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 quarter ended June 30, 2001

                                       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 No. 333-05017

                         United Australia/Pacific, Inc.
             (Exact name of Registrant as specified in its charter)

       State of Colorado                                         84-1341958
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

     4643 South Ulster Street, #1300
            Denver, Colorado                                      80237
(Address of principal executive offices)                       (Zip code)

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







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
    ---      ---


The Company has no publicly-traded shares of capital stock. As of August 7, 2001
the Company had 28,460,926 shares of common stock outstanding.



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                                        UNITED AUSTRALIA/PACIFIC, INC.
                                               TABLE OF CONTENTS



                                                                                                                 Page
                                                                                                                Number
                                                                                                                ------

                                        PART I - FINANCIAL INFORMATION

<S>                                                                                                               <C>
Item 1.  Financial Statements

     Condensed Consolidated Balance Sheets as of June 30, 2001 (Unaudited) and December 31, 2000..............     2

     Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the
         Three and Six Months Ended June 30, 2001 and 2000 (Unaudited)........................................     3

     Condensed Consolidated Statement of Stockholders' Deficit for the Six Months Ended June 30, 2001
         (Unaudited)..........................................................................................     4

     Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001 and 2000
         (Unaudited).........................................................................................      5

     Notes to Condensed Consolidated Financial Statements as of June 30, 2001 (Unaudited)....................      6


Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations...............     15

Item 3.  Quantitative and Qualitative Disclosures about Market Risk..........................................     20




                                          PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K....................................................................     21

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                                                       1
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                                          UNITED AUSTRALIA/PACIFIC, INC.
                                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (In thousands, except par value and number of shares)
                                                  (Unaudited)

                                                                                                            June 30,    December 31,
                                                                                                              2001         2000
                                                                                                            ---------   ------------
<S>                                                                                                         <C>           <C>
ASSETS
Current assets
  Cash and cash equivalents...............................................................................  $  4,202      $  5,617
  Short-term liquid investments...........................................................................   125,920       101,477
  Subscriber receivables, net of allowance for doubtful accounts of $1,824 and $1,039, respectively.......     8,728         8,969
  Related party receivables...............................................................................     2,770         3,095
  Other receivables.......................................................................................     2,159         2,255
  Inventory...............................................................................................     4,654        12,151
  Prepaids and other current assets.......................................................................     3,739        10,697
                                                                                                            --------      --------
      Total current assets................................................................................   152,172       144,261
Investments in affiliates, accounted for under the equity method, net.....................................    61,480        64,991
Property, plant and equipment, net of accumulated depreciation of $312,437 and $294,935, respectively.....    96,732       124,479
Goodwill and other intangible assets, net of accumulated amortization of $24,877 and $19,789,
  respectively............................................................................................   174,032       200,702
Deferred financing costs, net of accumulated amortization of $8,065 and $6,826, respectively..............     8,990        10,846
Other non-current assets, net.............................................................................       475           287
                                                                                                            --------      --------
      Total assets........................................................................................  $493,881      $545,566
                                                                                                            ========      ========

LIABILITIES AND STOCKHOLDERS' DEFICIT
  Current liabilities
  Accounts payable........................................................................................  $  1,229      $  5,554
  Accrued liabilities.....................................................................................    60,136        58,088
  Current portion of due to parent........................................................................    21,231        18,583
  Current portion of other long-term debt.................................................................     1,538         1,366
                                                                                                            --------      --------
      Total current liabilities...........................................................................    84,134        83,591
Due to parent.............................................................................................     7,370         8,068
Senior discount notes.....................................................................................   490,643       466,241
Other long-term debt......................................................................................   207,753       226,894
Other long-term liabilities...............................................................................       511           511
                                                                                                            --------      --------
      Total liabilities...................................................................................   790,411       785,305
                                                                                                            --------      --------

Minority interests in subsidiaries........................................................................    98,951        68,807
                                                                                                            --------      --------

Stockholders' deficit
  Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding..............         -             -
  Common stock, $0.01 par value, 30,000,000 shares authorized, 28,460,926 and 22,961,728 shares
    issued and outstanding, respectively..................................................................       285           230
Additional paid-in capital................................................................................   346,312       317,813
Deferred compensation.....................................................................................    (4,374)       (8,904)
Accumulated deficit.......................................................................................  (669,459)     (562,050)
Other cumulative comprehensive income (loss)..............................................................   (68,245)      (55,635)
                                                                                                            --------      --------
      Total stockholders' deficit.........................................................................  (395,481)     (308,546)
                                                                                                            --------      --------
      Total liabilities and stockholders' deficit.........................................................  $493,881      $545,566
                                                                                                            ========      ========

               The accompanying notes  are an integral part of these condensed consolidated financial statements.
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                                                UNITED AUSTRALIA/PACIFIC, INC.
                        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                                (In thousands, except per share amounts and  number of shares)
                                                        (Unaudited)

                                                                            Three Months Ended                Six Months Ended
                                                                                 June 30,                          June 30,
                                                                       ---------------------------        --------------------------
                                                                           2001           2000               2001           2000
                                                                       -----------     -----------        -----------    -----------
<S>                                                                    <C>             <C>                <C>            <C>
Revenue.............................................................   $   43,518      $   42,851         $   88,600     $   89,195

Operating expense...................................................      (42,148)        (42,578)           (89,654)       (82,687)
Selling, general and administrative expense, including
 management fees from related party of $877, $869,
 $1,732 and $1,705, respectively....................................      (16,532)        (12,674)           (28,572)       (25,677)
Depreciation and amortization.......................................      (29,401)        (24,770)           (60,074)       (54,797)
                                                                       ----------      ----------         ----------     ----------
       Operating loss...............................................      (44,563)        (37,171)           (89,700)       (73,966)

Gain on issuance of common equity securities by subsidiary..........            -               -                  -         61,172
Interest income.....................................................        1,420           5,100              2,730          8,248
Interest expense....................................................      (21,149)        (19,670)           (44,208)       (38,969)
Foreign currency exchange gain (loss), net..........................        2,082              71               (435)          (195)
(Loss) gain on sale of investment in affiliate......................         (961)         (1,790)             1,764         (1,790)
Other expense, net..................................................         (382)           (459)              (382)          (375)
                                                                       ----------      ----------         ----------     ----------
       Loss before income taxes and other items.....................      (63,553)        (53,919)          (130,231)       (45,875)

Income tax (expense) benefit........................................           (2)            816                 (2)           741
Minority interests in subsidiaries..................................       20,789          14,154             36,463         26,213
Share in results of affiliates, net.................................       (8,007)         (4,424)           (13,639)        (5,005)
                                                                       ----------      ----------         ----------     ----------
       Net loss.....................................................   $  (50,773)     $  (43,373)        $ (107,409)    $  (23,926)
                                                                       ==========      ==========         ==========     ==========

Foreign currency translation adjustments............................   $    2,222      $   (4,500)        $  (13,035)    $  (19,740)
Cumulative effect of change in accounting principle.................            -               -                523              -
Amortization of cumulative effect of change in
 accounting principle...............................................          (98)              -                (98)             -
                                                                       ----------      ----------         ----------     ----------
       Comprehensive income (loss)..................................   $  (48,649)     $  (47,873)        $ (120,019)    $  (43,666)
                                                                       ==========      ==========         ==========     ==========

Net loss per common share:
       Basic net loss...............................................   $    (1.78)     $    (2.44)        $    (3.78)    $    (1.34)
                                                                       ==========      ==========         ==========     ==========
       Diluted net loss.............................................   $    (1.78)     $    (2.44)        $    (3.78)    $    (1.34)
                                                                       ==========      ==========         ==========     ==========

Weighted-average number of common shares outstanding:
       Basic........................................................   28,460,926      17,810,299         28,430,544     17,810,299
                                                                       ==========      ==========         ==========     ==========
       Diluted......................................................   28,460,926      17,810,299         28,430,544     17,810,299
                                                                       ==========      ==========         ==========     ==========


               The accompanying notes  are an integral part of these condensed consolidated financial statements.
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                                                        3

