<PAGE>   1
                                 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 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 0-5550


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


           State of Delaware                           84-0588868
   -------------------------------         ------------------------------------
   (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 [X] No [ ]



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

                   Class A common stock - 811,655 shares; and
                     Class B common stock - 94,447 shares.


<PAGE>   2

                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                          Consolidated Balance Sheets
                                  (unaudited)


<TABLE>
<CAPTION>
                                                                    June 30,   December 31,
                                                                    ---------  ------------
                                                                      1997        1996
                                                                    ---------   ---------
<S>                                                                 <C>               <C>
Assets                                                               amounts in millions

Trade and other receivables, net                                    $     409         308

Investments in affiliates, accounted for under the
   equity method, and related receivables (note 4)                        312         317

Property and equipment, at cost:
   Land                                                                    72          74
   Distribution systems                                                 9,502       9,726
   Support equipment and buildings                                      1,424       1,423
                                                                    ---------   ---------
                                                                       10,998      11,223
   Less accumulated depreciation                                        4,202       4,031
                                                                    ---------   ---------
                                                                        6,796       7,192
                                                                    ---------   ---------

Franchise costs                                                        17,145      17,174
   Less accumulated amortization                                        2,518       2,380
                                                                    ---------   ---------
                                                                       14,627      14,794
                                                                    ---------   ---------

Other assets, net of amortization                                         392         525
                                                                    ---------   ---------

                                                                    $  22,536      23,136
                                                                    =========   =========
</TABLE>


                                                                    (continued)



                                      I-1
<PAGE>   3

                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                     Consolidated Balance Sheets, continued
                                  (unaudited)


<TABLE>
<CAPTION>
                                                                     June 30,     December 31,
                                                                       1997          1996
                                                                    ----------    ----------
<S>                                                                 <C>           <C>
Liabilities and Common Stockholder's Equity (Deficit)                 amounts in millions

Accounts payable                                                    $      129           191

Accrued interest                                                           266           268

Accrued programming expense                                                213           232

Other accrued expenses                                                     709           536

Debt (note 6)                                                           13,638        14,318

Deferred income taxes                                                    5,352         5,459

Other liabilities                                                           97            84
                                                                    ----------    ----------

      Total liabilities                                                 20,404        21,088
                                                                    ----------    ----------

Minority interests in equity of consolidated
   subsidiaries                                                            800           802

Redeemable preferred stock                                                 232           232

Company-obligated mandatorily redeemable
   preferred securities of subsidiary
   trusts ("Trust Preferred Securities") holding solely
   subordinated debt securities of the Company (note 7)                  1,500         1,000

Common stockholder's equity (deficit):
   Class A common stock, $1 par value. Authorized 910,553 shares;
      issued and outstanding
      811,655 shares                                                         1             1
   Class B common stock, $1 par value. Authorized, issued and
      outstanding 94,447 shares                                             --            --
   Additional paid-in capital                                            2,125         2,234
   Unrealized holding gains for available-for-sale
      securities, net of taxes                                               6            --   
   Accumulated deficit                                                    (796)         (822)
                                                                    ----------    ----------
                                                                         1,336         1,413

   Investment in Tele-Communications, Inc. ("TCI"),
     at cost (note 1)                                                   (1,143)       (1,143)
   Intercompany receivable (note 8)                                       (593)         (256)
                                                                    ----------    ----------

      Total common stockholder's equity (deficit)                         (400)           14
                                                                    ----------    ----------
Commitments and contingencies (note 9)                              $   22,536        23,136
                                                                    ==========    ==========
</TABLE>

See accompanying notes to consolidated financial statements.



                                      I-2
<PAGE>   4
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)
                                        
                     Consolidated Statements of Operations
                                  (unaudited)

<TABLE>
<CAPTION>
                                               Three months ended     Six months ended
                                                    June 30,              June 30,
                                               ------------------    ------------------
                                                1997       1996       1997       1996
                                               -------    -------    -------    -------
                                                         amounts in millions
<S>                                            <C>          <C>        <C>        <C>  
Revenue                                        $ 1,545      1,430      3,050      2,763

Operating costs and expenses:
   Operating                                       562        500      1,106        977
   Selling, general and administrative             304        384        586        742
   Compensation (adjustment to compensation)
      relating to stock appreciation rights          8         --          8         (4)
   Depreciation                                    236        246        453        482
   Amortization                                    127        103        241        199
                                               -------    -------    -------    -------
                                                 1,237      1,233      2,394      2,396
                                               -------    -------    -------    -------

         Operating income                          308        197        656        367

Other income (expense):
   Interest expense                               (274)      (247)      (546)      (493)
   Interest income (note 8)                          7         12         16         19
   Share of losses of affiliates, net
      (note 4)                                     (10)       (43)       (22)      (103)
   Loss on early extinguishment of debt
      (note 6)                                     (11)       (66)       (11)       (66)
   Minority interests in earnings of
      consolidated subsidiaries, net               (55)       (11)       (81)       (15)
   Gain on disposition and exchange of
      assets, net                                   22          3         40         12
   Other, net                                        5         (1)         1         (3)
                                               -------    -------    -------    -------
                                                  (316)      (353)      (603)      (649)
                                               -------    -------    -------    -------

      Earnings (loss) before income taxes           (8)      (156)        53       (282)

Income tax benefit (expense)                        (5)        42        (27)        88
                                               -------    -------    -------    -------

      Net earnings (loss)                          (13)      (114)        26       (194)

Preferred stock dividend requirements               (3)        (2)        (5)        (4)
                                               -------    -------    -------    -------

      Net earnings (loss) attributable to
        common stockholder                     $   (16)      (116)        21       (198)
                                               =======    =======    =======    =======
</TABLE>


See accompanying notes to consolidated financial statements.





