UNITED STATES

                      SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON, D. C.  20549

                                   FORM 10-Q


[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
        For the quarterly period ended September 30, 1997

                                       OR

[_]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
        For the transition period from _______ to _______


Commission File Number 1-9554


                       TCI PACIFIC COMMUNICATIONS, INC.
- ------------------------------------------------------------------------------
            (Exact name of Registrant as specified in its charter)


       State of Delaware                                04-2980402
- --------------------------------          ------------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)
 
 
        5619 DTC Parkway
       Englewood, Colorado                                80111
- ----------------------------------------               ----------
(Address of principal executive offices)               (Zip Code)
 

      Registrant's telephone number, including area code: (303) 267-5500

     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       No   X
                                                  -----    -----

     All of the Registrant's common stock is owned by TCI Communications,
Inc.  The number of shares outstanding of the Registrant's common stock as of
October 31, 1997 was:

                       Class A Common Stock - 0 shares.
                      Class B Common Stock - 100 shares.


               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES
                              (see notes 1 and 2)
 
                          Consolidated Balance Sheets
                                  (unaudited)



                                                                    September 30,              December 31,
                                                                         1997                      1996
                                                                    -------------            --------------
Assets                                                                        amounts in thousands
- ------
                                                                                       
Cash                                                                   $      311                       --
Restricted cash (note 1)                                                       --                   33,664
Trade and other receivables, net                                            5,366                   18,986
Prepaid expenses                                                            5,037                    6,144
Property and equipment, at cost:
 Land                                                                       5,798                    5,795
 Distribution systems                                                     380,755                  348,949
 Support equipment and buildings                                           36,784                   35,812
                                                                       ----------                ---------
                                                                          423,337                  390,556
 Less accumulated depreciation                                             43,682                   11,373
                                                                       ----------                ---------
                                                                          379,655                  379,183
                                                                       ----------                ---------
Franchise costs                                                         3,041,289                3,015,246
 Less accumulated amortization                                             88,744                   30,773
                                                                       ----------                ---------
                                                                        2,952,545                2,984,473
                                                                       ----------                ---------
Other assets, at cost, net of amortization                                 16,909                   18,111
                                                                       ----------                ---------
                                                                       $3,359,823                3,440,561
                                                                       ==========                =========
Liabilities and Common Stockholder's Equity
- -------------------------------------------
Cash overdraft                                                         $       --                    9,736
 
Accounts payable                                                            3,283                    3,490
 
Accrued expenses:
 Accrued franchise fees                                                     7,159                    8,663
 Accrued property tax expense                                               1,952                    2,549
 Accrued payroll                                                            2,391                    1,559
 Other                                                                      9,781                   17,237
                                                                       ----------                ---------
                                                                           21,283                   30,008
                                                                       ----------                ---------
 
Subscriber advance payments                                                 2,197                    2,727
 
Debt (note 5)                                                             951,216                1,151,884
 
Deferred income taxes                                                   1,042,563                1,073,340
 
Other liabilities                                                             413                      380
                                                                       ----------                ---------
 
   Total liabilities                                                    2,020,955                2,271,565
                                                                       ----------                ---------
 
Exchangeable Preferred Stock (notes 1 and 6)                              629,676                  629,801
 
Common stockholder's equity:
 Class A common stock, $1 par value.  Authorized 6,257,961
  shares; no shares issued and outstanding                                     --                       --
 Class B common stock, $.01, par value.  Authorized 100
  shares; issued and outstanding 100 shares                                    --                       --
 Additional paid-in capital                                               313,641                  336,921
 Accumulated deficit                                                       (1,433)                  (2,452)
                                                                       ----------                ---------
                                                                          312,208                  334,469
 Due to TCI Communications, Inc. ("TCIC") (note 7)
                                                                                                          
                                                                          396,984                  204,726
                                                                       ----------                ---------
   Total common stockholder's equity                                      709,192                  539,195
                                                                       ----------                ---------
 
Commitments (note 8)
                                                                       $3,359,823                3,440,561
                                                                       ==========                =========

See accompanying notes to financial statements.

                                      I-1

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES
                              (see notes 1 and 2)

                           Statements of Operations
                                  (unaudited)


                                             Pacific      Pacific     VII Cable
                                             (note 2)     (note 2)    (note 2)
                                           ------------  -----------  ---------
                                           Three months  Two months   One month
                                               ended        ended       ended
                                          September 30, September 30,  July 31,
                                               1997         1996        1996
                                           ------------  -----------  ---------
                                                     amounts in thousands
 
Revenue                                        $127,888     82,008   |   40,961
                                                                     |          
Operating costs and expenses:                                        |          
   Operating (note 7)                            45,359     30,703   |   16,639 
   Selling, general and administrative                               |          
    (note 7)                                     31,657     18,008   |    9,351 
   Depreciation                                  10,656      6,239   |    5,687 
   Amortization                                  20,460     11,375   |    1,817 
                                               --------    -------   |   ------ 
                                                108,132     66,325   |   33,494 
                                               --------    -------   |   ------ 
                                                                     |
     Operating income                            19,756     15,683   |    7,467 
                                                                     |          
Other income (expense):                                              |          
   Interest expense:                                                 |        
     Related party (note 7)                      (6,708)   (16,744)  |   (6,905)
     Other                                      (17,272)        --   |       -- 
   Interest income                                   --         --   |    2,214 
   Other, net                                         4       (506)  |      359 
                                               --------    -------   |   ------ 
                                                (23,976)   (17,250)  |   (4,332)
                                               --------    -------   |   ------ 
                                                                     |          
   Earnings (loss) before income taxes           (4,220)    (1,567)  |    3,135 
                                                                     |          
Income tax benefit (expense)                      2,071        666   |   (1,279)
                                               --------    -------   |   ------ 
                                                                     |          
   Net earnings (loss)                           (2,149)      (901)  |    1,856 
                                                                     |   ====== 
                                                                     |          
Dividend requirement on Exchangeable                                 |          
   Preferred Stock                               (7,823)    (5,214)  |  
                                               --------    -------   |   
                                                                     |
   Net loss attributable to common                                   |        
      stockholder                              $ (9,972)    (6,115)  |          
                                               ========    =======   
 
See accompanying notes to financial statements.

