  Accumulated deficit....................................................................................   (445,844)     (481,240)
  Other cumulative comprehensive loss....................................................................    (22,583)      (29,191)
                                                                                                           ---------     ---------
         Total stockholders' deficit.....................................................................   (154,904)     (294,629)

Commitments and contingencies (Notes 15 and 16)
                                                                                                           ---------     ---------
         Total liabilities and stockholders' deficit.....................................................  $ 666,591     $ 216,032
                                                                                                           =========     =========

                      The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                                               27
<PAGE>
<TABLE>
<CAPTION>
                                                 UNITED AUSTRALIA/PACIFIC, INC.
                                             CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (Stated in thousands, except share and per share amounts)

                                                                                             For the Years Ended December 31,
                                                                                        ------------------------------------------
                                                                                           1999            1998            1997
                                                                                        ----------      ----------      ----------
<S>                                                                                     <C>             <C>             <C>
Revenue...............................................................................  $  150,752      $   89,819      $   68,961

System operating expense, including related party expense of
  $4,381, $4,124 and $3,291, respectively.............................................    (112,498)        (71,149)        (52,703)
System selling, general and administrative expense....................................     (49,501)        (49,738)        (50,006)
Corporate general and administrative expense, including management fees and
  allocated expense from related party of $21,767, $5,475 and $2,739, respectively....     (26,847)         (5,696)         (3,306)
Depreciation and amortization.........................................................    (104,720)        (97,140)        (80,802)
                                                                                        ----------      ----------      ----------
         Operating loss...............................................................    (142,814)       (133,904)       (117,856)

Gain on issuance of common equity securities by subsidiary............................     248,361               -               -
Interest income, including related party income of $0, $0 and $425, respectively......       6,253             207           1,569
Interest expense, including related party expense of $0, $1,079 and $1,730,
  respectively........................................................................     (69,470)        (56,705)        (43,994)
Provision for losses on marketable equity securities and investment related costs.....      (4,949)         (4,462)         (4,784)
Other expense, net....................................................................      (2,987)         (1,128)         (1,601)
                                                                                        ----------      ----------      ----------
         Income (loss) before income taxes and other items............................      34,394        (195,992)       (166,666)

Income tax expense....................................................................        (993)              -               -
Minority interest in subsidiary.......................................................      13,609               -           1,018
Share in results of affiliated companies, net.........................................     (11,614)        (10,299)         (2,408)
                                                                                        ----------      ----------      ----------
         Net income (loss)............................................................  $   35,396      $ (206,291)     $ (168,056)
                                                                                        ==========      ==========      ==========

Foreign currency translation adjustments..............................................  $    6,608      $     (227)     $  (30,831)
Unrealized gains on securities:
  Reclassification adjustment for losses included in net income (loss)................           -               -           3,412
                                                                                        ----------      ----------      ----------
         Comprehensive income (loss)..................................................  $   42,004      $ (206,518)     $ (195,475)
                                                                                        ==========      ==========      ==========

Net income (loss) per common share:
         Basic net income (loss)......................................................  $     1.99      $   (14.02)     $   (12.12)
                                                                                        ==========      ==========      ==========
         Diluted net income (loss)....................................................  $     1.94      $   (14.02)     $   (12.12)
                                                                                        ==========      ==========      ==========

Weighted-average number of common shares outstanding:
         Basic........................................................................  17,810,254      14,718,857      13,864,941
                                                                                        ==========      ==========      ==========
         Diluted......................................................................  18,199,726      14,718,857      13,864,941
                                                                                        ==========      ==========      ==========


                      The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                                                 28





<PAGE>
<TABLE>
<CAPTION>

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

                                                                                                            Other
                                                                                                          Cumulative
                                             Common Stock       Additional                               Comprehensive
                                         --------------------    Paid-In      Deferred     Accumulated      Income
                                           Shares      Amount    Capital    Compensation     Deficit       (Loss)(1)       Total
                                         ----------  --------   ----------  ------------   -----------   -------------   ---------
<S>                                      <C>           <C>       <C>          <C>           <C>            <C>           <C>
Balances, January 1, 1997............... 13,864,941    $ 139     $112,346     $      -      $(106,893)     $ (1,545)     $   4,047

Cash contributions from parent..........          -        -        7,863            -              -             -          7,863

Non-cash contributions from parent......          -        -        9,749            -              -             -          9,749

Gain on sale of stock by New
 Zealand subsidiary.....................          -        -        5,985            -              -             -          5,985

Issuance of warrants to purchase
  common stock..........................          -        -        3,678            -              -             -          3,678

Net loss................................          -        -            -            -       (168,056)            -       (168,056)

Provision for loss on marketable
  equity securities, net................          -        -            -            -              -         3,412          3,412

Change in cumulative translation
  adjustments...........................          -        -            -            -              -       (30,831)       (30,831)
                                         -----------   -----     --------     --------      ---------      --------      ---------

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

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

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

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

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

Change in cumulative translation
  adjustments...........................          -        -            -            -              -          (227)          (227)
                                         ----------    -----     --------     --------      ---------      --------      ---------

Balances, December 31, 1998............. 17,810,249      178      215,624            -       (481,240)      (29,191)      (294,629)

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

Non-cash contributions from parent......          -        -       45,521            -              -             -         45,521

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

Amortization of deferred compensation...          -        -            -       22,540              -             -         22,540

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

Net income..............................          -        -            -            -         35,396             -         35,396

Change in cumulative translation
  adjustments...........................          -        -            -            -              -         6,608          6,608

                                         ----------    -----     --------     --------      ---------      --------      ---------
Balances, December 31, 1999............. 17,810,299    $ 178     $331,688     $(18,343)     $(445,844)     $(22,583)     $(154,904)
                                         ==========    =====     ========     ========      =========      ========      =========

(1)  As of January 1, 1997,  the components of Other Cumulative  Comprehensive Income (Loss) include $1,867 and $(3,412) for foreign
     currency translation adjustments and unrealized loss on investment, respectively. Beginning December 31, 1997, Other Cumulative
     Comprehensive Income (Loss) represents foreign currency translation adjustments only.

                      The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                                                 29
<PAGE>
<TABLE>
<CAPTION>
                                                     UNITED AUSTRALIA/PACIFIC, INC.
                                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                        (Stated in thousands)

                                                                                               For the Years Ended December 31,
                                                                                           ----------------------------------------
                                                                                              1999           1998           1997
                                                                                           ----------     ----------     ----------
<S>                                                                                         <C>           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).........................................................................  $ 35,396      $(206,291)     $(168,056)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
   Gain on issuance of common equity securities by subsidiary.............................  (248,361)             -              -
   Share in results of affiliated companies, net..........................................     6,351         10,299          2,408
   Minority interest in subsidiaries......................................................   (13,609)             -         (1,018)
   Depreciation and amortization..........................................................   104,720         97,140         80,802
   Allocation of expense accounted for as capital contributions by parent.................     3,216          4,622          1,949
   Stock-based compensation expense.......................................................    22,540              -              -
   Provision for losses on marketable equity securities and investment related costs......     4,949          4,462          4,784
   Accretion of interest on senior notes and amortization of deferred financing costs.....    56,069         49,508         38,747
   Increase in receivables, net...........................................................    (1,107)        (2,757)        (1,691)
   Decrease (increase) in other assets....................................................    (4,890)        (5,719)            68
   Increase in accounts payable, accrued liabilities and other............................    15,870         24,894         17,100
                                                                                            --------      ---------      ---------
Net cash flows from operating activities..................................................   (18,856)       (23,842)       (24,907)
                                                                                            --------      ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term liquid investments.................................................  (266,378)          (763)       (15,988)
Sale of short-term liquid investments.....................................................     1,676         12,325         22,303
Restricted cash released (deposited)......................................................        91              -           (420)
Investments in and advances to affiliated companies and acquisition of assets.............    (5,177)       (11,389)        (3,272)
Consolidation (deconsolidation) of New Zealand subsidiary.................................       613         (9,881)             -
Capital expenditures......................................................................  (117,819)       (71,466)      (101,135)
Decrease in construction payables.........................................................    (1,416)        (2,007)       (29,621)
                                                                                            --------      ---------      ---------
Net cash flows from investing activities..................................................  (388,410)       (83,181)      (128,133)
                                                                                            --------      ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash contributed from parent..............................................................    29,659         58,947          7,863
Cash contributed from minority interest partner...........................................         -              -         19,566
Proceeds from issuance of common stock by subsidiary, net.................................   292,784              -              -
Proceeds from issuance of common stock in connection with subsidiary option plan..........       807              -              -
Warrants exercised........................................................................         1              -              -
Borrowings on the New Austar Bank Facility and Saturn Bank Facility.......................   229,928         39,519         85,210
Payment of the Austar Bank Facility.......................................................  (129,149)             -              -
Proceeds from offering of senior discount notes...........................................         -              -         29,925
Borrowings on related party payable to parent.............................................         -              -          9,998
Deferred debt financing costs.............................................................    (8,014)          (473)        (5,643)
Payment of capital leases and other debt..................................................      (927)        (3,326)          (490)
                                                                                            --------      ---------      ---------
Net cash flows from financing activities..................................................   415,089         94,667        146,429
                                                                                            --------      ---------      ---------

EFFECT OF EXCHANGE RATES ON CASH..........................................................    (1,976)           193           (265)
                                                                                            --------      ---------      ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..........................................     5,847        (12,163)        (6,876)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................................       181         12,344         19,220
                                                                                            --------      ---------      ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD..................................................  $  6,028      $     181      $  12,344
                                                                                            ========      =========      =========

                      The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                                                 30

<PAGE>
<TABLE>
<CAPTION>
                                                     UNITED AUSTRALIA/PACIFIC, INC.
                                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                        (Stated in thousands)

                                                                                               For the Years Ended December 31,
                                                                                           ----------------------------------------
                                                                                              1999           1998           1997
                                                                                           ----------     ----------     ----------
<S>                                                                                         <C>           <C>            <C>
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash capital contributions from parent................................................  $ 17,233      $  12,473      $   7,800
                                                                                            ========      =========      =========
Gain on issuance of shares by New Zealand subsidiary......................................  $      -      $       -      $   5,985
                                                                                            ========      =========      =========
Non-cash issuance of warrants to purchase common stock....................................  $      -      $       -      $   3,678
                                                                                            ========      =========      =========
Investment in XYZ Entertainment...........................................................  $ 25,072      $       -      $       -
                                                                                            ========      =========      =========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest....................................................................  $ 11,977      $   5,323      $   1,239
                                                                                            ========      =========      =========
Cash received for interest................................................................  $  2,747      $     144      $     796
                                                                                            ========      =========      =========

CONSOLIDATION/DECONSOLIDATION OF NEW ZEALAND SUBSIDIARY:
Working capital...........................................................................  $ 10,162      $   4,159      $       -
Property, plant and equipment.............................................................   (80,656)       (26,484)             -
Elimination of investment in Saturn.......................................................    21,974              -              -
Goodwill and other assets.................................................................    (5,737)        (2,805)             -
Notes payable and other debt..............................................................    54,870          3,833              -
Minority interest.........................................................................         -         11,416              -
                                                                                            --------      ---------      ---------
Total cash received (relinquished)........................................................  $    613      $  (9,881)     $       -
                                                                                            ========      =========      =========






                      The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                                                 31
<PAGE>


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

1.   ORGANIZATION AND NATURE OF OPERATIONS

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

The following chart presents a summary of the Company's  ownership structure and
its  significant  investments  in  multi-channel  television,   programming  and
telephony operations as of December 31, 1999.