                                      I-3
<PAGE>   5
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

        Consolidated Statement of Common Stockholder's Equity (Deficit)
                         Six months ended June 30, 1997
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                           Unrealized
                                                                           holding
                                                                           gains for
                                                                           available-                                   Total
                                              Common stock     Additional  for-sale    Accu-  Investment                common
                                            -----------------   paid-in   securities, mulated    in    Intercompany  stockholder's
                                            Class A   Class B   capital  net of taxes deficit    TCI    receivable  equity (deficit)
                                            -------   -------   -------  ------------ -------    ---    ----------  ----------------
                                                                               amounts in millions
<S>                                          <C>       <C>       <C>         <C>        <C>     <C>           <C>           <C>
Balance at January 1, 1997                   $    1     --       2,234         --       (822)   (1,143)       (256)         14

   Net earnings                                --       --        --           --         26      --          --            26
   Accreted dividends on redeemable
     preferred stock                           --       --          (5)        --       --        --          --            (5)
   Change in unrealized holding gains for
     available-for-sale securities, net of
     taxes                                     --       --        --              6     --        --          --             6
   Transfer of assets from TCI
     Communications, Inc. to TCI (note 8)      --       --        (104)        --       --        --            33         (71)
   Change in intercompany receivable           --       --        --           --       --        --          (370)       (370)
                                             ------   ------    ------    ---------   ------    ------  ----------  ----------

Balance at June 30, 1997                     $    1     --       2,125            6     (796)   (1,143)       (593)       (400)
                                             ======   ======    ======    =========   ======    ======  ==========  ==========
</TABLE>




See accompanying notes to consolidated financial statements.



                                      I-4
<PAGE>   6
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                     Consolidated Statements of Cash Flows
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                Six months ended
                                                                                  June 30,
                                                                            ----------------------
                                                                              1997         1996
                                                                            ---------    ---------
                                                                             amounts in millions
                                                                                  (see note 3)
<S>                                                                         <C>            <C>  
Cash flows from operating activities:
   Net earnings (loss)                                                      $      26         (194)
   Adjustments to reconcile net earnings (loss) to net cash
      provided by operating activities:
        Depreciation and amortization                                             694          681
        Compensation (adjustment to compensation) relating
           to stock appreciation rights                                             8           (4)
        Payments of compensation obligation relating to stock
           appreciation rights                                                     (2)          (2)
        Share of losses of affiliates, net                                         22          103
        Loss on early extinguishment of debt                                       11           66
        Deferred income tax benefit                                               (92)         (88)
        Minority interests in earnings of consolidated
           subsidiaries, net                                                       81           15
        Gain on disposition and exchange of assets, net                           (40)         (12)
        Intercompany tax allocation                                               115           (3)
        Payments of restructuring charges                                         (19)          --
        Other noncash charges (credits)                                             4           (4)
        Changes in operating assets and liabilities, net of the
           effect of acquisitions:
              Change in receivables                                               (82)          13
              Change in accrued interest                                           (2)          32
              Change in other accruals and payables                               109          (82)
                                                                            ---------    ---------

                Net cash provided by operating activities                         833          521
                                                                            ---------    ---------

Cash flows from investing activities:
   Capital expended for property and equipment                                   (170)        (891)
   Cash paid for acquisitions                                                     (76)        (109)
   Cash received in exchanges                                                      15           50
   Cash proceeds from disposition of assets                                       193           55
   Additional investments in and loans to affiliates and others                   (10)        (489)
   Repayment of loans by affiliates and others                                    102           --
   Other investing activities                                                    (110)         (14)
                                                                            ---------    ---------
                Net cash used in investing activities                             (56)      (1,398)
                                                                            ---------    ---------
Cash flows from financing activities:
   Borrowings of debt                                                             995        4,087
   Repayments of debt                                                          (1,677)      (4,159)
   Prepayment penalties                                                            (7)         (60)
   Proceeds from issuance of redeemable preferred stock                            --          223
   Proceeds from issuance of Trust Preferred Securities                           490          971
   Payment of redeemable preferred stock dividends                                 (5)          (2)
   Payment of dividends on subsidiary preferred stock and Trust Preferred
      Securities                                                                  (80)         (10)
   Change in intercompany receivable                                             (493)        (173)
                                                                            ---------    ---------

                Net cash provided by (used in) financing activities              (777)         877
                                                                            ---------    ---------
                Net change in cash                                                 --           --

                Cash at beginning of period                                        --           --
                                                                            ---------    ---------
                Cash at end of period                                       $      --           --
                                                                            =========    =========
</TABLE>

See accompanying notes to consolidated financial statements.



                                      I-5
<PAGE>   7


                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                   Notes to Consolidated Financial Statements


                                 June 30, 1997
                                  (unaudited)


(1)      General

         The accompanying consolidated financial statements include the
         accounts of TCI Communications, Inc. ("TCIC" or the "Company") and
         those of all majority-owned subsidiaries. All significant intercompany
         accounts and transactions have been eliminated in consolidation. TCIC
         is a subsidiary of TCI.

         The accompanying interim consolidated 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 consolidated financial statements
         should be read in conjunction with the consolidated financial
         statements and notes thereto contained in TCIC's Annual Report on Form
         10-K for the year ended December 31, 1996.

         TCIC, through its subsidiaries and affiliates, is principally engaged
         in the construction, acquisition, ownership and operation of cable
         television systems. TCIC operates its cable television systems
         throughout the continental United States and Hawaii.

         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.

         TCIC owns an aggregate of 189,867 shares of TCI Convertible Redeemable
         Participating Preferred Stock, Series F ("Series F Preferred Stock").
         Each share of Series F Preferred Stock is convertible into 1,496.65
         shares of Series A TCI Group common stock ("TCI Group Stock"). In
         addition, TCIC owns 116,853,195 shares of Series A TCI Group Stock.
         Such ownership of Series F Preferred Stock and Series A TCI Group
         Stock is reflected as investment in TCI, at cost, in the accompanying
         consolidated balance sheets.