                                      I-2

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES
                              (see notes 1 and 2)

                           Statements of Operations
                                  (unaudited)



                                            Pacific      Pacific     VII Cable 
                                            (note 2)     (note 2)    (note 2)   
                                          ------------  -----------  ---------  
                                          Nine months   Two months Seven months 
                                             ended        ended       ended    
                                         September 30, September 30,  July 31,  
                                              1997         1996        1996     
                                         ------------- ------------- ---------- 
                                                    amounts in thousands        
                                                                                
Revenue                                       $380,283     82,008   |  280,630  
                                                                    |           
Operating costs and expenses:                                       |           
   Operating (note 7)                          131,863     30,703   |  108,652  
   Selling, general and administrative                              |           
    (note 7)                                    83,062     18,008   |   68,132  
   Depreciation                                 32,498      6,239   |   40,681  
   Amortization                                 58,714     11,375   |   10,899  
                                              --------    -------   |  -------  
                                               306,137     66,325   |  228,364  
                                              --------    -------   |  -------  
                                                                    |           
     Operating income                           74,146     15,683   |   52,266  
                                                                    |           
Other income (expense):                                             |           
   Interest expense:                                                |           
     Related party (note 7)                    (16,876)   (16,744)  |  (30,908) 
     Other                                     (57,098)        --   |       --  
   Interest income                                 405         --   |    2,214  
   Other, net                                      (46)      (506)  |      520  
                                              --------    -------   |  -------  
                                               (73,615)   (17,250)  |  (28,174) 
                                              --------    -------   |  -------  
                                                                    |           
   Earnings (loss) before income taxes             531     (1,567)  |   24,092  
                                                                    |           
Income tax benefit (expense)                       488        666   |  (13,432) 
                                              --------    -------   |  -------  
                                                                    |           
   Net earnings (loss)                           1,019       (901)  |   10,660  
                                                                    |  =======  
Dividend requirement on Exchangeable                                |           
   Preferred Stock                             (23,280)    (5,214)  |           
                                              --------    -------               
   Net loss attributable to common                                              
      stockholder                             $(22,261)    (6,115)              
                                              ========    ======= 
 
See accompanying notes to financial statements.

                                      I-3
 


 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES
                              (see notes 1 and 2)

             Consolidated Statement of Common Stockholder's Equity
                                  (unaudited)



                                                   Common Stock       Additional              
                                                ------------------     paid-in      Accumulated     Due to      Total
                                                Class A    Class B     capital        deficit        TCIC      equity      
                                                -------    -------    ----------    -----------     -------    -------
                                                                        amounts in thousands
                                                                                              
 Balance at January 1, 1997                     $   --         --        336,921         (2,452)    204,726    539,195
 
   Net earnings                                     --         --            --           1,019         --       1,019
   Accreted dividends on Exchangeable
     Preferred Stock                                --         --        (23,280)           --          --     (23,280)
   Allocation of programming charges from 
     TCIC (note 7)                                  --         --            --             --       92,111     92,111
   Allocation of expenses in connection with 
     the Services Agreement (note 7)                --         --            --             --       11,421     11,421
   Intercompany income tax allocation               --         --            --             --       30,263     30,263
   Net cash transfers from TCIC                     --         --            --             --       58,463     58,463
                                                -------    -------    ----------    -----------     -------    -------
 
Balance at September 30, 1997                   $   --         --        313,641         (1,433)    396,984    709,192
                                                =======    =======    ==========    ===========     =======    =======
 
 
See accompanying notes to financial statements.

                                      I-4

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES
                              (see notes 1 and 2)

                            Statements of Cash Flows
                                  (unaudited)


                                          Pacific      Pacific     VII Cable 
                                          (note 2)     (note 2)     (note 2)   
                                        ------------  -----------  ----------  
                                        Nine months   Two months   Seven months 
                                           ended        ended         ended    
                                       September 30, September 30,   July 31,  
                                            1997         1996         1996     
                                       ------------- ------------- ---------- 
                                                   amounts in thousands        
                                                       (see note 3)
Cash flows from operating activities:
  Net earnings (loss)                      $   1,019        (901) |    10,660
  Adjustments to reconcile net                                    |             
    earnings (loss) to net cash provided by                       |             
    operating activities:                                         |             
     Depreciation and amortization            91,212      17,614  |    51,580 
     Intercompany tax allocation              30,263         775  |       --    
     Deferred income tax expense                                  |           
       (benefit)                             (30,777)     (1,441) |     2,559 
     Other noncash credits                       --          --   |       (35)
     Changes in operating assets                                  |             
       and liabilities:                                           |             
       Change in receivables                  13,620      (7,769) |     1,215 
       Change in accruals and                                     |  
         payables                             (9,462)      3,050  |     6,288
       Change in prepaid expenses              1,107      (6,572) |       141 
                                           ---------     -------  |   -------   
                                                                  |             
         Net cash provided by                                     |             
             operating activities             96,982       4,756  |    72,408 
                                           ---------     -------  |   -------   
Cash flows from investing activities:                             |             
  Capital expended for property and                               |
    equipment                                (27,108)     (2,626) |   (68,581)
  Cash paid for acquisitions                 (35,191)        --   |       --    
  Decrease in restricted cash                 33,664         --   |       --
  Cash proceeds from disposition of                               |
    assets                                       --          --   |       81   
  Other investing activities                   3,110       4,860  |    (4,364)
                                           ---------     -------  |   ------- 
                                                                  |             
         Net cash provided by (used in)                           |             
             investing activities            (25,525)      2,234  |   (72,864)
                                           ---------     -------  |   ------- 
                                                                  |             
Cash flows from financing activities:                             |             
  Change in cash overdraft                    (9,736)        --   |       --    
  Borrowings of debt                             --          --   | 1,700,000 
  Repayments of debt                        (200,000)    (25,001) |   (57,000)
  Payment of preferred stock dividends       (23,405)        --   |       --    
  Net cash transfers from TCIC               161,995        (839) |       --    
  Allocated charges from TCIC                    --       20,301  |       --    
  Transfer of cash to Viacom International                        |
    Services Inc. ("New VII") as                                  |             
    part of First Distribution                   --          --   |(1,701,112)
  Change in cash transfers from                                   |
    Viacom, Inc.                                 --          --   |     4,163
  Allocated charges from Viacom, Inc.            --          --   |    52,321
                                           ---------     -------  | ---------   
                                                                  |             
         Net cash used in financing                               |   
             activities                      (71,146)     (5,539) |    (1,628)
                                           ---------     -------  | ---------   
                                                                  | 
         Net increase (decrease)                                  |
             in cash                             311       1,451  |    (2,084)
                                                                  |             
           Cash at beginning of period            --      40,733  |     2,294
                                           ---------     -------  | ---------
                                                                  | 
           Cash at end of period           $     311      42,184  |       210
                                           =========     =======    =========   

 
See accompanying notes to financial statements.

