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 March 31, 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 May 7, 2001
the Company had 28,460,926 shares of common stock outstanding.



<PAGE>
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<CAPTION>

                                               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 March 31, 2001 (Unaudited) and December 31, 2000.............     2

     Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
         for the Three Months Ended March 31, 2001 and 2000 (Unaudited).......................................     3

     Condensed Consolidated Statement of Stockholders' Deficit for the Three Months Ended March 31, 2001
         (Unaudited)..........................................................................................     4

     Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and
         2000 (Unaudited)....................................................................................      5

     Notes to Condensed Consolidated Financial Statements (Unaudited)........................................      6


Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations...............     13

Item 3.  Quantitative and Qualitative Disclosures about Market Risk..........................................     18


                                               PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K....................................................................     20

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                                                          1
<PAGE>
<TABLE>
<CAPTION>
                                               UNITED AUSTRALIA/PACIFIC, INC.
                                            CONDENSED CONSOLIDATED BALANCE SHEETS
                                    (In thousands, except par value and number of shares)
                                                         (Unaudited)
                                                                                                                    As of
                                                                                                           -------------------------
                                                                                                             March 31,  December 31,
                                                                                                               2001         2000
                                                                                                           -----------  ------------
<S>                                                                                                         <C>           <C>
ASSETS
Current assets
  Cash and cash equivalents.............................................................................    $  5,769      $  5,617
  Short-term liquid investments.........................................................................      55,019       101,477
  Subscriber receivables, net of allowance for doubtful accounts of $1,175 and $1,039, respectively.....       7,027         8,969
  Related party receivables.............................................................................       2,464         3,095
  Other receivables.....................................................................................       1,535         2,255
  Inventory.............................................................................................       8,931        12,151
  Prepaids and other current assets.....................................................................       9,210        10,697
                                                                                                            --------      --------
      Total current assets..............................................................................      89,955       144,261
Investments in affiliates, accounted for under the equity method, net...................................      60,015        64,991
Property, plant and equipment, net of accumulated depreciation of $276,753 and $294,935,
 respectively...........................................................................................      95,145       124,479
Goodwill and other intangible assets, net of accumulated amortization of $21,354 and $20,088,
 respectively...........................................................................................     226,836       254,387
Deferred financing costs, net of accumulated amortization of $7,057 and $6,826, respectively............       9,658        10,846
Other non-current assets, net...........................................................................          17           287
                                                                                                            --------      --------
      Total assets......................................................................................    $481,626      $599,251
                                                                                                            ========      ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
  Accounts payable......................................................................................    $  1,564      $  5,554
  Accrued liabilities...................................................................................      52,216        58,088
  Current portion of due to parent......................................................................      17,970        18,583
  Current portion of other long-term debt...............................................................       1,127         1,366
                                                                                                            --------      --------
      Total current liabilities.........................................................................      72,877        83,591
Due to parent...........................................................................................       7,008         8,068
Senior discount notes...................................................................................     482,472       466,241
Other long-term debt....................................................................................     196,884       226,894
Deferred taxes..........................................................................................           -            67
Other long-term liabilities.............................................................................         525           444
                                                                                                            --------      --------
      Total liabilities.................................................................................     759,766       785,305
                                                                                                            --------      --------
Minority interests in subsidiaries......................................................................      46,274        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............................................................................     370,996       371,498
  Deferred compensation.................................................................................      (6,644)       (8,904)
  Accumulated deficit...................................................................................    (618,686)     (562,050)
  Other cumulative comprehensive loss...................................................................     (70,365)      (55,635)
                                                                                                            --------      --------
      Total stockholders' deficit.......................................................................    (324,414)     (254,861)
                                                                                                            --------      --------
      Total liabilities and stockholders' deficit.......................................................    $481,626      $599,251
                                                                                                            ========      ========

             The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>

                                                             2
<PAGE>
<TABLE>
<CAPTION>

                                               UNITED AUSTRALIA/PACIFIC, INC.
                       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
                               (In thousands, except per share amounts and number of shares)
                                                         (Unaudited)

                                                                                               For the Three Months Ended
                                                                                                       March 31,
                                                                                              -----------------------------
                                                                                                  2001            2000
                                                                                              -------------   -------------
<S>                                                                                            <C>               <C>
Revenue....................................................................................    $   45,082       $  46,344
Operating expense..........................................................................       (41,395)        (35,017)
Selling, general and administrative expense, including management fees from
 related party of $855 and $836, respectively..............................................       (18,151)        (18,095)
Depreciation and amortization..............................................................       (30,673)        (30,027)
                                                                                               ----------       ----------
      Operating loss.......................................................................       (45,137)        (36,795)

Gain on issuance of common equity securities by subsidiary.................................             -          61,172
Interest income............................................................................         1,310           3,148
Interest expense...........................................................................       (23,059)        (19,299)
Foreign currency exchange loss.............................................................        (2,517)           (266)
Gain on sale of investment in affiliate....................................................         2,725               -
Other income, net..........................................................................             -              84
                                                                                               ----------       ----------
      (Loss) income before income taxes and other items....................................       (66,678)          8,044

