<PAGE>   1





                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D. C.  20549

                                  F O R M 10-Q


( X )    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
         SECURITIES EXCHANGE ACT OF 1934
         For the quarterly period ended June 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
July 31, 1997 was:

                        Class A Common Stock - 0 shares.
                       Class B Common Stock - 100 shares.
<PAGE>   2
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES
                             (see notes 1 and 2)

                          Consolidated Balance Sheets
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                      June 30,           December 31,
                                                                        1997                 1996         
                                                                   ---------------      ---------------
Assets                                                                      amounts in thousands
------                                                                                             
<S>                                                                <C>                        <C>
Restricted cash (note 1)                                           $            --               33,664

Trade and other receivables, net                                            16,077               18,986

Prepaid expenses                                                             1,954                6,144

Property and equipment, at cost:
   Land                                                                      5,807                5,795
   Distribution systems                                                    367,945              348,949
   Support equipment and buildings                                          35,948               35,812
                                                                   ---------------      ---------------
                                                                           409,700              390,556
   Less accumulated depreciation                                            33,120               11,373
                                                                   ---------------      ---------------
                                                                           376,580              379,183
                                                                   ---------------      ---------------

Franchise costs                                                          3,042,372            3,015,246
   Less accumulated amortization                                            68,680               30,773
                                                                   ---------------      ---------------
                                                                         2,973,692            2,984,473
                                                                   ---------------      ---------------

Other assets, at cost, net of amortization                                  17,311               18,111
                                                                   ---------------      ---------------

                                                                   $     3,385,614            3,440,561
                                                                   ===============      ===============
Liabilities and Common Stockholder's Equity 
--------------------------------------------

Cash overdraft                                                     $        18,201                9,736

Accounts payable                                                             2,708                3,490

Accrued expenses:
   Accrued franchise fees                                                    6,510                8,663
   Accrued property tax expense                                              2,104                2,549
   Accrued programming expense                                                 523                2,331
   Other                                                                    10,261               16,465
                                                                   ---------------      ---------------
                                                                            19,398               30,008
                                                                   ---------------      ---------------

Subscriber advance payments                                                  2,779                2,727

Debt (note 5)                                                              966,529            1,151,884

Deferred income taxes                                                    1,057,124            1,073,340

Other liabilities                                                              413                  380
                                                                   ---------------      ---------------

     Total liabilities                                                   2,067,152            2,271,565
                                                                   ---------------      ---------------

Exchangeable Preferred Stock (notes 1 and 6)                               629,739              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                                              322,180              336,921
   Accumulated deficit                                                          --               (2,452)
                                                                   ---------------      --------------- 
                                                                           322,180              334,469
   Due to TCI Communications, Inc. ("TCIC") (note 7)                       366,543              204,726
                                                                   ---------------      ---------------

     Total common stockholder's equity                                     688,723              539,195
                                                                   ---------------      ---------------

Commitments (note 8)                                               $     3,385,614            3,440,561
                                                                   ===============      ===============
</TABLE>

See accompanying notes to financial statements.

                                      I-1
<PAGE>   3
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES
                             (see notes 1 and 2)

                           Statements of Operations
                                 (unaudited)