                                      I-5
 

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                         Notes to Financial Statements

                               September 30, 1997
                                  (unaudited)


(1)  Acquisition and Related Transactions
     ------------------------------------

     On July 24, 1995, Viacom, Inc. ("Viacom"), Viacom International Inc. (after
     giving effect to the First Distribution as defined below, "VII Cable "), a
     wholly-owned subsidiary of Viacom, and New VII, a wholly-owned subsidiary
     of VII Cable, entered into certain agreements (the "Transaction
     Agreements") with Tele-Communications, Inc. ("TCI") and TCIC, a subsidiary
     of TCI, providing for, among other things, the conveyance of Viacom
     International Inc.'s non-cable assets and liabilities to New VII, the
     distribution of all of the common stock of New VII to Viacom (the "First
     Distribution"), the Exchange Offer (as defined below) and the issuance to
     TCIC of all of the Class B common stock of VII Cable. On June 24, 1996,
     Viacom commenced an exchange offer (the "Exchange Offer") pursuant to which
     Viacom shareholders had the option to exchange shares of Viacom Class A or
     Class B common stock ("Viacom Common Stock") for a total of 6,257,961
     shares of VII Cable Class A common stock. The Exchange Offer expired on
     July 22, 1996 with a final exchange ratio of 0.4075 shares of VII Cable
     Class A common stock for each share of Viacom Common Stock accepted for
     exchange.

     Prior to the consummation of the Exchange Offer on July 31, 1996, Viacom
     International Inc. entered into a $1.7 billion credit agreement (the
     "Credit Agreement").  Proceeds from the Credit Agreement were transferred
     by Viacom International Inc. to New VII as part of the First Distribution.
     Immediately following the consummation of the Exchange Offer, on July 31,
     1996, TCIC, through a capital contribution of $350 million in cash,
     purchased all of the shares of Class B common stock of VII Cable (the
     "Acquisition").  At that time, VII Cable was renamed TCI Pacific
     Communications, Inc. (together with its consolidated subsidiaries,
     "Pacific") and the shares of Class A common stock of VII Cable were
     converted into shares of 5% Class A Senior Cumulative Exchangeable
     Preferred Stock (the "Exchangeable Preferred Stock").  Proceeds from the
     $350 million capital contribution were used to repay a portion of the
     Credit Agreement.

     On October 13, 1995, TCIC (as buyer) and Prime Cable of Fort Bend, L.P. and
     Prime Cable Income Partners, L.P. (as sellers) executed asset and stock
     purchase and sale agreements (the "Houston Purchase Agreements") providing
     for the sale of certain cable television systems serving the greater
     Houston Metropolitan Area for a total base purchase price of $301 million,
     subject to adjustments.  On December 18, 1995, TCIC assigned all of its
     rights, remedies, title and interest in, to and under the Houston Purchase
     Agreements to a subsidiary of InterMedia Capital Partners IV, L.P. ("IMP").
     On May 8, 1996, IMP consummated the transactions contemplated by the
     Houston Purchase Agreements.  In connection with the Acquisition, IMP
     exchanged its Houston cable systems plus cash amounting to $36,633,000 (the
     "Exchange Cash") for VII Cable's Nashville cable system.  The Exchange Cash
     was escrowed for cable system acquisitions.  In January 1997, Pacific used
     the Exchange Cash to purchase a cable system serving approximately 20,000
     subscribers in and around Boulder County, Colorado.

                                                                     (continued)

                                      I-6

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                         Notes to Financial Statements


(2)  Basis of Presentation
     ---------------------
     Pacific, through its subsidiaries and affiliates, is principally engaged in
     the construction, acquisition, ownership, and operation of cable television
     systems. Pacific operates its cable television systems primarily in the
     following six geographic markets: the San Francisco and Northern California
     area; Salem, Oregon; the Seattle, Washington and Greater Puget Sound area;
     Houston, Texas; Boulder County, Colorado; and Dayton, Ohio.

     TCI's Common Stock, par value $1.00 per share, is comprised of six series:
     Tele-Commmunications, Inc. Series A TCI Group Common Stock ("Series A TCI
     Group Common Stock") and Tele-Communications, Inc. Series B TCI Group
     Common Stock (collectively the "TCI Group Common Stock"), Tele-
     Communications, Inc. Series A Liberty Media Group Common Stock and Tele-
     Communications, Inc. Series B Liberty Media Group Common Stock
     (collectively, the "Liberty Media Group Common Stock"). Tele-
     Communications, Inc. Series A TCI Ventures Group Common Stock and Tele-
     Communications, Inc. Series B TCI Ventures Group Common Stock
     (collectively, the "TCI Ventures Group Common Stock").

     The TCI Group Common Stock is intended to reflect the separate performance
     of the TCI Group, which is comprised of TCI's domestic distribution and
     communications businesses (other than the investments attributed to the TCI
     Ventures Group), and any other businesses and assets of TCI not attributed
     to either the Liberty Media Group or the TCI Ventures Group. The Liberty
     Media Group Common Stock is intended to reflect the separate performance of
     the Liberty Media Group, which is comprised of TCI's businesses, and
     investments in entities, that are engaged in the production, acquisition
     and distribution through all available formats and media of branded
     entertainment, educational and informational programming and software,
     including multimedia products, and its investments in entities engaged in
     electronic retailing, direct marketing, advertising sale relating to
     programming services, infomercials and transactions processing, and the
     operation of UHF television stations. The TCI Ventures Group Common Stock
     is intended to reflect the separate performance of the TCI Ventures Group,
     which is comprised of TCI's principal international assets and businesses
     and substantially all of TCI's non-cable and non-programming domestic
     assets and businesses. Pacific is a member of the TCI Group.