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                                               UNITED AUSTRALIA/PACIFIC, INC.
                                  CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                                           (In thousands, except number of shares)
                                                         (Unaudited)

                                                                                                            Other
                                                                                                          Cumulative
                                             Common Stock       Additional                               Comprehensive
                                         --------------------    Paid-In      Deferred     Accumulated      Income
                                           Shares      Amount    Capital    Compensation     Deficit      (Loss)(1)        Total
                                         ----------  --------   ----------  ------------   -----------   -------------   ---------
<S>                                      <C>           <C>       <C>          <C>           <C>            <C>           <C>

Balances, December 31, 2000............. 22,961,728    $230      $317,813     $(8,904)      $(562,050)     $(55,635)     $(308,546)

Issuance of capital stock to
 parent for capital contributions.......  5,499,198      55          (55)           -               -             -              -

Cash contributions from parent..........          -       -          406            -               -             -            406

Equity transactions of subsidiary.......          -       -       29,538          194               -             -         29,732

Amortization of deferred compensation...          -       -       (1,390)       4,336               -             -          2,946

Net loss................................          -       -            -            -        (107,409)            -       (107,409)

Cumulative effect of change in
 accounting principle...................          -       -            -            -               -           523            523

Amortization of cumulative effect of
 change in accounting principle.........          -       -            -            -               -           (98)           (98)

Change in cumulative translation
 adjustments............................          -       -            -            -               -       (13,035)       (13,035)
                                         ----------    ----      ---------    -------       ---------      --------      ---------
Balances, June 30, 2001................. 28,460,926    $285      $346,312     $(4,374)      $(669,459)     $(68,245)     $(395,481)
                                         ==========    ====      =========    =======       =========      ========      =========



(1)  As of December 31, 2000 and June 30, 2001, Other  Cumulative  Comprehensive
     Income  (Loss)  represents  foreign  currency  translation  adjustments  of
     $(55,635) and $(68,670) and the  cumulative  effect of change in accounting
     principle of nil and $425, respectively.


               The accompanying notes  are an integral part of these condensed consolidated financial statements.
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                                                        4

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                                             UNITED AUSTRALIA/PACIFIC, INC.
                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (In thousands)
                                                       (Unaudited)

                                                                                                          Six Months Ended
                                                                                                               June 30,
                                                                                                      ---------------------------
                                                                                                         2001            2000
                                                                                                      ----------      -----------
<S>                                                                                                   <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss........................................................................................      $(107,409)      $  (23,926)
Adjustments to reconcile net loss to net cash flows from operating activities:
  Gain on issuance of common equity securities by subsidiary....................................              -          (61,172)
  Share in results of affiliates, net...........................................................         13,639            5,005
  Minority interests in subsidiaries............................................................        (36,463)         (26,213)
  Depreciation and amortization.................................................................         60,074           54,797
  Stock-based compensation expense..............................................................          3,194            4,718
  (Gain) loss on sale of investment in affiliate................................................         (1,764)           1,790
  Accretion of interest on senior notes and amortization of deferred financing costs............         26,014           30,291
  Increase in receivables, net..................................................................           (897)          (4,228)
  Increase in other assets......................................................................           (254)          (4,712)
  Increase (decrease) in accounts payable, accrued liabilities and other........................         11,122             (500)
                                                                                                      ---------       ----------
      Net cash flows from operating activities..................................................        (32,744)         (24,150)
                                                                                                      ---------       ----------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short-term liquid investments.......................................................       (393,505)      (1,043,474)
Proceeds from sale of short-term liquid investments.............................................        359,620          987,258
Investments in affiliates and other investments.................................................        (20,454)          (4,862)
Spectrum license fees and other acquisitions....................................................         (1,429)          (3,684)
Distribution received from affiliated company...................................................          5,223            3,197
Capital expenditures............................................................................        (25,437)         (53,942)
Other...........................................................................................          3,598           (4,670)
                                                                                                      ---------       ----------
      Net cash flows from investing activities..................................................        (72,384)        (120,177)
                                                                                                      ---------       ----------

CASH FLOWS FROM FINANCING ACTIVITIES
Cash contributed from parent....................................................................            406               69
Proceeds from issuance of common equity securities by subsidiary, net of offering costs.........        105,664          102,403
Proceeds from borrowings on the New Austar Bank Facility........................................              -           38,848
Deferred financing costs and other..............................................................           (930)             695
                                                                                                      ---------       ----------
      Net cash flows from financing activities..................................................        105,140          142,015
                                                                                                      ---------       ----------

EFFECT OF EXCHANGE RATES ON CASH................................................................         (1,427)            (517)
                                                                                                      ---------       -----------
DECREASE IN CASH AND CASH EQUIVALENTS...........................................................         (1,415)          (2,829)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..................................................          5,617            6,028
                                                                                                      ---------       ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD........................................................      $   4,202       $    3,199
                                                                                                      =========       ==========

SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest..........................................................................      $  10,724       $    7,733
                                                                                                      =========       ==========
Cash received for interest......................................................................      $   2,537       $   10,323
                                                                                                      =========       ==========

DECONSOLIDATION OF NEW ZEALAND SUBSIDIARY
Working capital.................................................................................      $       -       $   (7,319)
Property, plant and equipment...................................................................              -           93,202
Recording of investment in Saturn...............................................................              -          (62,857)
Goodwill and other assets.......................................................................              -           35,451
Notes payable and other debt....................................................................              -          (58,529)
                                                                                                      ---------       ----------
      Total cash relinquished...................................................................      $       -       $      (52)
                                                                                                      =========       ==========


               The accompanying notes  are an integral part of these condensed consolidated financial statements.
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                                                        5


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                         UNITED AUSTRALIA/PACIFIC, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2001
                                   (Unaudited)



1.   ORGANIZATION AND NATURE OF OPERATIONS

United  Australia/Pacific,  Inc.  (the  "Company" or "UAP") is a  majority-owned
subsidiary of United Asia/Pacific Communications,  Inc. ("Asia/Pacific"),  which
is  in  turn  an  indirect  wholly-owned  subsidiary  of  UnitedGlobalCom,  Inc.
("United").  UAP provides video,  telephone and Internet access services,  which
the  Company  refers to as  "Distribution",  in  Australia  and New  Zealand and
related  content and other media  services in  Australia.  The  following  chart
presents a summary of the  Company's  ownership  structure  and its  significant
investments in telecommunications as of June 30, 2001.

          ***********************************************************
          *                                                         *
          *                         United                          *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *      United International Properties, Inc. ("UIPI")     *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *                     Asia/Pacific(1)                     *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *                           UAP                           *
          *                                                         *
          ***********************************************************
                                       *
                              63.2%    *
          ***********************************************************
          *                                                         *
          *                    United Austar, Inc.                  *
          *                                                         *
          ***********************************************************
                                       *
                              80.7%    *
          ***********************************************************
          *          Austar United Communications Limited           *
          *                    ("Austar United")                    *
          *                                                         *
          ***********************************************************
                                       *
                                       *
          ***********************************************************
          *Distribution                                             *
          *------------                                             *
          * Australia:                                              *
          *  Austar                                          100.0% *
          *  Austar United Broadband                         100.0% *
          * New Zealand:                                            *
          *  TelstraSaturn                                    50.0% *
          *                                                         *
          *Content                                                  *
          *-------                                                  *
          * Australia:                                              *
          *  XYZ Entertainment                                50.0% *
          *  TVSN                                             51.0%*
          ***********************************************************


(1)  Asia/Pacific also holds a direct ownership interest in United Austar,  Inc.
     and Austar United of 36.8% and 0.6%, respectively.



                                       6
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                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States  and  with  the  instructions  to Form  10-Q  and  Article  10 of
Regulation S-X for interim financial information.  Accordingly, these statements
do not include  all of the  information  and  footnotes  required  by  generally
accepted accounting principles for complete financial statements. In the opinion
of management,  all  adjustments  (consisting of normal  recurring  adjustments)
considered necessary for a fair presentation have been included. All significant
intercompany  accounts and transactions  have been eliminated in  consolidation.
Operating  results  for the three and six  months  ended  June 30,  2001 are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 2001. For further information,  refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000.  Certain prior year amounts have been
reclassified to conform with the current year presentation.

