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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 000-22877

UPC POLSKA, LLC
(DEBTOR-IN-POSSESSION THROUGH FEBRUARY 18, 2004)
(Exact name of registrant as specified in its charter)

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

        Indicate by check mark (X) whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        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. ý

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) Yes o    No ý

        State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the common equity was last sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.

        Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court Yes ý    No o

The number of units outstanding of UPC Polska, LLC's membership interest denominated
as "Common Stock" as of December 31, 2003, was:
1,000

Documents incorporated by reference
None.

UPC POLSKA, LLC
(DEBTOR-IN-POSSESSION THROUGH FEBRUARY 18, 2004)
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2003

TABLE OF CONTENTS

PART I

        UPC Polska, LLC (previously @Entertainment, Inc. and UPC Polska, Inc.) ("UPC Polska") is a Delaware limited liability company whose predecessor was established in May 1997 and in June 1997 succeeded Poland Communications, LLC ("PC LLC", formerly known as Poland Communications, Inc.) as the group holding company to facilitate an initial public offering of stock in the United States and internationally. PC LLC was founded in 1990 by David T. Chase, a Polish-born investor. On August 6, 1999, United Pan-Europe Communications N.V. ("UPC") acquired all of the outstanding shares of UPC Polska. Until December 2, 2002, UPC Polska was wholly owned by UPC. On December 2, 2002, UPC transferred all issued shares in the capital of UPC Polska to a wholly owned subsidiary, UPC Telecom B.V. UPC also assigned to UPC Telecom B.V. all rights and obligations arising from loan agreements between UPC Polska and UPC. In September 2003, UPC completed the restructuring of its balance sheet in a Chapter 11 bankruptcy and a Dutch moratorium proceeding and, as a result, all holders of UPC shares, bond debts and certain creditors of UPC became holders of common stock of UGC Europe, Inc., a Delaware corporation (formerly known as New UPC, Inc.). UGC Europe, Inc. owns substantially all of the outstanding common stock of UPC and is a subsidiary of UnitedGlobalCom, Inc. On December 18, 2003 UPC Polska, Inc. converted into a Delaware limited liability company. References to "UPC" mean United Pan-Europe Communications N.V. References to "UPC Telecom" mean UPC Telecom B.V. References to the "Company" mean UPC Polska and its consolidated subsidiaries, including as of December 31, 2003:

•

Poland Communications, LLC ("PC LLC"), previously Poland Communications, Inc.;



•

Wizja TV II B.V.;



•

Atomic TV Sp. z o.o. (previously Ground Zero Media Sp. z o.o.) ("Atomic TV");



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At Media Sp. z o.o. ("At Media"); and



•

@Entertainment Programming, LLC ("@EP"), previously @Entertainment Programming, Inc.

        On July 3, 2003, Poland Communications, Inc. and @Entertainment Programming, Inc. were converted into limited liability companies.

        On August 20, 2003, Wizja TV II B.V. acquired Wizja TV B.V. and merged in accordance with Title 7 of Book 2 of the Dutch Civil Code. As a consequence of the merger, Wizja TV B.V. ceased to exist.

        Until December 7, 2001, the Company's consolidated subsidiaries also included UPC Broadcast Centre Limited (previously @Entertainment Limited then Wizja TV Limited) ("UPC Broadcast Centre Ltd") and Wizja TV Sp. z o.o. ("Wizja TV Sp. z o.o."). On December 7, 2001, UPC Broadcast Centre Ltd. and Wizja TV Sp. z o.o. were contributed to and merged into Telewizyjna Korporacja Partycypacyjna S.A. ("TKP"), an entity controlled by Group Canal+ S.A. ("Canal+") in connection with a transaction with Canal+, which is described in more detail in the Note 4 in the notes to the consolidated financial statements contained in Item 8 "Consolidated Financial Statements and Supplementary Data" in this Annual Report on Form 10-K.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Certain statements in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are not historical facts but rather reflect the Company's current expectations concerning future results and events. The words "believes", "expects", "intends", "plans", "anticipates", "likely", "will", "may", "shall" and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company (or entities in which the Company has interests), or

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industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements.

        Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management's view only as of the date of this Annual Report on Form 10-K. The Company undertakes no obligation to publicly release the results of any revisions to these forward- looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, conditions or circumstances.

        The risks, uncertainties and other factors that might cause such differences include, but are not limited to:

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economic conditions in Poland generally, as well as in the pay television business in Poland, including increasing rates of unemployment;



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ongoing process of copyright law development in Poland;



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changes in laws and regulations affecting the Company, especially those related to taxation;



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risks relating to future relations with the Polish National Telephone Company ("TPSA");



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business changes, including changes in technology and programming changes, especially those related to free to air programming;



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competitive pressures from other companies in the same or similar lines of business as the Company;



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the Company's inability to comply with government regulations;



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the overall market acceptance of the Company's products and services, including acceptance of the pricing of those products and services;



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foreign exchange rate fluctuations;



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the failure of TKP to satisfy contractual obligations owed to or on behalf of the Company arising out of the Company's transaction with Canal+ and the Company's limited ability to liquidate its investment in TKP;



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expected changes to VAT law on entry to the EU;



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the ramifications of the restructuring;



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the ability to fund, develop and execute the business plan of the Company;



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potential adverse developments with respect to the Company's liquidity or results of operations;



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future financial performance of the Company, including availability, terms and deployment of capital.

EXCHANGE RATE INFORMATION

        In this Annual Report on Form 10-K, references to "U.S. Dollars" or "$" are to U.S. currency, references to "Euros" or "EUR" are to EU currency, and references to "zloty" or "PLN" are to Polish currency. The Company has presented its primary consolidated financial statements in accordance with generally accepted accounting principles in the U.S. in U.S. Dollars. Amounts originally measured in zloty for all periods presented have been translated into U.S. Dollars.