                                                                    (continued)



                                      I-6
<PAGE>   8
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                   Notes to Consolidated Financial Statements


(2)      Derivative Financial Instruments

         TCIC has entered into variable and fixed interest rate exchange
         agreements ("Interest Rate Swaps") which it uses to manage interest
         rate risk arising from its financial liabilities. Such Interest Rate
         Swaps are accounted for as hedges; and accordingly, amounts receivable
         or payable under Interest Rate Swaps are recognized as adjustments to
         interest expense. Gains and losses on early terminations of Interest
         Rate Swaps are included in the carrying amount of the related debt and
         amortized as yield adjustments over the remaining term of the
         derivative financial instruments. TCIC does not use such instruments
         for trading purposes.

(3)      Supplemental Disclosures to Consolidated Statements of Cash Flows

         Cash paid for interest was $548 million and $461 million for the six
         months ended June 30, 1997 and 1996, respectively. Also during these
         periods, cash paid for income taxes was not material.

         Significant noncash investing and financing activities are as follows:

<TABLE>
<CAPTION>
                                                                                       Six months ended
                                                                                          June 30,
                                                                                    ----------------------
                                                                                       1997         1996
                                                                                    ---------    ---------
                                                                                     amounts in millions
<S>                                                                                 <C>          <C>
                   Cash paid for acquisitions:
                      Fair value of assets acquired                                 $      74          917
                      Liabilities assumed, net of current assets                           (2)           4
                      Deferred tax benefit (liability) recorded in acquisitions             1         (244)
                      Minority interests in equity of acquired entities                     3           (4)
                      Common stock of TCI issued in acquisition contributed to
                        TCIC                                                               --         (564)
                                                                                    ---------    ---------
                           Cash paid for acquisitions                               $      76          109
                                                                                    =========    =========
                   Cash received in exchanges:
                      Aggregate cost basis of assets acquired                       $     395          193
                      Historical cost of assets given up                                 (399)        (222)
                      Gain recorded on exchange of assets                                 (11)         (21)
                                                                                    ---------    ---------
                           Cash received in exchanges                               $     (15)         (50)
                                                                                    =========    =========
                   Transfer of net assets:
                      Fair value of assets transferred to (from) TCI                $      90         (179)
                      Liabilities assumed, net of current assets                           --           40
                      Deferred tax liability transferred to TCI                           (19)          --
                      Decrease in additional paid-in-capital resulting from
                          transfer of net assets to TCI                                  (104)          --
                      Decrease in intercompany receivable resulting from transfer
                          of net assets                                                    33          139
                                                                                    ---------    ---------
                                                                                    $      --    $      --
                                                                                    =========    =========
</TABLE>

                                                                    (continued)



                                      I-7
<PAGE>   9
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                   Notes to Consolidated Financial Statements


(4)      Investments in Affiliates

         Summarized unaudited results of operations for affiliates accounted
         for under the equity method are as follows:

<TABLE>
<CAPTION>
                                                         Six months ended
                    Combined Operations                     June 30,
                    -------------------               ----------------------
                                                         1997         1996
                                                      ---------    ---------
                                                       amounts in millions
<S>                                                   <C>                <C>
                      Revenue                         $     187          344
                      Operating expenses                   (114)        (378)
                      Depreciation and amortization         (78)         (46)
                                                      ---------    ---------

                          Operating loss                     (5)         (80)

                      Interest expense                      (38)         (18)
                      Other, net                              4           17
                                                      ---------    ---------

                          Net loss                    $     (39)         (81)
                                                      =========    =========
</TABLE>

         Effective December 31, 1996, TCIC transferred its 30% ownership
         interest in Sprint Spectrum Holding Company, L.P. ("Sprint Spectrum"),
         31.1% ownership interest in Teleport Communications Group Inc. ("TCG")
         and certain other investments to TCI. Collectively, the carrying value
         of such investments was $1,116 million at December 31, 1996 and
         accounted for $102 million of TCIC's share of its affiliates' losses
         for the six months ended June 30, 1996.

         Certain of TCIC's affiliates are general partnerships and any
         subsidiary of TCIC that is a general partner in a general partnership
         is, as such, liable as a matter of applicable partnership law for all
         debts of that partnership in the event liabilities of that partnership
         were to exceed its assets.

(5)      Acquisition

         On July 31, 1996, pursuant to certain agreements entered into among
         TCIC, TCI, Viacom International, Inc. and Viacom, Inc. ("Viacom"),
         TCIC acquired all of the common stock of a subsidiary of Viacom
         ("Cable Sub") which owned Viacom's cable systems and related assets
         (the "Viacom Acquisition").

         The transaction was structured as a tax-free reorganization in which
         Cable Sub transferred all of its non-cable assets, as well as all of
         its liabilities other than current liabilities, to a new subsidiary of
         Viacom ("New Viacom Sub"). Cable Sub also transferred to New Viacom
         Sub the proceeds (the "Loan Proceeds") of a $1.7 billion loan facility
         (the "Loan Facility") arranged by TCIC, TCI and Cable Sub. Following
         these transfers, Cable Sub retained cable assets with a value at
         closing of approximately $2.326 billion and the obligation to repay
         the Loan Proceeds. Neither Viacom nor New Viacom Sub has any
         obligation with respect to repayment of the Loan Proceeds.


                                                                    (continued)



                                      I-8
<PAGE>   10
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                   Notes to Consolidated Financial Statements


         Prior to the consummation of the Viacom Acquisition, Viacom offered to
         the holders of shares of Viacom Class A Common Stock and Viacom Class
         B Common Stock (collectively, "Viacom Common Stock") the opportunity
         to exchange (the "Exchange Offer") a portion of their shares of Viacom
         Common Stock for shares of Class A Common Stock, par value $100 per
         share, of Cable Sub ("Cable Sub Class A Stock"). Immediately following
         the completion of the Exchange Offer, TCIC acquired from Cable Sub
         shares of Cable Sub Class B Common Stock (the "Share Issuance") for
         $350 million (which was used to reduce Cable Sub's obligations under
         the Loan Facility). At the time of the Share Issuance, the Cable Sub
         Class A Stock received by Viacom stockholders pursuant to the Exchange
         Offer automatically converted into 5% Class A Senior Cumulative
         Exchangeable Preferred Stock of Cable Sub with a stated value of $100
         per share. Upon completion of the Viacom Acquisition, Cable Sub was
         renamed TCI Pacific Communications, Inc.