          ***********************************************************
          *                                                         *
          *                         United                          *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *      United International Properties, Inc. ("UIPI")     *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *                           UAP                           *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *                      The Company                        *
          *                                                         *
          ***********************************************************
                                       *
                              75.4%    *
          ***********************************************************
          *          Austar United Communications Limited           *
          *                    ("Austar United")                    *
          *                                                         *
          ***********************************************************
                                       *
                                       *
          ***********************************************************
          *                                                         *
          *Australia:                                               *
          * Austar Entertainment Pty Limited ("Austar")     100.0%  *
          * XYZ Entertainment Pty Limited ("XYZ                     *
          *  Entertainment")                                 50.0%  *
          *New Zealand:                                             *
          * Saturn Communications Limited ("Saturn")        100.0%  *
          *                                                         *
          ***********************************************************




                                       32
<PAGE>

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


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

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

PRINCIPLES OF CONSOLIDATION

The accompanying  consolidated  financial statements include the accounts of the
Company and all subsidiaries where the Company exercises a controlling financial
interest through the ownership of a majority voting interest.  On July 27, 1999,
Austar United acquired from the minority  shareholder of Saturn  ("SaskTel") its
35.0% interest in Saturn in exchange for 13,659,574 of Austar  United's  shares,
thereby  increasing Austar United's  ownership  interest in Saturn from 65.0% to
100%.  As a  result,  Saturn  is  consolidated  in  these  financial  statements
effective July 27, 1999. The Company  previously  consolidated the operations of
Saturn from July 1, 1996  through  December 31,  1998.  Prior to that time,  the
Company  accounted for its investment in Saturn under the equity method.  During
the fourth quarter of 1998, the Company  discontinued  consolidating the results
of  operations  of Saturn  effective  as of January 1, 1998 and  returned to the
equity method of accounting through July 26, 1999. The change was made to comply
with the consensus  guidance of the Emerging  Issues Task Force  regarding Issue
96-16  ("EITF  96-16"),  and  related  rules  of  the  Securities  and  Exchange
Commission  ("SEC"),  because SaskTel had participating  approval or veto rights
with respect to certain  significant  decisions of Saturn in the ordinary course
of business. Accordingly, the condensed consolidated statement of operations and
statement  of cash  flows  for the  period  ended  December  31,  1998 have been
adjusted to reflect the  deconsolidation  of Saturn  effective  as of January 1,
1998.  Effective  October 1, 1998, the Company  discontinued  consolidating  the
results  of  operations  of  Telefenua  due to an  other-than-temporary  loss of
control.  All  significant  intercompany  accounts  and  transactions  have been
eliminated in consolidation.

CASH AND CASH EQUIVALENTS AND SHORT-TERM LIQUID INVESTMENTS

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

INVENTORIES

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

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

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

PROPERTY, PLANT AND EQUIPMENT

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

                                       33
<PAGE>

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

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

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

GOODWILL AND OTHER INTANGIBLE ASSETS

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

RECOVERABILITY AMOUNTS OF TANGIBLE AND INTANGIBLE ASSETS

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

DEFERRED FINANCING COSTS

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

START-UP COSTS

In April 1998, the AICPA issued  Statement of Position  98-5,  "Reporting on the
Costs of Start-up Activities",  ("SOP 98-5"), which provides for guidance on the
financial  reporting for start-up and  organization  costs. It requires costs of
start-up activities and organization costs to be expensed as incurred.  SOP 98-5
was effective for financial statements for fiscal years beginning after December
15, 1998. There was no material effect of the adoption of SOP 98-5 during 1999.

REVENUE RECOGNITION

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

CONCENTRATION OF CREDIT RISK

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

STOCK-BASED COMPENSATION

Stock-based  compensation is recognized using the intrinsic value method for the
Austar United stock option plan,  which results in compensation  expense for the
difference  between  the  grant  price  and the  fair  market  value at each new
measurement  date.  With respect to this plan, the rights  conveyed to employees
are the  substantive  equivalents  to stock  appreciation  rights.  Accordingly,
compensation expense is recognized at each financial statement date based on the
difference  between  the grant  price  and the  estimated  fair  value of Austar
United's common stock.

                                       34
<PAGE>

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

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

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

INCOME TAXES

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

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

"Basic net income  (loss) per share" is determined by dividing net income (loss)
available to common stockholders by the weighted-average number of common shares
outstanding  during each period.  "Diluted net income (loss) per share" includes
the effects of potentially  issueable  common stock,  but only if dilutive.  The
Company's warrants (see Note 9) are included in the Company's diluted net income
(loss) per share amounts for 1999.

COMPREHENSIVE INCOME (LOSS)

The Company has adopted  Statement of Financial  Accounting  Standards  No. 130,
"Reporting Comprehensive Income" ("SFAS 130"), which requires that an enterprise
(i) classify  items of other  comprehensive  income  (loss) by their nature in a
financial   statement  and  (ii)  display  the  accumulated   balance  of  other
comprehensive  income (loss)  separately  from retained  earnings and additional
paid-in capital in the equity section of a statement of financial position.  The
Company adopted SFAS 130 effective January 1, 1998.

FOREIGN OPERATIONS AND FOREIGN EXCHANGE RATE RISK

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

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

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

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


                                       35
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NEW ACCOUNTING PRINCIPLES

The Financial  Accounting  Standards Board ("FASB") recently issued Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities" ("SFAS 133"),  which requires that companies  recognize
all  derivatives  as either assets or  liabilities  in the balance sheet at fair
value.  Under  SFAS  133,  accounting  for  changes  in fair  market  value of a
derivative  depends on its intended use and  designation.  SFAS 133 is effective
for  fiscal  years  beginning  after June 15,  2000.  The  Company is  currently
assessing the effect of SAB 101.

In December 1999, the staff of the SEC issued Staff Accounting  Bulletin No. 101
("SAB 101") "Views on Selected  Revenue  Recognition  Issues" which provides the
staff's views in applying generally accepted  accounting  principles to selected
revenue  recognition  issues.  SAB 101 is effective  second  quarter  2000.  The
Company is currently assessing the effect of SAB 101.

RECLASSIFICATIONS

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

3.   RESTRUCTURING OF ASSETS AND INITIAL PUBLIC OFFERING

In June 1999, the Company's  interests in Austar,  XYZ  Entertainment and Saturn
were  contributed  to Austar  United in exchange for new shares issued by Austar
United. On July 27, 1999, Austar United acquired from SaskTel its 35.0% interest
in  Saturn  in  exchange  for  13,659,574  of Austar  United's  shares,  thereby
increasing Austar United's  ownership  interest in Saturn from 65.0% to 100%. In
addition,  Austar  United  successfully  completed  an initial  public  offering
("Austar  United IPO")  selling  103.5 million  shares on the  Australian  Stock
Exchange,  raising  gross and net  proceeds  in  Australian  dollars  ("A$")4.70
($3.03) per share of A$486.5  ($313.6)  million and  A$453.6  ($292.8)  million,
respectively.  Based on the carrying value of the Company's investment in Austar
United as of July 27,  1999,  the Company  recognized  a gain of $248.4  million
resulting from the step-up in the carrying amount of the Company's investment in
Austar  United,  in  accordance  with SAB 51. No  deferred  taxes were  recorded
related to this gain due to the  Company's  intent on holding its  investment in
Austar United indefinitely.  Austar United's IPO reduced the Company's ownership
interest from 100% to  approximately  75.5%.  Subsequent  stock option exercises
reduced our ownership  interest to 75.4% as of December 31, 1999.  Including all
vested stock options granted to employees,  the Company's  ownership interest in
Austar United on a fully diluted  basis is  approximately  73.7% at December 31,
1999.

4.   CASH AND CASH EQUIVALENTS AND SHORT-TERM LIQUID INVESTMENTS
<TABLE>
<CAPTION>
                                                                            As of December 31, 1999
                                                                ----------------------------------------------
                                                                    Cash          Short-Term
                                                                  and Cash          Liquid
                                                                Equivalents      Investments         Total
                                                                -------------    -------------    ------------
                                                                                (In thousands)
     <S>                                                           <C>             <C>              <C>
     Cash....................................................      $6,028          $     -          $  6,028
     Certificates of deposit.................................           -           269,043          269,043
     Government securities...................................           -               350              350
                                                                   ------          --------         --------
        Total................................................      $6,028          $269,393         $275,421
                                                                   ======          ========         ========

                                                                            As of December 31, 1998
                                                                ----------------------------------------------
                                                                    Cash          Short-term
                                                                  and Cash          Liquid
                                                                Equivalents      Investments         Total
                                                                -------------    -------------    ------------
                                                                                (In thousands)
     Cash....................................................      $  181          $      -         $    181
     Commercial paper........................................           -               406              406
     Government securities...................................           -               357              357
                                                                   ------          --------         --------
        Total................................................      $  181          $    763         $    944
                                                                   ======          ========         ========
</TABLE>
                                       36
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.  INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES, ACCOUNTED FOR UNDER THE
    EQUITY METHOD
<TABLE>
<CAPTION>
                                                            As of December 31, 1999
                           -------------------------------------------------------------------------------------------
                              Investments in          Cumulative Share        Cumulative
                              and Advances to           in Results of        Translation      Valuation
                           Affiliated Companies     Affiliated Companies     Adjustments      Allowance         Total
                           --------------------     --------------------     -----------      ----------       -------
                                                                   (In thousands)
     <S>                         <C>                     <C>                   <C>            <C>              <C>
     XYZ Entertainment(1)...     $44,306                 $(18,564)             $ 2,804        $     -          $28,546
                                 -------                 --------              -------        -------          -------
          Total.............     $44,306                 $(18,564)             $ 2,804        $     -          $28,546
                                 =======                 ========              =======        =======          =======

                                                            As of December 31, 1998
                           -------------------------------------------------------------------------------------------
                              Investments in          Cumulative Share        Cumulative
                              and Advances to           in Results of        Translation      Valuation
                           Affiliated Companies     Affiliated Companies     Adjustments      Allowance         Total
                           --------------------     --------------------     -----------      ----------       -------
                                                                   (In thousands)
     Saturn.................     $49,808                 $(23,138)             $(2,881)        $     -          $23,789
     XYZ Entertainment......      19,363                  (18,666)                 111               -              808
     Telefenua..............      18,599                  (14,215)                   -          (4,384)(2)            -
                                 -------                 --------              -------         -------          -------
          Total.............     $87,770                 $(56,019)             $(2,770)        $(4,384)         $24,597
                                 =======                 ========              =======         =======          =======
</TABLE>
     (1)  In June 1999, the 25.0% interest in XYZ Entertainment  held by UAP was
          transferred to the Company at its carrying value of $25.1 million.
     (2)  The Company reserved the remaining balance of the Telefenua investment
          of $4,384 due to the uncertainty of realization.

