----

|   |   |   |   |   |
|--------|--------|--------|--------|--------|

|   | x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
|--------|-----------------------------------------------------------|

|   | SECURITIES EXCHANGE ACT OF 1934 |
|--------|---------------------------------|

|   | o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
|--------|------------------------------------------------------------|

|   | SECURITIES EXCHANGE ACT OF 1934 |
|--------|---------------------------------|

|   | GENERAL COMMUNICATION, INC.                            |   |
|--------|--------------------------------------------------------|--------|
|   | (Exact name of registrant as specified in its charter) |   |

|   | State of Alaska                 |   | 92-0072737          |   |
|--------|---------------------------------|--------|---------------------|--------|
|   | (State or other jurisdiction of |   | (I.R.S Employer     |   |
|   | incorporation or organization)  |   | Identification No.) |   |

|   | 2550 Denali Street                      |   |       |   |
|--------|-----------------------------------------|--------|------------|--------|
|   | Suite 1000                              |   |       |   |
|   | Anchorage, Alaska                       |   | 99503      |   |
|   | (Address of principalexecutive offices) |   | (Zip Code) |   |

|   | Registrant’s telephone number, including area code: (907) 868-5600 |
|--------|--------------------------------------------------------------------------|

|   | Not Applicable                                                                         |   |
|--------|----------------------------------------------------------------------------------------|--------|
|   | Former name, former address and former fiscal year, if changed since last report  |   |

| Large accelerated filer o                                             | Accelerated filer x         |
|-----------------------------------------------------------------------|-----------------------------|
| Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |

----

|                                                      |                                                 |                                                              |      |   | Page No.  |
|-----------------------------------------------------------|------------------------------------------------------|-------------------------------------------------------------------|-----------|--------|-----------|
|                                                      |                                                 |                                                              |      |   |      |
| Cautionary Statement Regarding Forward-Looking Statements |                                                 |
|                                                      |                                                 |                                                              |      |   |      |
| Part I.  FINANCIAL INFORMATION                  |                                                 |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      | Item I.                                              | Financial Statements                                              |      |   |      |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      |                                                 | Consolidated Balance Sheets (unaudited) as of June 30, 2009       |      |   |      |
|                                                      |                                                 |   and December 31, 2008                                 |      |   |   4  |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      |                                                 | Consolidated Income Statement for the three and six months ended  |      |   |      |
|                                                      |                                                 |   June 30, 2009 (unaudited) and 2008 (unaudited)        |      |   |   6  |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      |                                                 | Consolidated Statements of Cash Flows for the six months          |      |   |      |
|                                                      |                                                 |   ended June 30, 2009 (unaudited) and 2008 (unaudited)  |      |   |   7  |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      |                                                 | Notes to Interim Consolidated Financial Statements (unaudited)    |      |   |   8  |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      | Item 2.                                              | Management’s Discussion and Analysis of Financial Condition |      |   |      |
|                                                      |                                                 |   and Results of Operations                             |      |   |   26 |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      | Item 3.                                              | Quantitative and Qualitative Disclosures About Market Risk        |      |   |   47 |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      | Item 4.                                              | Controls and Procedures                                           |      |   |   48 |
|                                                      |                                                 |                                                              |      |   |      |
| Part II.  OTHER INFORMATION                     |                                                 |                                                              |      |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      | Item 1.                                              | Legal Proceedings                                                 |      |   |   49 |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      | Item 4.                                              | Submission of Matters to a Vote of Security Holders               |      |   |   50 |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      | Item 6.                                              | Exhibits                                                          |      |   |   50 |
|                                                      |                                                 |                                                              |      |   |      |
|                                                      | Other items are omitted, as they are not applicable. |                                                              |      |
|                                                      |                                                 |                                                              |      |   |      |
| SIGNATURES                                                |                                                 |                                                              |   51 |

----

Cautionary

----

PART

ITEM
FINANCIAL

BALANCE

| (Amounts in thousands)                                    |   | June 30, |      |   | December 31, |   |
|-----------------------------------------------------------|--------|----------|-----------|--------|--------------|--------|
| ASSETS                                                    |   | 2009     |      |   | 2008         |   |
|                                                      |   |     |      |   |         |   |
| Current assets:                                           |   |     |      |   |         |   |
| Cash and cash equivalents                                 |   | $        | 27,431    |   |         |   | 29,904 |   |
|                                                      |   |     |      |   |         |   |   |   |
| Receivables                                               |   |     | 120,128   |   |         |   | 113,136 |   |
| Less allowance for doubtful receivables                   |   |     | 4,261     |   |         |   | 2,582 |   |
| Net receivables                                           |   |     | 115,867   |   |         |   | 110,554 |   |
|                                                      |   |     |      |   |         |   |   |   |
| Inventories                                               |   |     | 8,688     |   |         |   | 7,085 |   |
| Deferred income taxes                                     |   |     | 7,034     |   |         |   | 7,843 |   |
| Prepaid expenses                                          |   |     | 6,228     |   |         |   | 5,960 |   |
| Investment securities                                     |   |     | 883       |   |         |   | 1,563 |   |
| Other current assets                                      |   |     | 4,756     |   |         |   | 647 |   |
| Total current assets                                      |   |     | 170,887   |   |         |   | 163,556 |   |
|                                                      |   |     |      |   |         |   |   |   |
| Property and equipment in service, net of depreciation    |   |     | 806,020   |   |         |   | 793,051 |   |
| Construction in progress                                  |   |     | 36,746    |   |         |   | 54,098 |   |
| Net property and equipment                                |   |     | 842,766   |   |         |   | 847,149 |   |
|                                                      |   |     |      |   |         |   |   |   |
| Cable certificates                                        |   |     | 191,565   |   |         |   | 191,565 |   |
| Goodwill                                                  |   |     | 68,586    |   |         |   | 66,868 |   |
| Wireless licenses                                         |   |     | 25,967    |   |         |   | 25,967 |   |
| Other intangible assets, net of amortization              |   |     | 20,568    |   |         |   | 22,976 |   |
| Deferred loan and senior notes costs, net of amortization |   |     | 5,903     |   |         |   | 6,496 |   |
| Other assets                                              |   |     | 21,633    |   |         |   | 10,724 |   |
| Total other assets                                        |   |     | 334,222   |   |         |   | 324,596 |   |
| Total assets                                              |   | $        | 1,347,875 |   |         |   | 1,335,301 |   |