Income tax expense.........................................................................             -             (75)
Minority interests in subsidiaries.........................................................        15,674          12,059
Share in results of affiliates, net........................................................        (5,632)           (581)
                                                                                               ----------       ----------
      Net (loss) income....................................................................    $  (56,636)      $  19,447
                                                                                               ==========       ==========

Foreign currency translation adjustments...................................................    $  (15,257)      $ (15,240)
Cumulative effect of change in accounting principle........................................           527               -
                                                                                               ----------       ----------
      Comprehensive (loss) income..........................................................    $  (71,366)      $   4,207
                                                                                               ==========       ==========

Net (loss) income per common share:
      Basic net (loss) income..............................................................    $    (1.99)      $     1.09
                                                                                               ==========       ==========
      Diluted net (loss) income............................................................    $    (1.99)      $     1.06
                                                                                               ==========       ==========

Weighted-average number of common shares outstanding:
      Basic................................................................................    28,399,824       17,810,299
                                                                                               ==========       ==========
      Diluted..............................................................................    28,399,824       18,298,249
                                                                                               ==========       ==========

              The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>

                                                              3

<PAGE>
<TABLE>
<CAPTION>

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

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

Balances, December 31, 2000............. 22,961,728    $230      $371,498     $(8,904)      $(562,050)     $(55,635)     $(254,861)

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

Cash contributions from parent..........          -       -          295            -               -             -            295

Equity transactions of subsidiary.......          -       -         (194)         194               -             -              -

Amortization of deferred compensation...          -       -         (548)       2,066               -             -          1,518

Net loss................................          -       -            -            -         (56,636)            -        (56,636)

Cumulative effect of change in
 accounting principle...................          -       -            -            -               -           527            527

Change in cumulative translation
 adjustments............................          -       -            -            -               -       (15,257)       (15,257)
                                         ----------    ----      ---------    -------       ---------      --------      ---------
Balances, March 31, 2001................ 28,460,926    $285      $370,996     $(6,644)      $(618,686)     $(70,365)     $(324,414)
                                         ==========    ====      =========    =======       =========      ========      =========

(1)  As of March 31, 2001 and December 31, 2000, Other Cumulative  Comprehensive
     Loss represents foreign currency  translation  adjustments of $(70,892) and
     $(55,635) and the cumulative effect of a change in accounting  principle of
     $527 and nil, respectively.


              The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>

                                                              4

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

                                                                                              For the Three Months Ended
                                                                                                       March 31,
                                                                                           ----------------------------------
                                                                                               2001                 2000
                                                                                           -------------       --------------
<S>                                                                                           <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income..........................................................................   $(56,636)           $ 19,447
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
  Gain on issuance of common equity securities by subsidiary...............................          -             (61,172)
  Share in results of affiliates, net......................................................      5,632              (1,508)
  Minority interests in subsidiaries.......................................................    (15,674)            (12,059)
  Depreciation and amortization............................................................     30,673              30,027
  Stock-based compensation expense.........................................................      2,066               2,459
  Gain on sale of investment in affiliate..................................................     (2,725)                  -
  Accretion of interest on senior notes and amortization of deferred financing costs.......     17,041              15,010
  Loss on derivative securities............................................................      1,260                   -
  Decrease (increase) in receivables, net..................................................      1,927              (1,303)
  Increase in other assets.................................................................         (2)             (2,210)
  Increase in accounts payable, accrued liabilities and other..............................      1,239               1,373
                                                                                              --------            --------
      Net cash flows from operating activities.............................................    (15,199)             (9,936)
                                                                                              --------            --------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short-term liquid investments..................................................   (197,901)           (489,594)
Proceeds from sale of short-term liquid investments........................................    233,990             507,753
Investments in affiliates and other investments............................................    (12,681)             (2,578)
Distribution received from affiliated company..............................................      3,170               1,576
Capital expenditures.......................................................................     (9,244)            (29,201)
Spectrum license fees......................................................................     (1,429)                  -
Other......................................................................................        561                (387)
                                                                                              --------            --------
      Net cash flows from investing activities.............................................     16,466             (12,431)
                                                                                              --------            --------

CASH FLOWS FROM FINANCING ACTIVITIES
Cash contributed from parent...............................................................        295                  23
Issuance of common stock in connection with subsidiary stock option plan...................          -                 537
Proceeds from borrowings on the Austar Bank Facility and Saturn Bank Facility..............          -              18,162
Deferred financing costs and other.........................................................       (287)                  -
Other borrowings, net......................................................................          -               3,113
                                                                                              --------            --------
      Net cash flows from financing activities.............................................          8              21,835
                                                                                              --------            --------