As of December  31, 1999 and 1998,  the  Company had the  following  differences
related  to the  excess  of its cost  over its  proportionate  interest  in each
affiliate's net tangible assets  included in the above table.  Such  differences
are being amortized over 15 years.
<TABLE>
<CAPTION>
                                                                  As of December 31, 1999      As of December 31, 1998
                                                                ---------------------------  ---------------------------
                                                                   Basis      Accumulated       Basis      Accumulated
                                                                Difference    Amortization   Difference    Amortization
                                                                ------------ --------------  ------------ --------------
                                                                                     (In thousands)
     <S>                                                          <C>           <C>           <C>            <C>
     XYZ Entertainment.....................................       $25,791       $(1,609)      $     -        $     -
     Saturn................................................             -             -        12,733         (1,005)
                                                                  -------       -------       -------        -------
          Total............................................       $25,791       $(1,609)      $12,733        $(1,005)
                                                                  =======       =======       =======        =======
</TABLE>
Condensed  financial  information  for  Saturn,  stated in U.S.  dollars,  is as
follows:
                                                                    As of
                                                               December 31, 1998
                                                              ------------------
                                                                (In thousands)
     Current assets.........................................       $  4,071
     Non-current assets.....................................         59,242
                                                                   --------
          Total assets......................................       $ 63,313
                                                                   ========

     Current liabilities....................................       $ 33,608
     Non-current liabilitities..............................             19
     Shareholders' equity                                            29,686
                                                                   --------
          Total liabilities and shareholders' equity........       $ 63,313
                                                                   ========

                                                              For the Year Ended
                                                               December 31, 1998
                                                             -------------------
                                                                (In thousands)
     Revenue................................................       $  1,693
     Expenses...............................................        (16,934)
                                                                   --------
          Net loss..........................................       $(15,241)
                                                                   ========
                                       37
<PAGE>

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

6.   PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
                                                                     As of December 31,
                                                                 -------------------------
                                                                    1999           1998
                                                                 ----------     ----------
                                                                      (In thousands)
     <S>                                                          <C>             <C>
     Subscriber premises equipment and converters..............   $276,725        $174,630
     MMDS distribution facilities..............................     64,373          54,725
     Cable distribution networks...............................     91,298           2,009
     Office equipment, furniture and fixtures..................     23,111           9,810
     Buildings and leasehold improvements......................      5,645           2,841
     Other.....................................................     20,133          13,847
                                                                  --------        --------
                                                                   481,285         257,862
        Accumulated depreciation...............................   (261,891)       (147,511)
                                                                  --------        --------
        Net property, plant and equipment......................   $219,394        $110,351
                                                                  ========        ========
</TABLE>

7.    GOODWILL AND OTHER INTANGIBLE ASSETS
<TABLE>
<CAPTION>
                                                                     As of December 31,
                                                                 -------------------------
                                                                    1999           1998
                                                                 ----------     ----------
                                                                      (In thousands)
     <S>                                                          <C>             <C>
     Austar United.............................................   $114,882        $      -
     Austar....................................................          -          55,805
     Other.....................................................          -           4,266
                                                                  --------        --------
                                                                   114,882          60,071
        Accumulated amortization...............................    (23,536)        (17,512)
                                                                  --------        --------
        Net goodwill and other intangible assets...............   $ 91,346        $ 42,559
                                                                  ========        ========
</TABLE>

8.    CURRENT PORTION OF NOTES PAYABLE
<TABLE>
<CAPTION>
                                                                     As of December 31,
                                                                 -------------------------
                                                                    1999           1998
                                                                 ----------     ----------
                                                                      (In thousands)
     <S>                                                          <C>             <C>
     Austar Bank Facility (See Note 10).........................  $      -        $ 36,738
                                                                  --------        --------
        Total current portion of notes payable..................  $      -        $ 36,738
                                                                  ========        ========
</TABLE>

9.    SENIOR DISCOUNT NOTES
<TABLE>
<CAPTION>
                                                                     As of December 31,
                                                                 -------------------------
                                                                    1999           1998
                                                                 ----------     ----------
                                                                      (In thousands)
     <S>                                                          <C>             <C>
     May 1996 Notes (as defined below), net of
      unamortized discount......................................  $369,111        $321,687
     September 1997 Notes (as defined below), net
      of unamortized discount...................................    38,834          34,953
                                                                  --------        --------
        Total senior discount notes.............................  $407,945        $356,640
                                                                  ========        ========
</TABLE>
                                       38
<PAGE>

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

MAY 1996 NOTES

The 14.0% senior notes,  which the Company issued in May 1996 at a discount from
their principal amount of $443.0 million (the "May 1996 Notes"), had an accreted
value of $369.1 million as of December 31, 1999. On and after May 15, 2001, cash
interest  will  accrue  and  will be  payable  semi-annually  on each May 15 and
November 15,  commencing  November 15, 2001.  The May 1996 Notes are due May 15,
2006.  Effective May 16, 1997, the interest rate on these notes  increased by an
additional  0.75%  per  annum to  14.75%.  On  October  14,  1998,  the  Company
consummated  an equity sale  resulting in gross proceeds to the Company of $70.0
million which  reduced the interest rate from 14.75% to 14.0% per annum.  Due to
the increase in the interest rate effective May 16, 1997 until  consummation  of
the equity sale, the May 1996 Notes will accrete to a principal amount of $447.4
million on May 15, 2001,  the date cash  interest  begins to accrue.  The quoted
fair market  value of these notes was  approximately  $375.8  million and $223.7
million as of December 31, 1999 and 1998, respectively.

SEPTEMBER 1997 NOTES

The 14.0% senior notes, which the Company issued in September 1997 at a discount
from their principal  amount of $45.0 million (the "September 1997 Notes"),  had
an accreted value of $38.8 million as of December 31, 1999. On and after May 15,
2001, cash interest will accrue and will be payable semi-annually on each May 15
and November 15, commencing  November 15, 2001. The September 1997 Notes are due
May 15, 2006.  Effective  September  23, 1997,  the interest rate on these notes
increased by an additional  0.75% per annum to 14.75%.  On October 14, 1998, the
Company  consummated  an equity sale,  reducing the interest rate from 14.75% to
14.0% per annum.  Due to the increase in the interest rate  effective  September
23, 1997 until  consummation  of the equity sale,  the September 1997 Notes will
accrete to a principal  amount of $45.4  million on May 15, 2001,  the date cash
interest  begins to accrue.  The quoted  fair  market  value of these  notes was
approximately  $38.2 million and $22.7 million as of December 31, 1999 and 1998,
respectively.

On November 17, 1997, pursuant to the terms of the indentures  governing the May
1996 Notes and the September 1997 Notes (collectively, the "Notes"), the Company
issued  warrants  to  purchase  488,000  shares  of  its  common  stock,   which
represented  3.4% of the Company's  common stock at that time.  The warrants are
exercisable  at a price of $10.45 per share which would result in gross proceeds
of  approximately  $5.1 million  upon  exercise.  The  warrants are  exercisable
through May 15,  2006.  The  warrants  were valued at $3.7 million and have been
reflected as an additional  discount to the Notes on a pro-rata  basis and as an
increase  in  additional  paid-in  capital.  Warrants  to acquire 50 shares were
exercised November 24, 1999.

10.  OTHER LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                     As of December 31,
                                                                 -------------------------
                                                                    1999           1998
                                                                 ----------     ----------
                                                                      (In thousands)
     <S>                                                          <C>             <C>
     Austar Bank Facility (as defined below)................      $202,703        $ 67,352
     Saturn Bank Facility (as defined below)................        57,685               -
     Capitalized leases and other...........................         2,263           2,923
                                                                  --------        --------
                                                                   262,651          70,275
        Less current portion................................        (1,500)         (2,189)
                                                                  --------        --------
        Total other long-term debt.........................       $261,151        $ 68,086
                                                                  ========        ========
</TABLE>

AUSTAR BANK FACILITY

In July 1997, Austar secured a senior syndicated term debt facility (the "Austar
Bank  Facility")  in the  amount  of  A$200.0  million  to fund  its  subscriber
acquisition and working  capital needs.  Austar had drawn the full amount of the
facility  by April 1999 when it secured a new  syndicated  senior  secured  debt
facility (the "New Austar Bank  Facility") for A$400.0  million to refinance the
A$200.0 million Austar Bank Facility and to fund Austar's subscriber acquisition
and  working  capital  needs.  The New  Austar  Bank  Facility  consists  of two
sub-facilities:  (i) A$200.0 million  amortizing term facility ("Tranche 1") and
(ii) A$200.0 million cash advance facility  ("Tranche 2"). Tranche 1 was used to
refinance  the  Austar  Bank  Facility,  and  Tranche  2 is  available  upon the
contribution of additional equity on a 2:1 debt-to-equity  basis. As of December
31,  1999,  Austar had drawn  A$309.0  ($202.7)  million on the New Austar  Bank
Facility. All of Austar's assets are pledged as collateral for this facility. In
addition,  pursuant to this facility, Austar cannot pay any dividends,  interest
or fees under its  technical  assistance  agreements  without the consent of the

                                       39
<PAGE>

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

majority banks.  The New Austar Bank Facility bears interest at the professional
market rate in  Australia  plus a margin  ranging from 1.75% to 2.25% based upon
certain  debt to cash  flow  ratios.  The New  Austar  Bank  Facility  is  fully
repayable  pursuant to an amortization  schedule beginning December 31, 2002 and
ending March 31, 2006.

SATURN BANK FACILITY

On July 15, 1999,  Saturn closed a syndicated  senior debt facility (the "Saturn
Bank Facility") in the amount of NZ$125.0 ($65.4) million to fund the completion
of Saturn's network.  As of December 31, 1999, Saturn had drawn NZ$109.0 ($57.7)
million  against the facility and expects to draw down the remaining  balance by
the end of fourth  quarter 2000.  The interest rate on the debt facility is 3.0%
over the current base rate upon draw down and has averaged  approximately  8.6%.
The Saturn Bank Facility is repayable over a five year period  beginning  fourth
quarter 2001.

DEBT MATURITIES

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

     Year ended December 31, 2000.......................  $  1,500
     Year ended December 31, 2001.......................     5,356
     Year ended December 31, 2002.......................    18,069
     Year ended December 31, 2003.......................    62,069
     Year ended December 31, 2004.......................    96,839
     Thereafter.........................................    78,818
                                                          --------
                                                          $262,651
                                                          ========
OTHER FINANCIAL INSTRUMENTS

Interest  rate swap  agreements  are used by the Company  from time to time,  to
manage  interest rate risk on its floating rate debt  facilities.  Interest rate
swaps are entered into depending on the Company's  assessment of the market, and
generally  are used to  convert  the  floating  rate  debt to fixed  rate  debt.
Interest  differentials  paid  or  received  under  these  swap  agreements  are
recognized  over the life of the contracts as adjustments to the effective yield
of the underlying  debt, and related amounts payable to, or receivable from, the
counterparties are included in the consolidated  balance sheet.  Currently,  the
Company has four interest rate swaps to manage interest rate exposure on the New
Austar  Bank  Facility.  Two  of  these  swap  agreements  expire  in  2002  and
effectively  convert an aggregate  principal amount of A$50.0 ($32.8) million of
variable  rate,  long-term debt into fixed rate  borrowings.  The other two swap
agreements  expire in 2004 and convert an aggregate  principal amount of A$100.0
($65.6) million of variable rate, long-term debt into fixed rate borrowings.  As
of December 31, 1999, the weighted-average fixed rate under these agreements was
8.0%  compared  to a  weighted-average  variable  rate  on the New  Austar  Bank
Facility of approximately  7.6%. As a result of these swap agreements,  interest
expense was increased by approximately A$0.9 ($0.6) million during 1999.

In addition, the company has an interest rate swap to manage its exposure on the
Saturn Bank Facility which effectively converts an aggregate principal amount of
NZ$60.6  ($31.7)  million  of  variable  rate,  long-term  debt into  fixed rate
borrowings.  The interest rate swap  includes an  increasing  fixed rate with an
additional  margin  which is  expected  to decline  as the debt to EBITDA  ratio
declines.  As of December 31, 1999,  the average  fixed rate under the agreement
was 9.3%  compared to a  weighted-average  variable rate of 8.6%. As a result of
this swap  agreement,  interest  expense was increased by  approximately  NZ$0.4
($0.2) million during 1999.

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

11.  RELATED PARTY

Effective  May 1,  1996,  the  Company  and  United  Management,  Inc.  ("United
Management") (formerly known as UIH Management,  Inc.), an indirect wholly-owned
subsidiary of United,  executed a 10-year  management  services  agreement  (the
"Management  Agreement"),  pursuant to which United Management  performs certain
administrative,  accounting,  financial  reporting  and other  services  for the
Company,  which has no separate employees of its own. Pursuant to the Management
Agreement,  the  management  fee was $0.75  million  for the first  year of such
agreement  (beginning May 1, 1996), and it increases on each anniversary date of
the  Management  Agreement by 8.0% per year.  Effective  March 31, 1997,  United

                                       40
<PAGE>

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

Management assigned its rights and obligations under the Management Agreement to
UAP, the  Company's  immediate  parent,  and extended the agreement for 20 years
from that date  (the "UAP  Management  Agreement").  In  addition,  the  Company
reimburses  UAP or  United  for any  out-of-pocket  expenses  including  travel,
lodging and entertainment  expenses,  incurred by UAP or United on behalf of the
Company.  In  December  1997,  United  began  allocating  corporate  general and
administrative   expense  to  the   Company  in  the  form  of  deemed   capital
contributions,  based on  increased  activity  at the  operating  system  level.
Management believes that this method of allocating costs is reasonable.  For the
years  ended  December  31,  1999,  1998 and 1997,  the Company  recorded  $20.8
million, $4.6 million and $1.9 million,  respectively,  in corporate general and
administrative  expense  allocated from United and management  fees due from the
Company to UAP. The December 31, 1999 amount  includes $17.6 million of non-cash
stock-based compensation expense related to UAP stock appreciation rights.