        For your convenience, this Annual Report contains certain zloty and Euro amounts, not derived from the consolidated financial statements, which have been translated into U.S. Dollars. Readers should not assume that the zloty and Euro amounts actually represent such U.S. dollar amounts or

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could be, or could have been, converted into U.S. Dollars at the rates indicated or at any other rate. Unless otherwise stated, such U.S. dollar amounts have been derived by converting from zloty to U.S. Dollars at the rate of PLN 3.7405 = $1.00 and by converting from zloty to Euro at the rate of PLN 4.7170 = EUR 1.00, the exchange rates quoted by the National Bank of Poland at noon on December 31, 2003 and by converting from Euro to U.S. Dollars at the rate of EUR 0.7938 =$1.00, the exchange rate quoted and certified for customs purposes by the Federal Reserve Bank of New York at noon on December 31, 2003. These rates may differ from the actual rates in effect during the periods covered by the financial information discussed herein. The Federal Reserve Bank of New York does not certify for customs purposes a noon buying rate for zloty.

ITEM 1. BUSINESS

GENERAL

        The Company operates the largest cable television systems in Poland with approximately 1,875,276 homes passed and 988,907 total subscribers as of December 31, 2003. The Company's cable television networks have been constructed with the flexibility and capacity to be cost-effectively reconfigured to offer an array of interactive and integrated entertainment, telecommunications and information services. Over the last three years, the Company has been upgrading its network so that it can provide two-way telecommunication services, such as internet access.

        The Company does not derive any significant revenues from, or have any significant assets in, countries other than Poland. The Company does not believe its business is seasonal.

REGIONAL CLUSTERS

        The Company has established eight regional clusters for its cable television business encompassing eight of the ten largest cities in Poland, which the Company believes are among those with the strongest economies and most favorable demographics for cable television in the country. The following table illustrates certain operating data of each of the Company's existing regional clusters.

OVERVIEW OF THE COMPANY'S EXISTING CABLE TELEVISION SYSTEMS⁽¹⁾

(1)

All data as at or for the year ended December 31, 2003.

(2)

Represents a weighted average based on the total number of basic and intermediate subscribers at December 31, 2003, stated in U.S. Dollars, net of 22% VAT.

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REORGANIZATION UNDER BANKRUPTCY CODE

        On July 7, 2003, UPC Polska filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") and subsequently filed a pre-negotiated plan of reorganization, which was later amended (as amended, the "Plan"). On January 22, 2004, the Bankruptcy Court confirmed the Plan. The Plan was consummated and became effective on February 18, 2004. Subsidiaries of UPC Polska were not subject to UPC Polska's Chapter 11 Case.

        The circumstances leading to UPC Polska's filing for relief under the Bankruptcy Code, the terms of the Plan and the effects of the filing and the Plan on UPC Polska's financial condition and results of operations are discussed in Item 7 "Managements' Discussion and Analysis of Financial Condition and Results of Operations" and in Note 3 "Reorganization under Bankruptcy Code" in the notes to the consolidated financial statements contained in Item 8 "Consolidated Financial Statements and Supplementary Data" in this Annual Report on Form 10-K.

        For more information about the Plan and restructuring of UPC Polska, please see the Plan which was filed as an exhibit to the Company's current report on Form 8-K, dated December 22, 2003.

CABLE TELEVISION

        Since December 2001, the Company has engaged in only one business segment—cable television services. Until December 2001, the Company's business consisted of three components:

•

cable television services;



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digital satellite direct-to-home, or "D-DTH", services; and



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programming.

        During 2001, the Company reviewed its long-term business strategy and decided to focus on its core competency, the provision of cable television services, including the provision of internet services to its existing customers. As a part of this re-focus, the Company decided to streamline its operations by restructuring its D-DTH and programming businesses. In December 2001, the Company consummated a joint venture transaction with Canal+ to combine the Company's existing D-DTH platform with TKP's D-DTH and premium pay television business to distribute D-DTH services and programming to subscribers in Poland through TKP. The Company has a 25% equity interest in TKP. TKP is controlled and operated by Canal+. This transaction resulted in the discontinuance of the Company's D-DTH and programming businesses. For further information on the Canal+ transaction, see Note 4 "Merger of D-DTH Business" in the consolidated financial statements contained in Item 8 "Consolidated Financial Statements and Supplementary Data" in this Annual Report on Form 10-K.

BUSINESS STRATEGY

        The Company's principal objective under its revised business strategy is to make its cable business operationally cash flow positive. The Company also intends to continually increase the operational cash flow from the business through limited, but well-focused additional investment. It will focus on continuing to enhance its position as a leading provider of cable television in Poland and on providing internet access services to its subscribers.

        Management of the Company believes that significant opportunities exist for cable television providers capable of delivering high quality, Polish language programming on a multi-channel basis and other services on cable (i.e. data and voice transmission). As such, the Company's current focus is on its cable television market.

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        The Company's business strategy is designed to increase its average revenue per subscriber and also, although to a lesser extent, to increase its subscriber base.

        The Company intends to achieve these goals by:

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increasing penetration of new service products within existing upgraded homes;



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investing limited funds in high return projects for internet upgrade and new plant;



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providing additional revenue-generating services to existing customers, including internet services;



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refining the channel line up available on its cable network;



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improving the effectiveness of the Company's sales and marketing efforts;



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reducing churn (customer disconnects); and



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increasing rates aggressively on the Company's broadcast package.

        The Company also intends to continue to increase the effectiveness of its operations and reduce its expenses by further:

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enhancing internal controls;



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improving debt collection activities;



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improving corporate decision-making processes; and



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reorganizing the Company so as to simplify its legal and operational structure.