----

| (Amounts in thousands)                                                                                                                                                                                                                                                           |   | June 30, |      |   | December 31, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-----------|--------|--------------|--------|
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                       |   | 2009     |      |   | 2008         |   |
|                                                                                                                                                                                                                                                                             |   |     |      |   |         |   |
| Current liabilities:                                                                                                                                                                                                                                                             |   |     |      |   |         |   |
| Current maturities of obligations under long-term debt and capital leases                                                                                                                                                                                                        |   | $        | 13,088    |   |         |   | 12,857 |   |
| Accounts payable                                                                                                                                                                                                                                                                 |   |     | 32,371    |   |         |   | 40,497 |   |
| Deferred revenue                                                                                                                                                                                                                                                                 |   |     | 21,866    |   |         |   | 22,095 |   |
| Accrued payroll and payroll related obligations                                                                                                                                                                                                                                  |   |     | 19,911    |   |         |   | 22,632 |   |
| Accrued liabilities                                                                                                                                                                                                                                                              |   |     | 10,872    |   |         |   | 11,043 |   |
| Accrued interest                                                                                                                                                                                                                                                                 |   |     | 9,616     |   |         |   | 10,224 |   |
| Subscriber deposits                                                                                                                                                                                                                                                              |   |     | 1,368     |   |         |   | 1,262 |   |
| Total current liabilities                                                                                                                                                                                                                                                        |   |     | 109,092   |   |         |   | 120,610 |   |
|                                                                                                                                                                                                                                                                             |   |     |      |   |         |   |   |   |
| Long-term debt                                                                                                                                                                                                                                                                   |   |     | 724,200   |   |         |   | 708,406 |   |
| Obligations under capital leases, excluding current maturities                                                                                                                                                                                                                   |   |     | 91,698    |   |         |   | 94,029 |   |
| Obligation under capital lease due to related party, excluding current maturity                                                                                                                                                                                                  |   |     | 1,872     |   |         |   | 1,868 |   |
| Deferred income taxes                                                                                                                                                                                                                                                            |   |     | 88,642    |   |         |   | 86,187 |   |
| Long-term deferred revenue                                                                                                                                                                                                                                                       |   |     | 50,785    |   |         |   | 49,998 |   |
| Other liabilities                                                                                                                                                                                                                                                                |   |     | 15,856    |   |         |   | 15,288 |   |
| Total liabilities                                                                                                                                                                                                                                                                |   |     | 1,082,145 |   |         |   | 1,076,386 |   |
|                                                                                                                                                                                                                                                                             |   |     |      |   |         |   |   |   |
| Commitments and contingencies                                                                                                                                                                                                                                                    |   |     |      |   |         |   |   |   |
| Stockholders’ equity:                                                                                                                                                                                                                                                      |   |     |      |   |         |   |   |   |
| Common stock (no par):                                                                                                                                                                                                                                                           |   |     |      |   |         |   |   |   |
| Class A. Authorized 100,000 shares; issued 49,976 and 50,062 shares at June 30, 2009 and December 31, 2008, respectively; outstanding 49,702 and 49,593 shares at June 30, 2009 and December 31, 2008, respectively                                                              |   |     | 150,883   |   |         |   | 151,262 |   |
| Class B. Authorized 10,000 shares; issued 3,192 and 3,203 shares at June 30, 2009 and December 31, 2008, respectively; outstanding 3,192 and 3,201 shares at June 30, 2009 and December 31, 2008, respectively; convertible on a share-per-share basis into Class A common stock |   |     | 2,689     |   |         |   | 2,706 |   |
| Less cost of 274 and 469 Class A and Class B common shares held in treasury at June 30, 2009 and December 31, 2008, respectively                                                                                                                                            |   |     | (2,369    | )      |         |   | (2,462 | ) |
| Paid-in capital                                                                                                                                                                                                                                                                  |   |     | 30,474    |   |         |   | 27,233 |   |
| Retained earnings                                                                                                                                                                                                                                                                |   |     | 84,053    |   |         |   | 80,176 |   |
| Total stockholders’ equity                                                                                                                                                                                                                                                 |   |     | 265,730   |   |         |   | 258,915 |   |
| Total liabilities and stockholders’ equity                                                                                                                                                                                                                                 |   | $        | 1,347,875 |   |         |   | 1,335,301 |   |

|   | See accompanying notes to interim consolidated financial statements. |
|--------|----------------------------------------------------------------------|

----

INCOME

|                                                                                   |   | Three Months Ended |    |   | Six Months Ended |   |
|----------------------------------------------------------------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                                                                                   |   | June 30,           |    |   | June 30,         |   |
| (Amounts in thousands, except per share amounts)                                       |   | 2009               |    |   | 2008             |   |   | 2009 |   |   | 2008 |   |
| Revenues                                                                               |   | $                  | 148,796 |   |             |   | 142,461 |   |   |   | 297,485 |   |   |   | 277,135 |   |
|                                                                                   |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold (exclusive of depreciation and amortization shown separately below) |   |               | 47,348  |   |             |   | 52,448 |   |   |   | 95,205 |   |   |   | 103,759 |   |
| Selling, general and administrative expenses                                           |   |               | 51,719  |   |             |   | 48,260 |   |   |   | 108,305 |   |   |   | 94,666 |   |
| Depreciation and amortization expense                                                  |   |               | 31,170  |   |             |   | 27,708 |   |   |   | 61,904 |   |   |   | 54,951 |   |
| Operating income                                                                       |   |               | 18,559  |   |             |   | 14,045 |   |   |   | 32,071 |   |   |   | 23,759 |   |
|                                                                                   |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                                                                |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense (including amortization of deferred loan fees)                        |   |               | (13,273 | )      |             |   | (11,778 | ) |   |   | (25,920 | ) |   |   | (20,686 | ) |
| Interest income                                                                        |   |               | 11      |   |             |   | 402 |   |   |   | 19 |   |   |   | 483 |   |
| Other expense, net                                                                     |   |               | (13,262 | )      |             |   | (11,376 | ) |   |   | (25,901 | ) |   |   | (20,203 | ) |
| Income before income tax expense                                                       |   |               | 5,297   |   |             |   | 2,669 |   |   |   | 6,170 |   |   |   | 3,556 |   |
| Income tax expense                                                                     |   |               | 2,733   |   |             |   | 1,783 |   |   |   | 3,252 |   |   |   | 3,210 |   |
|                                                                                   |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                             |   |               | 2,564   |   |             |   | 886 |   |   |   | 2,918 |   |   |   | 346 |   |
|                                                                                   |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net income attributable to the non-controlling interest                                |   |               | ---     |   |             |   | 946 |   |   |   | --- |   |   |   | 1,922 |   |
|                                                                                   |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net income attributable to General Communication, Inc.                                 |   | $                  | 2,564   |   |             |   | 1,832 |   |   |   | 2,918 |   |   |   | 2,268 |   |
|                                                                                   |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Basic net income per common share                                                      |   | $                  | 0.05    |   |             |   | 0.04 |   |   |   | 0.06 |   |   |   | 0.04 |   |
|                                                                                   |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Diluted net income per common share                                                    |   | $                  | 0.05    |   |             |   | 0.03 |   |   |   | 0.05 |   |   |   | 0.04 |   |