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

Austar and Saturn  were  parties to  technical  assistance  agreements  with UAP
whereby  such  operating  companies  paid to UAP fees based on their  respective
gross revenues. The operating systems reimbursed United for certain direct costs
incurred  by  United,   including  salaries  and  benefits  relating  to  senior
management  positions,  pursuant  to  the  terms  of  the  technical  assistance
agreements.  For the years ended  December 31, 1999,  1998 and 1997, the Company
recorded $0.9 million, $0.9 million and $0.8 million,  respectively,  in related
party  management  fees under these  agreements.  Effective  June 24, 1999,  the
rights under these  management fee agreements  were assigned to Austar United as
part of the restructuring associated with the Austar United IPO.

Included in the amount due to parent is the following:
<TABLE>
<CAPTION>
                                                                              As of December 31,
                                                                           -------------------------
                                                                              1999           1998
                                                                           ----------     ----------
                                                                                (In thousands)
     <S>                                                                    <C>             <C>
     United A/P..........................................................   $ 1,977         $ 1,056
     Austar United technical assistance agreement obligations,
      including management fees of $1,200 and $0, respectively...........     2,874               -
     Austar technical assistance agreement obligations, including
      deferred management fees of $9,472 and $5,973, respectively (1)....    13,889           8,347
     Saturn technical assistance agreement obligations...................     1,820               -
     Other...............................................................     1,815             840
                                                                            -------         -------
                                                                             22,375          10,243
          Less current portion...........................................   (12,754)         (3,665)
                                                                            -------         -------
          Total due to parent............................................   $ 9,621         $ 6,578
                                                                            =======         =======
</TABLE>
     (1)  Austar United and UAP have the option of converting  these  management
          fees into equity.

                                       41
<PAGE>

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

12.  STOCKHOLDERS' DEFICIT

EQUITY TRANSACTIONS OF SUBSIDIARY

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

                                                              For the Year Ended
                                                              December 31, 1999
                                                              ------------------
                                                                   Austar
                                                                   United
                                                              ------------------
                                                                (In thousands)
     Variable plan accounting for stock options...............     $40,883
     Deferred compensation expense............................     (40,883)
     Amortization of deferred compensation....................      22,540
                                                                   -------
          Total...............................................     $22,540
                                                                   =======

AUSTAR UNITED PLAN

On June 17, 1999,  Austar  United  established  a stock option plan (the "Austar
United Plan").  Effective on Austar United's IPO date of July 27, 1999,  certain
employees  of United and Austar  United were  granted  options  under the Austar
United Plan in direct  proportion to their previous holding of UAP options under
the UAP Plan along with retroactive  vesting through the initial public offering
date to reflect  vesting under the UAP Plan. The maximum term of options granted
under the Austar United Plan is ten years. In general, the options vest in equal
monthly  increments over the four-year period following the date of grant. Under
the Austar United Plan,  options to purchase a total of  28,760,709  shares have
been authorized,  of which 3,231,428 were available for grant. The Austar United
Plan was accounted for as a variable plan prior to the  Australian  IPO and as a
fixed plan effective  July 27, 1999. For the year ended December 31, 1999,  $4.9
million of compensation  expense was recognized under this plan in the statement
of operations.

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

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

The total fair value of options granted was approximately A$88.0 ($57.7) million
for the year  ended  December  31,  1999.  This  amount is  amortized  using the
straight-line  method  over  the  vesting  period  of  the  options.  Cumulative
compensation  expense recognized in proforma net income, with respect to options
that are  forfeited  prior to vesting,  is  adjusted as a reduction  of proforma
compensation  expense  in  the  period  of  forfeiture.  Pro  forma  stock-based
compensation,   net  of  the  effect  of  the  forfeitures  and  net  of  actual
compensation  expense  recorded in the statement of  operations  was nil for the
year ended December 31, 1999.

                                       42
<PAGE>

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

A summary of stock option activity for the Austar United Plan is as follows:
<TABLE>
<CAPTION>
                                                                        For the Year Ended
                                                                        December 31, 1999
                                                                ----------------------------------
                                                                   Number           Weighted-
                                                                     of              Average
                                                                   Shares         Exercise Price
                                                                ------------   -------------------
                                                                               (Australian dollars)
     <S>                                                         <C>                   <C>
     Outstanding at beginning of period......................             -               -
     Granted during the period...............................    25,631,736            2.26
     Cancelled during the period.............................      (102,455)           3.75
     Exercised during the period.............................      (684,250)           1.83
                                                                 ----------

     Outstanding at end of period............................    24,845,031            2.27
                                                                 ==========

     Exercisable at end of period............................    11,564,416            1.90
                                                                 ==========
</TABLE>

The combined  weighted-average fair values and weighted-average  exercise prices
of options granted during the year ended December 31, 1999 are as follows:
<TABLE>
<CAPTION>
                                                                          For the Year Ended
                                                                          December 31, 1999
                                                                ---------------------------------------
                                                                   Number        Fair       Exercise
     Exercise Price                                              of Options      Value        Price
     --------------                                             ------------- ---------- ---------------
                                                                                      (Australian dollars)
     <S>                                                         <C>             <C>          <C>
     Less than market price..................................    22,334,236      3.58         1.91
     Equal to market price...................................     3,222,500      2.47         4.70
     Greater than market price...............................        75,000      2.43         4.70
                                                                 ----------
        Total................................................    25,631,736      3.44         2.26
                                                                 ==========
</TABLE>

The following table summarizes  information about the Austar United Plan options
outstanding and exercisable at December 31, 1999:
<TABLE>
<CAPTION>
                                                                               Weighted-Average
                                                                 Number of         Remaining        Number of
                                                                  Options      Contractual Life      Options
     Exercise Price (Australian dollars)                        Outstanding         (Years)        Exercisable
     --------------                                             -----------    ----------------    -----------
     <S>                                                         <C>                 <C>            <C>
     $1.80...................................................    20,813,572          9.55           11,171,494
     $4.70...................................................     4,031,459          9.60              392,922
                                                                 ----------                         ----------
        Total................................................    24,845,031          9.56           11,564,416
                                                                 ==========                         ==========
</TABLE>

13.   INCOME TAXES

In  general,  a U.S.  corporation  may claim a foreign  tax credit  against  its
federal income tax expense for foreign income taxes paid or accrued. Because the
Company must calculate its foreign tax credit separately for dividends  received
from each  foreign  corporation  in which the Company owns 10.0% to 50.0% of the
voting stock, and because of certain other limitations, the Company's ability to
claim a  foreign  tax  credit  may be  limited,  particularly  with  respect  to
dividends  paid out of  earnings  subject to a high rate of foreign  income tax.
Generally, the Company's ability to claim a foreign tax credit is limited to the
amount of U.S. taxes the Company pays with respect to its foreign source income.
In calculating  its foreign  source income,  the Company is required to allocate
interest  expense and  overhead  incurred in the U.S.  between its  domestic and
foreign  activities.  Accordingly,  to the extent  U.S.  borrowings  are used to
finance equity contributions to its foreign subsidiaries,  the Company's ability
to claim a foreign tax credit may be significantly  reduced.  These  limitations
and the  inability of the Company to offset  losses in one foreign  jurisdiction
against  income earned in another  foreign  jurisdiction  could result in a high
effective tax rate on the Company's earnings.


                                       43
<PAGE>

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

The Company is included  as a member of  United's  consolidated  tax return and,
after the  offering  of the May 1996  Notes,  remained  a member  of the  United
consolidated  group.  United  and  the  Company  are  parties  to a tax  sharing
agreement that defines the parties' rights and  obligations  with respect to tax
liabilities  and benefits  relating to the Company and its operations as part of
the consolidated  group of United. In general,  United is responsible for filing
consolidated  tax returns and paying the associated  taxes, and the Company will
reimburse United for the portion of the tax cost relating to the Company and its
operations.  For financial reporting  purposes,  the Company accounts for income
taxes  as if it  filed  separate  income  tax  returns  in  accordance  with the
fundamental  provisions of the tax sharing agreement.  Any differences in income
tax expense (benefit)  allocated to the Company by United in accordance with the
tax sharing agreement and the income tax expense (benefit) will be accounted for
as a deemed  capital  distribution  or  contribution.  Because the Company holds
certain of its foreign  investments  through  affiliates  which hold investments
accounted for under the equity method in foreign  corporations,  taxable  income
(loss) generated does not flow through to the Company for U.S. federal and state
tax purposes even though the Company  records its  allocable  share of affiliate
income  (losses)  for  financial  reporting  purposes.  Accordingly,  due to the
indefinite  reversal of such amounts in future  periods,  no deferred tax assets
have  been  established  for tax basis in excess  of the  Company's  book  basis
(approximately $18.0 million and $13.0 million as of December 31, 1999 and 1998,
respectively)  in investments in affiliated  companies who, in turn, have equity
investments in foreign corporations.

The Company's  United States tax net operating  losses,  totaling  approximately
$21.9 million at December 31, 1999,  expire  beginning in 2014 through 2029. The
significant components of the net deferred tax asset are as follows:
<TABLE>
<CAPTION>
                                                                                                      As of December 31,
                                                                                                  -------------------------
                                                                                                     1999           1998
                                                                                                  ----------     ----------
                                                                                                       (In thousands)
     <S>                                                                                           <C>            <C>
     Deferred tax assets:
     --------------------
       Basis differences in property, plant and equipment......................................    $     482      $   1,367
       Accrued interest expense on the Notes...................................................       52,040         32,885
       U.S. tax net operating loss carryforward................................................        8,323          4,615
       Basis difference in marketable equity securities........................................        1,696          1,696
       Tax net operating loss carryforward of consolidated foreign subsidiaries (1)............      156,470        107,856
                                                                                                   ---------      ---------
     Gross deferred tax assets.................................................................      219,011        148,419

     Deferred tax liabilities:
     -------------------------
       Other...................................................................................       (1,014)             -
                                                                                                   ---------      ---------
     Gross deferred tax liabilities............................................................       (1,014)             -
                                                                                                   ---------      ---------
     Valuation allowance for deferred tax assets...............................................     (219,011)      (148,419)
                                                                                                   ---------      ---------
     Deferred tax liabilities, net.............................................................    $  (1,014)     $       -
                                                                                                   =========      =========
</TABLE>
     (1)  For   Australian   income  tax  purposes,   the  net  operating   loss
          carryforward  may be  limited  in the event of a change in  control of
          Austar or a change in the business.


                                       44
<PAGE>

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

The difference  between income tax expense provided in the financial  statements
and the expected  income tax expense  (benefit) at statutory rates is reconciled
as follows:
<TABLE>
<CAPTION>
                                                                                      For the Years Ended December 31,
                                                                                 --------------------------------------------
                                                                                     1999           1998           1997
                                                                                 -------------  -------------- -------------
                                                                                                (In thousands)
     <S>                                                                           <C>            <C>            <C>
     Expected income tax benefit at the U.S. statutory rate of 35.0%............   $ 12,038       $(68,597)      $(58,333)
     Tax effect of permanent and other differences:
       Change in valuation reserve..............................................     66,968         64,624         56,060
       State tax, net of federal benefit........................................      1,032         (6,189)        (5,042)
       International rate differences...........................................      3,325         (1,251)          (615)
       Non-deductible interest accretion on the Notes...........................      1,693          2,605          2,145
       Amortization of outside basis differences................................        788          1,412          1,570
       Amortization of licenses.................................................        923          1,819          1,312
       Gain on issuance of common equity securities by subsidiary...............    (94,377)             -              -
       Non-deductible expenses and other........................................      8,603          5,577          2,903
                                                                                   --------       --------       --------
     Total income tax expense...................................................   $    993       $      -       $      -
                                                                                   ========       ========       ========
</TABLE>

14.   SEGMENT INFORMATION

The   Company's   business  has   historically   been  derived  from  its  video
entertainment segment. This service has been provided in various countries where
the Company owns and operates its systems.  Accordingly,  the Company's  current
reportable segments are the various countries in which it operates multi-channel
television,  programming and/or telephony operations.  These reportable segments
are  evaluated  separately  because each country  presents  different  marketing
strategies  and  technology  issues as well as distinct  economic  climates  and
regulatory  constraints.  The key  operating  performance  criteria used in this
evaluation  include  revenue  growth,   operating  income  before  depreciation,
amortization, non-cash general and administrative expense allocated from parent,
stock-based  compensation charges ("Adjusted EBITDA") and capital  expenditures.
Senior  management of the Company does not view segment  results below  Adjusted
EBITDA,  therefore,  interest income, interest expense,  provision for losses on
investment  related  costs,  gain on sale of  investments,  share in  results of
affiliated companies,  minority interests in subsidiaries and other expenses are
not broken out by segment below.