EFFECT OF EXCHANGE RATES ON CASH...........................................................     (1,123)               (428)
                                                                                              --------            --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...........................................        152                (960)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............................................      5,617               6,028
                                                                                              --------            --------
CASH AND CASH EQUIVALENTS, END OF PERIOD...................................................   $  5,769            $  5,068
                                                                                              ========            ========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
  Cash paid for interest...................................................................   $  3,541            $  2,027
                                                                                              ========            ========
  Cash received for interest...............................................................   $  1,393            $  6,018
                                                                                              ========            ========

              The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>

                                                             5
<PAGE>

                         UNITED AUSTRALIA/PACIFIC, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF MARCH 31, 2001
                                   (Unaudited)

1.  ORGANIZATION AND NATURE OF OPERATIONS

United  Australia/Pacific,  Inc.  (the  "Company"  or  "UAP")  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"),  provides video,  telephone and Internet access services,  which the
Company  refers to as  "Distribution",  in Australia and New Zealand and related
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 March 31, 2001.

          ***********************************************************
          *                                                         *
          *                         United                          *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *      United International Properties, Inc. ("UIPI")     *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *                     Asia/Pacific(1)                     *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *                           UAP                           *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *                   United Austar, Inc.(2)                *
          *                                                         *
          ***********************************************************
                                       *
                              72.8%    *
          ***********************************************************
          *          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% *
          ***********************************************************

(1)  Asia/Pacific holds a direct ownership interest in Austar United of 0.6%.
(2)  United  Austar,  Inc. is a holding  company for UAP's  investment in Austar
     United Communications Limited.


                                       6
<PAGE>

                         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 generally  accepted  accounting  principles 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 months ended March 31, 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.

NEW ACCOUNTING PRINCIPLE

Effective  January 1, 2001, the Company adopted Financial  Accounting  Standards
Board  Statement of Financial  Accounting  Standards  No. 133,  "Accounting  for
Derivative Instruments and Hedging Activities" ("SFAS 133"), which requires that
companies  recognize  all  derivatives  as either assets or  liabilities  in the
balance sheet at fair value. Under SFAS 133,  accounting for changes in the fair
market value of a derivative during the reporting period depends on its intended
use and  designation.  Austar United has interest rate swaps to manage  interest
rate exposure on the Austar Bank Facility that qualify as derivatives under SFAS
133. The impact of recording  these  derivative  securities at fair market value
upon adoption was $0.5 million, which was recorded in the condensed consolidated
balance sheet in other cumulative comprehensive loss as a cumulative effect of a
change in accounting principle.


                                       7
<PAGE>

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

RISKS AND UNCERTAINTIES

Austar  United  has  incurred  operating  losses  and  negative  cash flows from
operations  which  have  been  driven  by  the  continuing  development  efforts
including  the  introduction  of new services  such as telephone  and  Internet.
Additionally,  substantial  capital  expenditures  have been  required to deploy
these services and to acquire  businesses.  Management  expects Austar United to
incur  operating  losses in 2001 and 2002 primarily as a result of the continued
introduction  of these new services which are in the early stages of deployment.
Their  business plan calls for  substantial  growth in the number of subscribers
that will use these new  services.  This growth  requires  the  availability  of
capital  resources  that are sufficient to fund expected  capital  expenditures.
Growth in  subscribers  will also be  required  in order  for  Austar  United to
achieve consolidated operating  profitability and positive operating cash flows.
Management  believes  that the  entity can  achieve  the  anticipated  growth in
subscribers  and that the required  capital  resources will be available to fund
expected capital expenditures and operating losses.  However, if such subscriber
growth is not achieved, management believes access to sources of capital will be
sufficient  to satisfy  future cash needs.  Management's  estimates  of the cash
flows  generated  by these new  services  and the capital  resources  needed and
available  to complete  their  deployment  could  change,  and such change could
differ  materially from the estimates used to evaluate the Company's  ability to
realize its investments.



                                       8
<PAGE>

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


3.  INVESTMENTS IN AFFILIATES
<TABLE>
<CAPTION>
                                                                As of March 31, 2001
                                    ------------------------------------------------------------------------------
                                                      Cumulative        Cumulative         Cumulative
                                                      Dividends      Share in Results     Translation
                                    Contributions      Received        of Affiliates      Adjustments     Total
                                    -------------     ----------     ----------------     -----------   ----------
                                                                     (In thousands)
     <S>                               <C>             <C>              <C>                <C>           <C>
     TelstraSaturn.................    $ 79,310        $     -          $(31,894)          $(10,314)     $37,102
     XYZ Entertainment.............      44,306         (8,634)           (9,364)            (4,713)      21,595
     Other.........................       2,860              -            (1,006)              (536)       1,318
                                       --------        --------         --------           --------      -------
          Total....................    $126,476        $(8,634)         $(42,264)          $(15,563)     $60,015
                                       ========        ========         ========           ========      =======