USE OF ESTIMATES

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

PRINCIPLES OF CONSOLIDATION

The accompanying interim condensed consolidated financial statements include the
accounts of the Company and all  subsidiaries  where it exercises a  controlling
financial  interest  through the ownership of a majority  voting  interest.  The
Company  discontinued  consolidating the results of its New Zealand  subsidiary,
Saturn, effective April 1, 2000, due to the formation of TelstraSaturn,  a 50/50
joint venture, which is accounted for under the equity method.

RISKS, UNCERTAINTIES AND LIQUIDITY

Because  of  delays  in  rolling  out   TelstraSaturn's   network  in  Auckland,
TelstraSaturn  currently expects that it may not meet a covenant required by its
debt  facility  with  respect  to the ratio of its debt to the amount of network
constructed as of September 30, 2001. TelstraSaturn has received a waiver of its
noncompliance  with this  covenant as of June 30, 2001 and believes that it will
continue  to obtain  waivers in relation to these  covenants.  TelstraSaturn  is
planning  to seek an  amendment  to the debt  facility  to reflect  its  revised
network rollout plans.  TelstraSaturn  believes this amendment is reasonable and
should be obtained.  However,  the Company cannot be assured such amendment will
be obtained.  If TelstraSaturn  does not obtain this amendment,  TelstraSaturn's
noncompliance  with this covenant  could have a material  adverse  effect on its
financial  condition,  and  consequently  the carrying value of Austar  United's
investment in  TelstraSaturn  ($38.1  million as of June 30, 2001) would also be
adversely  affected.  There is no recourse to the  shareholders of TelstraSaturn
for repayment of monies drawn under the TelstraSaturn Bank Facility.

Management believes Austar United's working capital and projected operating cash
flow as of June 30, 2001 are sufficient to fund Austar  United's  operations and
meet Austar  United's  budgeted  capital  expenditure  requirements  through the
remainder  of 2001.  Management  expects  Austar  United  to  continue  to incur
operating  losses  in  the  near  future  primarily  as a  result  of  increased
programming  costs  due to the  weakness  of the  Australian  dollar to the U.S.
dollar, as well as the continued  introduction of new services such as telephone
and Internet.  The Company  cannot be assured that Austar United will be able to
generate  enough  growth in its video,  telephone  and  Internet  businesses  to
achieve consolidated operating profitability and positive operating cash flows.

                                       7
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Austar United  intends to refinance  its A$400.0  ($204.1)  million  Austar Bank
Facility  by the end of 2001.  If Austar  United is  unable  to  refinance  this
facility,  it is likely that certain of the financial  covenants required by the
facility will not be met as of December 31, 2001, resulting in the debt becoming
due and  payable  in the first  quarter  of 2002.  If the debt  becomes  due and
payable,  Austar  United  may  need  to  negotiate  a  waiver  of the  financial
covenants,  sell assets or obtain  funding from  external  sources to repay this
amount and continue to pay its other liabilities when due. The Company cannot be
assured that Austar United will be successful in obtaining a waiver of financial
covenants  or be  successful  in  renegotiating  or otherwise  refinancing  this
facility.  If  the  Austar  Bank  Facility  indebtedness  is  accelerated,   the
acceleration  will  also  constitute  an event of  default  under  UAP's  Senior
Discount  Notes,  and the  holders  of the UAP  Notes  will  have  the  remedies
discussed below.

The Company's Senior Discount Notes began to accrue interest on a cash-pay basis
May 15, 2001, with the first payment of $34.5 million due November 15, 2001. The
Company  does  not  have  enough  cash  to make  this  interest  payment  and is
considering various alternatives,  including securing additional  investments to
fund  the  payment  or  refinancing  of the  Notes.  Although  the  Company  has
historically received financial support from United, under current circumstances
the Company cannot be assured that United or any other investor will provide the
funds needed.

If the Company  does not make the interest  payment on November  15,  2001,  the
holders of the Notes will have various  remedies.  If a failure to pay continues
for a period of 30 days or more,  the trustee under the Indenture  governing the
Notes, on its own initiative or at the request of the holders of the Notes,  can
declare the entire unpaid principal of the Notes to be due and payable (which at
such time would be approximately $492.9 million).  Based upon the current market
value of the Company's  assets,  their  liquidation would be insufficient to pay
the principal and premium on the Notes. The trustee,  either independently or at
the request of the Note holders,  could initiate bankruptcy  proceedings against
the  Company,  sue to recover  the amount of the Notes or take any other  action
available to creditors.

As required under Australian  regulatory rules, Austar United's auditors (Arthur
Andersen)  have  reviewed  Austar  United's  June 30,  2001  mid-year  report in
accordance with Australian  standards.  Austar's  auditors have included a going
concern  modification  in their  report on the June 30, 2001  accounts of Austar
United.  Their report  states that "there is  uncertainty  as to whether  Austar
United and the group will be able to obtain the  funding it requires in order to
enable it to continue to operate as a going concern and,  therefore,  whether it
will realize its assets and extinguish  its  liabilities in the normal course of
business and at the amounts stated in the financial statements."

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  The Company cannot be assured that it
will be successful in obtaining all of its anticipated funding needs or avoiding
defaults under its existing debt agreements.  The Company has suffered recurring
losses and  projects  continuing  negative  cash flows  from  operations.  These
matters raise  substantial  doubt about the  Company's  ability to continue as a
going concern.  The financial statements do not include any adjustments relating
to the recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might result should the Company be unable
to continue as a going concern.

NEW ACCOUNTING PRINCIPLES

In June 2001, the Financial  Accounting  Standards Board authorized the issuance
of Statement of Financial  Accounting  Standards No. 141, Business  Combinations
("SFAS No.  141") and  Statement  of  Financial  Accounting  Standards  No. 142,
Goodwill and Other Intangible Assets ("SFAS No. 142"). SFAS No. 141 requires the
use of the purchase method of accounting for all business combinations initiated
after June 30,  2001.  SFAS No. 141  requires  intangible  assets  acquired in a
business  combination  to be recognized if they arise from  contractual or legal
rights or are "separable", that is, feasible that they may be sold, transferred,
licensed,  rented,  exchanged  or pledged.  As a result,  it is likely that more
intangible  assets will be  recognized  under SFAS No. 141 than its  predecessor
Accounting   Principles  Board  Opinion  No.  16,  although  in  some  instances
previously recognized intangibles will be subsumed into goodwill.

Under SFAS No. 142, goodwill and intangible assets with indefinite lives will no
longer be amortized on a straight-line basis over its estimated useful life, but
will be tested for  impairment  on an annual  basis and whenever  indicators  of
impairment arise. The goodwill impairment test, which is based on fair value, is
to be performed on a reporting unit level.  Goodwill will no longer be allocated
to other long-lived assets for impairment testing under SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of.  Additionally,  goodwill  on  equity  method  investments  will no longer be
amortized;  however,  it will continue to be tested for impairment in accordance
with Accounting Principles Board Opinion No. 18, The Equity Method of Accounting

                                       8
<PAGE>

                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

for  Investments  in Common Stock.  Under SFAS No. 142,  intangible  assets with
indefinite  lives  will not be  amortized.  Instead  they will be carried at the
lower of cost or market value and tested for impairment at least  annually.  All
other  recognized  intangible  assets will  continue to be amortized  over their
estimated useful lives.

SFAS No. 142 is effective  for fiscal years  beginning  after  December 15, 2001
although goodwill on business  combinations  consummated after July 1, 2001 will
not be amortized. On adoption the Company may need to record a cumulative effect
adjustment to reflect the impairment of previously recognized intangible assets.
In addition, goodwill on prior business combinations will cease to be amortized.
We  have  not yet  determined  the  impact  that  this  adoption  would  have on
intangible assets or whether a cumulative effect adjustment would be required.