<TABLE>
<CAPTION>
                                                                 Pacific                VII Cable
                                                                 (note 2)                (note 2)     
                                                            -------------------     ------------------
                                                               Three months            Three months
                                                                  ended                   ended
                                                                 June 30,                June 30,
                                                                   1997                    1996       
                                                            -------------------     ------------------
                                                                       amounts in thousands
<S>                                                         <C>                     <C>
Revenue                                                     $           127,443  |             121,348
                                                                                 |
Operating costs and expenses:                                                    |
  Operating (note 7)                                                     43,984  |              45,954
  Selling, general and administrative (note 7)                           23,991  |              28,926
  Depreciation                                                            9,520  |              17,675
  Amortization                                                           18,914  |               4,541
                                                            -------------------  |  ------------------
                                                                         96,409  |              97,096
                                                            -------------------  | -------------------
                                                                                 |
    Operating income                                                     31,034  |              24,252
                                                                                 |
Other income (expense):                                                          |
  Interest expense:                                                              |
    TCIC (note 7)                                                        (5,639) |             (11,512)
    Other                                                               (19,048) |                (533)
                                                            -------------------  |  ------------------
                                                                        (24,687) |             (12,045)
  Other, net                                                                (50) |                 301
                                                            -------------------  |  ------------------
                                                                        (24,737) |             (11,744)
                                                            -------------------  |  ------------------
                                                                                 |
  Earnings before income taxes                                            6,297  |              12,508
                                                                                 |
Income tax expense                                                       (1,654) |              (7,094)
                                                            -------------------  |  ------------------
                                                                                 |
  Net earnings                                                            4,643  |               5,414
                                                                                 |  ==================
                                                                                 |
Dividend requirement on Exchangeable                                             |
  Preferred Stock                                                        (7,822) |
                                                            -------------------  |   
                                                                                 |
  Net loss attributable to common                                                |
    stockholder                                             $            (3,179) |
                                                            ===================  |
</TABLE>


See accompanying notes to financial statements.


                                      I-2
<PAGE>   4
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES
                             (see notes 1 and 2)

                           Statements of Operations
                                 (unaudited)


<TABLE>
<CAPTION>
                                                                         Pacific                  VII Cable
                                                                         (note 2)                  (note 2) 
                                                                   -------------------        -------------------
                                                                        Six months                 Six months
                                                                          ended                      ended
                                                                         June 30,                   June 30,
                                                                           1997                       1996
                                                                   -------------------        -------------------
                                                                                 amounts in thousands
<S>                                                                <C>                       <C>
Revenue                                                                        252,395   |                239,669
                                                                                         |
Operating costs and expenses:                                                            |
  Operating (note 7)                                                            86,504   |                 92,013
  Selling, general and administrative (note 7)                                  51,405   |                 58,781
  Depreciation                                                                  21,842   |                 34,994
  Amortization                                                                  38,254   |                  9,082
                                                                   -------------------   |    -------------------
                                                                               198,005   |                194,870
                                                                   -------------------   |    -------------------
                                                                                         |
    Operating income                                                            54,390   |                 44,799
                                                                                         |
Other income (expense):                                                                  |
  Interest expense:                                                                      |
    TCIC (note 7)                                                              (10,168)  |                (22,933)
    Other                                                                      (39,826)  |                 (1,070)
                                                                   -------------------   |    -------------------  
                                                                               (49,994)  |                (24,003)
  Interest income                                                                  405   |                     --
  Other, net                                                                       (50)  |                    161
                                                                   -------------------   |     ------------------
                                                                               (49,639)  |                (23,842)
                                                                   -------------------   |     ------------------ 
                                                                                         |
  Earnings before income taxes                                                   4,751   |                 20,957
                                                                                         |
Income tax expense                                                              (1,583)  |                (12,153)
                                                                   -------------------   |     ------------------ 
                                                                                         |
  Net earnings                                                                   3,168   |                  8,804
                                                                                         |     ==================
                                                                                         |
Dividend requirement on Exchangeable                                                     |
  Preferred Stock                                                              (15,457)  |
                                                                   -------------------   |
                                                                                         |
  Net loss attributable to common                                                        |
    stockholder                                                                (12,289)  |
                                                                   ===================   |
</TABLE>


See accompanying notes to financial statements.