                                                              As of 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>
                                                                                             As of
                                                                               ----------------------------------
                                                                                  March 31,         December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                <C>
    Subscriber premises equipment and converters........................           $278,097           $309,200
    MMDS distribution facilities........................................             50,897             58,035
    Cable distribution networks.........................................              2,309              2,629
    Office equipment, furniture and fixtures............................             17,597             18,748
    Buildings and leasehold improvements................................              4,938              5,670
    Other...............................................................             18,060             25,132
                                                                                   --------           --------
                                                                                    371,898            419,414
      Accumulated depreciation..........................................           (276,753)          (294,935)
                                                                                   --------           --------
      Net property, plant and equipment.................................           $ 95,145           $124,479
                                                                                   ========           ========
</TABLE>

5.  GOODWILL AND OTHER INTANGIBLE ASSETS
<TABLE>
<CAPTION>
                                                                                             As of
                                                                               ----------------------------------
                                                                                  March 31,         December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                <C>

    Goodwill............................................................           $148,418           $159,920
    License fees and other intangible assets............................             99,772            114,555
                                                                                   --------           --------
                                                                                    248,190            274,475
      Accumulated amortization .........................................            (21,354)           (20,088)
                                                                                   --------           --------
      Net goodwill and other intangible assets..........................           $226,836           $254,387
                                                                                   ========           ========
</TABLE>
                                        9
<PAGE>

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

6.  SENIOR DISCOUNT NOTES
<TABLE>
<CAPTION>
                                                                                             As of
                                                                               ----------------------------------
                                                                                  March 31,         December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                <C>
    May 1996 Notes.......................................................          $436,161           $421,372
    September 1997 Notes.................................................            46,311             44,869
                                                                                   --------           --------
      Total senior discount notes........................................          $482,472           $466,241
                                                                                   ========           ========
</TABLE>

THE NOTES

The 14.0%  senior  discount  notes  were  issued by the  Company in May 1996 and
September  1997 at a discount  from their  principal  amount of $488.0  million,
resulting in gross proceeds of $255.0  million.  On and after May 15, 2001, cash
interest  will  accrue  and  will be  payable  semi-annually  on each May 15 and
November  15,  commencing  November  15,  2001.  The Notes are due May 15, 2006.
Effective  May 16,  1997,  the  interest  rate on these  notes  increased  by an
additional  0.75%  per  annum to  14.75%.  On  October  14,  1998,  the  Company
consummated  an equity sale  resulting in gross proceeds to the Company of $70.0
million,  reducing the interest rate from 14.75% to 14.0% per annum.  Due to the
increase in the interest rate effective May 16, 1997 until  consummation  of the
equity sale,  the Notes will accrete to a principal  amount of $492.9 million on
May 15, 2001, the date cash interest begins to accrue.

In November 1997,  pursuant to the terms of the indentures  governing the Notes,
the Company issued warrants to purchase  488,000 shares of its common stock. The
warrants  are  exercisable  through May 15, 2006 at a price of $10.45 per share,
which would result in gross proceeds of $5.1 million upon exercise. The warrants
were valued at $3.7 million and have been reflected as an additional discount to
the Notes on a pro rata basis and as an increase in additional  paid-in capital.
Warrants to acquire 50 shares were exercised November 24, 1999.

7.  OTHER LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                                             As of
                                                                               ----------------------------------
                                                                                  March 31,         December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                 <C>
    Austar Bank Facility................................................           $194,137           $223,501
    Capital leases and other ...........................................              3,874              4,759
                                                                                   --------           --------
                                                                                    198,011            228,260
      Less current portion .............................................             (1,127)            (1,366)
                                                                                   --------           --------
      Total other long-term debt .......................................           $196,884           $226,894
                                                                                   ========           ========
</TABLE>

AUSTAR BANK FACILITY

On April 23, 1999,  Austar  executed an A$400.0  syndicated  senior secured debt
facility to refinance the existing bank facility and to fund Austar's subscriber
acquisition and working capital needs. The Austar Bank Facility  consists of two
sub-facilities:  (i) A$200.0 million  amortizing term facility ("Tranche 1") and
(ii) A$200.0 million cash advance facility  ("Tranche 2"). Tranche 1 was used to
refinance  the  existing  bank  facility,  and Tranche 2 is  available  upon the
contribution of additional equity on a 2:1 debt-to-equity basis. The Austar Bank
Facility  bears  interest at the  professional  market rate in Australia  plus a
margin  ranging from 1.75% to 2.25% based upon certain debt to cash flow ratios.
The Austar Bank Facility is fully repayable pursuant to an amortization schedule
beginning  December 31, 2002 and ending March 31, 2006.  As of December 31, 2000
and March 31, 2001, Austar has fully drawn the facility.

OTHER FINANCIAL INSTRUMENTS

Interest  rate swap  agreements  are used by the Company  from time to time,  to
manage interest rate risk on its  floating-rate  debt facilities.  Interest rate

                                       10
<PAGE>

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

swaps are entered into depending on the Company's  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,  the
Company has 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 ($24.3) 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
($48.5) million of variable-rate, long-term debt into fixed-rate borrowings. For
the three  months ended March 31, 2001,  the  weighted-average  fixed rate under
these  agreements  was 5.7%  compared to the  weighted-average  variable rate of
5.3%.  Fair  values  of the  interest  rate  swap  agreements  are  based on the
estimated  amounts  that the  Company  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  $(0.5)  and $0.7  million  as of March  31,  2001 and
December 31, 2000, respectively.