     In the accompanying financial statements and in the following text,
     references are made to VII Cable and Pacific.  The period for the seven
     months ended July 31, 1996 reflects the carve-out historical results of
     operations of the cable television business of Viacom and is referred to as
     "VII Cable."  The financial statements as of December 31, 1996 and
     September 30, 1997 and for the two months and nine months ended September
     30, 1997 reflect the consolidated results of operations and financial
     condition of Pacific and are referred to as "Pacific."  The "Company"
     refers to both Pacific and its predecessor entity, VII Cable.


                                                                     (continued)
                                      I-7

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                         Notes to Financial Statements

     The accompanying financial statements include the accounts of the Company
     and all investments of more than 50% in subsidiaries in which the Company
     has significant control. All significant intercompany transactions have
     been eliminated for all periods presented. As a result of the Acquisition,
     which was accounted for as a purchase, the consolidated financial
     information for the periods after the Acquisition is presented on a
     different cost basis than that for the periods before the Acquisition and
     therefore is not comparable.

     The accompanying interim financial statements are unaudited but, in
     the opinion of management, reflect all adjustments (consisting of normal
     recurring accruals) necessary for a fair presentation of the results for
     such periods.  The results of operations for any interim period are not
     necessarily indicative of results for the full year.  These financial
     statements should be read in conjunction with Pacific's financial
     statements and notes thereto contained in Pacific's annual report on Form
     10-K for the year ended December 31, 1996.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities at
     the date of the financial statements and the reported amounts of revenue
     and expenses during the reporting period.  Actual results could differ from
     those estimates.

     Certain amounts have been reclassified for comparability with the 1997
     presentation.

(3)  Derivative Financial Instruments
     --------------------------------

     The Company has entered into a fixed interest rate exchange agreement
     ("Interest Rate Swap") which it uses to manage interest rate risk arising
     from the Company's financial liabilities.  Such Interest Rate Swap is
     accounted for as a hedge; and accordingly, any amounts receivable or
     payable under the Interest Rate Swap are recognized as an adjustment to
     interest expense.  Any gain or loss on early termination of the Interest
     Rate Swap is included in the carrying amount of the related debt and
     amortized as yield adjustments over the remaining term of the derivative
     financial instrument.

(4)  Supplemental Disclosure to Statements of Cash Flows
     ---------------------------------------------------

     Cash paid for interest was $74,012,000 for the nine months ended
     September 30, 1997.  Cash paid for income taxes was not material for the
     nine months ended September 30, 1997.


                                                                     (continued)

                                      I-8

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                         Notes to Financial Statements


     Prior to the Acquisition, interest and income taxes were settled through
     the intercompany account. See note 7 for discussion of such charges.

     Significant noncash investing and financing activities are as follows:
 
 
                               Nine months       Two months      Seven months
                                  ended            ended             ended
                              September 30,    September 30,        July 31,
                                  1997             1996               1996
                              -------------    -------------     ------------ 
                                            amounts in thousands
                                                               
     Accrued preferred stock                                  |
      dividends                  $23,280          5,214       |       --
                               =========        =======       |   ======
                                                              |
 

     The Company's transactions (other than intercompany income tax allocations
     between TCIC and Pacific) effected through Pacific's intercompany account
     with TCIC have been treated as constructive cash receipts and payments for
     purposes of the accompanying statements of cash flows.

(5)  Debt
     ----

     In connection with the Transaction Agreements described in note 1, Viacom
     International Inc. borrowed $1.7 billion pursuant to the Credit Agreement.
     The $300 million term loan and $50 million of the $1.05 billion revolving
     commitment loan (the "Revolving Loan") were repaid with the proceeds from
     the TCIC capital contribution described in note 1. At September 30, 1997,
     the Credit Agreement consisted of a $350 million term loan (the "Term
     Loan") which is due December 31, 2004 and the Revolving Loan which provides
     for semi-annual escalating commitment reductions from June 30, 1998 through
     September 30, 2004. The Term Loan and the Revolving Loan provide for
     quarterly interest payments at variable rates (7.2% and 6.8% respectively,
     at September 30, 1997) based upon the Company's debt to cash flow ratio (as
     defined in the Credit Agreement). The Credit Agreement contains restrictive
     covenants which require, among other things, the maintenance of specified
     cash flow and financial ratios and include certain limitations of
     indebtedness, investments, guarantees, dispositions, stock repurchases and
     dividend payments. In addition, the Revolving Loan requires a commitment
     fee ranging from 3/8% to 1/2% per annum to be paid quarterly on the average
     unborrowed portion of the total amount available for borrowing. At
     September 30, 1997, the unborrowed portion of the revolving loan was $450
     million.

     Based on current rates available for debt of the same maturity, the Company
     believes that the fair value of Pacific's debt is approximately equal to
     its carrying value at September 30, 1997.



                                                                     (continued)

                                      I-9

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                         Notes to Financial Statements

     In accordance with the terms of the Credit Agreement, Pacific has entered
     into an Interest Rate Swap with TCIC pursuant to which Pacific will pay a
     fixed interest rate of 7.5% on a notional amount of $600 million. The terms
     of the Interest Rate Swap become effective only if the one month LIBOR rate
     exceeds 6.5% for five consecutive days within the two-year observation
     period, as defined by the Interest Rate Swap (the "Trigger"). In the event
     the Trigger occurs, the terms of the agreement become effective until
     August 1, 2001. As of September 30, 1997, the terms of the Interest Rate
     Swap have not become effective.

(6)  Exchangeable Preferred Stock
     ----------------------------

     The Company is authorized to issue and has issued 6,257,961 shares of 5%
     Class A Senior Cumulative Exchangeable Preferred Stock with a stated value
     of $100 per share in connection with the Acquisition (see note 1).

     The Exchangeable Preferred Stock is exchangeable, at the option of the
     holder commencing after the fifth anniversary of the date of issuance, for
     shares of Series A TCI Group Common Stock at an exchange rate of 5.447
     shares of Series A TCI Group Common Stock for each share of Exchangeable
     Preferred Stock exchanged. The Exchangeable Preferred Stock is subject to
     redemption, at the option of Pacific, on or after the fifteenth day
     following the fifth anniversary of the date of issuance, initially at a
     redemption price of $102.50 per share and thereafter at prices declining
     ratably annually to $100 per share on and after the eighth anniversary of
     the date of issuance, plus accrued and unpaid dividends to the date of
     redemption. The Exchangeable Preferred Stock is also subject to mandatory
     redemption on the tenth anniversary of the date of issuance for $100 per
     share plus accrued and unpaid dividends. Amounts payable by the Company in
     satisfaction of its dividend, optional redemption and mandatory redemption
     obligations with respect to the Exchangeable Preferred Stock may be made in
     cash or, at the election of the Company, in shares of Series A TCI Group
     Common Stock, or in any combination of the foregoing. If payments are made
     in shares of Series A TCI Group Common Stock, Pacific will discount the
     market value of such stock by 5% in determining the number of shares
     required to be issued to satisfy such payments.