NEW INVESTMENT OPPORTUNITIES

        The Company regularly evaluates potential acquisitions of cable networks, including network swaps with other cable operators. The Company currently has no definitive agreement with respect to any material acquisition, although it has discussions with other companies and assesses opportunities on an ongoing basis. The Company may be required to apply for the approval of the Polish Anti-Monopoly Office with respect to any acquisitions it wishes to consummate. The Company's ability to enter into definitive agreements relating to material acquisitions and their potential terms, as well as its ability to obtain the necessary anti-monopoly approvals, cannot be assured.

SERVICES AND FEES

        The Company's revenues from its cable television and internet services have been and will continue to be derived primarily from:

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monthly subscription fees for cable television services;



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fees for internet service; and



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one-time installation fees.

        The Company charges cable television subscribers fixed monthly fees for their choice of service packages and for other services such as premium channel tuner rentals and additional outlets, all of which are included in monthly subscription fees. Throughout its cable television systems, the Company currently offers three packages of cable television service:

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basic package;



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intermediate package (in selected areas of Poland); and



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broadcast package.

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        On December 31, 2003, approximately 630,700, or 63.8%, of the Company's subscribers received the basic package, as compared to 629,500, or 63.2%, at December 31, 2002; approximately 34,000, or 3.4%, received the intermediate package, as compared to 37,500, or 3.8%, at December 31, 2002; and approximately 324,200, or 32.8%, received the broadcast package, as compared to 327,800, or 33.0%, at December 31, 2002.

        Basic Package.    The Company's basic package includes approximately 34 to 60 channels. During 2003, this package generally included all Polish terrestrial broadcast channels, selected European satellite programming legally available in Poland, regional and local programming and the Company's programming package, consisting of proprietary third party channels. The Company's basic package offerings vary by location.

        Intermediate Package.    The Company's intermediate package includes approximately 20 to 22 channels. This package is offered for monthly fees equal to approximately one-third of the amount charged for the basic package. The intermediate package is designed to compete with small cable operators on the basis of price, using a limited programming offering. The Company's intermediate package offerings vary by location.

        Broadcast Package.    The Company's broadcast package includes 6 to 12 broadcast channels for monthly fees, which are substantially less than the amounts charged for the intermediate package.

        Premium and Other Services.    For an additional monthly charge, certain of the Company's cable networks have offered two premium television services, HBO Poland and Canal+ Multiplex. In February 2002, the Company began distribution of Canal+ Multiplex, a Polish-language premium package of three movie, sport and general entertainment channels, through its network on terms set forth in the agreement governing the TKP joint venture with Canal+. Starting from December 2002, the Company introduced the HBO 2 channel to most of its cable networks. The Company also offers HBO Poland channels and Canal+ Multiplex as one package.

        Other optional services include additional outlets and stereo service, which enable a subscriber to receive from 4 to 25 radio channels in stereo.

        For more information about programming offered to the Company's cable subscribers, please see "Business—Programming for Cable Network".

        Internet Services.    The Company provides internet services under the brand "chello" to its cable television customers. The Company is currently expanding its internet ready network in Warsaw, Krakow, Gdansk and Katowice and is planning to begin providing internet services in certain other areas during 2004. Revenue from internet services amounted to $7.4 million for fiscal year 2003 compared to $4.1 million for fiscal year 2002.

        Nearly all of the Company's internet subscribers use service with transfer speed of up to 512 Kb downstream and 128 Kb upstream. The Company has started to diversify its internet service by launching "chello plus" (premium tier with higher downstream speed) in late 2003 and launched "chello light" (lower tier) in early 2004 in response to aggressively priced competition. On December 31, 2003, approximately 32,600 of the Company's customers received internet services. On December 31, 2002, approximately 13,900 of the Company's customers received internet services.

        Pricing Strategy.    The Company's pricing strategy is focused on maintaining cable basic subscribers, aggressively raising rates on low-priced services (such as the broadcast package) and generating incremental revenue from additional services offered to basic cable customers such as internet services and premium channels.

        The Company's continuous objective is to decrease its level of churn. The Company operates certain "stop-disconnect programs", which involve improved procedures for dealing with customers at

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the point of disconnect and limited discounts from the standard monthly fees, to prevent customers from disconnecting. The Company believes it has and will continue to have a positive effect on earnings, specifically by reducing its sales and marketing costs incurred to acquire new subscribers. For the years ended December 31, 2003 and 2002, the churn rate was 10.9% and 12.5%, respectively.

        The Company intends to achieve its goals through:

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increasing rates for broadcast service as much as allowable by existing contracts and by doing so to reduce the pricing gap between basic and broadcast rates;



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making moderate rate increases for basic service;



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expanding internet services to additional cities in Poland;



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continuing programs designed to reward loyal, existing subscribers—so-called "loyalty offers";



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marketing offers to new subscribers with term commitments; and



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systematically combating piracy.

        Historically, the Company has experienced high annual churn rates and has passed on the effects of inflation through price increases. This pricing strategy of passing on the effects of inflation through price increases commenced in January 1997 and was designed to increase revenue per subscriber and to achieve real profit margin increases in U.S. dollar terms. Because the Company's current pricing strategy is aimed at maintaining subscribers, there were no price increases throughout 2001 and 2002 on the basic package. However, in spring 2003, the Company implemented a moderate rate increase. Going forward, the Company intends to implement moderate rate increases, combined with the introduction of new channels, in order to maintain a proper balance between the programming content and the price. The Company's rates for cable services are levied with 22% VAT. However, the Company anticipates that if the proposed draft of an amendment to the VAT law is adopted, the VAT rate on cable television services will be adjusted to 7%.

        Cable television subscribers used to be billed monthly in advance. As is customary in Poland, most of the Company's customers pay their bills through their local post office, bank or customer offices. In order to reduce costs, including correspondence related expenses and bank fees, the Company introduced bi-monthly billing in spring 2003.