3.   INVESTMENTS IN AFFILIATES
<TABLE>
<CAPTION>
                                                                     June 30, 2001
                                    ------------------------------------------------------------------------------
                                                      Cumulative        Cumulative        Cumulative
                                                      Dividends      Share in Results    Translation
                                    Contributions      Received        of Affiliates     Adjustments      Total
                                    -------------     ----------     ----------------    ------------   ----------
                                                                     (In thousands)
     <S>                               <C>            <C>               <C>                <C>           <C>
     TelstraSaturn.................    $ 87,020       $      -          $(41,196)          $ (7,747)     $38,077
     XYZ Entertainment.............      44,306        (10,687)           (7,547)            (3,598)      22,474
     Other.........................       2,923              -            (1,528)              (466)         929
                                       --------       --------          --------           --------      -------
          Total....................    $134,249       $(10,687)         $(50,271)          $(11,811)     $61,480
                                       ========       ========          ========           ========      =======


                                                                    December 31, 2000
                                    ------------------------------------------------------------------------------
                                                      Cumulative        Cumulative        Cumulative
                                                      Dividends      Share in Results    Translation
                                    Contributions      Received        of Affiliates     Adjustments      Total
                                    -------------     ----------     ----------------    ------------   ----------
                                                                     (In thousands)

     TelstraSaturn.................    $ 66,629       $      -          $(24,503)          $ (5,007)     $37,119
     XYZ Entertainment.............      44,306         (5,464)          (11,515)            (1,387)      25,940
     Other.........................       2,860              -              (614)              (314)       1,932
                                       --------       ---------         --------           --------      -------
          Total....................    $113,795       $ (5,464)         $(36,632)          $ (6,708)     $64,991
                                       ========       =========         =========          ========      =======
</TABLE>

4.   PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
                                                                                  June 30,          December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                <C>
    Subscriber premises equipment and converters..............................     $306,889           $309,200
    MMDS distribution facilities..............................................       54,195             58,035
    Cable distribution networks...............................................        2,458              2,629
    Office equipment, furniture and fixtures..................................       22,818             18,748
    Buildings and leasehold improvements......................................        3,562              5,670
    Other.....................................................................       19,247             25,132
                                                                                   --------           --------
                                                                                    409,169            419,414
       Accumulated depreciation...............................................     (312,437)          (294,935)
                                                                                   --------           --------
       Net property, plant and equipment......................................     $ 96,732           $124,479
                                                                                   ========           ========
</TABLE>
                                       9
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.   GOODWILL AND OTHER INTANGIBLE ASSETS
<TABLE>
<CAPTION>
                                                                                  June 30,          December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                <C>
    Goodwill..................................................................     $ 93,226           $105,936
    License fees and other intangible assets..................................      105,683            114,555
                                                                                   --------           --------
                                                                                    198,909            220,491
       Accumulated amortization...............................................      (24,877)           (19,789)
                                                                                   --------           --------
       Net goodwill and other intangible assets...............................     $174,032           $200,702
                                                                                   ========           ========
</TABLE>

6.   SENIOR DISCOUNT NOTES
<TABLE>
<CAPTION>
                                                                                  June 30,          December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                <C>
    May 1996 Notes............................................................     $443,639           $421,372
    September 1997 Notes......................................................       47,004             44,869
                                                                                   --------           --------
       Total senior discount notes............................................     $490,643           $466,241
                                                                                   ========           ========
</TABLE>

7.   OTHER LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                                  June 30,          December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                <C>
    Austar Bank Facility (Note 2).............................................     $204,144           $223,501
    Capitalized leases and other..............................................        5,147              4,759
                                                                                   --------           --------
                                                                                    209,291            228,260
      Less current portion....................................................       (1,538)            (1,366)
                                                                                   --------           --------
      Total other long-term debt..............................................     $207,753           $226,894
                                                                                   ========           ========
</TABLE>

8.   STOCKHOLDERS' DEFICIT

EQUITY TRANSACTIONS OF SUBSIDIARIES

The issuance of common  equity,  variable plan  accounting for stock options and
the recognition of deferred  compensation expense by the Company's  subsidiaries
affects the equity accounts of the Company.  The following represents the effect
on additional  paid-in-capital  and deferred  compensation  as a result of these
equity transactions:
<TABLE>
<CAPTION>
                                                                                    Six Months
                                                                                      Ended
                                                                                   June 30, 2001
                                                                                   -------------
                                                                                   (In thousands)
<S>                                                                                  <C>
    Issuance of shares by United Austar, Inc  to Asia/Pacific.................       $29,732
    Variable plan accounting for stock options................................          (194)
    Deferred compensation expense.............................................           194
    Amortization of deferred compensation.....................................         4,336
    Amortization of deferred compensation (minority interest).................        (1,390)
                                                                                     -------
         Total................................................................       $32,678
                                                                                     =======
</TABLE>

In May 2001,  Austar United  successfully  completed a rights  offering  selling
214.2 million  shares and raising  gross and net proceeds at A$0.95  ($0.49) per
share of A$203.5 ($106.3) million and A$202.3  ($105.7)  million,  respectively.
United  Austar,  Inc.  accepted its full  entitlement  under the pro rata rights
offer and accepted the  shortfall  subscriptions  by other rights  holders for a
total share  acquisition  of 212.0 million  shares,  increasing its ownership in

                                       10
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Austar  United  from  72.8%  to  80.7%.  Concurrent  with the  rights  offering,
Asia/Pacific acquired a 36.8% direct interest in United Austar, Inc. in exchange
for  $105.2  million  in cash.  Based  on the  carrying  value of the  Company's
investment in United Austar,  Inc. at the time of this transaction,  the Company
recognized a SAB 51 gain of $29.7 million, which was recorded in equity.

9.   RELATED PARTY TRANSACTIONS

The  Company  and  Asia/Pacific  are  parties to a 20-year  management  services
agreement (the "Management Agreement"),  pursuant to which Asia/Pacific performs
certain administrative,  accounting,  financial reporting and other services for
the Company in exchange for a fee of  approximately  $1.0  million per year.  In
addition,  the Company  reimburses  Asia/Pacific or United for any out-of-pocket
expenses including travel, lodging and entertainment expenses incurred on behalf
of the Company.  For the three and six months ended June 30, 2001 and 2000,  the
Company  recorded $0.3,  $0.5, $0.3 and $0.5 million,  respectively,  under this
agreement.

Effective June 24, 1999, United and Austar United executed a management services
agreement  pursuant to which United  performs  certain  technical and consulting
services in return for a monthly management fee of $0.2 million. This amount may
be adjusted  before  January 1 of each year by the board of  directors of United
but may not  increase by more than 15.0% in any one year.  This  agreement  also
requires that Austar United  reimburse  United for all direct and other expenses
reasonably  incurred by United on behalf of Austar  United.  The agreement  will
continue through December 31, 2010.

Prior to June 1999, Austar was a party to a technical  assistance agreement with
Asia/Pacific  whereby Austar paid Asia/Pacific a fee based on its gross revenue.
Austar also  reimbursed  United for  certain  direct  costs  incurred by United,
including  salaries  and  benefits  relating  to  senior  management  positions,
pursuant to the terms of the technical assistance agreement.  Effective June 24,
1999,  the rights under this agreement were assigned to Austar United as part of
the restructuring associated with the Austar United initial public offering.

Included in the amount due to parent is the following:
<TABLE>
<CAPTION>
                                                                                  June 30,          December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                <C>
    Management fee payable to Asia/Pacific....................................     $ 3,496            $ 2,972
    Austar United technical assistance agreement obligations to United........       5,679              5,950
    Austar United management fees payable to United...........................       4,800              3,600
    Austar deferred management fees payable to Asia/Pacific...................       7,370              8,068
    Austar technical assistance agreement obligations and other payables to
      Asia/Pacific and United.................................................       7,256              6,061
                                                                                   -------            -------
                                                                                    28,601             26,651
           Less current portion ..............................................     (21,231)           (18,583)
                                                                                   -------            -------
           Total due to parent ...............................................     $ 7,370            $ 8,068
                                                                                   =======            =======

</TABLE>









                                       11
<PAGE>


                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


10. SEGMENT INFORMATION

The Company provides video,  voice and Internet access services in Australia and
New Zealand, and related content and other media services in Australia.