(7)  Related Party Transactions
     --------------------------

     Due to TCIC's ownership of 100% of the common equity of Pacific, the
     amounts due to TCIC have been classified as a component of common
     stockholder's equity in the accompanying consolidated balance sheets. Such
     amounts are due on demand and accrue interest at variable rates.

     Pacific purchases, at TCIC's cost, certain pay television and other
     programming through a certain indirect subsidiary of TCIC. Charges for such
     programming were $92,111,000 during the nine months ended September 30,
     1997 and are included in operating expenses in the accompanying financial
     statements.


                                                                     (continued)

                                      I-10

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                         Notes to Financial Statements

     Effective August 1, 1996, TCI began to provide certain facilities, services
     and personnel to Pacific. The scope of the facilities, personnel and
     services provided to Pacific and the respective charges payable in respect
     thereof are set forth in a services agreement entered into among TCI, TCIC
     and Pacific (the "Services Agreement"). Pursuant to the Services Agreement,
     TCIC provides to Pacific administrative and operational services necessary
     for the conduct of its business, including, but not limited to, such
     services as are generally performed by TCIC's accounting, finance,
     corporate, legal and tax departments. In addition, TCIC makes available to
     Pacific such general overall management services and strategic planning
     services as TCIC and Pacific have agreed, and provides Pacific with such
     access to and assistance from TCIC engineering and construction groups and
     TCIC's programming and technology/venture personnel at Pacific's request.

     The Services Agreement also provides that, for so long as TCIC continues to
     beneficially own shares of Pacific's common stock representing at least a
     majority in voting power of the outstanding shares of capital stock of
     Pacific entitled to vote generally in the election of directors, TCIC will
     continue to provide in the same manner, and on the same basis as is
     generally provided from time to time to other participating TCIC
     subsidiaries, benefits and administrative services to Pacific's employees.
     In this regard, Pacific is allocated that portion of TCIC's compensation
     expense attributable to benefits extended to employees of Pacific.

     Pursuant to the Services Agreement, Pacific reimburses TCIC for all direct
     expenses incurred by TCIC in providing such services and a pro rata share
     of all indirect expenses incurred by TCIC in connection with the rendering
     of such services, including a pro rata share of the salary and other
     compensation of TCIC employees performing services for Pacific and general
     overhead expenses. Charges for expenses incurred in connection with the
     Services Agreement were $11,421,000 during the nine months ended September
     30, 1997 and $1,993,000 during the two months ended September 30, 1996.
     Such changes are included in selling, general and administrative expenses
     in the accompanying financial statements. The obligations of TCIC to
     provide services under the Services Agreement (other than TCIC's obligation
     to allow Pacific's employees to participate in TCIC's employee benefit
     plans) will continue in effect until terminated by any party to the
     Services Agreement at any time on not less than 60 days' notice.

     Prior to the Acquisition, Viacom provided VII Cable with certain general
     services, including insurance, legal, financial and other corporate
     functions. Charges for these services were made primarily based on the
     average of certain specified ratios of revenues, operating income and net
     assets. Management believes that the methodologies used to allocate these
     charges were reasonable. The charges for such services were $5,750,000 for
     the seven months ended July 31, 1996, and are included in selling, general
     and administrative expenses in the accompanying financial statements.



                                                                     (continued)

                                      I-11

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                         Notes to Financial Statements


     Prior to the Acquisition, VII Cable, in the normal course of business, was
     involved in transactions with companies owned by or affiliated with Viacom.
     VII Cable had agreements to distribute television programs of such
     companies, including Showtime Networks Inc., MTV Networks, Comedy Central
     and USA Networks. The agreements required VII Cable to pay license fees
     based upon the number of customers receiving the service. Affiliate license
     fees incurred and paid under these agreements were $19,858,000 for the
     seven months ended July 31, 1996. In addition, cooperative advertising
     expenses charged to affiliated companies were $364,000 for the seven months
     ended July 31, 1996.

     Viacom allocated to VII Cable interest expense of $26,019,000 during the
     seven months ended July 31, 1996. Such allocated interest expense is
     related to Viacom corporate debt and was allocated to VII Cable on the
     basis of a percentage of VII Cable's average net assets to Viacom's average
     net assets.

     Prior to the Acquisition, VII Cable was included in the consolidated
     federal income tax returns of Viacom. Tax expense for the seven months
     ended July 31, 1996 reflected in the accompanying statements of operations
     has been prepared on a separate return basis as though VII Cable had filed
     stand-alone income tax returns. The current income tax liabilities for such
     periods have been satisfied by Viacom. In connection with the transactions
     described in note 1, Viacom agreed to indemnify VII Cable against income
     tax assessments, if any, arising from federal, state or local tax audits
     for periods in which VII Cable was a member of Viacom's consolidated tax
     group.

     Subsequent to the Acquisition, Pacific is included in the consolidated
     federal income tax return of TCI. Income tax expense or benefit for Pacific
     is based on those items in the consolidated calculation applicable to
     Pacific. Intercompany tax allocation represents an apportionment of tax
     expense or benefit (other than deferred taxes) among the subsidiaries of
     TCI in relation to their respective amounts of taxable earnings or losses.
     The payable or receivable arising from the intercompany tax allocation is
     recorded as an increase or decrease in amounts due to TCIC.