8.  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 months ended March 31, 2001 and 2000, the Company
recorded $0.3 million and $0.2 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>
                                                                                             As of
                                                                               ----------------------------------
                                                                                  March 31,         December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                 <C>
    Management fee payable to Asia/Pacific..............................           $ 3,227             $ 2,972
    Austar United technical assistance agreement obligations
      to United.........................................................             4,622               5,950
    Austar United management fees payable to United.....................             4,200               3,600
    Austar deferred management fees payable to Asia/Pacific.............             7,008               8,068
    Austar technical assistance agreement obligations and other
      payables to Asia/Pacific and United...............................             5,921               6,061
                                                                                   -------             -------
                                                                                    24,978              26,651
          Less current portion..........................................           (17,970)            (18,583)
                                                                                   -------             -------
          Total due to parent...........................................           $ 7,008             $ 8,068
                                                                                   =======             =======
</TABLE>

                                       11
<PAGE>

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

9.  SEGMENT INFORMATION
<TABLE>
<CAPTION>
                                                                                                                  As of
                                                                                                         --------------------------
                                                                                                           March 31,   December 31,
                                           For the Three Months Ended March 31, 2001                         2001          2000
                         ------------------------------------------------------------------------------  ------------  ------------
                                                                                                            Total         Total
                           Video       Voice       Internet      Content        Other         Total         Assets        Assets
                         ----------  ----------  ------------  ------------  -----------   ------------  ------------   -----------
                                                       (In thousands)
<S>                       <C>          <C>          <C>           <C>           <C>           <C>           <C>           <C>
Revenue:
  Australia.............  $38,479      $  873       $ 3,033       $ 2,590       $   107       $ 45,082      $403,424      $520,693
  Corporate and other...        -           -             -             -             -              -        78,202        78,558
                          -------      ------       -------       -------       -------       --------      --------      --------
    Total...............  $38,479      $  873       $ 3,033       $ 2,590       $   107       $ 45,082      $481,626      $599,251
                          =======      ======       =======       =======       =======       ========      ========      ========

Adjusted EBITDA: (1)
  Australia.............  $(3,369)     $ (742)       (5,465)      $(1,536)      $  (970)      $(12,082)
  Corporate and other...        -           -             -             -          (316)          (316)
                          -------      ------       -------       --------      -------       --------
    Total...............  $(3,369)     $ (742)      $(5,465)      $(1,536)      $(1,286)      $(12,398)
                          =======      ======       ========      =======       =======       ========


                                           For the Three Months Ended March 31, 2000
                         ------------------------------------------------------------------------------
                           Video       Voice       Internet      Content        Other         Total
                         ----------  ----------  ------------  -----------   -----------   ------------
                                                       (In thousands)
Revenue:
  Australia.............  $40,849      $    -       $     8       $     -       $   599       $ 41,456
  New Zealand...........      844       3,166           878             -             -          4,888
  Corporate and other...        -                         -             -             -             -
                          -------      ------       -------       -------       -------       --------
    Total...............  $41,693      $3,166       $   886       $     -       $   599       $ 46,344
                          =======      ======       =======       =======       =======       ========

Adjusted EBITDA: (1)
  Australia.............  $ 1,192      $  (37)      $(1,721)      $     -       $(1,777)      $ (2,343)
  New Zealand...........     (253)       (357)          248             -        (1,344)        (1,706)
  Corporate and other...        -           -             -             -          (260)          (260)
                          -------      ------       -------       -------       --------      --------
    Total...............  $   939      $ (394)      $(1,473)      $     -       $(3,381)      $ (4,309)
                          =======      ======       =======       =======       =======       ========
</TABLE>

The  Company's   consolidated   Adjusted  EBITDA  reconciles  to  the  condensed
consolidated  statements  of  operations  and  comprehensive  (loss)  income  as
follows:
<TABLE>
<CAPTION>
                                                                                   For the Three Months Ended
                                                                                            March 31,
                                                                               ----------------------------------
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                 <C>
    Operating loss .....................................................           $(45,137)           $(36,795)
    Depreciation and amortization ......................................             30,673              30,027
    Non-cash stock-based compensation expense ..........................              2,066               2,459
                                                                                   --------            --------
      Consolidated Adjusted EBITDA (1) .................................           $(12,398)           $ (4,309)
                                                                                   ========            ========
</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 EBITDA in the same manner.