                                       45
<PAGE>

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

The Company's segment information is as follows:
<TABLE>
<CAPTION>
                                           For the year ended December 31, 1999                 As of December 31, 1999
                                      ---------------------------------------------   ---------------------------------------------
                                                                                                     Property, Plant
                                      Multichannel                                      Capital       and Equipment,       Total
                                       Television   Telephony    Other      Total     Expenditures         Net             Assets
                                      -----------   ---------   -------   ---------   ------------   ----------------   -----------
                                                       (In thousands)                                 (In thousands)
<S>                                    <C>           <C>         <C>      <C>           <C>             <C>               <C>
Revenue:
  Australia.........................   $144,632      $     -     $   -    $144,632      $ 94,513        $123,617          $563,627
  New Zealand.......................      1,279        4,107       734       6,120        23,306          95,777            76,139
  Other.............................          -            -         -           -             -               -            26,825
                                       --------      -------     -----    --------      --------        --------          --------
    Total...........................   $145,911      $ 4,107     $ 734    $150,752      $117,819        $219,394          $666,591
                                       ========      =======     =====    ========      ========        ========          ========
Adjusted EBITDA: (1)
  Australia.........................   $ (4,742)     $     -     $   -    $ (4,742)
  New Zealand.......................       (918)      (1,160)      (47)     (2,125)
  Other.............................          -            -      (169)       (169)
                                       --------      -------     -----    --------
    Total...........................   $ (5,660)     $(1,160)    $(216)   $ (7,036)
                                       ========      =======     =====    ========

                                           For the year ended December 31, 1998                 As of December 31, 1998
                                      ---------------------------------------------   ---------------------------------------------
                                                                                                     Property, Plant
                                      Multichannel                                      Capital       and Equipment,       Total
                                       Television   Telephony    Other      Total     Expenditures         Net             Assets
                                      -----------   ---------   -------   ---------   ------------   ----------------   -----------
                                                       (In thousands)                                 (In thousands)
Revenue:
  Australia.........................   $ 86,408      $     -     $   -    $ 86,408      $ 71,197        $110,351          $181,169
  New Zealand.......................          -            -         -           -             -               -            23,789
  Other.............................      3,411            -         -       3,411           269               -            11,074
                                       --------      -------     -----    --------      --------        --------          --------
    Total...........................   $ 89,819       $    -     $   -    $ 89,819      $ 71,466        $110,351          $216,032
                                       ========      =======     =====    ========      ========        ========          ========
Adjusted EBITDA: (1)
  Australia.........................   $(27,065)     $     -     $   -    $(27,065)
  New Zealand.......................          -            -         -           -
  Other.............................       (101)           -         -        (101)
                                       --------      -------     -----    --------
    Total...........................   $(27,166)     $     -     $   -    $(27,166)
                                       ========      =======     =====    ========


                                           For the year ended December 31, 1997                 As of December 31, 1997
                                      ---------------------------------------------   ---------------------------------------------
                                                                                                     Property, Plant
                                      Multichannel                                      Capital       and Equipment,       Total
                                       Television   Telephony    Other      Total     Expenditures         Net             Assets
                                      -----------   ---------   -------   ---------   ------------   ----------------   -----------
                                                       (In thousands)                                 (In thousands)
Revenue:
  Australia..........................  $ 64,370      $     -     $   -    $ 64,370      $ 84,375        $147,871          $202,325
  New Zealand........................       473            -         -         473        16,258          26,484            43,349
  Other..............................     4,118            -         -       4,118           502           8,746            33,358
                                       --------      -------     -----    --------      --------        --------          --------
    Total............................  $ 68,961      $     -     $   -    $ 68,961      $101,135        $183,101          $279,032
                                       ========      =======     =====    ========      ========        ========          ========
Adjusted EBITDA: (1)
  Australia..........................  $(24,082)     $     -     $   -    $(24,082)
  New Zealand........................    (6,688)           -         -      (6,688)
  Other..............................      (254)           -         -        (254)
                                       --------      -------     -----    --------
    Total............................  $(31,024)     $     -     $   -    $(31,024)
                                       ========      =======     =====    ========
</TABLE>
                                       46
<PAGE>

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

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

Adjusted  EBITDA  reconciles  to the  consolidated  statement of  operations  as
follows:
<TABLE>
<CAPTION>
                                                                    For the Year Ended December 31,
                                                                --------------------------------------
                                                                   1999          1998          1997
                                                                ----------    ----------    ----------
                                                                            (In thousands)
     <S>                                                        <C>           <C>           <C>
     Net operating loss.....................................    $(142,814)    $(133,904)    $(117,856)
     Depreciation and amortization..........................      104,720        97,140        80,802
     Non-cash stock-based compensation expense..............       22,540             -             -
     Non-cash general and administrative expense
       allocation from parent...............................        3,216         4,621         1,949
     Management fees........................................        5,302         4,977         4,081
                                                                ---------     ---------     ---------
          Consolidated Adjusted EBITDA......................    $  (7,036)    $ (27,166)    $ (31,024)
                                                                =========     =========     =========
</TABLE>

15.   COMMITMENTS

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

     Year ended December 31, 2000............................  $ 4,159
     Year ended December 31, 2001............................    4,178
     Year ended December 31, 2002............................    4,178
     Year ended December 31, 2003............................    4,178
     Year ended December 31, 2004............................    4,178
     Thereafter..............................................    7,164
                                                               -------
                                                               $28,035
                                                               =======


The  Company  has various  lease  agreements  for office  space,  equipment  and
vehicles.  Rent expense under these lease agreements totaled $4.1 million,  $2.6
million and $2.9 million for the years ended  December 31, 1999,  1998 and 1997,
respectively.

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

     Year ended December 31, 2000............................  $   533
     Year ended December 31, 2001............................      413
     Year ended December 31, 2002............................      215
     Year ended December 31, 2003............................      160
     Year ended December 31, 2004............................      122
     Thereafter..............................................      321
                                                               =======
                                                               $ 1,764
                                                               =======






                                       47
<PAGE>

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

A subsidiary of Austar has a five-year  agreement with Optus Networks to lease a
54MHz transponder. Pursuant to the agreement, which commenced September 1, 1997,
Austar will pay approximately  $370 per month in satellite service fees to Optus
Networks. Satellite fees payable annually are approximately as follows:

     Year ended December 31, 2000............................  $ 4,440
     Year ended December 31, 2001............................    4,440
     Year ended December 31, 2002............................    2,960
                                                               =======
                                                               $11,840
                                                               =======

16.  CONTINGENCIES

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

17.   SUBSEQUENT EVENTS

In  January 2000,  Austar United acquired a 50.0%  interest in Massive Media Pty
Limited ("Massive Media") which owns 100% of Massive Interactive Pty Limited and
75.0% of Massive  Technologies  Pty  Limited  for $4.4  million  including  $0.6
million in Austar United shares and $3.8 million in cash.

On February  23,  2000,  Austar  United  announced  an  agreement  with  Telstra
Corporation  Limited  ("Telstra")  the  largest  telecommunications  company  in
Australia,  to form a 50/50  joint  venture  between  Saturn and  Telstra's  New
Zealand  operation which will be called Telstra Saturn Limited ("TSL").  This is
expected to close by the end of March 2000.

On March 29, 2000,  Austar United  announced the sale of 20.0 million  shares to
the public at A$8.50  ($5.15)  per share for gross  proceeds  to the  Company of
A$170.0 ($103.0) million.







                                       48
<PAGE>

                                    PART III

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

The directors and executive  officers of the Company as of March 1, 2000 are set
forth below.  All officers are appointed  for an indefinite  term serving at the
pleasure of the Board. The number of members on the Company's Board is currently
fixed at two.
<TABLE>
<CAPTION>
     Name                            Age        Position
     ----                            ---        --------
     <S>                              <C>       <C>
     Gene W. Schneider                73        Chairman of the Board
     Michael T. Fries                 37        Director, President and Chief Executive Officer
     John C. Porter                   42        Chief Operating Officer (until August 1999);
                                                  Chief Executive Officer--Austar United
     Bruce Mann                       44        Executive Director--Austar
     Jack B. Matthews                 48        Chief Executive Officer--Saturn
</TABLE>

GENE W.  SCHNEIDER  has served as  Chairman of the Board for the Company and UAP
since their  respective  formation dates. He has also been Chairman of the Board
of  Directors  of United  since its  inception in May 1989 and was a director of
United International  Holdings,  a Colorado general partnership,  from September
1989 until its  dissolution in December  1993. Mr.  Schneider has also served as
United's Chief Executive  Officer since October 1995 and served as its President
from  October  1997  until he  relinquished  the title in  September  1998.  Mr.
Schneider has served as a director of Austar United, a majority-owned subsidiary
of the  Company,  since  June  1999.  Mr.  Schneider  served  as a member of the
Supervisory  Board of UPC from July 1995 until February 1999,  when he became an
advisor to the Board.  From May 1989 to November 1991, Mr.  Schneider  served as
Chairman of United Artists  Entertainment  Company, then the third largest cable
television  company and the largest theater owner in the world. He was a founder
of United Cable Television  Corporation in the early 1950's and, as its Chairman
and Chief Executive  Officer,  helped build United Cable into the eighth-largest
multiple  system  operator in the United  States prior to its merger with United
Artists.  He has been active in cable  television  affairs and has served on the
Board of the National Cable Television  Association,  and on numerous committees
and special projects thereof, since the National Cable Television  Association's
inception in the early 1950's.  Mr.  Schneider is one of the original  inductees
into the National Cable Television  Association's Cable Television Pioneers. Mr.
Schneider is an advisor to the  Supervisory  Board of UPC and to the Supervisory
Board of chello  broadband  and the  Chairman of the Board for  Advance  Display
Technologies, Inc.

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

JOHN C.  PORTER  has served as the Chief  Executive  Officer  and a director  of
Austar  United since June 1999 and also has served as the  Managing  Director of
Austar since February 1997.  From January 1997 to August 1999, Mr. Porter served
as the Chief Operating Officer of UAP, and from February 1998 to August 1999, he
served as Chief Operating Officer of the Company.  From 1995 until January 1997,
he served as the Chief  Operating  Officer for Austar,  where he was responsible
for the roll-out of its business. Prior to joining Austar, Mr. Porter spent over
10 years in various  capacities for Time Warner Cable, a subsidiary Time Warner,
Inc.,  most recently as President of its Ohio  Division.  Mr. Porter has over 17
years management experience in the U.S. pay television industry.

JACK B. MATTHEWS has served as Chief  Executive  Officer of Saturn since January
1995.  Mr.  Matthews is responsible  for the technical,  operating and marketing
aspects of the business.  Mr. Matthews has served in various general  management
capacities  with several U.S.  multiple  system  operators,  including Cox Cable
Communications  and  Continental  Cablevision.  From August  1993 until  joining
Saturn,  Mr.  Matthews was the Vice  President-Sales  & Marketing of  Arrowsmith
Technologies,  a cable technology  company.  From 1990 to 1993, Mr. Matthews was
the President of COMM/ONE, an entrepreneurial  business marketing  sophisticated
video and  voice  processing  systems.  Mr.  Matthews  has over 14 years of U.S.
multi-channel television industry experience.