                                      I-3
<PAGE>   5
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES
                             (see notes 1 and 2)

                   Statement of Common Stockholder's Equity
                                 (unaudited)

<TABLE>
<CAPTION>
                                                         Common stock        Additional
                                                    --------------------      paid-in     Accumulated    Due to         Total
                                                     Class A     Class B      capital       deficit       TCIC         equity   
                                                    ---------    -------     ---------     ---------    ---------     ---------
                                                                               amounts in thousands
<S>                                                 <C>          <C>         <C>           <C>          <C>           <C>
Balance at January 1, 1997                          $      --         --       336,921        (2,452)     204,726       539,195
                                                                            
  Net earnings                                             --         --            --         3,168           --         3,168
  Accreted dividends on Exchangeable Preferred
    Stock                                                  --         --       (14,741)         (716)          --       (15,457)
  Allocation of programming charges from TCIC
    (note 7)                                               --         --            --            --       60,457        60,457
  Allocation of expenses in connection with the
    Services Agreement (note 7)                            --         --            --            --        6,659         6,659
  Intercompany income tax allocation                       --         --            --            --       17,773        17,773
  Net cash transfers from TCIC                             --         --            --            --       76,928        76,928
                                                    ---------    -------     ---------     ---------    ---------     ---------

Balance at June 30, 1997                            $      --         --       322,180            --      366,543       688,723
                                                    =========    =======     =========     =========    =========     =========
</TABLE>


See accompanying notes to financial statements.


                                      I-4
<PAGE>   6
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES
                             (see notes 1 and 2)

                           Statements of Cash Flows
                                 (unaudited)


<TABLE>
<CAPTION>
                                                                               Pacific                   VII Cable
                                                                               (note 2)                   (note 2)    
                                                                            -------------              -------------
                                                                              Six months                 Six months
                                                                                ended                      ended
                                                                               June 30,                   June 30,
                                                                                 1997                       1996      
                                                                            -------------              -------------
                                                                                      amounts in thousands
                                                                                          (see note 3)
<S>                                                                         <C>                        <C>
Cash flows from operating activities:
   Net earnings                                                             $       3,168      |               8,804
   Adjustments to reconcile net earnings to net cash provided by                               |
     operating activities:                                                                     |
       Depreciation and amortization                                               60,096      |              44,076
       Intercompany tax allocation                                                 17,773      |                  --
       Deferred income tax expense (benefit)                                      (16,216)     |               4,554
       Other noncash credits                                                           --      |                  62
       Changes in operating assets and liabilities:                                            |
            Change in receivables                                                   2,909      |               3,100
            Change in accruals and payables                                       (11,340)     |               6,922
            Change in prepaid expenses                                              4,190      |               1,356
                                                                            -------------      |       -------------
                                                                                               |
              Net cash provided by operating activities                            60,580      |              68,874
                                                                            -------------      |       -------------
                                                                                               |       
Cash flows from investing activities:                                                          |
   Capital expended for property and equipment                                    (12,556)     |             (52,398)
   Cash paid for acquisitions                                                     (35,210)     |                  --
   Other investing activities                                                       1,532      |              (3,021)
                                                                            -------------      |       -------------
                                                                                               |
              Net cash used in investing activities                               (46,234)     |             (55,419)
                                                                            -------------      |       -------------
                                                                                               |
Cash flows from financing activities:                                                          |
   Change in cash overdraft                                                         8,465      |                  --
   Repayments of debt                                                            (185,000)     |                  --
   Payment of preferred stock dividends                                           (15,519)     |                  --
   Net cash transfers from TCIC                                                   144,044      |                  --
   Change in cash transfers from Viacom, Inc.                                          --      |             (11,466)
                                                                            -------------      |       -------------
                                                                                               |
              Net cash used in financing activities                               (48,010)     |             (11,466)
                                                                            -------------      |       -------------
                                                                                               |
              Net increase (decrease) in cash                                     (33,664)     |               1,989
                                                                                               |
                Cash at beginning of period                                        33,664      |               2,294
                                                                            -------------      |       -------------
                                                                                               |
                Cash at end of period                                       $          --      |               4,283
                                                                            =============      |       =============
</TABLE>


See accompanying notes to financial statements.


                                      I-5
<PAGE>   7
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                        Notes to Financial Statements


                                 June 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 Viacom
         International Services Inc. ("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
<PAGE>   8
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                        Notes to Financial Statements



         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.

(2)      Basis of Presentation

         In the accompanying financial statements and in the following text,
         references are made to VII Cable and Pacific.  The period for the six
         months ended June 30, 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 June 30, 1997 and for the six months ended June 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.

