This is the 3rd annual report of the Australian and New Zealand Neonatal Network and presents information on the network's 1996-1997 audit of high risk neonates. All 29 level III Neonatal Intensive Care Units in Australia and New Zealand collaborate voluntarily to form the Australian and New Zealand Neonatal Network. Their aim is to improve the care of high-risk newborn infants and their families in the region through colalborative audit and research. The network's audit of high-risk infants has involved all units since 1995. During the period 1995 to 1997, there has been little change in the rate of survival or in the length or stay in hospital for survivors. The audit's registration criteria include all liveborn babies who were admitted to a level III NICU who were born at less than 32 completed weeks' gestation; or born weighing less than 1500 grams; or received assisted ventilation for four or more consecutive hours, or received major surgery. During 1996 and 1997 12,287 infants met at least one of these criteria. In 1996 5,943 babies were born at less than 32 weeks' gestation and 5,181 were born weighing less than 1500 grams; 10,471 infants had assisted ventilation and 1,556 received major surgery.