The Company evaluates  performance and allocates  resources based on the results
of  these  divisions.  The  key  operating  performance  criteria  used  in this
evaluation   include  revenue  growth  and  Adjusted  EBITDA.   Adjusted  EBITDA
represents  net  operating  earnings  before   depreciation,   amortization  and
stock-based  compensation charges.  Stock-based compensation charges result from
variable  plan  accounting  for the  Austar  United  stock  option  plan and are
generally non-cash charges. Industry analysts generally consider Adjusted EBITDA
to be a helpful way to measure the  performance of cable  television  operations
and communications companies. Adjusted EBITDA should not, however, be considered
a replacement for net income, cash flows or for any other measure of performance
or liquidity under generally accepted accounting principles,  or as an indicator
of a company's  operating  performance.  The presentation of Adjusted EBITDA may
not be comparable to statistics with a similar name reported by other companies.
Not all companies and analysts calculate Adjusted EBITDA in the same manner.

A summary of segment information by geographic area is as follows:

<TABLE>
<CAPTION>
                                         June 30,          December 31,
                                           2001                2000
                                      ---------------      -------------
                                                (In thousands)
    <S>                                  <C>                  <C>
    Total Assets:
       Australia...................      $475,019             $520,693
       Corporate and other.........        18,862               24,873
                                         --------             --------
         Total.....................      $493,881             $545,566
                                         ========             ========

</TABLE>
<TABLE>
<CAPTION>
                                                           Three Months Ended June 30, 2001
                                      -----------------------------------------------------------------------------

                                        Video        Voice        Internet      Content        Other        Total
                                      ----------   ----------    ----------   ----------    ----------   ----------
                                                                     (In thousands)
    <S>                                <C>           <C>          <C>          <C>           <C>          <C>
    Revenue:
      Australia....................    $37,469       $ 751        $ 2,593      $ 2,636       $    69      $ 43,518
      Corporate and other..........          -           -              -            -             -             -
                                       -------       -----        -------      -------       -------      --------
         Total.....................    $37,469       $ 751        $ 2,593      $ 2,636       $    69      $ 43,518
                                       =======       =====        =======      =======       =======      ========

    Adjusted EBITDA:
      Australia....................    $(4,648)      $(223)       $(5,530)     $(2,438)      $  (821)     $(13,660)
      Corporate and other..........          -           -              -            -          (374)         (374)
                                       -------       -----        -------      -------       -------      --------
         Total......................   $(4,648)      $(223)       $(5,530)     $(2,438)      $(1,195)     $(14,034)
                                       =======       =====        =======      =======       =======      ========

</TABLE>
                                       12
<PAGE>


                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

<TABLE>
<CAPTION>
                                                           Three Months Ended June 30, 2000
                                      -----------------------------------------------------------------------------

                                        Video        Voice        Internet      Content        Other        Total
                                      ----------   ----------    ----------   ----------    ----------   ----------
                                                                     (In thousands)
    <S>                                <C>           <C>          <C>          <C>           <C>          <C>
    Revenue:
      Australia....................    $41,688       $    -       $    421      $     -      $   742      $ 42,851
      New Zealand..................          -            -              -            -            -             -
      Corporate and other..........          -            -              -            -            -             -
                                       -------       ------       --------      -------      -------      --------
         Total.....................    $41,688       $    -       $    421      $     -      $   742      $ 42,851
                                       =======       ======      ==========     =======      =======      ========

    Adjusted EBITDA:
      Australia....................    $(1,635)      $  (89)      $ (5,143)     $     -      $(2,976)     $ (9,843)
      New Zealand..................          -            -              -            -            -             -
      Corporate and other..........          -            -              -            -         (299)         (299)
                                       -------       ------       --------      -------      -------      ---------
         Total.....................    $(1,635)      $  (89)      $ (5,143)     $     -      $(3,275)     $(10,142)
                                       =======       ======       ========      =======      =======      =========

                                                           Six Months Ended June 30, 2001
                                      -----------------------------------------------------------------------------

                                        Video        Voice        Internet      Content        Other        Total
                                      ----------   ----------    ----------   ----------    ----------   ----------
                                                                     (In thousands)
    Revenue:
      Australia....................    $75,948       $1,624       $  5,626      $ 5,226      $   176      $ 88,600
      Corporate and other..........          -            -              -            -            -             -
                                       -------       ------       --------      -------      -------     ---------
         Total.....................    $75,948       $1,624       $  5,626      $ 5,226      $   176      $ 88,600
                                       =======       ======       ========      =======      =======      ========

    Adjusted EBITDA:
      Australia....................    $(8,017)      $ (965)      $(10,995)     $(3,974)     $(1,791)     $(25,742)
      Corporate and other..........          -            -              -            -         (690)         (690)
                                       -------       ------       --------      -------      -------      --------
         Total.....................    $(8,017)      $ (965)      $(10,995)     $(3,974)     $(2,481)     $(26,432)
                                       =======       ======       ========      =======      =======      ========

                                                             Six Months Ended June 30, 2000
                                      -----------------------------------------------------------------------------

                                        Video        Voice        Internet      Content        Other        Total
                                      ----------   ----------    ----------   ----------    ----------   ----------
                                                                     (In thousands)
    Revenue:
      Australia...................     $82,537       $    -       $    429      $     -      $ 1,341      $ 84,307
      New Zealand.................         844        3,166            878            -            -         4,888
      Corporate and other.........           -            -              -            -            -             -
                                       -------       ------       --------      -------      -------      --------
         Total....................     $83,381       $3,166       $  1,307      $     -      $ 1,341      $ 89,195
                                       =======       ======       ========      =======      =======      ========

    Adjusted EBITDA:
      Australia...................     $  (443)      $ (126)      $ (6,864)     $     -      $(4,753)     $(12,186)
      New Zealand.................        (253)        (357)           248            -       (1,344)       (1,706)
      Corporate and other.........           -            -              -            -         (559)         (559)
                                       -------       ------       --------      -------      -------      --------
         Total....................     $  (696)      $ (483)      $ (6,616)     $     -      $(6,656)     $(14,451)
                                       =======       ======       ========      =======      =======      ========

</TABLE>

                                       13
<PAGE>


                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


The  Company's   consolidated   Adjusted  EBITDA  reconciles  to  the  condensed
consolidated statements of operations and comprehensive income(loss) as follows:
<TABLE>
<CAPTION>

                                                                        Three Months Ended             Six Months Ended
                                                                            June 30,                        June 30,
                                                                    ------------------------       ------------------------
                                                                       2001          2000             2001          2000
                                                                    ----------    ----------       ----------    ----------
                                                                         (In thousands)                 (In thousands)
     <S>                                                             <C>           <C>              <C>            <C>
     Operating loss..........................................        $(44,563)     $(37,171)        $(89,700)      $(73,966)
     Depreciation and amortization...........................          29,401        24,770           60,074         54,797
     Non-cash stock-based compensation expense...............           1,128         2,259            3,194          4,718
                                                                     --------      --------         --------       --------
          Consolidated Adjusted EBITDA.......................        $(14,034)     $(10,142)        $(26,432)      $(14,451)
                                                                     ========      ========         ========       ========
</TABLE>


                                       14
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS


The  following  discussion  contains,  in  addition to  historical  information,
forward-looking   statements  that  involve  risks  and   uncertainties.   These
forward-looking   statements  may  include,   among  other  things,   statements
concerning our plans,  objectives and future economic  prospects,  expectations,
beliefs,  future plans and strategies,  anticipated events or trends and similar
expressions   concerning   matters  that  are  not   historical   facts.   These
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors which may cause our actual results,  performance or  achievements,
or industry results,  to be materially  different from what we say or imply with
such  forward-looking  statements.  These factors  include,  among other things,
changes in television  viewing  preferences  and habits by our  subscribers  and
potential   subscribers,   their  acceptance  of  new  technology,   programming
alternatives and new video services we may offer. They also include subscribers'
acceptance of our newer telephone and Internet access  services,  our ability to
manage and grow our newer telephone and Internet access services, our ability to
secure  adequate  capital to pay  interest  on our Notes and fund  other  system
growth and  development and any  acquisitions,  risks inherent in investment and
operations in foreign countries, changes in government regulation and changes in
the nature of key strategic  relationships  with joint  venturers.  We have also
included forward-looking  statements concerning our potential plans to refinance
our Notes and our operating companies' banking facilities.  Many factors outside
of our control will affect our ability to refinance this indebtedness, including
general financial market conditions. These forward-looking statements apply only
as of the time of this  report,  and we have no  obligation  or plans to provide
updates or revisions to these forward-looking statements or any other changes in
events,  conditions or  circumstances  on which these  statements are based. The
following  discussion  and  analysis  of  financial  condition  and  results  of
operations  cover the  three and six  months  ended  June 30,  2001 and 2000 and
should be read  together  with our unaudited  condensed  consolidated  financial
statements  and  related  notes  included  elsewhere  herein.   These  unaudited
condensed  consolidated  financial  statements  provide  additional  information
regarding our financial activities and condition.