         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.

                                                                     (continued)

                                      I-7
<PAGE>   9
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                        Notes to Financial Statements


(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 $50,043,000 for the six months ended June
         30, 1997.  Cash paid for income taxes was not material for the six
         months ended June 30, 1997.

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

         Significant noncash investing and financing activities are as follows:

<TABLE>
<CAPTION>
                                                                     Six months             Six months
                                                                       ended                  ended
                                                                      June 30,               June 30,
                                                                        1997                  1996
                                                                   --------------        ----------------
                                                                             amounts in thousands
             <S>                                                   <C>                   <C>
             Accrued preferred stock dividends                     $       15,457   |                  --
                                                                   ==============   |    ================
</TABLE>


         Following the Acquisition, transactions (other than intercompany
         income tax allocations) effected through Pacific's inter- company
         account with TCIC have been treated as constructive cash receipts and
         payments for purposes of the accompanying statements of cash flows.

                                                                     (continued)

                                      I-8
<PAGE>   10
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                        Notes to Financial Statements


(5)      Debt

         In connection with the Transaction Agreements described in note 1,
         Viacom International Inc. borrowed $1.7 billion pursuant to the Credit
         Agreement, $350 million of which was repaid with the proceeds from the
         TCIC capital contribution described in note 1.  At June 30, 1997, the
         Credit Agreement consists of a $300 million term loan (the "Term
         Loan") which is due December 31, 2004 and a $1.05 billion revolving
         commitment loan (the "Revolving 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
         June 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 June 30, 1997, the
         unborrowed portion of the revolving loan was $435 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 June 30, 1997.

         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 June 30, 1997,
         the terms of the Interest Rate Swap have not become effective.

         Additionally, in connection with the Credit Agreement, TCIC incurred
         commitment fees of approximately $13 million which have been deferred
         and will be amortized over the terms of the Agreement.

(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).

                                                                     (continued)

                                      I-9
<PAGE>   11
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                        Notes to Financial Statements


         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 Tele-Communications, Inc. Series A TCI Group Common
         Stock ("Series A TCI Group Stock") at an exchange rate of 5.447 shares
         of Series A TCI Group 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 Stock, or in
         any combination of the foregoing.  If payments are made in shares of
         Series A TCI Group 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 $60,457,000 during the six months ended June
         30, 1997 and are included in operating expenses in the accompanying
         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.
                                                                     (continued)

                                      I-10
<PAGE>   12
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

                        Notes to Financial Statements


         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 $6,659,000
         during the six months ended June 30, 1997, and 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 $4,838,000 for the six months ended
         June 30, 1996, and are included in selling, general and administrative
         expenses in the accompanying financial statements.

         Prior to the Acquisition, VII Cable, through 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 $16,846,000 for the six months ended
         June 30, 1996.  In addition, cooperative advertising expenses charged
         to affiliated companies were $168,000 for the six months ended June
         30, 1996.

         Viacom allocated to VII Cable interest expense of $22,933,000 during
         the six months ended June 30, 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.

         Subsequent to the Acquisition, Pacific has been 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.

(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 $3,372,000 and
         $3,993,000 during the six months ended June 30, 1997 and 1996,
         respectively.

                                      I-11
<PAGE>   13
              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, a wholly owned subsidiary of
Viacom, and New VII, a wholly owned subsidiary of VII Cable, 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 October 13, 1995, TCIC (as buyer) and Prime Cable of Fort Bend,
L.P. and Prime Cable Income Partners, L.P. (as sellers) executed 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 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 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.