                                       12
<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 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.  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  months  ended March 31, 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>
                                                                As of March 31, 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........................   72.8%      100.0%      2,085,000    2,083,100  1,149,600   426,700      20.5%
  TelstraSaturn.................   36.4%       50.0%        136,500      107,000    107,000    22,100      20.7%
                                                          ---------    ---------  ---------   -------
       Total....................                          2,221,500    2,190,100  1,256,600   448,800
                                                          =========    =========  =========   =======


                                                          Telephone        Subscribers              Lines
                                    UAP       System     Serviceable  ---------------------- ----------------------
                                 Ownership   Ownership      Homes     Residential  Business  Residential  Business
                                 ---------   ---------   -----------  ----------- ---------- ----------- ----------
Voice:
  TelstraSaturn.................   36.4%       50.0%        115,800       34,100      1,600    40,000      4,800
  Austar United Broadband.......   72.8%      100.0%              -        7,400          -     7,400          -
                                                          ---------    ---------  ---------   -------      -----
       Total....................                            115,800       41,500      1,600    47,400      4,800
                                                          =========    =========  =========   =======      =====


                                                          Internet
                                    UAP       System     Serviceable
                                  Ownership  Ownership      Homes     Subscribers
                                 ----------  ---------   -----------  -----------
Internet:
  Austar United Broadband.......   72.8%      100.0%      1,149,600       84,200
  TelstraSaturn.................   36.4%       50.0%        115,800       49,300
                                                          ---------    ---------
       Total....................                          1,265,400      133,500
                                                          =========    =========

                                    UAP       System
                                 Ownership   Ownership   Subscribers
                                 ---------   ---------   -----------
Content:
  XYZ Entertainment.............   36.4%        50.0%     6,656,500
                                                          =========
</TABLE>

                                       13
<PAGE>
<TABLE>
<CAPTION>
                                                                As of March 31, 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........................   66.3%      100.0%      2,085,000    2,083,100        -      389,800      18.7%
  Saturn........................   66.3%      100.0%        115,500       87,800   87,800       17,800      20.3%
                                                          ---------    ---------   ------      -------
       Total....................                          2,200,500    2,170,900   87,800      407,600
                                                          =========    =========   ======      =======

                                                          Telephone        Subscribers              Lines
                                    UAP       System     Serviceable  ---------------------- ----------------------
                                 Ownership   Ownership      Homes     Residential  Business  Residential  Business
                                 ---------   ---------   -----------  ----------- ---------- ----------- ----------
Voice:
  Saturn........................   66.3%      100.0%         95,400       25,200    1,200       29,600      2,900
  Austar United Broadband.......   66.3%      100.0%              -            -        -            -          -
                                                          ---------    ---------   ------      -------      -----
       Total....................                             95,400       25,200    1,200       29,600      2,900
                                                          =========    =========   ======      =======      =====


                                                          Internet
                                    UAP       System     Serviceable
                                  Ownership  Ownership      Homes     Subscribers
                                 ----------  ---------   -----------  -----------
Internet:
  Saturn........................   66.3%      100.0%         95,400        8,400
  Austar United Broadband.......   66.3%      100.0%         79,400            -
                                                          ---------    ---------
       Total....................                            174,800        8,400
                                                          =========    =========

                                    UAP       System
                                 Ownership   Ownership   Subscribers
                                 ---------   ---------   -----------
Content:
  XYZ Entertainment.............   33.1%       50.0%      4,815,000
                                                          =========


</TABLE>
                                       14
<PAGE>


RESULTS OF OPERATIONS

REVENUE

Revenue  decreased  $1.3  million  for the three  months  ended  March 31,  2001
compared to the three  months  ended March 31,  2000,  the detail of which is as
follows:
<TABLE>
<CAPTION>
                                                                                   For the Three Months Ended
                                                                                            March 31,
                                                                               ----------------------------------
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                 <C>
    Video...............................................................           $38,479             $41,693
    Voice...............................................................               873               3,166
    Internet............................................................             3,033                 886
    Content.............................................................             2,590                   -
    Other...............................................................               107                 599
                                                                                   -------             -------
        Total revenue...................................................           $45,082             $46,344
                                                                                   =======             =======
</TABLE>

Revenue  for Austar  United  increased  A$12.0  million,  or 16.4%,  from A$73.3
($46.3)  million for the three  months  ended  March 31, 2000 to A$85.3  ($45.1)
million for the three months ended March 31, 2001.  Video revenue  accounted for
A$6.9 million of this increase, due to video subscriber growth (426,700 at March
31, 2001 compared to 389,800 at March 31, 2000) as well as growth in the average
monthly revenue per video  subscriber from A$53.42 ($33.60) for the three months
ended March 31, 2000 to A$55.86  ($29.51)  for the three  months ended March 31,
2001. The remaining  increase was due to the launch of wireless data services in
late first  quarter 2000 and revenue from TVSN, a national  shopping  channel in
Australia and New Zealand,  acquired in October  2000.  On a U.S.  dollar basis,
revenue for Austar United decreased by $1.2 million due to the 19.1% devaluation
of the Australian dollar to the U.S. dollar from period to period.