        The Company has strict enforcement policies to encourage timely payment. Such policies include notices of late payment, visits from service personnel, and, ultimately, disconnection for nonpaying customers 90 days after a bill becomes past due. The Company's system architecture in most networks enables it to promptly shut off service to nonpaying customers and is designed to reduce non-authorized use of its cable systems.

TECHNOLOGY AND INFRASTRUCTURE

        The Company believes the fiber-optic cable television networks that it has constructed, which serve approximately 871,463 or 88%, of its subscribers, are among the most technologically advanced in Poland and are comparable to cable television networks in the United States. All of the Company's networks that have been constructed by the Company have bandwidths of at least 550 MHz. New portions of the networks, which have more recently been constructed, are being designed to have minimum bandwidths of 860 MHz. The Company continues to upgrade any portions of its cable television networks that have bandwidths below 550 MHz (which generally are those acquired from other entities) to at least 860 MHz in an effort to prepare the networks for additional channels and services and reduce the number of satellite receivers and inventory parts required in the networks. The Company uses fiber-optic and coaxial cables, electronic components and connectors supplied by leading Western firms in its cable television networks.

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        The Company has been able to avoid constructing its own underground conduits in certain areas by entering into a series of agreements with regional and local branches of the Polish National Telephone company (known in the Polish telecommunications industry as "TPSA") which permit the Company to use TPSA's conduit infrastructure for an indefinite period of time or for fixed periods of up to 20 years. The Company also has agreements to undertake joint construction with another company for new conduits in certain areas. These agreements represent a major advantage to the Company since they permit the Company to minimize the costly and time-consuming process of building new conduit infrastructure where TPSA conduit infrastructure exists. As of December 31, 2003, approximately 74% of the Company's cable television plant had been constructed utilizing pre-existing conduits of TPSA. A substantial portion of the Company's contracts with TPSA allow for termination by TPSA without penalty at any time either immediately upon the occurrence of certain conditions or upon provision of three (in most cases) to twelve months' notice without cause.

        TPSA may terminate a conduit agreement immediately (and without penalty) if:

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the Company does not have a valid permit from the Chairman of the Office for Telecommunication and Post Regulation ("URTip") (which replaced the Polish State Agency of Radio Communications as of January 1, 2001) authorizing the construction and operation of a cable television network in a specified geographic area covering the subscribers to which the conduit delivers the signal;



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the Company's cable network serviced by the conduit does not meet the technical specifications required by the New Telecommunication Law (formerly the Polish Telecommunication Act of 1990);



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the Company does not have a contract with the cooperative authority allowing for the installation of the cable network; or



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the Company does not pay the rent required under the conduit agreement.

        The Company is in compliance with all of the material conditions of the TPSA agreements. However, any termination by TPSA of such contracts could result in the Company losing its permits, termination of agreements with cooperative authorities and programmers, and an inability to service customers with respect to areas where its networks utilize the conduits that were the subject of such TPSA contracts. The Company, under the umbrella of the Polish Cable Association, is engaged in negotiations with TPSA over the new terms of the duct rental contracts.

        In addition, some conduit agreements with TPSA provide that cables can be installed in the conduit only for the use of cable television. If the Company uses the cables for a purpose other than cable television, such as data transmission, telephone, or internet access, such use could be considered a violation of the terms of certain conduit agreements, unless this use is expressly authorized by TPSA. There is no guarantee that TPSA would give its approval to permit other uses of the conduits. Since the fourth quarter of 2000, the Company has been providing internet services to its cable customers and renegotiating certain conduit agreements with TPSA. The Company believes that it is not in material violation of any of its conduit agreements with TPSA.

PROGRAMMING FOR CABLE NETWORK

        As a result of the TKP transaction, the Company has renegotiated or is in the process of renegotiating contracts with certain third party channel providers, in an effort to reduce costs, strengthen its cable programming offerings by terminating certain agreements for poorly performing channels and entering into other agreements for popular channels based on consumer demand and preferences.

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        The Company has entered into long-term programming agreements with a number of third party and affiliated content providers for its cable systems. The agreements have terms, which range from one to twenty years and require that the license fees be paid either at a fixed amount (guaranteed minimum) payable at the time of execution or based upon an actual number of subscribers connected to the system each month. As of December 31, 2003, the Company had an aggregate minimum commitment in relation to fixed obligations resulting from these agreements of approximately $23.9 million over the next sixteen years. In addition, the Company has a variable obligation in relation to these agreements, which is based on the actual number of subscribers in the month for which the fee is due.

        The Company has distributed Canal+ on a non-exclusive basis on some of its cable networks since October 1995. In connection with the TKP transaction, as of February 14, 2002, the Company began distributing "Canal+ Multiplex", a mixture of premium movies, premium sports and general entertainment, more broadly to the Company's cable subscribers.

        The Company continues to distribute across its cable networks the HBO Poland service, a Polish-language premium movie channel owned in part by Home Box Office. Starting from December 2002, the Company introduced the HBO 2 channel to most of its cable networks. HBO currently has exclusive rights in Poland to movies from Warner Bros.

COMPETITION

        The cable television industry in Poland has been and is expected to remain highly competitive. The Company competes with other cable television operators, as well as with companies employing numerous other methods of delivering television signals to subscribers, such as by terrestrial broadcast television signals and D-DTH services. The extent to which the Company's services are competitive with alternative delivery systems depends, in part, upon the Company's ability to provide a greater variety of Polish-language programming at a more reasonable price than the programming and prices available through alternative delivery systems.

        Pay television services also face competition from a variety of other sources of news, information and entertainment such as newspapers, cinemas, live sporting events, interactive computer programs and home video products such as videocassette recorders and DVD players. The extent of this type of competition depends upon, among other things, the price, variety and quality of programming offered by pay television services and the popularity of television itself.

        In the cable television industry, the Company believes that competition for subscribers is primarily based on price, program offerings, customer service, ability to provide additional services such as internet and quality and reliability of cable networks.