----

CASH 

| (Amounts in thousands)                                                                                                       |   |   | 2009    |   |   | 2008     |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|----------|--------|
| Cash flows from operating activities:                                                                                        |   |   |    |   |   |     |   |
| Net income                                                                                                                   |   | $      | 2,918   |   |   | 346      |   |
| Adjustments to reconcile net income to net cash provided  by operating activities (net of effects of acquisition): |   |   |    |   |   |     |   |
| Depreciation and amortization expense                                                                                        |   |   | 61,904  |   |   | 54,951   |   |
| Deferred income tax expense                                                                                                  |   |   | 3,252   |   |   | 2,470    |   |
| Share-based compensation expense                                                                                             |   |   | 3,229   |   |   | 2,853    |   |
| Other noncash income and expense items                                                                                       |   |   | 3,862   |   |   | 4,064    |   |
| Change in operating assets and liabilities, net of effect of acquisition                                                     |   |   | (32,418 | )      |   | 43,973   |   |
| Net cash provided by operating activities                                                                                    |   |   | 42,747  |   |   | 108,657  |   |
|                                                                                                                         |   |   |    |   |   |     |   |
| Cash flows from investing activities:                                                                                        |   |   |    |   |   |     |   |
| Purchases of property and equipment                                                                                          |   |   | (57,269 | )      |   | (113,491 | )      |
| Proceeds from sale of marketable securities                                                                                  |   |   | 613     |   |   | 800      |   |
| Purchase of marketable securities                                                                                            |   |   | (225    | )      |   | ---      |   |
| Purchase of business, net of cash received                                                                                   |   |   | (108    | )      |   | (40,161  | )      |
| Purchases of other assets and intangible assets                                                                              |   |   | (2,066  | )      |   | (2,325   | )      |
| Net cash used in investing activities                                                                                        |   |   | (59,055 | )      |   | (155,177 | )      |
|                                                                                                                         |   |   |    |   |   |     |   |
| Cash flows from financing activities:                                                                                        |   |   |    |   |   |     |   |
| Borrowing on Senior Credit Facility                                                                                          |   |   | 20,000  |   |   | 132,100  |   |
| Repayment of debt and capital lease obligations                                                                              |   |   | (6,330  | )      |   | (1,999   | )      |
| Proceeds from common stock issuance                                                                                          |   |   | 399     |   |   | 106      |   |
| Issuance of long-term debt                                                                                                   |   |   | ---     |   |   | 614      |   |
| Payment of debt issuance costs                                                                                               |   |   | ---     |   |   | (1,626   | )      |
| Other                                                                                                                        |   |   | (234    | )      |   | (46      | )      |
| Net cash provided by financing activities                                                                                    |   |   | 13,835  |   |   | 129,149  |   |
| Net increase (decrease) in cash and cash equivalents                                                                         |   |   | (2,473  | )      |   | 82,629   |   |
| Cash and cash equivalents at beginning of period                                                                             |   |   | 29,904  |   |   | 13,074   |   |
|                                                                                                                         |   |   |    |   |   |     |   |
| Cash and cash equivalents at end of period                                                                                   |   | $      | 27,431  |   |   | 95,703   |   |

----

The

| (l) | Business and Summary of Significant Accounting Principles |
|-----|-----------------------------------------------------------|

|   | (a) | Business |
|--------|-----|----------|

|   | · | Origination and termination of traffic in Alaska for certain common carriers, |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | Cable television services throughout Alaska, |
|--------|--------|----------------------------------------------|

|   | · | Competitive local access services in Anchorage, Fairbanks, Juneau, Wasilla, Eagle River, Kodiak, Palmer, Kenai, Soldotna, Seward, Chugiak, Sitka, Valdez, Ketchikan, Nome, and Homer, Alaska, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Incumbent local access services in rural Alaska, |
|--------|--------|--------------------------------------------------|

|   | · | Long-distance telephone service between Alaska and the remaining United States and foreign countries, |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | Sale of postpaid and prepaid wireless telephone services and sale of wireless telephone handsets and accessories, |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

|   | · | Data network services, |
|--------|--------|------------------------|

|   | · | Internet access services, |
|--------|--------|---------------------------|

|   | · | Broadband services, including our SchoolAccess® offering to rural school districts, our ConnectMD® offering to rural hospitals and health clinics, and managed video conferencing, |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Managed services to certain commercial customers, |
|--------|--------|---------------------------------------------------|

|   | · | Sales and service of dedicated communications systems and related equipment, |
|--------|--------|------------------------------------------------------------------------------|

|   | · | Lease, service arrangements and maintenance of capacity on our fiber optic cable systems used in the transmission of interstate and intrastate data, switched message long-distance and Internet services within Alaska and between Alaska and the remaining United States and foreign countries, and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Distribution of white and yellow pages directories to residential and business customers in certain markets we serve and on-line directory products. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Principles of Consolidation |
|--------|-----|-----------------------------|

|   | The consolidated financial statements include the consolidated accounts of GCI and its wholly-owned subsidiaries, as well as a variable interest entity in which we were the primary beneficiary as defined by Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 46R, “Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin (“ARB”) No. 51” throughAugust 17, 2008.  All significant intercompany transactions between non-regulated affiliates of our company are eliminated.  Statement of Financial Accounting Standard ("SFAS") No. 71, "Accounting for the Effects of Certain Types of Regulation" requires intercompany revenue and expenses generated between regulated and non-regulated affiliates of the company not be eliminated on consolidation.  Intercompany revenue and expenses with affiliates not subject to SFAS No. 71 have beeneliminated. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Recently Issued Accounting Pronouncements |
|--------|-----|-------------------------------------------|

----

|   | (d)   | Recently Adopted Accounting Pronouncements |
|--------|-----------------|--------------------------------------------|

|   | On January 1, 2009, we fully adopted SFAS No. 157 “Fair Value Measurements,” to include all nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The full adoption of SFAS No. 157 did not have any effect on our consolidated financial statements. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In April 2008, the FASB issued FASB Staff Position (“FSP”) No. 142-3, “Determination of the Useful Life of Intangible Assets.” FSP No. 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142, “Goodwill and Other Intangible Assets.”  FSP No. 142-3 appliesprospectively to intangible assets that are acquired individually or with a group of other assets in business combinations and asset acquisitions. FSP No. 142-3 became effective on January 1, 2009.  The adoption of FSP No. 142-3 effective January 1, 2009, did not have any effect on our consolidated financial statements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | In October 2008, the FASB issued FSP No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active.”  FSP No. 157-3 clarifies the application of SFAS No. 157 in a market that is not active and addresses application issues such as the use of internal assumptions when relevant observable data does not exist, the use of observable market information when the marketis not active and the use of market quotes when assessing the relevance of observable and unobservable data. FSP No.157-3 is effective for all periods presented in accordance with SFAS No. 157. The adoption of FSP No. 157-3 did not have any effect on our consolidated financial statements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (e) | Acquisitions |
|--------|-----|--------------|

|   | Effective June 1, 2008, we acquired 100% of the outstanding stock of United Utilities, Inc. ("UUI") and Unicom, Inc. (“Unicom”).  Effective July 1, 2008, we acquired 100% of the ownership interests of Alaska Wireless, LLC ("Alaska Wireless").  On August 18, 2008, we acquired 18.1% of the equity interest and voting control of Alaska DigiTel, LLC ("Alaska DigiTel") giving us 100% ownership interestin this entity. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Assuming we had completed all of our acquisitions on January 1, 2008, our revenues, net income attributable to GCI and basic and diluted earnings per common share ("EPS") for the three and six months ended June  30, 2008 would have been as follows (amounts in thousands, except per share amounts): |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     |   | Three Months Ended June 30, |    |   | Six MonthsEnded June 30, |   |
|------------------------------------------|--------|-----------------------------|---------|--------|--------------------------|--------|
|                                     |   | 2008                        |    |   | 2008                     |   |
| Pro forma consolidated revenue           |   | $                           | 146,824 |   |                     |   | 288,185 |   |
| Pro forma net income attributable to GCI |   | $                           | 1,944   |   |                     |   | 2,651 |   |
|                                     |   |                        |    |   |                     |   |   |   |
| EPS:                                     |   |                        |    |   |                     |   |   |   |
| Basic – pro forma                  |   | $                           | 0.04    |   |                     |   | 0.05 |   |
| Diluted – pro forma                |   | $                           | 0.04    |   |                     |   | 0.04 |   |