                                                                     (continued)

                                      I-12

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                         Notes to Financial Statements


     A tax sharing agreement (the "Old Tax Sharing Agreement") among TCI, TCIC
     and certain subsidiaries of TCI was implemented effective July 1, 1995. The
     Old Tax Sharing Agreement formalized certain of the elements of a pre-
     existing tax sharing arrangement and contains additional provisions
     regarding the allocation of certain consolidated income tax attributes and
     the settlement procedures with respect to the intercompany allocation of
     current tax attributes. Under the Old Tax Sharing Agreement, TCIC was
     responsible to TCI for its share of consolidated income tax liabilities
     (computed as if TCI were not liable for the alternative minimum tax)
     determined in accordance with the Old Tax Sharing Agreement, and TCI was
     responsible to TCIC to the extent that the income tax attributes generated
     by TCIC and its subsidiaries were utilized by TCI to reduce its
     consolidated income tax liabilities (computed as if TCI were not liable for
     the alternative minimum tax). The tax liabilities and benefits of such
     entities so determined are charged or credited to an intercompany account
     between TCI and TCIC. Such intercompany account is required to be settled
     only upon the date that an entity ceases to be a member of TCI's
     consolidated group for federal income tax purposes. Under the Old Tax
     Sharing Agreement, TCI retains the burden of any alternative minimum tax
     and has the right to receive the tax benefits from an alternative minimum
     tax credit attributable to any tax period beginning on or after August 1,
     1996 and ending on or before October 1, 1997.

     Effective October 1, 1997, (the "Effective Date"), the Old Tax Sharing
     Agreement was replaced by a new tax sharing agreement, as amended by the
     First Amendment thereto (the "New Tax Sharing Agreement"), which governs
     the allocation and sharing of income taxes by the TCI Group, the Liberty
     Media Group and the TCI Ventures Group (each a "Group"). The Company and
     its subsidiaries are members of the TCI Group for purposes of the New Tax
     Sharing Agreement. Effective for periods on and after the Effective Date,
     federal income taxes will be computed based upon the type of tax paid by
     TCI (on a regular tax or alternative minimum tax basis) on a separate basis
     for each Group. Based upon these separate calculations, an allocation of
     tax liabilities and benefits will be made such that each Group will be
     required to make cash payments to TCI based on its allocable share of TCI's
     consolidated federal income tax liabilities (on a regular tax or
     alternative minimum tax basis, as applicable) attributable to such Group
     and actually used by TCI in reducing its consolidated federal income tax
     liability. Tax attributes and tax basis in assets would be inventoried and
     tracked for ultimate credit to or charge against each Group. Similarly, in
     each taxable period that TCI pays alternative minimum tax, the federal
     income tax benefits of each Group, computed as if such Group were subject
     to regular tax, would be inventoried and tracked for payment to or payment
     by each Group in years that TCI utilizes the alternative minimum tax credit
     associated with such taxable period. The Group generating the utilized tax
     benefits would receive a cash payment only if, and when, the unutilized
     taxable losses of the other Group are actually utilized. If the unutilized
     taxable losses expire without ever being utilized, the Group generating the
     utilized tax benefits will never receive payment for such benefits.
     Pursuant to the New Tax Sharing Agreement, state and local income taxes are
     calculated on a separate return basis for each Group (applying provisions
     of state and local tax law and related regulations as if the Group were a
     separate unitary or combined group for tax purposes), and TCI's combined or
     unitary tax liability is allocated among the Groups based upon such
     separate calculation.

                                                                     (continued)

                                      I-13

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                         Notes to Financial Statements

     Notwithstanding the foregoing, items of income, gain, loss, deduction or
     credit resulting from certain specified transactions that are consummated
     after the Effective Date pursuant to a letter of intent or agreement that
     was entered into prior to the Effective Date will be shared and allocated
     pursuant to the terms of the Old Tax Sharing Agreement as amended.

(8)  Commitments
     -----------

     The Company leases business offices, has entered into pole rental
     agreements and uses certain equipment under lease arrangements. Rental
     expense under such arrangements amounted to $6,202,000 and $5,524,000
     during the nine months ended September 30, 1997 and 1996, respectively.

                                      I-14

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES


Management's Discussion and Analysis of
- ---------------------------------------
 Financial Condition and Results of Operations
 ---------------------------------------------

     The following discussion and analysis should be read in conjunction with
the Company's Management's Discussion and Analysis of Financial Condition and
Results of Operations included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996. The following discussion focuses on material
changes in the trends, risks and uncertainties affecting the Company's results
of operations and financial condition. Reference should also be made to the
Company's financial statements included herein.

(1)  Material changes in financial condition:
     ----------------------------------------

     On July 24, 1995, Viacom, VII Cable, and New VII entered into the
Transaction Agreements with TCI and TCIC, providing for, among other things, the
conveyance of Viacom International Inc.'s non-cable assets and liabilities to
New VII, the First Distribution, the Exchange Offer and the issuance to TCIC of
all of the Class B common stock of VII Cable.  On June 24, 1996, Viacom
commenced the Exchange Offer pursuant to which Viacom shareholders had the
option to exchange shares of Viacom Class A or Class B common stock for a total
of 6,257,961 shares of VII Cable Class A common stock.  The Exchange Offer
expired on July 22, 1996 with a final exchange ratio of 0.4075 shares of VII
Cable Class A common stock for each share of Viacom Common Stock accepted for
exchange.

     Prior to the consummation of the Exchange Offer on July 31, 1996, Viacom
International Inc. entered into the Credit Agreement. Proceeds from the Credit
Agreement were transferred by Viacom International Inc. to New VII as part of
the First Distribution. Immediately following the consummation of the Exchange
Offer, on July 31, 1996, TCIC, through a capital contribution of $350 million in
cash, purchased all of the shares of Class B common stock of VII Cable. At that
time, VII Cable was renamed TCI Pacific Communications, Inc. and the shares of
Class A common stock of VII Cable were converted into shares of 5% Class A
Senior Cumulative Exchangeable Preferred Stock. Proceeds from the $350 million
capital contribution were used to repay a portion of the Credit Agreement.

     On May 8, 1996, IMP consummated the transactions contemplated by the
Houston Purchase Agreements. In connection with the Acquisition, IMP exchanged
its Houston cable system plus cash amounting to $36,633,000 for VII Cable's
Nashville cable system. The Exchange Cash was escrowed for cable system
acquisitions. In January 1997, the Company used the Exchange Cash to purchase a
cable system serving approximately 20,000 subscribers in and around Boulder
County, Colorado. See note 1 to the accompanying financial statements for
additional discussion of the Acquisition and the Houston Purchase Agreements.