         In June 1997, the Company entered into an agreement with Cablevision
         Systems Corporation ("Cablevision") pursuant to which the Company
         agreed to contribute certain of its cable television systems serving
         approximately 820,000 customers to Cablevision in exchange for
         approximately 12.2 million newly issued Cablevision Class A shares.
         Such shares represent approximately 33% of Cablevision's total
         outstanding shares. Cablevision will also assume approximately $669
         million of TCI's debt. The transaction is subject to, among other
         matters, Cablevision shareholder and regulatory approvals. There is no
         assurance that the transaction will be consummated.

(6)      Debt

         Debt is summarized as follows:

<TABLE>
<CAPTION>
                                                           June 30,   December 31,
                                                             1997         1996
                                                          ---------    ---------
                                                           amounts in millions
<S>                                                       <C>              <C>  
           Parent company debt:
               Notes payable (a)                          $   7,812        8,031
               Commercial paper                                 570          638
               Other debt                                        35         --
                                                          ---------    ---------
                                                              8,417        8,669
           Debt of subsidiaries:
               Bank credit facilities (b)                     4,395        4,810
               Notes payable (a)                                762          768
               Convertible notes (c)                             40           43
               Other debt                                        24           28
                                                          ---------    ---------

                                                          $  13,638       14,318
                                                          =========    =========
</TABLE>

         (a)      During the six months ended June 30, 1997, in order to reduce
                  future interest costs, TCIC redeemed certain notes payable
                  which had an aggregate principal balance of $190 million and
                  fixed interest rates ranging from 8.75% to 10.13% (the "1997
                  Redemption"). In connection with the 1997 Redemption, TCIC
                  recognized a loss on early extinguishment of debt of $11
                  million. Such loss related to prepayment penalties amounting
                  to $7 million and the retirement of deferred loan costs.

                                                                    (continued)



                                      I-9
<PAGE>   11
                    TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                   Notes to Consolidated Financial Statements


                  During the six months ended June 30, 1996, TCIC redeemed
                  certain notes payable which had an aggregate principal
                  balance of $809 million and fixed interest rates ranging from
                  8.67% to 10.44% (the "1996 Redemption"). In connection with
                  the 1996 Redemption, TCIC recognized a loss on early
                  extinguishment of debt of $62 million. Such loss related to
                  prepayment penalties amounting to $60 million and the
                  retirement of deferred loan costs.

         (b)      During the second quarter of 1996, TCIC terminated, at its
                  option, certain revolving bank credit facilities with
                  aggregate commitments of approximately $2 billion. In
                  connection with such termination, TCIC recognized a loss on
                  early extinguishment of debt of $4 million related to the
                  retirement of deferred loan costs.

         (c)      These convertible notes, which are stated net of unamortized
                  discount of $167 million and $178 million at June 30, 1997
                  and December 31, 1996, respectively, mature on December 18,
                  2021. The notes require (so long as conversion of the notes
                  has not occurred) an annual interest payment through 2003
                  equal to 1.85% of the face amount of the notes. The notes are
                  convertible, at the option of the holders, into shares of
                  Series A TCI Group Stock and TCI Series A Liberty Media Group
                  common stock.

         TCIC's bank credit facilities and various other debt instruments
         generally contain restrictive covenants which require, among other
         things, the maintenance of certain earnings, specified cash flow and
         financial ratios (primarily the ratios of cash flow to total debt and
         cash flow to debt service, as defined), and include certain
         limitations on indebtedness, investments, guarantees, dispositions,
         stock repurchases and/or dividend payments.

         As security for borrowings under one of TCIC's bank credit facilities,
         TCIC has pledged 116,853,195 shares of Series A TCI Group Stock held
         by a subsidiary of TCIC.

         The fair value of TCIC's debt is estimated based on quoted market
         prices for the same or similar issues or on the current rates offered
         to TCIC for debt of the same remaining maturities. At June 30, 1997,
         the fair value of TCIC's debt was $13,759 million, as compared to a
         carrying value of $13,638 million on such date.

         In order to achieve the desired balance between variable and fixed
         rate indebtedness, TCIC has entered into various Interest Rate Swaps
         pursuant to which it (i) pays fixed interest rates (the "Fixed Rate
         Agreements") ranging from 7.1% to 9.3% and receives variable interest
         rates on notional amounts of $410 million at June 30, 1997 and (ii)
         pays variable interest rates (the "Variable Rate Agreements") and
         receives fixed interest rates ranging from 4.8% to 9.7% on notional
         amounts of $2,050 million at June 30, 1997. During the six months
         ended June 30, 1997 and 1996, TCIC's net payments pursuant to the
         Fixed Rate Agreements were $4 million and $8 million, respectively;
         and TCIC's net receipts pursuant to the Variable Rate Agreements were
         $11 million and $8 million, respectively.


                                                                    (continued)



                                     I-10
<PAGE>   12
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                   Notes to Consolidated Financial Statements


         TCIC's Fixed Rate Agreements and Variable Rate Agreements expire as
         follows (dollar amounts in millions):

<TABLE>
<CAPTION>
                     Fixed Rate Agreements                               Variable Rate Agreements
                     ---------------------                               ------------------------
            Expiration         Interest rate      Notional       Expiration          Interest rate   Notional
               date            to be paid          amount          date              to be received  amount
               ----            ----------          ------          ----              --------------  ------
<S>                <C>            <C>              <C>         <C>                 <C>               <C>    
           October 1997           7.1%-9.3%        $  180      September 1998      4.8%-5.4%         $   450
           December 1997              8.7%            230      April 1999             7.4%                50
                                                   ------      February 2000       5.8%-6.6%             300
                                                               March 2000          5.8%-6.0%             675
                                                     $410      September 2000         5.1%                75
                                                   ======      March 2027             9.7%               300
                                                               December 2036          9.7%               200
                                                                                                     -------
                                                                                                     $ 2,050
                                                                                                     =======
                                                               
                                                               
</TABLE>

         TCIC is exposed to credit losses for the periodic settlements of
         amounts due under the Interest Rate Swaps in the event of
         nonperformance by the other parties to the agreements. However, TCIC
         does not anticipate that it will incur any material credit losses
         because it does not anticipate nonperformance by the counterparties.