SUMMARY OPERATING DATA
<TABLE>
<CAPTION>
                                                                  June 30, 2001
                                 ----------------------------------------------------------------------------------
                                                          Homes in                 Two-way
                                    UAP       System       Service      Homes       Homes      Basic       Basic
                                 Ownership   Ownership      Area        Passed     Passed   Subscribers Penetration
                                 ---------   ---------   -----------  ---------- ---------- ----------- -----------
<S>                                <C>        <C>         <C>          <C>        <C>         <C>          <C>
Video:
  Austar........................   51.0%      100.0%      2,085,000    2,083,100  1,149,600   432,200      20.7%
  TelstraSaturn.................   25.5%       50.0%        146,900      115,000    115,000    24,800      21.6%
                                                          ---------    ---------  ---------   -------
       Total....................                          2,231,900    2,198,100  1,264,600   457,000
                                                          =========    =========  =========   =======



                                                               Subscribers              Lines
                                    UAP       System      ---------------------- ----------------------
                                 Ownership   Ownership    Residential  Business  Residential  Business
                                 ---------   ---------    ----------- ---------- ----------- ----------
Voice:
  TelstraSaturn.................   25.5%       50.0%          37,900      1,700      44,300     5,500
  Austar United Broadband.......   51.0%      100.0%           8,600          -       8,600         -
                                                           ---------  ---------   ---------   -------
       Total....................                              46,500      1,700      52,900     5,500
                                                           =========  =========   =========   =======


                                    UAP       System
                                 Ownership   Ownership    Subscribers
                                 ----------  ---------    -----------
Internet:
  Austar United Broadband.......   51.0%      100.0%          79,400
  TelstraSaturn.................   25.5%       50.0%          59,200
                                                           ---------
       Total....................                             138,600
                                                           =========

                                    UAP       System
                                 Ownership   Ownership    Subscribers
                                 ----------  ---------    -----------
Content:
XYZ Entertainment...............   25.5%       50.0%       6,972,800
                                                           =========
</TABLE>


                                       15
<PAGE>
<TABLE>
<CAPTION>
                                                                  June 30, 2000
                                 ----------------------------------------------------------------------------------
                                                          Homes in                 Two-way
                                    UAP       System       Service      Homes       Homes      Basic       Basic
                                 Ownership   Ownership      Area        Passed     Passed   Subscribers Penetration
                                 ---------   ---------   -----------  ---------- ---------- ----------- -----------
<S>                                <C>        <C>         <C>          <C>        <C>         <C>          <C>
Video:
  Austar........................   72.3%      100.0%      2,085,000    2,083,100          -   406,300      19.5%
  TelstraSaturn.................   36.2%       50.0%        141,000       93,000     93,000    19,000      20.4%
                                                          ---------    ---------  ---------   -------
       Total....................                          2,226,000    2,176,100     93,000   425,300
                                                          =========    =========  =========   =======



                                                               Subscribers              Lines
                                    UAP       System      ---------------------- ----------------------
                                 Ownership   Ownership    Residential  Business  Residential  Business
                                 ---------   ---------    ----------- ---------- ----------- ----------
Voice:
  TelstraSaturn.................   36.2%       50.0%         28,000        1,300     33,000     3,500
  Austar United Broadband.......   72.3%      100.0%              -            -          -         -
                                                          ---------    ---------   --------   -------
       Total....................                             28,000        1,300     33,000     3,500
                                                          =========    =========   ========   =======


                                    UAP       System
                                 Ownership   Ownership   Subscribers
                                 ----------  ---------   -----------
Internet:
  TelstraSaturn.................   36.2%       50.0%         36,300
  Austar United Broadband.......   72.3%      100.0%          8,500
                                                          ---------
       Total....................                             44,800
                                                          =========

                                    UAP       System
                                 Ownership   Ownership   Subscribers
                                 ----------  ---------   -----------
Content:
  XYZ Entertainment.............   36.2%        50.0%     5,085,000
                                                          =========

</TABLE>

                                       16
<PAGE>

RESULTS OF OPERATIONS

REVENUE

Revenue  increased $0.7 million and decreased $0.6 million for the three and six
months  ended June 30,  2001,  respectively,  compared  to the  amounts  for the
corresponding periods in the prior year as follows:
<TABLE>
<CAPTION>
                                                      Three Months Ended             Six Months Ended
                                                          June 30,                        June 30,
                                                  ------------------------       ------------------------
                                                     2001          2000             2001          2000
                                                  ----------    ----------       ----------    ----------
                                                                       (In thousands)
     <S>                                          <C>           <C>              <C>            <C>
    Video...................................      $37,469       $41,688           $75,948       $83,381
    Voice...................................          751             -             1,624         3,166
    Internet................................        2,593           421             5,626         1,307
    Content.................................        2,636             -             5,226             -
    Other...................................           69           742               176         1,341
                                                  -------       -------           -------       -------
         Total revenue......................      $43,518       $42,851           $88,600       $89,195
                                                  =======       =======           =======       =======
</TABLE>

Revenue  for Austar  United  increased  A$12.3  million,  or 17.0%,  from A$72.5
($42.9)  million  for the three  months  ended June 30,  2000 to A$84.8  ($43.5)
million for the three  months  ended June 30,  2001.  Revenue for Austar  United
increased  A$24.3  million,  or 16.7%,  from A$145.8 ($89.2) million for the six
months ended June 30, 2000 to A$170.1  ($88.6)  million for the six months ended
June 30,  2001.  Video  revenue  accounted  for A$2.4 and A$9.3  million of this
increase for the three and six months ended June 30, 2001, respectively,  due to
organic  subscriber  growth  (432,200  subscribers  at June 30, 2001 compared to
406,300  subscribers  at June 30,  2000)  offset by a  reduction  in the average
monthly revenue per video  subscriber from A$56.71 ($33.49) and A$55.35 ($33.66)
for the three and six  months  ended  June 30,  2000,  respectively,  to A$54.87
($28.16) and A$54.80  ($28.54) for the three and six months ended June 30, 2001,
respectively,  due to  lower  premium  revenues  in  the  current  periods.  The
remaining increase was due to the launch of wireless data services in late first
quarter 2000, the launch of its mobile  telephony  business in the third quarter
2000 and revenue from TVSN,  a national  shopping  channel in Australia  and New
Zealand, acquired in October 2000.