|   | (f) | Regulatory Accounting and Regulation |
|--------|-----|--------------------------------------|

|   | We account for our regulated operations in accordance with the accounting principles for regulated enterprises prescribed by SFAS No. 71.  This accounting recognizes the economic effects of rate regulation by recording cost and a return on investment as such amounts are recovered through rates authorized by regulatory authorities.  Accordingly, under SFAS No. 71, plant and equipment is depreciated over livesapproved by regulators and certain costs and obligations are deferred based upon approvals received from regulators to permit recovery of such amounts in future years.  Our cost studies and depreciation rates for our regulated operations are subject to periodic audits that could result in reductions of revenues. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (g) | Revenue Recognition |
|--------|-----|---------------------|

|   | As an Eligible Telecommuncations Carrier ("ETC"), we receive subsidies from the Universal Service Fund ("USF") to support the provision of local access service in high-cost areas.  On May 1, 2008, the Federal Communications Commission ("FCC") issued an order adopting the recommendation of the Federal State Joint Board on Universal Service ("JointBoard") to impose a state-by-state interim cap on high cost funds to be distributed to competitive ETCs.  As part of the revised policy, the FCC adopted a limited exception from the cap for competitive ETCs serving tribal lands or Alaska Native regions.  While the operation of the cap will generally reduce the high cost fund amounts available to competitive ETCs as new competitive ETCs are designated and as existing competitive ETCs acquire new customers, providers like us who serve tribal lands orAlaska Native regions were provided some relief.  On March 5, 2009, the FCC issued an additional order waiving a previously adopted limitation to the exception, the result of which is to provide uncapped support for all lines served by competitive ETCs for tribal lands or Alaska Native regions and the cap for all other regions will be in place until the FCC takes action on proposals for long time reform.  In the first quarter 2009, we recognized $1.9 million of voice and wireless revenue from the UniversalService Administrative Company ("USAC") related to services provided from August 2009 to December 2008 due to the March 2009 FCC order that provides uncapped support for all lines served by competitive ETCs for tribal lands or Alaska Native regions retroactive to August 2008.  On April 8, 2009, the FCC issued a Notice of Inquiry to review aspects of its high cost support program.  Comments were filed on May 8, 2009, and replies were filed on June 8, 2009.  We cannot predict at this time theoutcome of this proceeding or its affect on high cost support available to us. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | In the second quarter 2009, we recognized $3.1 million of wireless revenue from the USAC for interstate common line support for a new local access area for which we received ETC status in May 2009 of which $690,000 and $1.7 million were related to first quarter 2009 and the year ended December 31, 2008, respectively.  Collectability was not reasonablyassured until we were awarded ETC status, therefore, we deferred revenue recognition until such status was confirmed. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (h) | Earnings per Common Share |
|--------|-----|---------------------------|

|   | We compute net income per share of Class A and Class B common stock in accordance with SFAS No. 128, “Earnings per Share” using the two class method.  Under the provisions of SFAS No.128, basic net income per share is computed by dividing net income applicable to common stockholders by the weighted average number of common shares outstanding during the year.  Diluted net income per share is computedby dividing net income applicable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding during the period.  The computation of the dilutive net income per share of Class A common stock assumes the conversion of Class B common stock to Class A common stock, while the dilutive net income per share of Class B common stock does not assume the conversion of those shares. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In accordance with EITF No. 03-06, “Participating Securities and the Two Class Method under FASB No. 128,” the undistributed earnings for each year are allocated based on the contractual participation rights of Class A and Class B common shares as if the earnings for the year had been distributed.  Considering the terms of our Articles of Incorporation which provide that, if and when dividends are declaredon our common stock in accordance with Alaska corporate law, equivalent dividends shall be paid with respect to the shares of Class A common stock and Class B common stock and that both classes of common stock have identical dividend rights and would share equally in our net assets in the event of liquidation, we have allocated undistributed earnings on a proportionate basis. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                     | Three Months Ended June 30, |
|----------------------------------------------------------|-----------------------------|
|                                                     | 2009                        |   | 2008 |
|                                                     | Class A                     |   | Class B |   | Class A |   | Class B |
| Basic net income per share:                              |                        |   |   |   |   |   |   |
| Numerator:                                               |                        |   |   |   |   |   |   |
| Allocation of undistributed earnings attributable to GCI | 2,408                       |   | 156 |   | 1,718 |   | 114 |
|                                                     |                        |   |   |   |   |   |   |
| Denominator:                                             |                        |   |   |   |   |   |   |
| Weighted average common shares outstanding               | 49,300                      |   | 3,199 |   | 49,066 |   | 3,254 |
| Basic net income per common share                        | 0.05                        |   | 0.05 |   | 0.04 |   | 0.04 |

----

|                                                                                                      |   |   |   |   |   |   |        |
|-----------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|-------------|
| Diluted net income per share:                                                                             |   |   |   |   |   |   |        |
| Numerator:                                                                                                |   |   |   |   |   |   |        |
| Allocation of undistributed earnings for basic computation                                                | 2,408  |   | 156    |   | 1,718  |   | 114    |
| Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares             | 156    |   | ---    |   | 114    |   | ---         |
| Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares outstanding | ---    |   | (1     | )      | ---    |   | (1)         |
| Net income adjusted for allocation of undistributed earnings                                              | 2,564  |   | 155    |   | 1,832  |   | 113    |
|                                                                                                      |   |   |   |   |   |   |        |
| Denominator:                                                                                              |   |   |   |   |   |   |        |
| Number of shares used in basic computation                                                                | 49,300 |   | 3,199  |   | 49,066 |   | 3,254  |
| Conversion of Class B to Class A common shares outstanding                                                | 3,199  |   | ---    |   | 3,254  |   | ---    |
| Unexercised stock options                                                                                 | 372    |   | ---    |   | 397    |   | ---    |
| Unvested restricted stock awards                                                                          | 35     |   | ---    |   | 28     |   | ---    |
| Number of shares used in per share computations                                                           | 52,906 |   | 3,199  |   | 52,745 |   | 3,254  |
| Diluted net income per common share                                                                       | 0.05   |   | 0.05   |   | 0.03   |   | 0.03   |

|                                                                                                                                      | Six Months Ended June 30, |
|-------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
|                                                                                                                                      | 2009                      |   | 2008 |
|                                                                                                                                      | Class A                   |   | Class B |   | Class A |   | Class B |
| Basic net income per share:                                                                                                               |                      |   |   |   |   |   |   |
| Numerator:                                                                                                                                |                      |   |   |   |   |   |   |
| Allocation of undistributed earnings attributable to GCI                                                                                  | 2,740                     |   | 178 |   | 2,127 |   | 141  |
|                                                                                                                                      |                      |   |   |   |   |   |   |
| Denominator:                                                                                                                              |                      |   |   |   |   |   |   |
| Weighted average common shares outstanding                                                                                                | 49,286                    |   | 3,201 |   | 49,035 |   | 3,254  |
| Basic net income per common share                                                                                                         | 0.06                      |   | 0.06 |   | 0.04 |   | 0.04  |
|                                                                                                                                      |                      |   |   |   |   |   |   |
| Diluted net income per share:                                                                                                             |                      |   |   |   |   |   |   |
| Numerator:                                                                                                                                |                      |   |   |   |   |   |   |
| Allocation of undistributed earnings for basic computation                                                                                | 2,740                     |   | 178 |   | 2,127 |   | 141  |
| Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares                                             | 178                       |   | --- |   | 141 |   | ---  |
| Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares outstanding                                 | ---                       |   | (17 | ) | --- |   | (26) |
| Effect of share based compensation that may be settled in cash or shares                                                                  | (242)                     |   | --- |   | (401) |   | ---  |
| Net income adjusted for allocation of undistributed earnings and effect of share based compensation that may be settled in cash or shares | 2,676                     |   | 161 |   | 1,867 |   | 115  |
|                                                                                                                                      |                      |   |   |   |   |   |   |
| Denominator:                                                                                                                              |                      |   |   |   |   |   |   |
| Number of shares used in basic computation                                                                                                | 49,286                    |   | 3,201 |   | 49,035 |   | 3,254 |
| Conversion of Class B to Class A common shares outstanding                                                                                | 3,201                     |   | --- |   | 3,254 |   | --- |
| Unexercised stock options                                                                                                                 | 338                       |   | --- |   | 385 |   | --- |