        Operators of small cable networks, which are active throughout Poland, pose a competitive threat to the Company because they often incur lower capital expenditures and operating costs and therefore have the ability to charge lower fees to subscribers than does the Company. While these operators often do not meet the technical standards for cable systems under Polish law, enforcement of regulations governing technical standards has historically been poor. Regardless of the enforcement of these laws and regulations, the Company expects that operators of small cable networks will continue to remain a competitive force in Poland. In addition, due to certain loopholes in VAT regulations, some competitors of the Company do not charge 22% VAT on their services. This adversely affects the competitive position of the Company. The Company believes that after the accession of Poland to the European Union and proposed amendments to VAT law, many such loopholes will be removed, with all cable and satellite television providers included in the same VAT bracket.

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        The Company provides internet services to its customers. The Company's main competitors in this area are telephony operators like TPSA and other cable television operators. The Company's competitors or their affiliates have significant resources, both financial and technological.

        Multimedia Polska Sp. z o.o. ("Multimedia") and Telewizja Kablowa VECTRA S.A. ("Vectra"), two Polish cable television operators, continued their expansion in 2003, mostly through acquisitions of smaller networks. Vectra completed the acquisition of Dami assets from Polsat, claiming to have over 500,000 subscribers. Following the acquisition of TPSA cable assets, Multimedia claims now to have over 450,000 subscribers.

        In early 2004, Aster City Cable Sp. z o.o., the Company's main competitor in Warsaw, introduced digital set-top boxes to provide premium channels to its customers.

PIRACY

        The Company views piracy of satellite and cable services as one of its main problems in Poland, not unlike other Central European cable and satellite operators. While there has historically been little enforcement of penalties against commercial exploitation of piracy, the situation has been changing, with the issue now receiving more attention from the Polish government. In addition, the Company, Canal+ and HBO agreed to intensify their efforts to reduce the piracy of cable and satellite signals as well as to combine their lobbying efforts in this regard. The Cable Association and its members have offered to support the joint effort. Also, the American Chamber of Commerce in Poland has included anti-piracy measures and protection of intellectual property among its priorities.

TRADEMARKS

        The Company, either itself, through its subsidiaries or UPC, has filed or is in the process of filing for registration of its various trademarks. The Polska Telewizja Kablowa ("PTK") logo was registered for use in connection with television and programming services in July 1997. Variations of PTK have been registered in Poland. Also, numerous trademark applications have been filed in Poland for various other trademarks. Trademarks for UPC have been registered internationally.

EMPLOYEES

        At December 31, 2003, the Company had approximately 894 full-time employees and approximately 41 part-time employees. At December 31, 2002, the Company had approximately 914 full-time employees and approximately 13 part-time employees. In addition, as of December 31, 2003, the Company contracted approximately 243 salespersons, compared to 118 as of December 31, 2002, some of whom receive both commissions and fixed remuneration. From time to time, the Company employs additional salespersons on an as needed, commission only basis. In a division of one of the Company's subsidiaries, a trade union, which has a small number of members, was formed in mid-1999. The Company believes that its relations with its employees are good.

REGULATION

        The Company is subject to regulations in Poland and the European Union. Moreover, due to the accession of Poland to the European Union in May 2004, many regulatory laws are being adjusted to EU requirements.

GENERAL

        Poland is still in the process of revising its telecommunications, broadcasting and copyright regulation. On July 21, 2000, the Polish Parliament passed the Telecommunications Law (the "TL") which changed the regulatory framework of telecommunications activities in Poland. The TL replaced

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the Communications Act of 1990 (the "Communications Act") and became effective as of January 1, 2001.

        Until the end of the year 2000, the operation of cable television systems was regulated primarily by the Communications Act. As of January 1, 2001, the operation of those television systems has been regulated by the TL as further amended. Operators are also subject to the provisions of the Polish Radio and Television Act of 1992 (the "Television Act").

        Currently the Polish telecommunications and media sector is regulated by:

•

The Polish Minister of Infrastructure (who as of July 24, 2001, assumed certain responsibilities of the Minister of Communications);



•

The Chairman of the Telecommunications and Post Regulation Office ("URTiP") (which replaced the Polish State Agency of Radiocommunications ("PAR"), established under the Communications Act); and



•

The Polish National Radio and Television Council (the "Council").

        Cable television operators in Poland are required to obtain permits from the Chairman of the URTiP for utilization of a public network for distribution of radio and television programming and must register certain programming that they transmit over their networks with the Council.

        Neither the Minister of Infrastructure nor the Chairman of the URTiP currently has the authority to regulate the rates charged by operators of cable television services. However, excessive rates could be challenged by the Polish Anti-Monopoly Office should they be deemed to constitute monopolistic or other anti-competitive practices. Until December 31, 2002, cable television operators in Poland were also subject to the Copyright Act, which provides intellectual property rights protection to authors and producers of programming. On January 1, 2003, an amendment to the Copyright Act came into force, based on which the statutory license for broadcasting free-to-air ("FTA") was removed. In October 2003, a further amendment to the Copyright Act was enacted to restore the statutory license for cable operators to use the content of various providers, until Poland's accession to the European Union in May 2004.

        Under the terms of the Television Act, broadcasters in Poland are regulated by, and must obtain a broadcasting license from the Council.

TELECOMMUNICATION LAW

        Since January 1, 2001, the operation of cable and other television systems in Poland has been regulated under the TL, which replaced the previous Communications Act.

        The TL changes the licensing regime and the competencies of telecommunication authorities. The TL introduces a new authority, the Chairman of the URTiP. The Chairman of the URTiP has assumed most of the administration tasks previously performed by the Polish Minister of Communications and PAR (liquidated as of January 1, 2001). The Chairman of the URTiP is responsible for regulating telecommunication activities, including exercising control over operators and managing frequencies. The duties of the Minister of Infrastructure are limited primarily to issuing secondary regulations.