         The fair value of the Interest Rate Swaps is the estimated amount that
         TCIC would pay or receive to terminate the agreements at June 30,
         1997, taking into consideration current interest rates and the current
         creditworthiness of the counterparties. At June 30, 1997, TCIC would
         be required to pay an estimated $4 million to terminate the Fixed Rate
         Agreements and an estimated $25 million to terminate the Variable Rate
         Agreements.

         TCIC is required to maintain unused availability under bank credit
         facilities to the extent of outstanding commercial paper. At June 30,
         1997, TCIC had approximately $1.6 billion in unused lines of credit,
         excluding amounts related to lines of credit which provide
         availability to support commercial paper. Also, TCIC pays fees,
         ranging from 1/4% to 1/2% per annum, on the average unborrowed portion
         of the total amount available for borrowings under bank credit
         facilities.

(7)      Company-Obligated Mandatorily Redeemable Preferred Securities of 
         Subsidiary Trusts Holding Solely Subordinated Debt Securities of the 
         Company

         In 1996 and 1997, the Company, through certain subsidiary trusts, (the
         "Trusts"), issued preferred securities as follows:

<TABLE>
<CAPTION>

        Subsidiary Trust               Interest Rate         Face Amount
        ----------------               -------------         -----------
                                                             in millions
<S>                                       <C>                 <C>   
TCI Communications Financing I             8.72%              $  500
TCI Communications Financing II           10.00%                 500
TCI Communications Financing III           9.65%                 300
TCI Communications Financing IV            9.72%                 200
                                                              ------
                                                              $1,500
                                                              ======
</TABLE>

                                                                    (continued)



                                     I-11
<PAGE>   13
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                   Notes to Consolidated Financial Statements


         The Trusts exist for the exclusive purpose of issuing the Trust
         Preferred Securities and investing the proceeds thereof into
         Subordinated Deferrable Interest Notes (the "Subordinated Debt
         Securities") of the Company. The Subordinated Debt Securities have
         interest rates equal to the interest rate of the corresponding Trust
         Preferred Securities and have maturity dates ranging from 30 to 49
         years from the date of issuance. The Subordinated Debt Securities are
         unsecured obligations of the Company and are subordinate and junior in
         right of payment to certain other indebtedness of the Company. Upon
         redemption of the Subordinated Debt Securities, the Trust Preferred
         Securities will be mandatorily redeemable. The Company effectively
         provides a full and unconditional guarantee of the Trusts' obligations
         under the Trust Preferred Securities.

         The Trust Preferred Securities are presented together in a separate
         line item in the accompanying consolidated balance sheets captioned
         "Company-obligated mandatorily redeemable preferred securities of
         subsidiary trusts holding solely subordinated debt securities of the
         Company." Dividends accrued on the Trust Preferred Securities are
         included in minority interests in earnings of consolidated
         subsidiaries in the accompanying consolidated financial statements.

(8)      Transactions with Related Parties

         A tax sharing agreement (the "Tax Sharing Agreement") among TCIC and
         certain other subsidiaries of TCI was implemented effective July 1,
         1995. The Tax Sharing Agreement formalizes certain elements of
         pre-existing tax sharing arrangements 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. The Tax Sharing
         Agreement encompasses U.S. federal, state, local and foreign tax
         consequences and relies upon the U.S. Internal Revenue Code of 1986,
         as amended, and any applicable state, local and foreign tax law and
         related regulations. Beginning on the July 1, 1995 effective date,
         TCIC is responsible to TCI for its share of current consolidated
         income tax liabilities. TCI is responsible to TCIC to the extent that
         TCIC's income tax attributes generated after the effective date are
         utilized by TCI to reduce its consolidated income tax liabilities.
         Accordingly, all tax attributes generated by TCIC's operations after
         the effective date including, but not limited to, net operating
         losses, tax credits, deferred intercompany gains, and the tax basis of
         assets are inventoried and tracked for the entities comprising TCIC.

         TCIC purchases programming from certain subsidiaries of TCI. Charges
         to TCIC (which are based upon customary rates charged to others) for
         such programming were $21 million and $45 million for the six months
         ended June 30, 1997 and 1996, respectively. Such amounts are included
         in operating expenses in the accompanying consolidated statements of
         operations.

         Certain subsidiaries of TCI lease satellite transponder facilities
         from TCIC. Charges by TCIC for such arrangements for the six month
         periods ended June 30, 1997 and 1996, aggregated $4 million and $7
         million, respectively.


                                                                    (continued)



                                     I-12
<PAGE>   14
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                   Notes to Consolidated Financial Statements


         Through June 30, 1997, TCI Starz, Inc. ("TCI Starz"), a subsidiary of
         TCI, had a 50.1% general partnership interest in QE+ Ltd. ("QE+"),
         which distributes STARZ!, a first-run movie premium programming
         service. Another subsidiary of TCI, Liberty Media Corporation
         ("Liberty") held the remaining 49.9% partnership interest. TCIC
         entered into a long-term affiliation agreement (the "Old Affiliation
         Agreement") with QE+ related to the distribution of the STARZ!
         service. Rates per subscriber specified in the Old Affiliation
         Agreement were based upon customary rates charged to other cable
         system operators. Payments to QE+ for the six months ended June 30,
         1997 and 1996 were approximately $50 million and $25 million,
         respectively. The Old Affiliation Agreement also required TCIC to make
         payments to QE+ with respect to a guaranteed minimum number of
         subscribers totaling approximately $284 million for the years 1997 and
         1998.

         At June 30, 1997, TCIC had a $245 million intercompany receivable from
         TCI Starz which represented the net effect of advances to TCI Starz,
         who in turn paid such amounts to QE+, offset by TCIC's purchase of
         programming from QE+. Such receivable was non-interest bearing for
         five years from the date of the advances.