----

| Unvested restricted stock awards                                         | 39     |   | ---   |   | 25     |   | ---   |
|--------------------------------------------------------------------------|--------|--------|-------|--------|--------|--------|-------|
| Effect of share based compensation that may be settled in cash or shares | 237    |   | ---   |   | 251    |   | ---   |
| Number of shares used in per share computations                          | 53,101 |   | 3,201 |   | 52,950 |   | 3,254 |
| Diluted net income per common share                                      | 0.05   |   | 0.05  |   | 0.04   |   | 0.04  |

|                                                                     | Three Months Ended |   | Six Months Ended |   |
|--------------------------------------------------------------------------|--------------------|--------|------------------|--------|
|                                                                     | June 30,           |   | June 30,         |   |
|                                                                     | 2009               |   |             | 2008   |   | 2009 |   |   | 2008 |   |
| Weighted average shares associated with unexercised stock options        |               |   | 5,044            |   |   |   | 4,737 |   |   |   | 5,134 |   |   |   | 4,735 |   |
| Weighted average shares associated with unvested restricted share awards |               |   | 150              |   |   |   | 233 |   |   |   | --- |   |   |   | 249 |   |
| Effect of share-based compensation that may be settled in cash or shares |               |   | 247              |   |   |   | 253 |   |   |   | --- |   |   |   | --- |   |

|   | (i) | Common Stock |
|--------|-----|--------------|

|   | Following are the changes in issued common stock for the six months ended June 30, 2009 and 2008 (shares, in thousands): |
|--------|--------------------------------------------------------------------------------------------------------------------------|

|                                               |   | Class A |   |   | Class B |   |
|----------------------------------------------------|--------|---------|--------|--------|---------|--------|
| Balances at December 31, 2007                      |   |    | 50,437 |   |    |   | 3,257 |   |
| Class B shares converted to Class A                |   |    | 1      |   |    |   | (1 | ) |
| Shares issued under stock option plan              |   |    | 17     |   |    |   | --- |   |
| Shares issued under the Director Compensation Plan |   |    | 20     |   |    |   | --- |   |
| Shares retired                                     |   |    | (540   | )      |    |   | --- |   |
| Other                                              |   |    | (5     | )      |    |   | --- |   |
| Balances at June 30, 2008                          |   |    | 49,930 |   |    |   | 3,256 |   |
|                                               |   |    |   |   |    |   |   |   |
| Balances at December 31, 2008                      |   |    | 50,062 |   |    |   | 3,203 |   |
| Class B shares converted to Class A                |   |    | 9      |   |    |   | (9 | ) |
| Shares issued under stock option plan              |   |    | 69     |   |    |   | --- |   |
| Share awards issued                                |   |    | 55     |   |    |   | --- |   |
| Shares retired                                     |   |    | (219   | )      |    |   | (2 | ) |
| Balances at June 30, 2009                          |   |    | 49,976 |   |    |   | 3,192 |   |

----

|   | (j) | Investment Securities |
|--------|-----|-----------------------|

|   | We have investment securities of $883,000 at June 30, 2009, that are classified as trading under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities."  Our investments consist primarily of money market funds and U.S. government securities.  Trading securities are recorded at fair value with unrealized holding gains and losses included in net income.  During the six monthsended June 30, 2009, the change in net unrealized holding gains/losses in the trading portfolio included in earnings was a net loss of $20,000. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (k) | Asset Retirement Obligations |
|--------|-----|------------------------------|

|   | Following is a reconciliation of the beginning and ending aggregate carrying amount of our asset retirement obligations at June 30, 2009 and 2008 (amounts in thousands): |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Balance at December 31, 2007                            |   | $      | 4,173  |   |
|---------------------------------------------------------|--------|--------|--------|--------|
| Liability incurred                                      |   |   | 18     |   |
| Accretion expense for the six months endedJune 30, 2008 |   |   | 124    |   |
| Additions upon acquisition of UUI and Unicom            |   |   | 6,211  |   |
| Liability settled                                       |   |   | (40    | )      |
| Balance at June 30, 2008                                |   | $      | 10,486 |   |
|                                                    |   |   |   |   |
| Balance at December 31, 2008                            |   | $      | 6,179  |   |
| Liability incurred                                      |   |   | 377    |   |
| Accretion expense for the six months endedJune 30, 2009 |   |   | 202    |   |
| Liability settled                                       |   |   | (20    | )      |
| Balance at June 30, 2009                                |   | $      | 6,738  |   |

|   | (l) | Derivatives |
|--------|-----|-------------|

----

|               | Number of Contracts |   | Notional Value | Balance Sheet Location |   | Fair Value   |   |
|--------------------|---------------------|--------|----------------|------------------------|--------|--------------|--------|
| Interest rate caps | 2                   |   | $              | 180,000                |   | Other Assets |   | $ | 8 |   |

|                                                                  |                               |   | Amount of Gain (Loss) Recognized |   |
|-----------------------------------------------------------------------|------------------------------------|--------|----------------------------------|--------|
| Derivatives not designated as hedging instruments under SFAS No. 133: | Location of Gain (Loss) Recognized |   | Three Months Ended June 30, 2009 |   | Six Months Ended June 30, 2009 |   |
| Interest rate caps                                                    | Interest expense                   |   | $                                | 7      |   |   | $ | 1 |   |

|   | (m) | Use of Estimates |
|--------|-----|------------------|

|   | The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Significant items subject to estimates and assumptions include the allowance for doubtfulreceivables, unbilled revenues, accrual of the USF high-cost area program subsidy, share-based compensation, reserve for future customer credits, valuation allowances for deferred income tax assets, depreciable and amortizable lives of assets, the carrying value of long-lived assets including goodwill, cable certificates and wireless licenses, our effective tax rate, purchase price allocations, the accrual of cost of goods sold exclusive of depreciation and amortization ("Cost of Goods Sold"), and the accrualof contingencies and litigation. Actual results could differ from those estimates. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (n) | Classification of Taxes Collected from Customers |
|--------|-----|--------------------------------------------------|

|   | We report sales, use, excise, and value added taxes assessed by a governmental authority that is directly imposed on a revenue-producing transaction between us and a customer on a net basis in our income statement.  Following are certain surcharges on a gross basis in our income statement for the three and six months ended June 30, 2009 and 2008 (amounts in thousands): |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                      |   | Three Months Ended |   | Six Months Ended |   |
|---------------------------|--------|--------------------|--------|------------------|--------|
|                      |   | June 30,           |   | June 30,         |   |
|                      |   | 2009               |   | 2008             |   | 2009 |   | 2008 |   |
| Surcharges reported gross |   |               | 1,067  |             |   | 1,062 |   |   | 1,983 |   |   | 2,012 |   |

|   | (o) | Reclassifications |
|--------|-----|-------------------|

|   | Reclassifications have been made to the 2008 financial statements to make them comparable with the 2009 presentation. |
|--------|-----------------------------------------------------------------------------------------------------------------------|