                                       49
<PAGE>


BRUCE MANN has served as Executive  Director of  Marketing  and  Programming  of
Austar  since April 1995 and has also served as a Director of XYZ  Entertainment
since 1997.  From 1994 until  joining  Austar,  Mr.  Mann  served as  President,
National Division, of Cross Country Wireless,  Inc., a U.S. provider of wireless
multi-channel  television  services.  From 1991 to 1994, Mr. Mann served as Vice
President-Marketing  of  Washington  Redskins/Jack  Kent  Cooke  Stadium,  Inc.,
specializing  in sports and  entertainment  related  promotion,  advertising and
marketing.

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

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

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

ROBERT J. BIRRELL has served as Chief Financial  Officer and Secretary of Austar
United  since June 1999.  Mr.  Birrell  has also  served as Finance  Director of
Austar since January 1996 and has been involved with the development  aspects of
its business since April 1994. Prior to joining Austar, Mr. Birrell was involved
with various activities in large scale retailing in the Australian  marketplace.
From 1985 to 1993,  Mr.  Birrell  served  with  Industrial  Equity  Limited,  an
Australian based investment company.

JAMES R. CLARK became a Vice President of the Company and UAP in August 1999. He
is also the Vice  President  of  United  Latin  America,  Inc.,  a  wholly-owned
subsidiary  of United,  a position  he has held  since June 1999.  Mr.  Clark is
responsible  for planning,  monitoring  and reporting on  Australasia  and Latin
America  operations  for United.  From 1997 to May 1999,  Mr.  Clark served as a
Regional  Manager of Austar.  From January 1996 to 1997,  he served as Satellite
Operations Manager at Austar. While at Austar, Mr. Clark was responsible for the
launching of direct broadcast  satellite  service in rural  Australia.  Prior to
joining Austar,  from 1990 to 1995, he served as Regional Vice President for The
Disney Channel where he managed sales and marketing in eight mid-west  states of
the United States.

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

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

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

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


                                       50
<PAGE>

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

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

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

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

The following table sets forth the aggregate annual compensation paid during the
fiscal  years ended  December  31, 1999,  1998 and 1997 to the  Company's  Chief
Executive  Officer  and  each of the  four  most  highly  compensated  executive
officers  whose  annual  salary and bonus  exceeded  $100,000 for the year ended
December  31, 1999.  In  addition,  the  information  in this  section  reflects
compensation received by the named executive officers for all services performed
for the Company, United, Austar United and their respective affiliates:
<TABLE>
<CAPTION>
                                                                   Compensation Table
                                    ------------------------------------------------------------------------------------
                                                                                           Long-term
                                                 Annual Compensation                   Compensation Awards
                                    ----------------------------------------------     -------------------
                                                                        Other               Securities
                                                                       Annual               Underlying       All Other
                                    Year     Salary       Bonus      Compensation         Options(#)(1)     Compensation
                                    ------  ---------  ----------   --------------      ----------------   -------------
<S>                                 <C>     <C>         <C>           <C>                <C>                 <C>
Gene W. Schneider                   1999    $498,548    $      -      $     -            2,568,839 (2)       $6,155 (3)
Chairman of the Board               1998    $450,000    $      -      $ 5,793 (4)          387,500 (5)       $5,512 (3)
                                    1997    $369,904    $      -      $     -              125,000 (6)       $5,398 (3)

Michael T. Fries                    1999    $332,365    $      -      $ 4,496 (4)        6,204,285 (7)       $6,155 (3)
President and Chief Executive       1998    $300,000    $275,000      $31,041 (8)          575,000 (9)       $5,632 (3)
  Officer                           1997    $245,346    $      -      $     -                    -           $5,398 (3)

John C. Porter                      1999    $252,500    $ 32,226      $25,723 (10)       4,880,850 (11)      $5,952 (3)
Chief Operating Officer             1998    $245,913    $ 30,000      $60,081 (12)          50,000 (13)      $5,632 (3)
                                    1997    $218,972    $ 60,000      $47,142 (14)               -           $5,398 (3)

Jack B. Matthews                    1999    $208,481    $ 49,750      $ 7,385 (15)         750,000 (16)      $5,952 (17)
Chief Executive Officer (Saturn)    1998    $155,000    $      -      $19,725 (18)               -           $5,170 (17)
                                    1997    $154,731    $ 29,000      $19,753 (19)           8,000 (20)      $4,854 (17)

Bruce Mann                          1999    $200,000    $ 26,445      $18,188 (21)       3,158,197 (22)      $5,620 (23)
Executive Director (Austar)         1998    $181,457    $ 41,470      $21,839 (24)          40,000 (25)      $5,296 (23)
                                    1997    $160,770    $ 45,900      $24,476 (26)               -           $4,884 (23)
</TABLE>


                                       51
<PAGE>

(1)  The number of shares  underlying  options  have been  adjusted for United's
     2-for-1 stock split on November 30, 1999 and the cancellation of options as
     a result of the cancellation of UAP's stock option plan, which was replaced
     by the Austar United Option Plan.
(2)  Pursuant to United's  Employee Plan, Mr.  Schneider was granted  options to
     acquire  290,523  shares  of Class A Common  Stock on  December  17,  1999.
     Pursuant  to the Austar  United  Option  Plan,  Mr.  Schneider  was granted
     options to acquire  2,153,316  shares of Austar  United  Shares on July 20,
     1999.  Pursuant to the chello Phantom Stock Option Plan, Mr.  Schneider was
     granted phantom options based on 125,000 shares of chello on June 11, 1999.
(3)  Amounts  consist of matching  employer  contributions  made by United under
     United's  employee  401(k) plan of $4,800,  $4,800 and $4,750 for the years
     ended December 31, 1999,  1998 and 1997,  respectively,  with the remainder
     consisting  of term  life  insurance  premiums  paid  by  United  for  such
     officer's benefit.
(4)  Represents the value of personal use of the Company's airplane
(5)  Pursuant to United's  Employee plan, Mr.  Schneider was granted  options to
     acquire 200,000 shares of Class A Common Stock on October 8, 1998. Pursuant
     to the UPC Phantom Stock Option Plan,  Mr.  Schneider  was granted  phantom
     options based on 187,500 ordinary shares of UPC on September 24, 1998.
(6)  Pursuant to the ULA Stock Option Plan,  Mr.  Schneider was granted  phantom
     options  based on  125,000  shares of ULA  Class A Common  Stock on June 6,
     1997.
(7)  Pursuant to  United's  Employee  Plan,  Mr.  Fries was  granted  options to
     acquire  100,000  shares  of Class A Common  Stock on  December  17,  1999.
     Pursuant to the Austar United Option Plan, Mr. Fries was granted options to
     acquire 6,029,285 shares of Austar United Shares on July 20, 1999. Pursuant
     to the chello  Phantom  Stock  Option Plan,  Mr. Fries was granted  phantom
     options based on 75,000 shares of chello on June 11, 1999.
(8)  Amount represents payments for living expense,  including rent, relating to
     foreign  assignment of $30,824,  and $217 which represents the value of Mr.
     Fries personal use of the Company's airplane.
(9)  Pursuant to  United's  Employee  Plan,  Mr.  Fries was  granted  options to
     acquire  200,000  shares of Class A Common  Stock on  September  18,  1998.
     Pursuant  to the UPC  Phantom  Stock  Option  Plan,  Mr.  Fries was granted
     phantom  options  based on 75,000  ordinary  shares of UPC on September 18,
     1998.  Pursuant to the ULA Stock Option Plan, Mr. Fries was granted phantom
     options  based on 300,000  shares of ULA Class A Common  Stock on September
     18, 1998.
(10) Amount  represents  monthly  payments for housing  allowance of $17,270 and
     cost of living adjustment of $8,453.
(11) Pursuant to the Austar United Option Plan,  Mr. Porter was granted  options
     to acquire 4,880,850 shares of Austar United Shares on July 20, 1999.
(12) Amount  represents  monthly  payments for housing  allowance of $46,834 and
     cost of living adjustment of $13,247.
(13) Pursuant to  United's  Employee  Plan,  Mr.  Porter was granted  options to
     acquire 50,000 shares of Class A Common Stock on December 18, 1998.
(14) Amount  represents  monthly  payments for housing  allowance of $31,211 and
     cost of living adjustment of $15,931.
(15) Amount represents monthly payments for housing allowance of $4,615 and cost
     of living adjustment of $2,770.
(16) Pursuant to the Austar United Option Plan, Mr. Matthews was granted options
     to acquire 750,000 shares of Austar United Shares on July 20, 1999.
(17) Amounts  consist of matching  employer  contributions  made by United under
     United's  employee  401(k) plan of $4,800,  $4,428 and $4,206 for the years
     ended December 31, 1999,  1998 and 1997,  respectively,  with the remainder
     consisting of term life insurance premiums paid by United for Mr. Matthew's
     benefit.
(18) Amount represents monthly payments for housing allowance of $4,615 and cost
     of living adjustment of $15,110.
(19) Amount  represents montly payments for housing allowance of $4,615 and cost
     of living adjustment of $15,138.
(20) Pursuant to United's  Employee  Plan, Mr.  Matthews was granted  options to
     acquire 8,000 shares of Class A Common Stock on December 20, 1997.
(21) Amount  represents  monthly  payments for housing  allowance of $12,025 and
     cost of living adjustment of $6,163.
(22) Pursuant to the Austar United Option Plan, Mr. Mann was granted  options to
     acquire 3,158,197 shares of Austar United Shares on July 20, 1999.
(23) Amounts  consist of matching  employer  contributions  made by United under
     United's  employee  401(k) plan of $4,468,  $4,464 and $4,236 for the years
     ended December 31, 1999,  1998 and 1997,  respectively,  with the remainder
     consisting  of term life  insurance  premiums paid by United for Mr. Mann's
     benefit.
(24) Amount  represents  monthly  payments for housing  allowance of $12,025 and
     cost of living adjustment of $9,814.
(25) Pursuant to United's Employee Plan, Mr. Mann was granted options to acquire
     40,000 shares of Class A Common Stock on December 18, 1998.
(26) Amount  represents  monthly  payments for housing  allowance of $12,025 and
     cost of living adjustment of $12,451.