         In July 1997, Liberty and TCI Starz entered into a series of
         transactions pursuant to which, among other matters, the business of
         STARZ! and Encore Media Corporation ("Encore") were contributed to a
         newly formed limited liability company ("Encore Media Group"). Upon
         consummation of the transactions, Liberty owns 80% of Encore Media
         Group and TCI Starz owns 20%.

         In connection with the formation of Encore Media Group, the Old
         Affiliation Agreement was canceled, and the Company and a subsidiary
         of Encore Media Group entered into a new 25-year affiliation agreement
         (the "New Affiliation Agreement"). Pursuant to the New Affiliation
         Agreement, the Company will pay fixed monthly amounts in exchange for
         unlimited access to substantially all of the existing Encore and
         Starz! programming services. The fixed annual amounts increase
         annually from $270 million in 1998 to $360 million in 2004, and will
         increase with inflation thereafter.

         Effective January 2, 1997, TCIC transferred its business of providing
         long-distance transport of video, voice and data traffic and other
         telecommunications services to TCI. Such transfer has been reflected
         as a net decrease in common stockholder's equity.

         Intercompany amounts at June 30, 1997 represent non-interest bearing
         intercompany receivables aggregating $139 million from certain
         subsidiaries of TCI, $245 million intercompany receivable from TCI
         Starz and interest-bearing loans to certain subsidiaries of TCI. Such
         interest-bearing loans plus accrued interest aggregated $209 million
         and $148 million at June 30, 1997 and December 31, 1996, respectively.
         Interest earned by TCIC on such intercompany loans aggregated $9
         million and $5 million for the six months ended June 30, 1997 and
         1996, respectively.

         Due to TCI's ownership of 100% of the common equity of TCIC, the
         amounts due to TCI 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 as described above.

                                                                    (continued)


                                     I-13

<PAGE>   15
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

                   Notes to Consolidated Financial Statements


(9)      Commitments and Contingencies

         TCIC has guaranteed notes payable and other obligations of affiliated
         and other companies with outstanding balances of approximately $200
         million at June 30, 1997. With respect to TCIC's guarantees of $166
         million of such obligations, TCIC has been indemnified for any loss,
         claim or liability that TCIC may incur, by reason of such guarantees.
         Although there can be no assurance, management of TCIC believes that
         it will not be required to meet its obligations under such guarantees,
         or if it is required to fulfill any of such obligations, that they
         will not be material to TCIC.

         TCIC is a direct obligor or guarantor of the payment of certain
         amounts that may be due pursuant to motion picture output,
         distribution and license agreements. As of June 30, 1997, the amount
         of such obligations or guarantees was approximately $131 million. The
         future obligations of TCIC with respect to these agreements is not
         currently determinable because such amount is dependent upon the
         number of qualifying films released theatrically by certain motion
         picture studios as well as the domestic theatrical exhibition receipts
         upon the release of such qualifying films.

         Certain key employees of TCIC hold restricted stock awards and options
         with tandem SARs to acquire shares of TCI and certain TCI
         subsidiaries' common stock. Estimates of the compensation related to
         the restricted stock awards and SARs have been recorded in the
         accompanying consolidated financial statements, but are subject to
         future adjustment based upon the market value of the respective common
         stock and, ultimately, on the final market value when the rights are
         exercised or the restricted stock awards are vested.

         TCIC has contingent liabilities related to legal proceedings and other
         matters arising in the ordinary course of business. Although it is
         reasonably possible TCIC may incur losses upon conclusion of such
         matters, an estimate of any loss or range of loss cannot be made. In
         the opinion of management, it is expected that amounts, if any, which
         may be required to satisfy such contingencies will not be material in
         relation to the accompanying consolidated financial statements.





                                     I-14
<PAGE>   16


                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)


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 trends, risks and uncertainties affecting the Company's
results of operations and financial condition. Reference should also be made to
the Company's consolidated financial statements included herein.

(1)      Material changes in financial condition:

         During March 1997, the Company, through special purpose entities
formed as Delaware business trusts, issued $300 million in face value of 9.65%
Capital Securities and $200 million in face value of 9.72% Trust Preferred
Securities. The Company used the net proceeds from such issuances to retire
commercial paper and repay certain other indebtedness.

         On July 31, 1996, TCIC consummated the Viacom Acquisition whereby TCIC
acquired all of the common stock of Cable Sub which owned Viacom's cable
systems and related assets. The transaction was structured as a tax-free
reorganization in which Cable Sub initially transferred all of its non-cable
assets, as well as all of its liabilities other than current liabilities, to
New Viacom Sub. Cable Sub also transferred to New Viacom Sub the Loan Proceeds
of the Loan Facility. Following these transfers, Cable Sub retained cable
assets with a value at closing of approximately $2.326 billion and the
obligation to repay the Loan Proceeds borrowed under the Loan Facility. Neither
Viacom nor New Viacom Sub has any obligation with respect to repayment of the
Loan Proceeds. For additional discussion of the Viacom Acquisition, see note 5
to the accompanying consolidated financial statements.

         In June 1997, the Company entered into an agreement with Cablevision
pursuant to which the Company agreed to contribute certain of its cable
television systems serving approximately 820,000 customers to Cablevision in
exchange for approximately 12.2 million newly issued Cablevision Class A
shares. Such shares represent approximately 33% of Cablevision's total
outstanding shares. Cablevision will also assume approximately $669 million of
TCI's debt. The transaction is subject to, among other matters, Cablevision
shareholder and regulatory approvals. There is no assurance that the
transaction will be consummated.

         During 1997 and 1996, in order to reduce future interest costs, the
Company redeemed certain fixed-rate notes payable which had an aggregate
principle balance of $190 million and $809 million, respectively. In connection
with such redemptions, the Company recognized losses on early extinguishment of
debt of $11 million and $62 million, respectively. Such losses related to
prepayment penalties and the retirement of deferred loan costs.