----

| (2) | Consolidated Statements of Cash Flows Supplemental Disclosures |
|-----|----------------------------------------------------------------|

|   | Change in operating assets and liabilities, net of effect of acquisition, consists of (amounts in thousands): |
|--------|---------------------------------------------------------------------------------------------------------------|

| Six month period ended June 30,                                  |   | 2009   |    |   | 2008   |   |
|------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| (Increase) decrease in accounts receivable                       |   | $      | (6,948  | )      |   |   | 7,001 |   |
| Decrease in prepaid expenses                                     |   |   | 64      |   |   |   | 114 |   |
| Increase in inventories                                          |   |   | (1,537  | )      |   |   | (2,030 | ) |
| (Increase) decrease in other current assets                      |   |   | (4,180  | )      |   |   | 89 |   |
| Increase in other assets                                         |   |   | (11,251 | )      |   |   | --- |   |
| Increase (decrease) in accounts payable                          |   |   | (4,341  | )      |   |   | 1,979 |   |
| Increase (decrease) in deferred revenues                         |   |   | (325    | )      |   |   | 3,159 |   |
| Decrease in accrued payroll and payroll related obligations      |   |   | (2,890  | )      |   |   | (41 | ) |
| Increase (decrease) in accrued liabilities                       |   |   | (171    | )      |   |   | 1,314 |   |
| Increase (decrease) in accrued interest                          |   |   | (608    | )      |   |   | 324 |   |
| Increase in subscriber deposits                                  |   |   | 106     |   |   |   | 115 |   |
| Increase (decrease) in long-term deferred revenue                |   |   | (794    | )      |   |   | 36,893 |   |
| Increase (decrease) in components of other long-term liabilities |   |   | 457     |   |   |   | (4,944 | ) |
|                                                             |   | $      | (32,418 | )      |   |   | 43,973 |   |

|   | We paid interest, exclusive of capitalized interest, totaling $25.7 million and $18.9 million during the six months ended June 30, 2009 and 2008, respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We paid $0 and $478,000 for income taxes during the six months ended June 30, 2009 and 2008, respectively.  We received $911,000 and $0 in income tax refunds during the six months ended June 30, 2009 and 2008, respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During the six months ended June 30, 2009 and 2008, we capitalized interest of $368,000 and $2.1 million, respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | During the six months ended June 30, 2009 and 2008, we had $377,000 and $18,000, respectively, in non-cash additions to property and equipment for assets added when recording asset retirement obligations. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During the six months ended June 30, 2009, we applied $465,000 of a warranty receivable to offset our cash obligation relating to a capital lease. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During the six months ended June 30, 2008, we financed $98.6 million for the use of satellite transponders through a capital lease obligation.  We also financed $1.3 million in capital expenditures through the extension of a previously existing capital lease. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We received net cash of $110.6 million from the $145.0 million term loan that we obtained in May 2008. We used $30.0 million of the term loan to repay the revolver portion of our Senior Credit Facility and our loan proceeds were reduced by $2.9 million for an original issue discount and $1.5 million for bank and legal fees associated with the new term loan. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In June 2008 the Galaxy XR satellite was taken out of service resulting in the removal of the remaining $8.8 million net book value and the recognition of an $8.8 million warranty receivable. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | We had $8.7 million and $13.0 million in non-cash additions to property and equipment due to unpaid purchases as of June 30, 2009 and 2008, respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We retired Class A common stock in the amount of $1.2 million and $5.5 million during the six months ended June 30, 2009 and 2008, respectively.  The Class A common stock retired in the six months ended June 30, 2009, was acquired to settle the minimum statutory tax-withholding requirements pursuant to restricted stock awards vesting and the settlement of deferred compensation. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Intangible Assets |
|-----|-------------------|

|   | Goodwill increased $1.7 million at June 30, 2009 as compared to December 31, 2008, primarily to record an adjustment for grant deferred revenue to the UUI and Unicom purchase price allocations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Amortization expense for amortizable intangible assets was as follows (amounts in thousands): |
|--------|-----------------------------------------------------------------------------------------------|

|                 |   | Three Months Ended |   | Six Months Ended |   |
|----------------------|--------|--------------------|--------|------------------|--------|
|                 |   | June 30,           |   | June 30,         |   |
|                 |   | 2009               |   | 2008             |   | 2009 |   | 2008 |   |
| Amortization expense | $      |               | 1,889  |             |   | 1,165 |   |   | 3,770 |   |   | 2,080 |   |

|   | Amortization expense for amortizable intangible assets for each of the five succeeding fiscal years is estimated to be (amounts in thousands): |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

| Years Ending December 31, |   |   |   |
|---------------------------|--------|--------|--------|
| 2009                      |   | $      | 7,607  |   |
| 2010                      |   |   | 5,711  |   |
| 2011                      |   |   | 3,640  |   |
| 2012                      |   |   | 2,691  |   |
| 2013                      |   |   | 1,391  |   |

|   | For the period from January 1, 2009 to June 30, 2009, the U.S. economy has been experiencing the effects of a recession.  Should economic conditions in the State of Alaska and other indicators deteriorate such that they impact our ability to achieve levels of forecasted operating results and cash flows, should our stock price and market capitalization decline below our book value for a sustained period oftime, or should other events occur indicating the carrying value of goodwill and intangible assets might be impaired , we would test our goodwill and intangible assets for impairment and may recognize an impairment loss to the extent that the carrying amount exceeds such asset's fair value.  Any future impairment charges could have a material adverse effect on our results of operations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Financial Instruments |
|-----|-----------------------|

|   | Fair Value of Financial Instruments |
|--------|-------------------------------------|

|   | On June 30, 2009, we adopted FSP FAS No. 107-1 and APB 28-1.  Under the guidance of FSP FAS No. 107-1 and APB 28-1, FSP FAS No. 107-1 amends SFAS No. 107 and APB Opinion No. 28 to require entities to disclose the fair value of all financial instruments within the scope of SFAS No. 107 in all interim financial statements. FSP FAS No. 107-1 also requires disclosure of the method(s) and significant assumptionsused to estimate the fair value of those financial instruments.  The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. At June 30, 2009 the fair values of cash and cash equivalents, net receivables, current portion of notes receivable, accounts payable, accrued payroll and payroll related obligations, accrued interest, accrued liabilities, and subscriber deposits approximate their carrying value due to theshort-term nature of these financial instruments. The carrying amounts and estimated fair values of our financial instruments at June 30, 2009 follow (amounts in thousands): |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                     |   | June 30, 2009   |    |
|----------------------------------------------------------|--------|-----------------|---------|
|                                                     |   | Carrying Amount |    | Fair Value |   |
| Current and long-term debt and capital lease obligations | $      |            | 830,858 |   |   | 776,198 |   |
| Other liabilities                                        |   |            | 65,374  |   |   | 65,131 |   |