        Under the TL, cable television operators are required to obtain a permit from the Chairman of the URTiP for utilization of a public network for distribution of radio and television programming, except utilization of the network within the confines of a single building. The Chairman of the URTiP shall grant the permit to any interested entity authorized to do business in Poland and which complies with the conditions set forth in the TL. Applications for renewals of permits may be refused only if during the validity of the permit there have been circumstances justifying the refusal, revocation or limitation of the scope of the permit.

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        Under the TL, a TL permit must be revoked if:

•

a final court order prohibits the operator from conducting the business covered by the permit;



•

the operator fails to meet the legal requirements for the grant of the permit;



•

the operator has failed to remedy a violation of the law within the designated time limit; or



•

the launching of business activity covered by the application causes a threat to national defense, national security or public safety and order.

        Also, if the Chairman of the URTiP has not raised objections against the notification of telecommunication activity, he can make objections during the course of the performance of the telecommunications activity (for which the notification was required), if:

•

the operator violates the provisions of the TL and has not remedied the irregularities within the period of time specified in a decision issued by the Chairman of the URTiP; or



•

the performance of business activity causes a threat to national defense, national security or public safety and order.

        The TL permit may be revoked if the operator breaches the provisions of the TL, the permit or other decisions issued under the TL, in any way does not pay the required fees, or a decision on the liquidation or declaration of bankruptcy of the operator has been made.

        The Company holds 85 telecommunications permits, one for each of its headends, which allows it to utilize the public networks for distribution of radio and television programming.

        Operators that perform their activities on the basis of a TL permit are required to allow other operators operating public networks to use their buildings, lines, conduits, poles, towers and masts, in particular, allowing them to use telecommunications equipment, where these activities would be impossible without such infrastructure sharing or would involve a significant cost. Operators are required to specify the conditions of the joint use in an agreement. If the parties cannot agree to specific conditions, either party may request the Chairman of the URTiP to issue a decision on joint use.

        Except for the operation of radio and television networks and public telephone networks, the performance of all other telecommunications activities requires only notification to the Chairman of the URTiP.

        Other telecommunications activity includes:

•

provision of data transmission services using Company-owned telecommunication networks and the networks of other duly authorized operators;



•

utilization of public data transmission networks created on the basis of cable television networks already utilized; and



•

provision of internet access services using Company-owned telecommunication networks and the networks of other duly authorized operators.

        In addition, providing access to telecommunication services provided by other duly authorized operators with regard to domestic and international transmission of data while not requiring a telecommunications permit, does require certain reporting to the Chairman of the URTiP.

TELEVISION ACT

        The Polish National Radio and Television Council.    The Council, an independent agency of the Polish government, was created under the Television Act to regulate broadcasting in Poland. The

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Council has regulatory authority over both the programming that cable television operators transmit over their networks and the broadcasting operations of broadcasters.

        Registration of Programming.    Under the Television Act, cable television operators must register each channel and the programming which will be aired on that channel with the Chairman of the Council prior to transmission. The Company's subsidiaries register their programming on a current basis.

COPYRIGHT PROTECTION

        Television operators, including cable operators in Poland, are subject to the provisions of the Polish Copyright Act, which governs the enforcement of intellectual property rights. In general, the holder of a Polish copyright for a program transmitted over the cable networks of a cable television operator has a right to receive compensation from such operator or to prevent transmission of the program. The rights of Polish copyright holders are generally enforced by organizations for collective copyright administration and protection such as Zwiazek Autorow i Kompozytorow Scenicznych (copyrights collective association or "ZAIKS") and Zwiazek Artystow Scen Polskich (artistic performance rights collective association or "ZASP"), and can also be enforced by the holders themselves.

        On January 1, 2003, the amendment to the Copyright Act came into force and removed a statutory license. To that date, the statutory license had been used by all cable operators in Poland to retransmit domestic and foreign FTA channels without formal agreements with the broadcasters, primarily Polish channels (TVP, Polsat, TVN) and a number of foreign FTAs (e.g. German channels). The removal of the statutory license resulted in the obligation for cable operators to enter into formal agreements with all broadcaster and copyright associations by January 1, 2003. Temporary permission for transmission from key Polish FTAs—TVP (TVP1, TVP2, TVP3, TV Polonia), TVN (TVN, TVN7) and Polsat (Polsat, Polsat 2, TV4)—was granted to Polish Cable Association members, including a subsidiary of the Company, just before January 1, 2003. After January 1, 2003, when the provisions removing the statutory license came into effect, the Company, as other operators, used this opportunity to optimize its programming offerings and changes in the programming offerings were communicated to customers in March 2003. In October 2003, a further amendment of the Copyright Act was enacted to restore the statutory license for cable operators to use the content of various providers, although they will still be obliged to pay license fees to such FTAs in an unspecified amount. This authorization will be valid until Poland joins the EU in May 2004.

        The amendments discussed above were only a part of ongoing modifications of Polish Law intended to bring the Polish legal system in line with EU standards. It was not synchronized with a long-overdue overhaul of copyright law, now anticipated in the course of 2004. The new law will be expected to resolve some of the current issues in Polish copyright law (numerous collecting societies, unclear competencies, unreasonable demands) and to bring about general agreement between operators, broadcasters and collecting societies on copyright rates.

        After January 1, 2003, the Company terminated its license agreements with copyright collective associations ZAiKS and ZASP on the basis that under the amended Copyright Act, these associations are not authorized to collect remuneration fees for cable retransmission. On December 19, 2003, as a result of lengthy negotiations, ZASP signed a temporary agreement with the Polish Cable Association. So far, the Company has not acceded to that agreement. ZAiKS has not participated in these negotiations and has demanded that the Company enter into a license agreement and pay royalties amounting to 3.5% of cable subscription revenue, as was the case under the terminated agreement. ZAiKS is not legally obligated to enter into negotiations with the Polish Cable Association and does not have to accept the arrangements of other associations concerning the maximum rate and it retains the right to bring a lawsuit for unpaid royalties.