                                                                     (continued)

                                      I-12
<PAGE>   14
              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 Stock at an exchange rate of 5.447 shares of
Series A TCI Group 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 Stock, or in any combination of the foregoing.  If payments
are made in shares of Series A TCI Group 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) ($114,486,000 for
the six months ended June 30, 1997) to interest expense ($49,994,000 for the
six months ended June 30, 1997), is determined by reference to the statements
of operations.  The Company's interest coverage ratio was 229% for the six
months ended June 30, 1997.  Management of the Company believes that the
foregoing 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 ($60,580,000 for the six months ended
June 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-13
<PAGE>   15
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

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

         In connection with the Transaction Agreements described in note 1,
Viacom International Inc. borrowed $1.7 billion pursuant to the Credit
Agreement, $350 million of which was repaid with the proceeds from the TCIC
capital contribution described in note 1.  At June 30, 1997, the Credit
Agreement consists of a $300 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 June 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 June 30, 1997, the unborrowed portion of the revolving loan was
$435 million.

         At June 30, 1997, all of the 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 and to diminish its exposure to extreme
increases in variable interest rates, 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 June 30, 1997, the terms of the
Interest Rate Swap had not become effective.

(2)      Material changes in results of operations:

         Revenue

         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
basis 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 six months ended June 30, 1997, 76% 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.

         Revenue increased approximately 5% for the six months ended June 30,
1997, as compared to the corresponding period of 1996.  The increase is
primarily attributable to a 9% increase in the average primary rate and a 4%
increase in the average premium rate.  As of June 30, 1997, Pacific served
approximately 1,172,000 basic customers subscribing to approximately 843,000
premium units.  Exclusive of subscribers gained in the acquisition of the cable
system in and around Boulder County, Colorado, this represents a 1% and 8%
decrease in basic customers and premium units, respectively, since December 31,
1996.

                                                                     (continued)

                                      I-14
<PAGE>   16
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

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

Operating Costs and Expenses

         Operating expenses decreased 6% for the six months ended June 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.

         Selling, general and administrative ("SG&A") expenses decreased 13%
for the six months ended June 30, 1997, as compared to the corresponding period
in 1996.  The majority of this decrease is due to lower salaries and related
expenses due to a reduction in work force in December of 1996.

         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 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 $4,838,000 for the six
month period and are included in SG&A.

         Effective August 1, 1996, TCI began to provide certain facilities,
services and personnel to Pacific.  The scope of the facilities, personnel and
services to Pacific and the respective charges payable in respect thereof are
set forth in the Services Agreement.  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, for so long as TCI
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, TCI will
continue to provide in the same manner, and on the same basis as is generally
provided from time to time to other participating TCI subsidiaries, 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 $6,659,000 during the six month period and are
included in SG&A.  See note 7 to the accompanying financial statements.

         Depreciation expense decreased 38% for the six months ended June 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, 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.

                                                                     (continued)

                                      I-15
<PAGE>   17
              TCI PACIFIC COMMUNICATIONS, INC. AND SUBSIDIARIES

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

         Amortization expense increased 321% for the six months ended June 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 108% for the six months ended June 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 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.

         The Company's net earnings (before preferred stock dividend
requirements) of $3,168,000 for the six months ended June 30, 1997 represents a
decrease of $5,636,000 as compared to the corresponding period of 1996.  Such
reduction primarily represents an increase in interest expense in 1997
partially offset by an increase in operating income and a decrease in income
tax expense.


                                      I-16
<PAGE>   18
              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 June 30,
                 1997:

<TABLE>
<CAPTION>
                      Date of                   Items
                      Report                  Reported               Financial Statements Filed
                      -------                 --------               --------------------------
                   <S>                      <C>                                <C>
                   June 25, 1997            Items 4 and 7                      None.
</TABLE>





                                      II-1
<PAGE>   19
                                   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:     August 13, 1997        By:    /s/ Stephen M. Brett   
                                       -----------------------------------
                                             Stephen M. Brett
                                               Senior Vice President
                                                 and Secretary



Date:     August 13, 1997        By:    /s/ Bernard W. Schotters    
                                       -----------------------------------
                                             Bernard W. Schotters
                                               Senior Vice President and
                                                 Treasurer
                                                 (Principal Financial Officer)



Date:     August 13, 1997        By:    /s/ Gary K. Bracken 
                                       -----------------------------------
                                             Gary K. Bracken
                                               Senior Vice President
                                               (Principal Accounting Officer)





                                      II-2
<PAGE>   20
                                 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