|   | Current and long-term debt and capital lease obligations:  The fair value of our Senior Notes is estimated based on the quoted market price for the same issue. The fair value of our Senior Credit Facility is estimated to approximate the carrying value because these instruments are subject to variable interest rates. The fair value of the CoBank Mortgage Note Payable is valued at the discounted amount offuture cash flows using our current incremental rate of borrowing on our Senior Credit Facility.  The fair value of the Rural Utilities Services Debt is valued at the discounted amount of future cash flows using a treasury rate that corresponds to the remaining term of the loan.  The fair value of our capital leases and capital lease due to related party are estimated based upon the discounted amount of future cash flows using our current incremental rate of borrowing on our Senior CreditFacility. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Other Liabilities:  Deferred compensation liabilities have no defined maturity dates therefore the fair value is the amount payable on demand as of the balance sheet date. Asset retirement obligations are recorded at their fair value and, over time, the liability is accreted to its present value each period. Lease escalation liabilities are valued at the discounted amount of future cash flows using the SeniorCredit Facility interest rate at June 30, 2009. Our non-employee share-based compensation awards are reported at their fair value at each reporting period. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Fair Value Measurements |
|--------|-------------------------|

|   | SFAS No. 157, “Fair Value Measurements,” establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. Level 1 inputs, the highest priority, are quoted prices in active markets for identical assets or liabilities. Level 2 inputs reflect other than quoted prices included in Level 1 that are either observable directly or through corroborationwith observable market data. Level 3 inputs are unobservable inputs, due to little or no market activity for the asset or liability, such as internally-developed valuation models.  We have applied the provisions of SFAS No. 157 to our trading securities, the assets of our deferred compensation plan (primarily money market funds and mutual funds) and interest rate caps. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Assets and liabilities measured at fair value on a recurring basis as of June 30, 2009 were as follows (amounts in thousands): |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

|                |   |    |                        |   |   | Fair Value Measurement at Reporting Date Using                 |   |
|---------------------|--------|---------|-----------------------------|--------|--------|----------------------------------------------------------------|--------|
| Description         |   |    | Balance as of June 30, 2009 |   |   | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |
| Trading securities: |   |    |                        |   |   |                                                           |   |   |   |   |   |   |   |
| Money market funds  |   |  $ | 79                          |   | $      | 79                                                             |   | $  | --- |   | $  | --- |   |
| U.S. treasury notes |   |    | 332                         |   |   | 332                                                            |   |   | --- |   |   | --- |   |

----

| U.S. government securities                             |   |    | 472   |   |    | 472   |   |    | --- |   |    | --- |   |
|--------------------------------------------------------|--------|---------|-------|--------|---------|-------|--------|---------|-----|--------|---------|-----|--------|
| Deferred compensation plan assets (money market funds) |   |    | 1,272 |   |    | 1,272 |   |    | --- |   |    | --- |   |
| Derivative financial instruments                       |   |    | 8     |   |    | ---   |   |    | 8   |   |    | --- |   |
| Total assets at fair value                             |   |  $ | 2,163 |   |  $ | 2,155 |   | $  | 8   |   | $  | --- |   |

|   | The valuation of our marketable securities, money market funds, and mutual funds are determined using quoted market prices in active markets utilizing market observable inputs. Derivative financial instruments are valued using mid-market quotations in active markets that are based on actual bid/ask quotations shown on reliable electronic information screens as of June 30, 2009. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Share-Based Compensation |
|-----|--------------------------|

|   | Our 1986 Stock Option Plan ("Stock Option Plan"), as amended, provides for the grant of options and restricted stock awards (collectively "award") for a maximum of 15.7 million shares of GCI Class A common stock, subject to adjustment upon the occurrence of stock dividends, stock splits, mergers, consolidations or certain other changes in corporate structure or capitalization. If an award expires or terminates, theshares subject to the award will be available for further grants of awards under the Stock Option Plan. The Compensation Committee of GCI’s Board of Directors administers the Stock Option Plan. Substantially all restricted stock awards granted vest over periods of up to five years. Substantially all options vest in equal installments over a period of five years and expire ten years from the date of grant. Options granted pursuant to the Stock Option Plan are only exercisable if at the time of exercise theoption holder is our employee, non-employee director, or a consultant or advisor working on our behalf. New shares are issued when stock option agreements are exercised and restricted stock awards are made. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The fair value of restricted stock awards is determined based on the quoted price of our common stock.  We use a Black-Scholes-Merton option pricing model to estimate the fair value of stock options issued. The Black-Scholes-Merton option pricing model incorporates various and highly subjective assumptions, including expected term and expected volatility. We have reviewed our historical pattern of optionexercises and have determined that meaningful differences in option exercise activity existed among employee job categories. Therefore, for all stock options, we have categorized these awards into two groups for valuation purposes. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The weighted average grant date fair value of options granted during the six months ended June 30, 2009 and 2008 was $3.49 per share and $4.27 per share, respectively. The total fair value of options vesting during the six months ended June 30, 2009 and 2008 was $2.4 million and $2.3 million, respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | We have recorded share-based compensation expense of $3.2 million for the six months ended June 30, 2009, which consists of $3.6 million for employee share-based compensation expense and a $411,000 decrease in the fair value of liability-classified share-based compensation.  We recorded share-based compensation expense of $2.9 million for the six months ended June 30, 2008, which consists of $3.5 millionfor employee share-based compensation expense and a $681,000 decrease in the fair value of liability-classified share-based compensation. Share-based compensation expense is classified as selling, general and administrative expense in our consolidated income statement.  Unrecognized share-based compensation expense was $2.0 million relating to 316,000 restricted stock awards and $7.7 million relating to 2.3 million unvested stock options as of June 30, 2009.  We expect to recognize share-basedcompensation expense over a weighted average period of 2.5 years for stock options and 1.3 years for restricted stock awards. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The following is a summary of our Stock Option Plan activity for the six months ended June 30, 2009: |
|--------|------------------------------------------------------------------------------------------------------|

|                                                                 |   | Shares(in thousands) |   |   | WeightedAverageExercise Price |   |
|----------------------------------------------------------------------|--------|----------------------|--------|--------|-------------------------------|--------|
| Outstanding options and restricted stock awards at December 31, 2008 |   |                 | 7,205  |   |                          | $      | 9.08 |   |
|                                                                 |   |                 |   |   |                          |   |   |   |
| Options granted                                                      |   |                 | 153    |   |                          | $      | 6.65 |   |
| Restricted stock awards granted                                      |   |                 | 32     |   |                          | $      | 7.15 |   |
| Options exercised                                                    |   |                 | (69    | )      |                          | $      | 5.76 |   |
| Restricted stock awards vested                                       |   |                 | (128   | )      |                          | $      | 11.23 |   |
| Options forfeited and retired                                        |   |                 | (13    | )      |                          | $      | 10.43 |   |
| Outstanding options and restricted stock awards at June 30, 2009     |   |                 | 7,180  |   |                          | $      | 9.02 |   |
|                                                                 |   |                 |   |   |                          |   |   |   |
| Available for grant at June 30, 2009                                 |   |                 | 779    |   |                          |   |   |   |