ADJUSTED EBITDA(1)

Adjusted EBITDA decreased $8.1 million for the three months ended March 31, 2001
compared to the three  months  ended March 31,  2000,  the detail of which is as
follows:
<TABLE>
<CAPTION>
                                                                                   For the Three Months Ended
                                                                                            March 31,
                                                                               ----------------------------------
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
    <S>                                                                            <C>                 <C>
    Video...............................................................           $ (3,369)           $   939
    Voice...............................................................               (742)              (394)
    Internet............................................................             (5,465)            (1,473)
    Content.............................................................             (1,536)                 -
    Corporate and other.................................................             (1,286)            (3,381)
                                                                                   --------            -------
           Total Adjusted EBITDA........................................           $(12,398)           $(4,309)
                                                                                   ========            =======
</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 EBITDA in the same manner.

Adjusted EBITDA for Austar United decreased A$16.4 million,  from negative A$6.5
($4.0)  million for the three  months  ended  March 31, 2000 to negative  A$22.9
($12.1)  million for the three months ended March 31,  2001.  This  decrease was
primarily due to development  and start-up costs  associated  with the launch of
Austar  United's  Internet  business,  as well as  increased  programming  costs
payable in U.S. dollars as the Australian  dollar continued to weaken during the
quarter.

                                       15
<PAGE>

GAIN ON ISSUANCE OF COMMON EQUITY SECURITIES BY SUBSIDIARY

In March  2000,  Austar  United  sold 20.0  million  shares  in a second  public
offering on the  Australian  Stock  Exchange,  raising gross and net proceeds at
A$8.50  ($5.20)  per share of A$170.0  ($104.0)  million  and  A$167.5  ($102.4)
million,  respectively.  Based on the carrying value of our investment in Austar
United as of March 29,  2000,  we  recognized  a gain of $61.2  million from the
resulting  step-up in the carrying amount of our investment in Austar United.

INTEREST EXPENSE

Interest  expense  increased  $3.8  million for the three months ended March 31,
2001  compared to the amounts  for the  corresponding  period in the prior year.
This  increase was primarily due to increased  interest  expense  related to the
Austar  Bank  Facility  due to a higher  balance  in  2001,  as well as a higher
effective  interest  rate as the value of Austar  United's  interest  rate swaps
decreased by $1.3 million during the three months ended March 31, 2001.

MINORITY INTERESTS IN SUBSIDIARIES

The minority  interests'  share of losses  increased  $3.4  million,  from $12.1
million for the three months ended March 31, 2000 to $15.5 million for the three
months ended March 31, 2001.  Austar  United's  initial public  offering in July
1999 and a second  offering  in March 2000  reduced  our  ownership  interest in
Austar  United  from  100% to a  cumulative  72.8% as of  March  31,  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>
                                                                                   For the Three Months Ended
                                                                                            March 31,
                                                                               ----------------------------------
                                                                                  March 31,         December 31,
                                                                                    2001                2000
                                                                               ---------------      -------------
                                                                                         (In thousands)
     <S>                                                                          <C>                    <C>
     TelstraSaturn (1)...................................................         $(7,391)               $   -
     XYZ Entertainment...................................................           2,151                 (615)
     Other...............................................................            (392)                  34
                                                                                  -------                -----
         Total share in results of affiliates............................         $(5,632)               $(581)
                                                                                  =======                =====
</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.

                                       16
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

As of March 31,  2001,  we had  invested  approximately  $534.9  million  in our
projects.  These fundings do not include  amounts  contributed  by  shareholders
other than us,  proceeds  from the Austar  United  initial  public  offering  or
operating subsidiary bank borrowings.
<TABLE>
<CAPTION>
                                                                                        As of
                                                                                       March 31,
                                                                                         2001
                                                                                    --------------
                                                                                    (In thousands)

     <S>                                                                               <C>
     UAP (Parent Only)
       Sources of Fundings:
         Senior discount notes proceeds, net of offering costs..................       $244,652
         Cash contributions and other equity from parent (1) (2)................        284,253
         Cash received for interest.............................................          7,133
                                                                                       --------
              Total sources.....................................................        536,038
                                                                                       --------
       Uses of Fundings:
         Austar United (1)......................................................       (418,811)
         Saturn.................................................................        (44,612)
         XYZ Entertainment......................................................        (16,738)
         Other (2)..............................................................        (55,011)
                                                                                       --------
              Total uses........................................................       (535,172)
                                                                                       --------
              Cash, end of period...............................................            866
                                                                                       --------

     Austar United cash.........................................................         59,922
                                                                                       --------
              Total consolidated cash and short-term liquid investments.........       $ 60,788
                                                                                       ========
</TABLE>
     ----------------
     (1)  Includes  issuance/use  of $29.8  million  and $6.2  million in United
          convertible preferred stock in 1995 and 1998, respectively, to acquire
          additional economic interests in Australia.
     (2)  Includes $17.2 million paid by United to purchase 2.0% of Asia/Pacific
          from Kiwi Cable in December 1999.