                                                                     (continued)

                                      I-15

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

(1)  Material changes in financial condition (continued):
     ----------------------------------------------------

     The Exchangeable Preferred Stock is exchangeable, at the option of the
holder commencing after the fifth anniversary of the date of issuance, for
shares of Series A TCI Group Common Stock at an exchange rate of 5.447 shares of
Series A TCI Group Common Stock for each share of Exchangeable Preferred Stock
exchanged. The Exchangeable Preferred Stock is subject to redemption, at the
option of Pacific, on or after the fifteenth day following the fifth anniversary
of the date of issuance, initially at a redemption price of $102.50 per share
and thereafter at prices declining ratably annually to $100 per share on and
after the eighth anniversary of the date of issuance, plus accrued and unpaid
dividends to the date of redemption. The Exchangeable Preferred Stock is also
subject to mandatory redemption on the tenth anniversary of the date of issuance
for $100 per share plus accrued and unpaid dividends. Amounts payable by the
Company in satisfaction of its dividend, optional redemption and mandatory
redemption obligations with respect to the Exchangeable Preferred Stock may be
made in cash or, at the election of the Company, in shares of Series A TCI Group
Common Stock, or in any combination of the foregoing. If payments are made in
shares of Series A TCI Group Common Stock, Pacific will discount the market
value of such stock by 5% in determining the number of shares required to be
issued to satisfy such payments.

     One measure of liquidity is commonly referred to as "interest coverage".
Interest coverage, which is measured by the ratio of Operating Cash Flow
(operating income before depreciation and amortization) ($165,358,000 for the
nine months ended September 30, 1997) to interest expense ($73,974,000 for the
nine months ended September 30, 1997), is determined by reference to the
statements of operations. The Company's interest coverage ratio was 224% for the
nine months ended September 30, 1997. Management of the Company believes that
such interest coverage ratio is adequate in light of the relative predictability
of its cable television operations and the Company's interest expense. However,
the Company's current intent is to reduce its outstanding indebtedness such that
its interest coverage ratio could be increased. There is no assurance that the
Company will be able to achieve such objective. Operating Cash Flow is a measure
of value and borrowing capacity within the cable television industry and is not
intended to be a substitute for cash flows provided by operating activities, a
measure of performance prepared in accordance with generally accepted accounting
principles, and should not be relied upon as such. Operating Cash Flow, as
defined, does not take into consideration substantial costs of doing business,
such as interest expense, and should not be considered in isolation to other
measures of performance.

     Another measure of liquidity is net cash provided by operating activities,
as reflected in the accompanying statements of cash flows. Net cash provided by
operating activities ($96,982,000 for the nine months ended September 30, 1997)
reflects net cash from the operations of the Company available for the Company's
liquidity needs after taking into consideration the aforementioned additional
substantial costs of doing business not reflected in Operating Cash Flow.
Management believes that net cash provided by operating activities, the
available credit under the Revolving Loan, and advances from TCIC, if necessary,
will provide adequate sources of short-term and long-term liquidity in the
future. See the Company's statements of cash flows included in the accompanying
financial statements.


                                                                     (continued)

                                      I-16

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

(1)  Material changes in financial condition (continued):
     ----------------------------------------------------

     At September 30, 1997, the Credit Agreement consists of a $350 million term
loan which is due December 31, 2004 and a $1.05 billion revolving commitment
loan that provides for semi-annual escalating commitment reductions from June
30, 1998 through September 30, 2004. The Term Loan and the Revolving Loan
provide for quarterly interest payments at variable rates (7.2% and 6.8%
respectively, at September 30, 1997) based upon the Company's debt to cash flow
ratio (as defined in the Credit Agreement). The Credit Agreement contains
restrictive covenants which require, among other things, the maintenance of
specified cash flow and financial ratios and include certain limitations of
indebtedness, investments, guarantees, dispositions, stock repurchases and
dividend payments. In addition, the Revolving Loan requires a commitment fee
ranging from 3/8% to 1/2% per annum to be paid quarterly on the average
unborrowed portion of the total amount available for borrowing. At September 30,
1997, the unborrowed portion of the revolving loan was $450 million.

     At September 30, 1997, all of Pacific's debt bore interest at variable
interest rates. Accordingly, in an environment of rising interest rates, the
Company could experience an increase in its interest expense. In order to
diminish its exposure to such interest expense increases, and in accordance with
the terms of the Credit Agreement, Pacific has entered into an Interest Rate
Swap with TCIC pursuant to which Pacific will pay a fixed interest rate of 7.5%
on a notional amount of $600 million. The terms of the Interest Rate Swap become
effective only if the one month LIBOR rate exceeds 6.5% for five consecutive
days within the two-year observation period, as defined by the Interest Rate
Swap. In the event the Trigger occurs, the terms of the agreement become
effective until August 1, 2001. As of September 30, 1997, the terms of the
Interest Rate Swap had not become effective.

(2)  Material changes in results of operations:
     ----------------------------------------- 

     Revenue
     -------

     Due to the consummation of the Acquisition, the Company's 1996 statement of
operations includes information reflecting the two month period ended September
30, 1996 (the "Two Month Period") and the seven month period ended July 31, 1996
(the "Seven Month Period"). In order to provide a meaningful basis for comparing
the years ended December 31, 1996 and 1995, the Two Month Period has been
combined with the Seven Month Period for purposes of the following discussion
and analysis.

     The operation of the Company's cable television systems is regulated at the
federal, state and local levels. The Cable Television Consumer Protection and
Competition Act of 1992 and the Telecommunications Act of 1996 (collectively,
the "Cable Acts") established rules under which the Company's basic and tier
service rates and its equipment and installation charges (the "Regulated
Services") are regulated if a complaint is filed or if the appropriate franchise
authority is certified.

     During the nine months ended September 30, 1997, 75% of the Company's
revenue was derived from Regulated Services. As noted above, any increase in
rates charged for Regulated Services are regulated by the Cable Acts. Moreover,
competitive factors may limit the Company's ability to increase its service
rates.

                                                                     (continued)

                                      I-17

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

(2)  Material changes in results of operations (continued):
     ----------------------------------------------------- 

     Revenue increased 5% for the nine months ended September 30, 1997, as
compared to the corresponding period of 1996. The majority of such increase is
attributable to a 7% increase in the average primary rate, partially offset by a
4% decrease in the average premium rate. As of September 30, 1997, Pacific
served approximately 1,167,000 basic customers subscribing to approximately
855,000 premium units. Exclusive of subscribers gained in the acquisition of the
cable system in and around Boulder County, Colorado, basic customers and premium
units decreased 2% and 7%, respectively, since December 31, 1996. In addition,
advertising sales accounted for the remaining increase in revenue.
 