                                       52
<PAGE>

OPTION GRANTS TABLE

Messrs.  Schneider,  Fries,  Porter, Mann and Matthews,  as employees of United,
have been granted options to acquire stock of United and its  subsidiaries.  The
following tables set forth information  concerning options to purchase shares of
United Class A Common Stock,  chello shares and Austar United shares  granted to
these named executives  during 1999 as well as the value of unexercised  options
held by such  executives  as of  December  31,  1999.  Other than an exercise of
280,000  options to acquire shares in Austar United by Mr. Porter,  no executive
has exercised any options  during the year ended  December 31, 1999. The Company
has not granted any options to acquire its stock.
<TABLE>
<CAPTION>
                                                       Option Grants in Year Ended December 31, 1999(1)
                        ------------------------------------------------------------------------------------------------------------

                                                                                                    Potential Realizable Value
                                                                                                      at Assumed Annual Rates
                                                                                                    of Stock Price Appreciation
                                                 Individual Grants                                     for Option Term (2)
                        -------------------------------------------------------------------  ---------------------------------------
                        Number of       Percentage of
                        Securities      Total Options                  Market
                        Underlying       Granted to                    Price
                         Options        Employees in  Exercise Price  on Grant   Expiration
Name                    Granted (#)      Fiscal Year      ($/Sh)     Date ($/Sh)    Date         0%($)      5%($)         10%($)
----                    -----------     ------------- -------------- ----------- ----------  ----------  -----------   -------------
<S>                     <C>                <C>        <C>            <C>         <C>          <C>         <C>
Gene W. Schneider
 Class A Common Stock...    90,523          5.6%         $ 5.2250      $56.6250  12/17/09    $4,652,882    $7,876,511    $12,822,191
 Class A Common Stock...     1,766          0.1%         $62.2875      $56.6250  12/17/04             -    $   17,628    $    51,051
 Class A Common Stock...   198,234         12.3%         $56.6250      $56.6250  12/17/09             -    $7,059,342    $17,889,760
 chello Shares..........   125,000(3)       6.1%       NLG20.0000    NLG20.0000  06/11/04             -    NLG690,704   NLG1,526,275
 Austar United Shares... 2,153,136(4)(5)    8.4%         A$1.8000      A$4.7000  07/20/09   A$6,244,616  A$12,609,398   A$22,374,223
Michael T. Fries
 Class A Common Stock...   100,000          6.2%         $56.6250      $56.6250  12/17/09             -    $3,561,116    $ 9,024,567
 chello Shares..........    75,000(3)00     3.6%       NLG20.0000    NLG20.0000  06/11/04             -    NLG414,422     NLG915,765
 Austar United Shares... 6,029,285(4)(6)   23.5%         A$1.8000      A$4.7000  07/20/09  A$17,484,927  A$35,306,316   A$62,647,826
John C. Porter
 Austar United Shares... 4,880,850(4)(7)   19.0%         A$1.8000      A$4.7000  07/20/09  A$14,154,465  A$28,581,305   A$50,714,909
Jack B. Matthews
 Austar United Shares...   600,000(4)(8)    2.3%         A$1.8000      A$4.7000  07/20/09   A$1,740,000   A$3,513,483    A$6,234,354
 Austar United Shares...   150,000(4)0      0.6%         A$4.7000      A$4.7000  07/20/09             -     A$443,371    A$1,123,588
Bruce M. Mann
 Austar United Shares... 3,158,197(4)(9)   12.3%         A$1.8000      A$4.7000  07/20/09   A$9,158,771  A$18,493,785   A$32,815,529
</TABLE>









                                       53
<PAGE>


(1)  Except as otherwise noted, all stock options granted during 1999 vest in 48
     equal  monthly  increments  following  the date of  grant.  Vesting  of the
     options granted would be accelerated  upon a change of control of United as
     defined in the respective options plans.
(2)  The potential  gains shown are net of the option  exercise price and do not
     include the effect of any taxes associated with exercise. The amounts shown
     are  for  the  assumed  rates  of  appreciation  only,  do  not  constitute
     projections of future stock price  performance,  and may not necessarily be
     realized.  Actual gains,  if any, on stock option  exercises  depend on the
     future  performance  of  United's  Class A Common  Stock,  Austar  United's
     ordinary  shares and chello  broadbands  ordinary  shares A,  respectively,
     continued  employment of the optionee through the term of the options,  and
     other factors.
(3)  Shares  subject to phantom  options,  which chello may at its option pay in
     cash or United,  UPC or, if publicly  traded,  chello  shares upon exercise
     thereof,  vest in 48 equal monthly increments from June 11, 1999. The price
     per share in U.S.  dollars  is $9.13 and has been  determined  based on the
     exchange rate of 2.19 on December 31, 1999.
(4)  The price per share in U.S.  dollars is $1.18 and has been determined based
     on the exchange rate of 1.5244 on December 31, 1999.
(5)  Vesting  from  date  of  grant  are:  options  for  837,399  shares  vested
     immediately; options for 717,177 shares vest over 23 months and options for
     598,740 vest over 38 months.  Austar  United  granted  accelerated  vesting
     based on the vesting periods of UAP options, which were cancelled in 1999.
(6)  Vesting  from  date of grant  are:  options  for  2,344,726  shares  vested
     immediately;  options for 2,008,085  shares vest over 23 months and options
     for  1,676,474  vests over 38 months.  Austar  United  granted  accelerated
     vesting based on the vesting  periods of UAP options,  which were cancelled
     in 1999.
(7)  Vesting  from  date of grant  are:  options  for  2,416,503  shares  vested
     immediately;  options for 1,149,440 shares vest over 23 months; options for
     956,164  shares vest over 38 months;  and  options for 358,743  shares vest
     over 12 months.  Austar  United  granted  accelerated  vesting based on the
     vesting periods of UAP options, which were cancelled in 1999.
(8)  Vesting  from  date  of  grant  are:  options  for  194,447  shares  vested
     immediately,  options for 138,887  shares vest over 38 months,  options for
     166,666  shares vest over 23 months,  and  options for 250,000  shares vest
     over 48 months.  Austar  United  granted  accelerated  vesting based on the
     vesting periods of UAP options, which were cancelled in 1999.
(9)  Vesting  from  date of grant  are:  options  for  1,485,177  shares  vested
     immediately,  429,076 shares vest over 12 months,  957,003 shares vest over
     38 months and 286,941  shares vest over 23 months.  Austar  United  granted
     accelerated vesting based on the vesting periods of UAP options, which were
     cancelled in 1999.





                                       54
<PAGE>


AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION TABLE

The following  table sets forth  information  concerning the exercise of options
and concerning  unexercised options held by each of the executive officers named
in the Summary Compensation Table above as of December 31, 1999.
<TABLE>
<CAPTION>
                                    Aggregated Option Exercises in Year Ended December 31, 1999 and Period-End Option Values
                                 -----------------------------------------------------------------------------------------------

                                                                     Number of Securities            Value of Unexercised
                                                                    Underlying Unexercised               In-the-Money
                                                                     Options at FY-End(#)           Options at FY-End($)(1)
                                 Shares Acquired    Value        ----------------------------   --------------------------------
                                 on Exercise(#)   Realized($)    Exerciseable  Unexerciseable   Exerciseable      Unexerciseable
                                 ---------------  -----------    ------------  --------------   ------------      --------------
<S>                                 <C>              <C>           <C>            <C>           <C>               <C>
Gene W. Schneider
 Class A Common Stock.........         -               -             603,421        391,666     $39,224,077        $15,388,856
 ULA Common Stock.............         -               -              78,125         46,875     $   359,375        $   215,625
 chello Shares................         -               -              15,625        109,375     NLG       -        NLG       -
 Austar United Shares.........         -               -           1,072,091      1,081,225     A$4,609,991        A$4,649,268
 UPC Shares...................         -               -             125,000         62,500     $15,252,165        $ 7,626,082

Michael T. Fries
 Class A Common Stock.........         -               -             387,500        242,500     $25,356,094        $10,718,906
 ULA Common Stock.............         -               -              93,750        206,250     $         -        $         -
 chello Shares................         -               -               9,375         65,625     NLG       -        NLG       -
 Austar United Shares.........         -               -           3,001,854      3,027,431    A$12,907,972       A$13,017,953
 UPC Shares...................         -               -              21,875         53,125     $ 2,653,471        $ 6,444,145

John C. Porter
 Class A Common Stock.........        8,332       $ 265,062            4,168         37,500     $   272,744        $ 2,453,906
 Austar United Shares.........      280,000       A$887,600        2,661,668      1,939,182    A$11,445,172        A$8,338,483

Jack B. Matthews
 Class A Common Stock.........         -               -               8,000           -        $   521,500        $         -
 Austar United Shares.........         -               -             274,993        475,007     A$1,137,157        A$1,652,843

Bruce M. Mann
 Class A Common Stock.........         -               -              10,000         30,000     $   654,375        $ 1,963,125
 Austar United Shares.........         -               -           1,893,091      1,265,106     A$8,140,291        A$5,439,956
</TABLE>

(1)  The value of the options for Class A Common  Stock and UPC Common  Stock is
     based on the  closing  price of $70.625  per share and  $127.50  per share,
     respectively  as reported by NASDAQ on December 31, 1999.  The value of the
     options for Austar  United  Shares is based on the closing  price of A$6.10
     per share as  reported by the  Australian  Stock  Exchange on December  31,
     1999. The values for the phantom options of chello and ULA are based on the
     fair  market  value of  NLG20.00  and $8.86  per  share,  respectively,  as
     determined by the Board at or prior to December 31, 1999. In addition,  the
     exercise  prices for UPC  options  have been  converted  from euros to U.S.
     dollars based on a conversion rate of 0.9932 on December 31, 1999.


                                       55
<PAGE>


AGREEMENTS WITH EMPLOYEES

Many of the employees  serving as senior  management in the Company's  operating
companies are parties to employment  agreements typically with terms of three to
five years. The agreements generally provide for a specified base salary as well
as a bonus set at a  specified  percentage  of the base  salary,  which bonus is
based on the performance of the respective company and employee.  The agreements
often  provide for the grant of an incentive  interest  equal to a percentage of
the residual equity value of the respective  company which is typically  defined
as the fair market value of the business less net  liabilities  and a reasonable
return on shareholders'  investment.  The employment  agreements  generally also
provide  for cost of  living  differentials,  relocation  and  moving  expenses,
automobile  allowances and income tax equalization  payments,  if necessary,  to
keep the employee's tax liability the same as it would be in the United States.

Of the persons identified in the Summary  Compensation  Table,  Messrs.  Porter,
Mann and Matthews continue to have such an employment agreement with United. The
agreements  with Mr.  Porter and Mr. Mann  terminate on the 8th of October 2002.
Mr. Matthews'  agreement  terminated January 1, 1999, however a current contract
is under  negotiation.  These employment  agreements  provide for an annual base
salary of $252,500  for Mr.  Porter,  $200,000 for Mr. Mann and $200,000 for Mr.
Matthews, and eligibility for an annual bonus of up to a fixed percentage of the
base salary,  based on the performance of their  respective  entities as well as
the individual's performance. All are entitled to participate in United employee
benefits. In addition, Mr. Matthews is eligible to receive a project award based
on company defined targets over the term of his  compensation  agreement and his
base salary is reviewed annually.

COMPENSATION OF DIRECTORS

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

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIOn

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

LIMITATION OF LIABILITY AND INDEMNIFICATION

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

The Company has entered into agreements to indemnify its directors and officers,
in addition to the  indemnification  provided for in the  Company's  Articles of
Incorporation  and Bylaws.  These  agreements  require the Company,  among other
things,  to indemnify the Company's  directors and officers for certain expenses
(including attorney's fees), judgments,  fines, penalties and settlement amounts
incurred by any such person in certain actions or proceedings, including actions
by or in the right of the Company,  arising out of such  person's  services as a
director or officer of the Company,  any  subsidiary of the Company or any other
company or  enterprise to which the person  provides  services at the request of
the Company. The Company believes that these agreements are necessary to attract
and retain qualified persons as directors and officers.



                                       56
<PAGE>


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

As of March 1, 2000, UAP owned 17,810,249 shares of the Company, evidencing over
99.9% of all  outstanding  common stock.  Such percentage is based on 17,810,299
shares of the Company's common stock issued and outstanding on March 1, 2000.

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

RELATIONSHIP WITH UAP AND UNITED

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

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

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

Austar and Saturn  were  parties to  technical  assistance  agreements  with UAP
whereby  such  operating  companies  paid to UAP fees based on their  respective
gross revenues. The operating systems reimbursed United for certain direct costs
incurred  by  United,   including  salaries  and  benefits  relating  to  senior
management  positions,  pursuant  to  the  terms  of  the  technical  assistance
agreements.  Effective  June 24,  1999,  the rights under these  management  fee
agreements  were  assigned  to  Austar  United  as  part  of  the  restructuring
associated with the Austar United IPO.

TAX SHARING AGREEMENT

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






                                       57
<PAGE>

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------

  (a)(1)  Financial Statements

  Included in PART II of the Report:
<TABLE>
<CAPTION>
                                                                                                                    Page
                                                                                                                   Number
                                                                                                                   ------
     <S>                                                                                                             <C>
     UNITED AUSTRALIA/PACIFIC, INC.
     Report of Independent Public Accountants.................................................................       26
     Consolidated Balance Sheets as of December 31, 1999 and 1998.............................................       27
     Consolidated Statements of Operations for the Years Ended December 31, 1999, 1998 and 1997...............       28
     Consolidated Statements of Stockholders' Deficit for the Years Ended December 31, 1999,
       1998 and 1997..........................................................................................       29
     Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997...............       30
     Notes to Consolidated Financial Statements...............................................................       32

  (a)(2)  Financial Statement Schedules

  Included in PART IV of the Report:

     (i)  Financial Statement Schedules required to be filed

     UNITED AUSTRALIA/PACIFIC, INC.
     Report of Independent Public Accountants.................................................................      S-1
     Schedule I - Condensed Financial Information of the Registrant (Parent only).............................      S-2
</TABLE>

     (ii) Separate Financial Statements and Related Schedules

     None.