ADJUSTED EBITDA (1)

Adjusted  EBITDA  decreased $3.9 million and $12.0 million for the three and six
months ended June 30, 2001  compared to the  corresponding  periods in the prior
year as follows:
<TABLE>
<CAPTION>
                                                      Three Months Ended             Six Months Ended
                                                          June 30,                        June 30,
                                                  ------------------------       ------------------------
                                                     2001          2000             2001          2000
                                                  ----------    ----------       ----------    ----------
                                                                       (In thousands)
    <S>                                           <C>           <C>              <C>            <C>
    Video...................................      $ (4,648)     $ (1,635)        $ (8,017)     $   (696)
    Voice...................................          (223)          (89)            (965)         (483)
    Internet................................        (5,530)       (5,143)         (10,995)       (6,616)
    Content.................................        (2,438)            -           (3,974)            -
    Corporate and other.....................        (1,195)       (3,275)          (2,481)       (6,656)
                                                  --------      --------         --------      --------
         Total Adjusted EBITDA..............      $(14,034)     $(10,142)        $(26,432)     $(14,451)
                                                  ========      ========         ========      ========
</TABLE>
    -----------------
    (1)   Adjusted EBITDA represents net operating earnings before depreciation,
          amortization  and  stock-based   compensation   charges.   Stock-based
          compensation  charges  are  non-cash  and result  from  variable  plan
          accounting for the Austar United stock option plan.  Industry analysts
          generally  consider Adjusted EBITDA to be a helpful way to measure the
          performance  of  cable   television   operations  and   communications
          companies.  Adjusted  EBITDA  should not,  however,  be  considered  a
          replacement  for net  income,  cash flows or for any other  measure of
          performance  or  liquidity   under   generally   accepted   accounting
          principles,  or as an indicator of a company's operating  performance.
          The   presentation  of  Adjusted  EBITDA  may  not  be  comparable  to
          statistics  with a similar name reported by other  companies.  Not all
          companies and analysts calculate Adjusted EBITDA in the same manner.


                                       17
<PAGE>


Adjusted EBITDA for Austar United decreased A$10.0 million, from negative A$16.6
($9.8)  million for the three  months  ended June 30,  2000 to  negative  A$26.6
($13.7)  million for the three months ended June 30, 2001.  Adjusted  EBITDA for
Austar United decreased A$26.5 million, from negative A$23.0 ($13.9) million for
the six months ended June 30, 2000 to negative  A$49.5  ($25.7)  million for the
six months ended June 30, 2001.  This decrease was primarily due to  development
and  start-up  costs  associated  with the  launch of Austar  United's  Internet
business, data services business and mobile telephony business.  Adjusted EBITDA
from its  video  business  decreased  for the six  months  ended  June 30,  2001
compared  to  June  30,  2000  primarily  due  to  an  incremental  increase  in
programming costs totaling A$7.7 million,  as the Australian dollar continued to
weaken during the period,  as well as continued strong marketing  efforts to add
subscribers.

MINORITY INTERESTS IN SUBSIDIARIES

The  minority  interests'  share of losses  increased  $6.6  million  from $14.2
million for the three months ended June 30, 2000 to $20.8  million for the three
months ended June 30, 2001. The minority  interests'  share of losses  increased
$10.3 million from $26.2 million for the six months ended June 30, 2000 to $36.5
million for the six months ended June 30, 2001.  Austar United's rights offering
in May 2001 reduced our indirect  ownership interest in Austar United from 72.8%
as of March 31, 2001 to 51.0% as of June 30, 2001. For accounting  purposes,  we
continue to consolidate 100% of the results of operations of Austar United, then
deduct the minority interests' share of losses.

SHARE IN RESULTS OF AFFILIATES
<TABLE>
<CAPTION>
                                                      Three Months Ended             Six Months Ended
                                                          June 30,                        June 30,
                                                  ------------------------       ------------------------
                                                     2001          2000             2001          2000
                                                  ----------    ----------       ----------    ----------
                                                                       (In thousands)
    <S>                                           <C>           <C>              <C>            <C>
    TelstraSaturn (1)..........................   $(9,302)      $(7,787)         $(16,693)      $(7,787)
    XYZ Entertainment..........................     1,817         3,562             3,968         2,947
    Other......................................      (522)         (199)             (914)         (165)
                                                  -------       -------          --------       -------
       Total share in results of affiliates....   $(8,007)      $(4,424)         $(13,639)      $(5,005)
                                                  =======       =======          ========       =======
</TABLE>
    (1)  On April 6, 2000, Saturn merged with Telstra NZ to form TelstraSaturn,
          and we discontinued  consolidating the results of operations of Saturn
          and returned to the equity method of accounting.

LIQUIDITY AND CAPITAL RESOURCES

Because  of  delays  in  rolling  out   TelstraSaturn's   network  in  Auckland,
TelstraSaturn  currently expects that it may not meet a covenant required by its
debt  facility  with  respect  to the ratio of its debt to the amount of network
constructed as of September 30, 2001. TelstraSaturn has received a waiver of its
noncompliance  with this  covenant as of June 30, 2001 and believes that it will
continue  to obtain  waivers in relation to these  covenants.  TelstraSaturn  is
planning  to seek an  amendment  to the debt  facility  to reflect  its  revised
network rollout plans.  TelstraSaturn  believes this amendment is reasonable and
should be  obtained.  However,  we  cannot be  assured  such  amendment  will be
obtained.  If  TelstraSaturn  does not obtain  this  amendment,  TelstraSaturn's
noncompliance  with this covenant  could have a material  adverse  effect on its
financial  condition,  and  consequently  the carrying value of Austar  United's
investment in  TelstraSaturn  ($38.1  million as of June 30, 2001) would also be
adversely  affected.  There is no recourse to the  shareholders of TelstraSaturn
for repayment of monies drawn under the TelstraSaturn Bank Facility.

We believe Austar United's working capital and projected  operating cash flow as
of June 30, 2001 are  sufficient  to fund Austar  United's  operations  and meet
Austar United's budgeted capital expenditure  requirements through the remainder
of 2001. We expect Austar  United to continue to incur  operating  losses in the
near future  primarily  as a result of  increased  programming  costs due to the
weakness of the Australian  dollar to the U.S. dollar,  as well as the continued
introduction  of new  services  such as  telephone  and  Internet.  We cannot be
assured that Austar United will be able to generate  enough growth in its video,
telephone   and   Internet   businesses   to  achieve   consolidated   operating
profitability and positive operating cash flows.

                                       18
<PAGE>

Austar United  intends to refinance  its A$400.0  ($204.1)  million  Austar Bank
Facility  by the end of 2001.  If Austar  United is  unable  to  refinance  this
facility,  it is likely that certain of the financial  covenants required by the
facility will not be met as of December 31, 2001, resulting in the debt becoming
due and  payable  in the first  quarter  of 2002.  If the debt  becomes  due and
payable,  Austar  United  may  need  to  negotiate  a  waiver  of the  financial
covenants,  sell assets or obtain  funding from  external  sources to repay this
amount and continue to pay its other  liabilities when due. We cannot be assured
that  Austar  United  will be  successful  in  obtaining  a waiver of  financial
covenants  or be  successful  in  renegotiating  or otherwise  refinancing  this
facility.  If  the  Austar  Bank  Facility  Indebtedness  is  accelerated,   the
acceleration  will  also  constitute  an event of  default  under  UAP's  Senior
Discount  Notes,  and the  holders  of the UAP  Notes  will  have  the  remedies
discussed below.

Our Senior  Discount Notes began to accrue  interest on a cash-pay basis May 15,
2001,  with the first  payment of $34.5 million due November 15, 2001. We do not
have  enough cash to make this  interest  payment  and are  considering  various
alternatives,  including securing additional  investments to fund the payment or
refinancing  of the Notes.  Although  we have  historically  received  financial
support  from  United,  under  current  circumstances  we cannot be assured that
United or any other investor will provide the funds needed.

If we do not make the interest  payment on November 15, 2001, the holders of the
Notes will have various remedies.  If a failure to pay continues for a period of
30 days or more, the trustee under the Indenture governing the Notes, on its own
initiative or at the request of the holders of the Notes, can declare the entire
unpaid principal of the Notes to be due and payable (which at such time would be
approximately  $492.9  million).  Based  upon the  current  market  value of our
assets, their liquidation would be insufficient to pay the principal and premium
on the Notes.  The trustee,  either  independently or at the request of the Note
holders,  could initiate  bankruptcy  proceedings against us, sue to recover the
amount of the Notes or take any other action available to creditors.