Operating Costs and Expenses
- ----------------------------

     Operating expenses decreased 5% for the nine months ended September 30,
1997, as compared to the corresponding period in 1996. Such decrease is due to
efficiencies realized as a result of the Acquisition offset by an increase in
programming costs. Pacific, as a member of the TCI Group, cannot determine
whether and to what extent increases in the cost of programming will affect its
future operating costs. However, due to TCI Group's obligations under a 25-year
affiliation agreement with an affiliate, it is anticipated that TCI Group's
programming costs with respect to STARZ!, a first-run premium movie programming
service, and Encore, a premium movie programming service airing movies from the
1960s, 1970s and 1980s, will increase in 1998 and future periods.

     Selling, general and administrative ("SG&A") expenses increased 16% and
decreased 4% for the three and nine months ended September 30, 1997,
respectively, as compared to the corresponding period in 1996. The increase
during the three-month period is due to an increase in overhead allocated to
Pacific and other individually insignificant items.

     Prior to the Acquisition, Viacom provided VII Cable with certain general
and administrative services, including insurance, legal, financial and other
corporate functions. Charges for such services were based on the average of
certain specified ratios of revenue, operating income and net assets of VII
Cable in relation to Viacom. The charges for such services were $5,750,000 for
the seven month period and are included in SG&A.

     Effective August 1, 1996, and pursuant to the Services Agreement, TCI
provides to Pacific administrative and operational services necessary for the
conduct of its business, including, but not limited to, such services as are
generally performed by TCI's accounting, finance, corporate, legal and tax
departments. In addition, TCI makes available to Pacific such general overall
management services and strategic planning services as TCI and Pacific have
agreed, and provides Pacific with such access to and assistance from TCI
engineering and construction groups and TCI's programming and technology/venture
personnel at Pacific's request.

     The Services Agreement also provides that, TCI will provide benefits and
administrative services to Pacific's employees. In this regard, Pacific is
allocated that portion of TCI's compensation expense attributable to benefits
extended to employees of Pacific. Pursuant to the Services Agreement, Pacific
reimburses TCI for all direct expenses incurred by TCI employees in providing
such services and a pro rata share of all indirect expenses incurred by such TCI
employees in connection with the rendering of such services, including a pro
rata share of the salary and other compensation of TCI employees performing
services for Pacific and general overhead expenses. Charges for expenses
incurred in connection with the Services Agreement were $11,421,000 during the
nine months ended September 30, 1997 and $1,993,000 during the two months ended
September 30, 1996 and are included in SG&A. See note 7 to the accompanying
financial statements.

                                                                     (continued)

                                      I-18

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES


     Depreciation expense decreased 31% for the nine months ended September 30,
1997, as compared to the corresponding period in 1996. Such decrease is
attributable to the consummation of the Acquisition, in which Pacific recorded
property and equipment at fair market value which was less than VII Cable's
historical cost. Such reduction was partially offset by an increase in
depreciation due to capital expenditures. Depreciation expense for the 1997
period includes $2,840,000 attributable to the five-month period ended December
31, 1996.

     Amortization expense increased 164% for the nine months ended September 30,
1997, as compared to the corresponding period in 1996. Such increases are
attributable to increased franchise costs as a result of the Acquisition.

Other Income and Expense and Net Loss
- -------------------------------------

     Interest expense increased 55% for the nine months ended September 30,
1997, as compared to the corresponding period in 1996. Such increase is due to
interest related to the $1.7 billion Credit Agreement entered into prior to
consummation of the Exchange Offer. Interest expense for periods prior to the
Acquisition reflects amounts recorded by VII Cable on borrowings under a credit
agreement and amounts allocated by Viacom to VII Cable based on a percentage of
VII Cable's average net assets to Viacom's average net assets.

     VII Cable was included in the consolidated federal, state and local income
tax returns filed by Viacom. However, the income tax provision was prepared on a
separate return basis as though VII Cable filed stand-alone income tax returns.

     Subsequent to the Acquisition, Pacific has been included in the
consolidated federal income tax return of TCI. Income tax expense or benefit for
Pacific was calculated pursuant to the Old Tax Sharing Agreement through
September 30, 1997. Effective October 1, 1997, Pacific's income tax provision
will be calculated in accordance with the New Tax Sharing Agreement. See note 7
to the accompanying financial statements.

     As a result of the above-described fluctuations in Pacific's results of
operations, the Company's net earnings (before preferred stock dividend
requirements) of $1,019,000 for the nine months ended September 30, 1997
decreased by $8,740,000 as compared to the corresponding period of 1996.

                                      I-19

 
               TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES



PART II - OTHER INFORMATION

Item 6.   Exhibit and Reports on Form 8-K.
- ------    ------------------------------- 

     (a)  Exhibit -

          (27) TCI Pacific Communications, Inc. Financial Data Schedule

     (b)  Reports on Form 8-K filed during the quarter ended September 30, 1997:

          None.

                                      II-1

 
                                  SIGNATURES


     Pursuant to the requirements 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.

 
 
                                 TCI PACIFIC COMMUNICATIONS, INC.
 
 
 
 
 
Date:  November 13, 1997         By: /s/ Stephen M. Brett
                                    --------------------------------
                                    Stephen M. Brett
                                     Senior Vice President
                                      and Secretary
 
 
 
Date:  November 13, 1997         By: /s/ Bernard W. Schotters
                                    --------------------------------
                                    Bernard W. Schotters
                                     Senior Vice President and
                                      Treasurer
                                       (Principal Financial Officer)
 
 
 
Date:  November 13, 1997         By: /s/ Gary K. Bracken
                                    --------------------------------
                                    Gary K. Bracken
                                     Senior Vice President
                                      (Principal Accounting Officer)
 
 
 
 

                                      II-2

 
                                 EXHIBIT INDEX
                                 -------------


The following exhibits are filed herewith or are incorporated by reference
herein (according to the number assigned to them in Item 601 of Regulation S-K)
as noted:


          (27) TCI Pacific Communications, Inc. Financial Data Schedule