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        The Company has brought a claim to the Copyrights Commission in the Polish Ministry of Culture for the settlement of the conditions of a new license arrangement with ZAiKS, with a request that the license fee be set at 0.3% of cable subscription revenue (instead of 3.5% of cable subscription revenue, as approved by the Minister of Culture in the remuneration tables for ZAiKS). With the entry into force of the amendment to the Copyright Act restoring the statutory license, the proceedings before the Copyrights Commission might be suspended or discontinued. The Copyrights Commission is the administrative body with statutory power to settle disputes concerning the remuneration tables as well as disputes related to conclusion of license arrangements between copyright associations and users of copyrights and neighboring rights. Additionally, on July 2, 2003, the Polish Cable Association on behalf of all cable operators in Poland (including the Company) brought an appeal to the National Administrative Court against the recent decision of the Ministry of Culture approving the remuneration tables for ZAiKS at 3.5% of cable subscription revenues. These proceedings are independent from one another.

        On September 19, 2003, the Company acceded to the agreement concluded between the Polish Cable Association and the Polish Filmmakers' Association (SFP), which represents about 70% of copyright holders in Poland. Based on this agreement, the Company will pay to SFP an advance payment at the rate of 0.765% of net revenue from subscription fees for retransmission of radio and television programs. The obligation of advance payment will expire at the date of conclusion of a long form agreement or after a six month-period, whichever occurs first.

        After January 1, 2003, certain other Polish copyright associations approached the Company demanding the negotiation of separate license agreements and payment of additional license fees. The Company has not entered into licensing agreements with these associations.

ACT ON THE PROTECTION OF COMPETITION AND CONSUMERS

        The Act on Competition and Consumer Protection dated December 15, 2000 defines conditions for the development and protection of competition as well as the principles for protection of enterprise and consumer interests pursued for the public good. Companies that obtain control of 40% or more of the relevant market and thus act in a significant degree independently from competitors, contracting parties and consumers, may be deemed to have a dominant position, and therefore face greater scrutiny from the Anti-Monopoly Office.

        The supervisory agency that supervises all entrepreneurs activity on the whole market is the Chairman of the Office for Competition and Consumer Protection. From time to time, the Company receives inquiries from and is subject to review by various divisions of the Office for Competition and Consumer Protection but has not been regarded as having a dominant position on the market.

FOREIGN OWNERSHIP RESTRICTIONS

        Until January 1, 2001, the Communications Act was in effect. It provided that permits could only be issued to and held by Polish citizens, or companies in which foreign persons held no more than 49% of the share capital, ownership interests and voting rights. In addition, under the Communications Act, a majority of the management and supervisory board of any cable television operator holding permits were required to be comprised of Polish citizens resident in Poland. These restrictions did not apply to any permits issued prior to July 7, 1995. The TL, which came into force on January 1, 2003, has eliminated most of the foreign ownership restrictions relating to telecommunications.

POLAND'S EU MEMBERSHIP

        In 1994, Poland made an official application for membership in the EU. Poland finalized its negotiations with the European Union during a summit meeting in Copenhagen on December 13, 2002 and the Accession Treaty was signed during a summit meeting in Athens on April 16, 2003. In

15

June 2003, Poland held a referendum on EU membership. More than 50% of voters voted in favor of the membership. As a result, Poland will become an EU member on May 1, 2004. When Poland joins the EU, it will be required to implement and obey all of the laws and regulations emanating from the European Commission, including the Television Without Frontiers Directive and the European Community ("EC") competition law in their then current versions.

EU-REGULATION OF COMPETITION

        European Community competition law governs agreements which prevent, restrict or distort competition and prohibits the abuse of dominant market positions through Articles 81 and 82 of the EC Treaty.

        Article 81 (1) renders unlawful agreements and concerted practices which may affect trade between member states and which have as their object or effect the prevention, restriction or distortion of competition within the member states of the European Community/European Economic Area. Article 81 (2) voids the offending provision or the entire agreement, if the offending parts are not severable. Article 81 (3) allows for exemption from the provisions of Articles 81 (1) and 81 (2) for agreements whose beneficial effects in improving production or distribution or promoting technical or economic progress outweigh their restrictive effects, provided that consumers receive a fair share of the benefit, that competition will not be eliminated and that no unnecessary restrictions are accepted. Such an exemption may only be granted by the European Commission. Article 82 prohibits undertakings from abuse of a dominant market position in the EC or a substantial part of it, in so far as the abuse may affect trade between member states. A company may be dominant in several member states or part of a single member state. A company enjoys a dominant position whenever it possesses such market strength that it can act to an appreciable extent independently of its competitors and customers. Generally speaking, a market share of as little as 40% can raise concern that a firm may be dominant. However, dominance is not unlawful per se; only the abuse of a dominant position is prohibited by Article 82. Any action that is designed to, or could, seriously injure competitors, suppliers, distributors, or consumers is likely to raise issues under Article 82.

        The European Commission has the power to fine heavily (up to 10% of a group's annual worldwide turnover) in relation to a breach of Article 81 or in relation to abusive conduct under Article 82. Agreements or practices that breach these provisions will be void and unenforceable in national courts and third parties that suffer loss as a result of a breach of Article 81 or Article 82 can sue for damages and/or seek injunctive relief. The Company does not believe that any of its current agreements infringe Article 81(1) or Article 82. If the European Commission were to find the agreements infringed Article 81(1) or Article 82, the agreements would be void and unenforceable. The parties could also be fined and liable to damages to third parties.