As of March 31, 2001, our working capital and projected  operating cash flow are
not  sufficient  to fund  our  budgeted  expenditures  and pay  interest  on our
indebtedness  over the next year. In May 2001,  United made an investment in one
of our subsidiaries in exchange for shares of the subsidiary's  stock. On May 2,
2001,  this  subsidiary  used these funds to purchase 157.3 million newly issued
common  shares of Austar  United,  resulting  in  proceeds  to Austar  United of
A$149.5 ($75.9) million.  United expects to make an additional investment in our
subsidiary to allow the subsidiary to purchase an additional 55.9 million shares
under Austar United's rights offering by the end of May 2001. This purchase will
result in additional  proceeds to Austar United of approximately  A$53.1 ($27.5)
million.  We believe  the  proceeds  from this  offering,  in addition to Austar
United's  cash  on  hand,  will  be  sufficient  for  Austar  United's   funding
requirements  through March 31, 2002. Our senior  discount notes begin to accrue
interest  on a  cash-pay  basis May 15,  2001,  with the first  payment of $34.5
million due November 15, 2001.  We are  considering  alternatives  to payment of
this interest,  including refinancing of the Notes. If payment is necessary,  we
will seek  funding  from  various  sources,  including  United.  There can be no
assurance  that we will be  successful  in  obtaining  all or a  portion  of our
anticipated funding needs.

STATEMENTS OF CASH FLOWS

THREE MONTHS  ENDED MARCH 31, 2001.  Cash and cash  equivalents  increased  $0.2
million  from $5.6  million as of December  31, 2000 to $5.8 million as of March
31, 2001. Principal sources of cash during the three months ended March 31, 2001
included net proceeds from the sale of short-term  liquid  investments  of $36.1
million, a distribution from XYZ Entertainment of $3.2 million and other sources
totaling  $0.8 million.  During the three months ended March 31, 2001,  cash was
used principally for capital expenditures of $9.2 million as Austar continued to
expand its business into the data market, the funding of operating activities of
$15.2 million,  advances to TelstraSaturn totaling $12.7 million, and other uses
totaling $2.8 million.

THREE MONTHS  ENDED MARCH 31, 2000.  Cash and cash  equivalents  decreased  $0.9
million  from $6.0  million as of December  31, 1999 to $5.1 million as of March
31, 2000. Principal sources of cash during the three months ended March 31, 2000
included net proceeds from the sale of short-term  liquid  investments  of $18.2
million,  borrowings  on the Austar and Saturn Bank  Facilities  totaling  $18.2

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<PAGE>


million, other borrowings of $3.1 million, a distribution from XYZ Entertainment
of $1.6 million and other sources totaling $0.5 million. During the three months
ended March 31, 2000,  cash was used  principally  for the purchase of property,
plant and equipment  totaling  $29.2  million as Austar and Saturn  continued to
expand  their  businesses  into  the  data  market,  the  funding  of  operating
activities  of $9.9 million,  investments  in and advances to affiliates of $2.6
million and other uses totaling $0.8 million.

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
                                                                      ----------
     For the three months ended March 31, 2001 .....................    1.8927
     For the three months ended March 31, 2000 .....................    1.5898
     Spot rate as of March 31, 2001 ................................    2.0604
     Spot rate as of December 31, 2000 .............................    1.7897


We are exposed to foreign  exchange rate  fluctuations  related to the 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.
<TABLE>
<CAPTION>>
                                                                                             As of March 31, 2001
                                                                                    -------------------------------------
                                                                                    Book Value                 Fair Value
                                                                                    ----------                 ----------
                                                                                    (In thousands, except interest rates)
     <S>                                                                              <C>                       <C>
     Long-term and short-term  debt:
       Fixed rate USD Notes....................................................       $482,472                  $276,007
         Average interest rate.................................................           14.0%                     31.2%
       Variable rate A$ Austar Bank Facility...................................       $194,137                  $194,137
         Average interest rate.................................................            7.1%                      7.1%

</TABLE>
                                       18
<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 and short-term debt:
Fixed rate USD Notes.........................   $     -   $    -    $     -     $     -    $     -     $482,472     $482,472
Variable rate A$ Austar Bank Facility........   $     -   $6,234    $34,288     $54,772    $65,905     $ 32,938     $194,137
</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  ($24.3)  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  ($48.5)  million  of  variable-rate,
long-term debt into fixed-rate borrowings.  For the three months ended March 31,
2001, the  weighted-average  fixed rate under these agreements was 5.7% compared
to the weighted-average  variable rate of 5.3%. 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 $(0.5) and $0.7  million as of March
31, 2001 and December 31, 2000, respectively.


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<PAGE>


                           PART II - OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     10.1  Form of  employment  agreement  between  United,  Austar  United  and
           employee.

     10.2  Underwriting agreement between  United  Austar  Inc.,   Austar United
           Communications Limited and United Australia Holdings, Inc.

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

     None.



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<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:      May 15, 2001
           ------------

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



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