     (a)(3)  Exhibits

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

       3.2    Articles of Amendment to Articles of Incorporation of Registrant.

       3.3    By-Laws of the Registrant. (1)

       4.1    The  Indenture  dated as of May 14,  1996,  between the Issuer and
              American Bank National  Association  (now known as Firstar Bank of
              Minnesota N.A. (the "Trustee")) (the "1996 Indenture"). (1)

       4.2    Supplemental  Indenture dated as of July 20, 1999,  between Issuer
              and Trustee with respect to the 1996 Indenture. (2)

       4.3    The Indenture  dated as of September 23, 1997,  between the Issuer
              and Trustee (the "1997 Indenture"). (3)

       4.4    Supplemental  Indenture dated as of July 20, 1999,  between Issuer
              and Trustee with respect to the 1997 Indenture. (2)

       4.5    Warrant  Agreement  dated as of  November  15,  1997,  between the
              Issuer and Trustee. (3)

       4.6    The  Articles of  Incorporation,  as  amended,  and By-Laws of the
              Registrant  are  included  as  Exhibits  3.1  and  3.2.  (1)

       10.1   A$400,000,000  Syndicated  Senior Secured  Debt Facility Agreement
              dated April 23,  1999,  among  Austar  Entertainment  Pty  Limited
              ("Austar"), Chase  Securities  Australia  Limited,  the Guarantors
              named therein and the financial institutions named therein. (4)

                                       58
<PAGE>

       10.2   Supplemental   Deed   dated   July   15,   1999   between   Saturn
              Communications Limited, as the Borrower ("Saturn"), the guarantors
              and mortgagors named therein, each financial institution specified
              as a bank in Schedule 1 attached  thereto,  and  Toronto  Dominion
              Australia Limited, as the Agent ("Agent"). (5)

       10.3   Second  Supplemental  Deed  dated  July 29,  1999  between  Saturn
              Communications,  the  guarantor  and  mortgagor  named therein and
              Agent. (5)

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

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

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

       10.7   Management Agreement dated May 1, 1996, between United Management,
              Inc. and the Issuer. (1)

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

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

       10.10  Registration  Rights  Agreement dated June 16, 1999 between Austar
              United and UIH Austar, Inc.

       10.11  Master Seconded Employee  Services  Agreement dated June 16, 1999,
              between United and Austar United.

       10.12  General  Agreement  dated June 16, 1999 between  United and Austar
              United.

       12.1   Statement re: Ratio of Earnings to Fixed Charges.

       21.1   List of Subsidiaries.

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

       24.1   Power of Attorney.

       27.1   Financial Data Schedule.

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

(1)  Incorporated by reference from the Company's Registration Statement on Form
     S-4 (SEC File No. 333-05017) filed on May 31, 1996.
(2)  Incorporated by reference from the Certain Report on Form 8-K (SEC File No.
     333-05017) filed on July 28, 1999.
(3)  Incorporated   by  reference   from   Amendment  No.  1  to  the  Company's
     Registration  Statement  on Form S-4  (SEC  File  No.  333-39707)  filed on
     December 5, 1997.
(4)  Incorporated  by  reference  from the Annual  Report on Form 10-K of United
     International  Holdings,  Inc. for the period ended December 31, 1998 (File
     No. 0-21974).
(5)  Incorporated by reference from Quarterly  Report on Form 10-Q (SEC File No.
     333-05017) for the quarter ended September 30, 1999,  filed on November 15,
     1999.

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

         None.

                                       59
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To United Australia/Pacific, Inc.:

We have audited, in accordance with auditing standards generally accepted in the
United   States,    the    consolidated    financial    statements   of   United
Australia/Pacific,  Inc.  included  in this Form 10-K and have issued our report
thereon  dated March 29, 2000.  Our audit was made for the purpose of forming an
opinion on the basic  consolidated  financial  statements  taken as a whole. The
following  schedule is the  responsibility  of the Company's  management  and is
presented  for  purposes  of  complying   with  the   Securities   and  Exchange
Commission's  rules  and  is  not  part  of  the  basic  consolidated  financial
statements.  This schedule has been subjected to the auditing procedures applied
in the audit of the basic consolidated  financial statements as indicated in our
report with respect  thereto and, in our  opinion,  based on our audits,  fairly
states in all material  respects  the  financial  data  required to be set forth
therein in relation to the basic  consolidated  financial  statements taken as a
whole.



                                              ARTHUR ANDERSEN LLP




Denver, Colorado
March 29, 2000



                                      S-1
<PAGE>
<TABLE>
<CAPTION>

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


                                                                                                             As of December 31,
                                                                                                          -------------------------
                                                                                                             1999          1998
                                                                                                          -----------   -----------
<S>                                                                                                        <C>           <C>
ASSETS
Current assets:
  Cash and cash equivalents............................................................................    $    298      $      -
  Short-term liquid investments........................................................................         497           763
  Related party receivables and costs to be reimbursed.................................................         327           327
  Other current assets.................................................................................          10             3
                                                                                                           --------      --------
     Total current assets..............................................................................       1,132         1,093
  Investments in and advances to affiliated companies, accounted for under the equity method, net......     245,425        52,801
  Deferred financing costs, net of accumulated amortization of $1,927 and $1,215, respectively.........       8,461         9,173
                                                                                                           --------      --------

     Total assets......................................................................................    $255,018      $ 63,067
                                                                                                           ========      ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Related party payables...............................................................................    $  1,977      $  1,056
  Accounts payable.....................................................................................           -             -
  Accrued liabilities..................................................................................           -             -
                                                                                                           --------      --------
     Total current liabilities.........................................................................       1,977         1,056
Senior discount notes..................................................................................     407,945       356,640
                                                                                                           --------      --------
     Total liabilities.................................................................................     409,922       357,696

Minority interest......................................................................................           -             -
                                                                                                           --------      --------
Stockholders' deficit:
  Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding...........           -             -
  Common stock, $0.01 par value, 30,000,000 shares authorized, 17,810,299 and 17,810,249
   shares issued and outstanding, respectively.........................................................         178           178
  Additional paid-in capital...........................................................................     331,688       215,624
  Deferred compensation................................................................................     (18,343)            -
  Accumulated deficit..................................................................................    (445,844)     (481,240)
  Other cumulative comprehensive loss..................................................................     (22,583)      (29,191)
                                                                                                           --------      --------
     Total stockholders' deficit.......................................................................    (154,904)     (294,629)
                                                                                                           --------      --------

   Total liabilities and stockholders' deficit.........................................................    $255,018      $ 63,067
                                                                                                           ========      ========

</TABLE>



                                                           S-2







<PAGE>
<TABLE>
<CAPTION>

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

                                                                                                For the Years Ended December 31,
                                                                                            ----------------------------------------
                                                                                               1999           1998           1997
                                                                                            -----------    -----------    ----------
<S>                                                                                          <C>           <C>            <C>
Corporate general and administrative expense, including management
  fees to related party of $921, $853 and $790, respectively.............................    $ (4,301)     $  (5,689)     $  (3,189)
                                                                                             --------      ---------      ---------
     Operating loss......................................................................      (4,301)        (5,689)        (3,189)

Interest income..........................................................................          40             81            643
Interest expense.........................................................................     (52,017)       (48,108)       (38,115)
Other expense, net.......................................................................          (1)          (836)          (559)
                                                                                             --------      ---------      ---------
     Loss before other item..............................................................     (56,279)       (54,552)       (41,220)

Share in results of affiliated companies, net............................................      91,675       (151,739)      (126,836)
                                                                                             --------      ---------      ---------
     Net income (loss)...................................................................    $ 35,396      $(206,291)     $(168,056)
                                                                                             ========      =========      =========

Foreign currency translation adjustments.................................................    $  6,608      $    (227)     $ (30,831)
Unrealized gains on securities:
     Reclassification adjustment for losses included in net income (loss)................           -              -          3,412
                                                                                             --------      ---------      ---------
Comprehensive income (loss)..............................................................    $ 42,004      $(206,518)     $(195,475)
                                                                                             ========      =========      =========
</TABLE>



                                                           S-3





<PAGE>
<TABLE>
<CAPTION>
                                              UNITED AUSTRALIA/PACIFIC, INC.
                                                      PARENT ONLY
                                                      SCHEDULE 1
                                 Condensed Information as to the Cash Flows of the Registrant
                                                (Stated in thousands)
                                                                                                       For the Years Ended
                                                                                                           December 31,
                                                                                              -------------------------------------
                                                                                                 1999          1998         1997
                                                                                              ----------    -----------  ----------
<S>                                                                                            <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...........................................................................   $ 35,396     $(206,291)   $(168,056)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
  Share in results of affiliated companies, net.............................................    (91,675)      151,739      126,836
  Allocation of expense accounted for as capital contributions by parent....................      3,216         4,622        1,949
  Accretion of interest on senior notes and amortization of deferred
   financing costs..........................................................................     52,017        48,108       38,115
  Decrease in related party receivables and other assets....................................        157           603        1,768
  Increase in accounts payable, accrued liabilities and other...............................        921         2,332        2,210
                                                                                               --------     ---------    ---------
Net cash flows from operating activities....................................................         32         1,113        2,822
                                                                                               --------     ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term liquid investments...................................................          -          (763)     (15,988)
Sale of short-term liquid investments.......................................................        266        12,325       22,303
Investments in and advances to affiliated companies and other investments...................    (29,659)      (72,570)     (61,024)
                                                                                               --------     ---------    ---------
Net cash flows from investing activities....................................................    (29,393)      (61,008)     (54,709)
                                                                                               --------     ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash contributed from parent................................................................     29,659        58,947        7,863
Proceeds from offering of senior discount notes.............................................          -             -       29,925
Borrowings on related party payable to parent...............................................          -             -        4,999
Deferred financing costs....................................................................          -            (7)        (755)
                                                                                               --------     ---------    ---------
Net cash flows from financing activities....................................................     29,659        58,940       42,032
                                                                                               --------     ---------    ---------

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS............................................        298          (955)      (9,855)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..............................................          -           955       10,810
                                                                                               --------     ---------    ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD....................................................   $    298     $       -    $     955
                                                                                               ========     =========    =========

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash capital contributions from parent..................................................   $ 42,305     $  12,473    $   7,800
                                                                                               ========     =========    =========
Gain on issuance of shares by New Zealand subsidiary........................................   $      -     $       -    $   5,985
                                                                                               ========     =========    =========
Non-cash issuance of warrants to purchase common stock......................................   $      -     $       -    $   3,678
                                                                                               ========     =========    =========
Increase in unrealized loss on investment...................................................   $      -     $       -    $    (985)
                                                                                               ========     =========    =========

</TABLE>




                                                                S-4




<PAGE>


                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this Report to be signed on its
behalf by the  undersigned,  thereunto duly  authorized,  in the City of Denver,
State of Colorado, on this 29th day of March 2000.


                                    United Australia/Pacific, Inc.
                                    a Colorado corporation

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


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


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


     *
---------------------------------
Gene W. Schneider                     Chairman of the Board       March 29, 2000

     *
---------------------------------
Michael T. Fries                      Director, President and     March 29, 2000
                                      Chief Executive Officer


/S/ Valerie L. Cover
---------------------------------
Valerie L. Cover                      Controller (Principal
                                      Accounting Officer)         March 29, 2000



*  By:   /S/ Valerie L. Cover
---------------------------------
     Valerie L. Cover
     Attorney-in-fact




                                       60