         Also, during the second quarter of 1996, certain subsidiaries of the
Company terminated, at such subsidiaries' option, certain revolving bank credit
facilities with aggregate commitments of approximately $2 billion. In
connection with such termination, the Company recognized a loss on early
extinguishment of debt of $4 million related to the retirement of deferred loan
costs.


                                                                    (continued)



                                     I-15
<PAGE>   17
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)


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

         At June 30, 1997, subsidiaries of the Company had approximately $1.6
billion of availability in unused lines of credit, excluding amounts related to
lines of credit which provide availability to support commercial paper.
Although such subsidiaries were in compliance with the restrictive covenants
contained in their credit facilities at said date, additional borrowings under
the credit facilities are subject to the subsidiaries' continuing compliance
with such restrictive covenants after giving effect to such additional
borrowings. Such restrictive covenants require, among other things, the
maintenance of certain earnings, specified cash flow and financial ratios
(primarily the ratios of cash flow to total debt and cash flow to debt service,
as defined), and include certain limitations on indebtedness, investments,
guarantees, dispositions, stock repurchases and/or dividend payments. See note
6 to the accompanying consolidated financial statements for additional
information regarding the material terms of the subsidiaries' lines of credit.

         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, amortization, compensation relating
to stock appreciation rights and adjustments to compensation relating to stock
appreciation rights) ($1,358 million and $1,044 million, for the six months
ended June 30, 1997 and 1996, respectively) to interest expense ($546 million
and $493 million, for the six months ended June 30, 1997 and 1996,
respectively), is determined by reference to the consolidated statements of
operations. The Company's interest coverage ratio was 249% and 212% for the six
months ended June 30, 1997 and 1996, respectively. 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 interest expense,
43% of which results from fixed rate indebtedness. 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 consolidated statements of cash
flows. Net cash provided by operating activities ($833 million and $521 million
for the six months ended June 30, 1997 and 1996, respectively) 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. Prior to 1997,
amounts expended by TCIC for its investing activities generally have exceeded
net cash provided by operating activities. The Company has reevaluated its
capital expenditure strategy and currently anticipates that it will expend
significantly less for property and equipment in 1997 than it did in 1996. In
this regard, the amount of capital expended by the Company for property and
equipment was $170 million during the six months ended June 30, 1997, as
compared to $891 million during the corresponding period in 1996. The Company
currently estimates that it will spend approximately $725 million for capital
expenditures during 1997. To the extent that net cash provided by operating
activities exceeds net cash used in investing activities in 1997, the Company
currently anticipates that such excess cash will initially be used to reduce
outstanding debt.


                                                                    (continued)


                                     I-16
<PAGE>   18

                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)


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

         In the event the Company is unable to achieve such objectives,
management believes that net cash provided by operating activities, the ability
of the Company and its subsidiaries to obtain additional financing (including
the subsidiaries available lines of credit and access to public debt markets),
issuances and sales of the Company's equity or equity of its subsidiaries, and
proceeds from disposition of assets will provide adequate sources of short-term
and long-term liquidity in the future. See the Company's consolidated
statements of cash flows included in the accompanying consolidated financial
statements.

         TCIC has guaranteed notes payable and other obligations of affiliated
and other companies with outstanding balances of approximately $200 million at
June 30, 1997. With respect to TCIC's guarantees of $166 million of such
obligations, TCIC has been indemnified for any loss, claim or liability that
TCIC may incur, by reason of such guarantees. Although there can be no
assurance, management of TCIC believes that it will not be required to meet its
obligations under such guarantees, or if it is required to fulfill any of such
obligations, that they will not be material to TCIC.

         TCIC is a direct obligor or guarantor of the payment of certain
amounts that may be due pursuant to motion picture output, distribution and
license agreements. As of June 30, 1997, the amount of such obligations or
guarantees was approximately $131 million. The future obligations of TCIC with
respect to these agreements is not currently determinable because such amount
is dependent upon the number of qualifying films released theatrically by
certain motion picture studios as well as the domestic theatrical exhibition
receipts upon the release of such qualifying films.

         The Company's various partnerships and other affiliates accounted for
under the equity method generally fund their acquisitions, required debt
repayments and capital expenditures through borrowings under and refinancing of
their own credit facilities (which are generally not guaranteed by the
Company), through net cash provided by their own operating activities and in
certain circumstances through capital contributions from their partners.

         In order to achieve the desired balance between variable and fixed
rate indebtedness and to diminish its exposure to extreme increases in variable
interest rates, the Company has entered into various Interest Rate Swaps.
Pursuant to the Interest Rate Swaps, the Company (i) pays fixed interest rates
ranging from 7.1% to 9.3% and receives variable interest rates on notional
amounts of $410 million at June 30, 1997 and (ii) pays variable interest rates
and receives fixed interest rates ranging from 4.8% to 9.7% on notional amounts
of $2,050 million at June 30, 1997. During the six months ended June 30, 1997
and 1996, the Company's net payments pursuant to the Fixed Rate Agreements were
$4 million and $8 million, respectively; and the Company's net receipts
pursuant to the Variable Rate Agreements were $11 million and $8 million,
respectively. The Company is exposed to credit losses for the periodic
settlements of amounts due under the Interest Rate Swaps in the event of
nonperformance by the other parties to the agreements. However, the Company
does not anticipate that it will incur any material credit losses because it
does not anticipate nonperformance by the counterparties. See note 6 to the
accompanying consolidated financial statements for additional information
regarding Interest Rate Swaps.

         At June 30, 1997, after considering the net effect of the
aforementioned Interest Rate Swaps, TCIC had $5,827 million (or 43%) of
fixed-rate debt and $7,811 million (or 57%) of variable-rate debt. Accordingly,
in an environment of rising interest rates, the Company could experience an
increase in its interest expense.


                                                                    (continued)



                                     I-17
<PAGE>   19

                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)

(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
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. Approximately 78% of the
Company's basic customers are served by cable television systems that are
subject to such rate regulation.

         During the six months ended June 30, 1997, 72% of the Company's
revenue was derived from Regulated Services. As noted above, any increases 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.