As required under Australian  regulatory rules, Austar United's auditors (Arthur
Andersen)  have  reviewed  Austar  United's  June 30,  2001  mid-year  report in
accordance with Australian  standards.  Austar's  auditors have included a going
concern  modification  in their  report on the June 30, 2001  accounts of Austar
United.  Their report  states that "there is  uncertainty  as to whether  Austar
United and the group will be able to obtain the  funding it requires in order to
enable it to continue to operate as a going concern and,  therefore,  whether it
will realize it assets and  extinguish  its  liabilities in the normal course of
business  and  at  the  amounts  stated  in  the  financial   statements."

The accompanying  financial  statements have been prepared assuming that we will
continue as a going concern.  We cannot be assured that we will be successful in
obtaining all of our  anticipated  funding needs or avoiding  defaults under our
existing  debt  agreements.  We  have  suffered  recurring  losses  and  project
continuing negative cash flows from operations.  These matters raise substantial
doubt about our ability to continue as a going concern. The financial statements
do not include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and  classification  of liabilities that
might result should we be unable to continue as a going concern.

STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2001. Cash and cash equivalents decreased $1.4 million
from $5.6  million as of December  31, 2000 to $4.2 million as of June 30, 2001.
Principal  sources of cash during the six months  ended June 30,  2001  included
proceeds  from Austar  United's  rights  offering  totaling  $105.7  million,  a
distribution  from XYZ  Entertainment of $5.2 million and other sources totaling
$4.0  million.  During  the six  months  ended  June  30,  2001,  cash  was used
principally  for the net purchase of short-term  investments  of $33.9  million,
capital  expenditures of $25.4 million,  the funding of operating  activities of
$32.7 million,  investments in TelstraSaturn  totaling $20.4 million,  and other
uses totaling $3.9 million.

Six Months Ended June 30, 2000. Cash and cash equivalents decreased $2.8 million
from $6.0  million as of December  31, 1999 to $3.2 million as of June 30, 2000.
Principal  sources of cash during the six months  ended June 30,  2000  included
proceeds from Austar United's  second public  offering  totaling $102.4 million,
borrowings  on the Austar  Bank  Facility  of $38.8  million  and other  sources
totaling $4.0 million.  During the six months ended June 30, 2000, cash was used
principally  for the net purchase of short-term  investments  of $56.2  million,
capital  expenditures of $53.9 million,  the funding of operating  activities of
$24.2  million,  investments in affiliated  companies  totaling $4.9 million and
other uses totaling $8.8 million.

                                       19
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INVESTMENT PORTFOLIO

We do not use derivative  financial  instruments in our  non-trading  investment
portfolio.  We place our cash and cash  equivalent  investments in highly liquid
instruments that meet high credit quality standards with original  maturities at
the date of purchase  of less than three  months.  We also place our  short-term
investments in liquid  instruments that meet high credit quality  standards with
original  maturities at the date of purchase of between three and twelve months.
We also limit the amount of credit exposure to any one issue,  issuer or type of
instrument. These investments are subject to interest rate risk and will fall in
value if market interest rates increase. We do not expect, however, any material
loss with respect to our investment portfolio.

IMPACT OF FOREIGN CURRENCY RATE CHANGES

The  following  rates  for the  primary  currency  that  impacts  our  financial
statements are shown below, per one U.S. dollar.

                                                                   Australian
                                                                     Dollars
                                                                   ----------
    Spot rate as of June 30, 2001.................................    1.9594
    Spot rate as of December 31, 2000.............................    1.7897
    Average rate three months ended June 30, 2001.................    1.9488
    Average rate six months ended June 30, 2001...................    1.9204
    Average rate three months ended June 30, 2000.................    1.6933
    Average rate six months ended June 30, 2000...................    1.6442



We are exposed to foreign  exchange rate  fluctuations  related to our operating
subsidiaries'  monetary  assets and  liabilities  and the  financial  results of
foreign  subsidiaries when their respective  financial statements are translated
into U.S.  dollars during  consolidation.  Our exposure to foreign exchange rate
fluctuations  also arises from items such as the cost of  equipment,  management
fees,  programming  costs and certain other charges that are denominated in U.S.
dollars but recorded in the functional  currency of the foreign  subsidiary.  In
addition,  certain  of the  operating  companies  have notes  payable  and notes
receivable  which are  denominated in a currency other than their own functional
currency.  Foreign currency rate changes also affect our share in results of our
unconsolidated  affiliates.  We generally do not execute hedge  transactions  to
reduce our exposure to foreign currency exchange rate risk. Accordingly,  we may
experience  economic  loss and a negative  impact on  earnings  and equity  with
respect to our holdings  solely as a result of foreign  currency  exchange  rate
fluctuations.

INTEREST RATE SENSITIVITY

The table below provides  information  about our primary debt  obligations.  The
information  is presented in U.S.  dollar  equivalents,  which is our  reporting
currency.
                                                      June 30, 2001
                                             --------------------------------
                                             Book Value            Fair Value
                                             ----------            ----------
                                           (In thousands, except interest rates)
Long-term debt:
   Fixed rate USD Notes                      $490,643               $162,647
     Average interest rate                       14.0%                  53.9%
   Variable rate A$ Austar Bank Facility     $204,144               $204,144
     Average interest rate                        6.8%                   6.8%



                                       20
<PAGE>


The table below presents principal cash flows by expected maturity dates for our
debt obligations. The information is presented in U.S. dollar equivalents, which
is our reporting currency.
<TABLE>
<CAPTION>
                                                                                As of December 31,
                                               ------------------------------------------------------------------------------
                                                 2001      2002      2003        2004        2005     Thereafter    Total
                                               --------- --------- ----------  ---------  ----------  ----------- -----------
                                                                             (In thousands)
<S>                                             <C>       <C>      <C>         <C>        <C>         <C>          <C>
Long-term debt:
Fixed rate USD Notes.........................   $     -   $    -   $     -     $     -    $     -     $490,643     $490,643
Variable rate A$ Austar Bank Facility........   $     -   $6,555   $36,055     $57,596    $69,302     $ 34,636     $204,144
</TABLE>

We use interest rate swap  agreements from time to time, to manage interest rate
risk on our floating-rate debt facilities.  Interest rate swaps are entered into
depending on our  assessment  of the market,  and  generally are used to convert
floating-rate debt to fixed-rate debt.  Interest  differentials paid or received
under these swap  agreements  are  recognized  over the life of the contracts as
adjustments to the effective  yield of the underlying  debt, and related amounts
payable  to,  or  receivable  from,  the  counterparties  are  included  in  the
consolidated  balance  sheet.  Currently,  we have four  interest  rate swaps to
manage  interest  rate exposure on the Austar Bank  Facility.  Two of these swap
agreements expire in 2002 and effectively  convert an aggregate principal amount
of A$50.0  ($25.5)  million of  variable-rate,  long-term  debt into  fixed-rate
borrowings.  The  other  two  swap  agreements  expire  in 2004 and  convert  an
aggregate   principal  amount  of  A$100.0  ($51.0)  million  of  variable-rate,
long-term  debt into  fixed-rate  borrowings.  For the six months ended June 30,
2001, the  weighted-average  fixed rate under these agreements was 5.7% compared
to the weighted-average  variable rate of 4.8%. Fair values of the interest rate
swap agreements are based on the estimated  amounts that we would receive or pay
to terminate the agreements at the reporting  date,  taking into account current
interest rates and the current creditworthiness of the counterparties. The total
fair value of the  interest  rate swaps was $0.2 and $0.7 million as of June 30,
2001 and December 31, 2000, respectively.


                           PART II - OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     None.


(b)  Reports on Form 8-K filed during the quarter.

     None.





                                       21
<PAGE>


                                    SIGNATURE


Pursuant to the  requirements of Section 13 or 15(d) 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.



United Australia/Pacific, Inc.



Date:      August 14, 2001
           ---------------------------------------------

By:        /s/ Valerie L. Cover
           ---------------------------------------------
           Valerie L. Cover
           Controller
           (A Duly Authorized Officer and Principal Accounting Officer)












                                       22