ITEM 2. PROPERTIES

        On December 31, 2003, the Company owned equipment used for its cable television business, including 85 headends for cable networks, and approximately 6,434 kilometers of fiber-optic and coaxial cable plant. The Company has approximately 114 lease agreements for offices, storage space and land adjacent to the buildings. The total area leased amounts to approximately 19,800 square meters. The areas leased by the Company range from 1 square meter up to 4,800 square meters. The agreements are for specified and unspecified periods of time and those for an unspecified period may be terminated with relatively short notice periods by either party, usually three months.

        The Company has entered into conduit leases with TPSA (the Polish national telephone company) and, in certain cases, with other entities. The majority of the TPSA leases require the Company to bear the costs of the maintenance of the cable. The Company may not sublease the conduit or cables or allow a third party to use the conduits or cables free of charge without TPSA's consent. The rental

16

charge for the conduit is usually determined on each 100 meters of conduit occupied. The agreements also contain indexation clauses for rent adjustment purposes (based on the Consumer Price Index). A substantial portion of the Company's contracts with TPSA for the use of such conduits permit termination by TPSA without penalty at any time either immediately upon the occurrence of certain conditions or upon provision of three to six months' notice without cause. Any termination by TPSA of such contracts could result in the Company losing its permits, the termination of agreements with cooperative authorities and programmers, and an inability to service customers with respect to the areas where its networks utilize the conduits that were the subject of such TPSA contracts. The Company believes it is in compliance with all material provisions of TPSA contracts. The Company, under the umbrella of the Polish Cable Association, is engaged in negotiations with TPSA over the new terms of the duct rental contracts. For a list of the reasons for which TPSA can terminate a conduit agreement, the proportion of the Company's cable subscribers serviced by conduits leases subject to immediate termination and the consequences to the Company of the loss of those conduit leases, see "Business—Business Strategy—Technology and Infrastructure."

        The Company believes that its existing owned properties, lease agreements and conduit agreements are adequate for purposes of the Company's existing cable television operations.

        Leases to which the Company was a party that related to its programming and D-DTH businesses have been assigned to TKP. These leases were for real property located in the U.K. and in Poland for office space and premises providing satellite receiving, production, post-production and program packaging facilities.

ITEM 3. LEGAL PROCEEDINGS

        From time to time, the Company is subject to various claims and suits arising out of the ordinary course of business. While the ultimate result of all such matters is not presently determinable, based upon current knowledge and facts, management does not expect that their resolution will have a material adverse effect on the Company's consolidated financial position or results of operations.

HBO ARBITRATION

        The Company was involved in a dispute with HBO Communications (UK) Ltd., Polska Programming B.V. and HBO Poland Partners (collectively "HBO") concerning its cable carriage agreement ("Cable Agreement") and its D-DTH carriage agreement ("D-DTH Agreement") for the HBO premium movie channel. As discussed in Note 3 "Reorganization under Bankruptcy Code" in the notes to the consolidated financial statements contained in this Annual Report on Form 10-K, in February 2004 the matter was settled for consideration of $6.0 million received by the HBO parties upon the settlement.

ZASP (COPYRIGHTS COLLECTIVE ASSOCIATION).

        A claim was made in the District Court on April 9, 2002 by ZASP. ZASP claims payments of copyright and neighboring rights for using artistic performances in cable TV transmission. The Company responded to the court claiming that artistic performances are not entitled to any remuneration and therefore the claim is meritless. Additionally, based on a request from ZASP, the court ordered the Company to disclose information concerning gross revenues accruing to it as of June 1, 1998. The order of the District Court was appealed by the Company on July 2, 2002, based on the same argument as the response to the claim.

        On January 17, 2003, the Appeals Court rejected the Company's appeal and supported the order of the District Court. The Company has not yet received a written Court Statement. The case commenced in the District Court and the Company is planning further legal action to dismiss the ZASP claim. On January 23, 2003, the Company brought an additional letter to the District Court

17

requesting it to reject the ZASP claim as inadmissible in the civil court jurisdiction in which it was filed. On July 2, 2003, the first hearing took place, during which ZASP asserted the value of its claim as approximately $750,000. On July 31, 2003, the Company received the District Court's verdict (issued during closed session) refusing to dismiss the ZASP suit based on lack of civil court jurisdiction. In reaction, the Company delivered an appeal to the Appeals Court on August 7, 2003.

        On December 30, 2003, the Appeals Court dismissed the Company's appeal of the District Court's decision. The case is pending. The next hearing date has not been scheduled by the Appeals Court yet. The Company intends to defend itself vigorously against the claim. However, the Company is unable to predict the final outcome of the case.

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

        Not applicable

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PART II

ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        UPC Polska, LLC's membership interest units denominated as common stock are owned by UPC Telecom B.V. and are not traded on any public trading market.

        On February 18, 2004, UPC Polska issued 1,000 newly issued membership interest units denominated as common stock along with cash in the amount of $15.0 million to UPC Telecom B.V. in exchange for cancellation of certain loans and amounts owing to this creditor and cancellation of its bankruptcy claims, pursuant to the Plan. The membership interest units denominated as common stock were offered pursuant to an exemption from registration under Section 1145 of the United States Bankruptcy Code.

ITEM 6. SELECTED FINANCIAL DATA

        The following selected consolidated financial data as of and for the years ended December 31, 2003, 2002, 2001, 2000 and 1999 have been derived from the Company's audited consolidated financial statements. For the period from January 1, 1999 through August 5, 1999, prior to the acquisition by UPC (the acquisition is described in Notes 1 and 5 to the consolidated financial statements contained in this Annual Report on Form 10-K) the Company operated under the name "@Entertainment, Inc.". On December 7, 2001, the Company sold its D-DTH and programming business to TKP, a subsidiary of Canal+ in which the Company retained a minority interest. The consolidated financial data presented below have been derived from the consolidated financial statements of the Company and the notes prepared in conformity with generally accepted accounting principles as applied in the United States.

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The selected consolidated financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations".

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