         Through December 4, 1996, the Company had an investment in a direct
broadcast satellite partnership, PRIMESTAR Partners L.P. ("Primestar").
Primestar provides programming and marketing support to each of its cable
partners who provide satellite television service to their customers. On
December 4, 1996, TCI distributed (the "Satellite Spin-off") to the holders of
shares of Series A TCI Group Stock and Series B TCI Group Stock all of the
issued and outstanding common stock of TCI Satellite Entertainment, Inc.
("Satellite"). At the time of the Satellite Spin-off, Satellite's assets and
operations included the Company's interest in Primestar, the Company's business
of distributing Primestar programming and two communications satellites. As a
result of the Satellite Spin-off, Satellite's operations are no longer
consolidated with those of the Company.

         Revenue increased 8% for the three months ended June 30, 1997, as
compared to the corresponding period of 1996. Exclusive of an increase in
revenue due to acquisitions (9%), and a decrease in revenue due to the Satellite
Spin-off (6%), revenue increased 5%. Such increase was primarily the result of a
7% increase in basic revenue and a 9% decrease in premium revenue. TCIC
experienced a 10% increase in its average basic rate, a 2% decrease in the
number of average basic customers, a 7% increase in its average premium rate and
a 13% decrease in the number of average premium customers.

         Revenue increased 10% for the six months ended June 30, 1997, as
compared to the corresponding period of 1996. Exclusive of an increase in
revenue due to acquisitions (11%), and a decrease in revenue due to the
Satellite Spin-off (6%), revenue increased 5%. Such increase was primarily the
result of an 8% increase in basic revenue and a 6% decrease in premium revenue.
TCIC experienced an 11% increase in its average basic rate, a 1% decrease in the
number of average basic customers, a 4% increase in its average premium rate and
an 8% decrease in the number of average premium customers.

         Operating Costs and Expenses

         Operating expenses increased 12% and 13% for the three months and six
months ended June 30, 1997, respectively, as compared to the corresponding
periods of 1996. Exclusive of the effects of acquisitions, net of dispositions,
such expenses increased 8% and 7%, respectively. Programming expenses accounted
for the majority of such increases. The Company cannot determine whether, and
to what extent, increases in the cost of programming will affect its future
operating costs.


                                                                    (continued)


                                     I-18
<PAGE>   20
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)


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

         Selling, general and administrative expenses decreased 21% for the
three months and six months ended June 30, 1997, as compared to the
corresponding periods of 1996. Exclusive of the effects of acquisitions, net of
dispositions, such expenses decreased 13% for each period. Such decrease is due
primarily to a reduction in salaries and related payroll expenses due to work
force reductions in the fourth quarter of 1996, as well as reduced marketing
and general overhead expenses. The Company currently anticipates that marketing
expense will increase for the six months ended December 31, 1997, as compared
to the six months ended June 30, 1997.

         The decrease in the Company's depreciation expense in 1997 is the
result of the net effect of a decrease due to the Satellite Spin-off partially
offset by increases due to acquisitions and capital expenditures. The increase
in the Company's amortization expense in 1997 is due to acquisitions.

         The Company records compensation relating to stock appreciation rights
and restricted stock awards granted to certain employees. Such compensation is
subject to future adjustment based upon market value, and ultimately, on the
final determination of market value when the rights are exercised or the
restricted stock awards are vested.

         Other Income and Expenses

         Interest expense aggregated $274 million and $546 million for the
three months and six months ended June 30, 1997, respectively, as compared to
$247 million and $493 million for the corresponding periods in 1996. The
majority of such increase in interest expense is due to increased debt balances
as a result of the Viacom Acquisition in August 1996. See note 5 to the
accompanying consolidated financial statements.

         Included in share of losses of affiliates for the three months and six
months ended June 30, 1996 was $41 million and $102 million, respectively,
attributable to the Company's investment in Sprint Spectrum and TCG. Effective
December 31, 1996, the Company transferred these investments to TCI. As such,
the Company no longer reflects share of losses from such investments.

         Minority interests in earnings of consolidated subsidiaries aggregated
$55 million and $81 million for the three months and six months ended June 30,
1997, respectively, as compared to $11 million and $15 million for the
corresponding periods in 1996. The majority of such change is due to the
issuance of additional Trust Preferred Securities in May 1996 and March 1997
and the accrual of dividends on preferred securities issued in August 1996 by a
subsidiary of the Company.

                                                                    (continued)



                                     I-19
<PAGE>   21
                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)


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

         Net Earnings (Loss)

         TCIC's net loss (before preferred stock dividend requirements) of $13
million for the three months ended June 30, 1997 represents a change of $101
million, as compared to TCIC's net loss (before preferred stock dividend
requirements) of $114 million for the corresponding period of 1996. TCIC's net
earnings (before preferred stock dividend requirements) of $26 million for the
six months ended June 30, 1997 represents a change of $220 million, as compared
to TCIC's net loss (before preferred stock dividend requirements) of $194
million for the corresponding period of 1996. Such changes are primarily the
net result of an increase in operating income, a decrease in share of losses of
affiliates and a decrease in loss on early extinguishment of debt partially
offset by an increase in interest expense and an increase in the aforementioned
dividends on preferred securities issued by certain subsidiaries of the Company
included in minority share of earnings.



                                     I-20
<PAGE>   22


                   TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
                  (A Subsidiary of Tele-Communications, Inc.)


PART II - OTHER INFORMATION

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

        (a)     Exhibit -

                (27)    TCI Communications, Inc. Financial Data Schedule

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

                None.



                                     II-1
<PAGE>   23


                                   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 COMMUNICATIONS, INC.





Date:      August 13, 1997            By:   /s/ Leo J. Hindery, Jr.
                                           ------------------------
                                                Leo J. Hindery, Jr.
                                                  President and
                                                  Chief Executive Officer



Date:      August 13, 1997            By:   /s/ Stephen M. Brett
                                           ---------------------
                                                Stephen M. Brett
                                                Senior Vice President



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



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







                                     II-2
<PAGE>   24


                                 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 Communications, Inc. Financial Data Schedule