|   | The following is a summary of activity for stock option grants that were not made pursuant to the Stock Option Plan for the six months ended June 30, 2009: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                               |   | Shares(in thousands) |   |   | WeightedAverageExercise Price |   |
|----------------------------------------------------|--------|----------------------|--------|--------|-------------------------------|--------|
| Outstanding at December 31, 2008 and June 30, 2009 |   |                 | 150    |   |                          | $      | 6.50 |   |
|                                               |   |                 |   |   |                          |   |   |   |
| Available for grant at June 30, 2009               |   |                 | ---    |   |                          |   |   |   |

|   | In January 2001 we entered into an aircraft operating lease agreement with a company owned by our President and CEO.  The lease was amended effective January 1, 2002 and February 25, 2005.  Upon signing the lease, the lessor was granted an option to purchase 250,000 shares of GCI Class A common stock at $6.50 per share, of which 150,000 shares remain available for purchase and expire on March 31,2010. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The total intrinsic values, determined as of the date of exercise, of options exercised during the six months ended June 30, 2009 and 2008 were $96,000 and $38,000, respectively. We received $399,000 and $106,000 in cash from stock option exercises during the six months ended June 30, 2009 and 2008, respectively. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Industry Segments Data |
|-----|------------------------|

----

|   | Corporate related expenses including engineering, information technology, accounting, legal and regulatory, human resources, and other general and administrative expenses for the three and six months ended June 30, 2009 and 2008 are allocated to our segments using segment margin for the years ended December 31, 2008 and 2007, respectively.  Bad debt expense for the three and six months ended June 30, 2009and 2008 is allocated to our segments using a combination of specific identification and allocations based upon segment revenue for the three and six months ended June 30, 2009 and 2008, respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We evaluate performance and allocate resources based on earnings before depreciation and amortization expense, net interest expense, income taxes, share-based compensation expense, and non-cash contribution adjustment (“adjusted EBITDA”). The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in note 1 in the “Notes toConsolidated Financial Statements” included in Part II of our December 31, 2008 annual report on Form 10-K. Intersegment sales are recorded at cost plus an agreed upon intercompany profit. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We earn all revenues through sales of services and products within the United States. All of our long-lived assets are located within the United States of America, except approximately 82% of our undersea fiber optic cable systems which transit international waters and all of our satellite transponders. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Summarized financial information for our reportable segments for the three and six months ended June 30, 2009 and 2008 follows (amounts in thousands): |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| Three months ended June 30, |   | Consumer |   |   | Network Access |   |   | Commercial |   |   | Managed Broadband |   |   | Regulated Operations |   |   | Total Reportable Segments |   |
|-----------------------------|--------|----------|--------|--------|----------------|--------|--------|------------|--------|--------|-------------------|--------|--------|----------------------|--------|--------|---------------------------|--------|
| 2009                        |   |     |   |   |           |   |   |       |   |   |              |   |   |                 |   |   |                      |   |
| Revenues:                   |   |     |   |   |           |   |   |       |   |   |              |   |   |                 |   |   |                      |   |
| Intersegment                |   | $        | ---    |   |           |   | 156    |       |   |   | 1,482             |   |   |                 | ---    |   |                      |   | 52 |   |   |   | 1,690 |   |
| External                    |   |     | 73,399 |   |           |   | 31,120 |       |   |   | 26,911            |   |   |                 | 10,998 |   |                      |   | 6,368 |   |   |   | 148,796 |   |
| Total revenues              |   | $        | 73,399 |   |           |   | 31,276 |       |   |   | 28,393            |   |   |                 | 10,998 |   |                      |   | 6,420 |   |   |   | 150,486 |   |
| Adjusted EBITDA             |   | $        | 22,292 |   |           |   | 15,671 |       |   |   | 5,592             |   |   |                 | 5,358  |   |                      |   | 2,323 |   |   |   | 51,236 |   |
|                        |   |     |   |   |           |   |   |       |   |   |              |   |   |                 |   |   |                      |   |   |   |   |   |   |   |
| 2008                        |   |     |   |   |           |   |   |       |   |   |              |   |   |                 |   |   |                      |   |   |   |   |   |   |   |
| Revenues:                   |   |     |   |   |           |   |   |       |   |   |              |   |   |                 |   |   |                      |   |   |   |   |   |   |   |
| Intersegment                |   | $        | 17     |   |           |   | 167    |       |   |   | 1,569             |   |   |                 | ---    |   |                      |   | 116 |   |   |   | 1,869 |   |
| External                    |   |     | 62,113 |   |           |   | 41,891 |       |   |   | 27,444            |   |   |                 | 9,134  |   |                      |   | 1,879 |   |   |   | 142,461 |   |
| Total revenues              |   | $        | 62,130 |   |           |   | 42,058 |       |   |   | 29,013            |   |   |                 | 9,134  |   |                      |   | 1,995 |   |   |   | 144,330 |   |
| Adjusted EBITDA             |   | $        | 13,423 |   |           |   | 21,676 |       |   |   | 5,696             |   |   |                 | 3,138  |   |                      |   | 359 |   |   |   | 44,292 |   |

----

| Six months ended June 30, |   | Consumer |    |   | Network Access |   |   | Commercial |   |   | Managed Broadband |   |   | Regulated Operations |   |   | Total Reportable Segments |   |
|---------------------------|--------|----------|---------|--------|----------------|--------|--------|------------|--------|--------|-------------------|--------|--------|----------------------|--------|--------|---------------------------|--------|
| 2009                      |   |     |    |   |           |   |   |       |   |   |              |   |   |                 |   |   |                      |   |
| Revenues:                 |   |     |    |   |           |   |   |       |   |   |              |   |   |                 |   |   |                      |   |
| Intersegment              |   | $        | ---     |   |           |   | 383    |       |   |   | 2,938             |   |   |                 | ---    |   |                      |   | 104 |   |   |   | 3,425 |   |
| External                  |   |     | 144,118 |   |           |   | 64,319 |       |   |   | 54,903            |   |   |                 | 21,608 |   |                      |   | 12,537 |   |   |   | 297,485 |   |
| Total revenues            |   | $        | 144,118 |   |           |   | 64,702 |       |   |   | 57,841            |   |   |                 | 21,608 |   |                      |   | 12,641 |   |   |   | 300,910 |   |
| Adjusted EBITDA           |   | $        | 41,070  |   |           |   | 32,590 |       |   |   | 10,893            |   |   |                 | 9,276  |   |                      |   | 3,855 |   |   |   | 97,684 |   |
|                      |   |     |    |   |           |   |   |       |   |   |              |   |   |                 |   |   |                      |   |   |   |   |   |   |   |
| 2008                      |   |     |    |   |           |   |   |       |   |   |              |   |   |                 |   |   |                      |   |   |   |   |   |   |   |
| Revenues:                 |   |     |    |   |           |   |   |       |   |   |              |   |   |                 |   |   |                      |   |   |   |   |   |   |   |
| Intersegment              |   | $        | 17      |   |           |   | 468    |       |   |   | 2,918             |   |   |                 | ---    |   |                      |   | 116 |   |   |   | 3,519 |   |
| External                  |   |     | 123,496 |   |           |   | 81,065 |       |   |   | 54,035            |   |   |                 | 16,660 |   |                      |   | 1,879 |   |   |   | 277,135 |   |
| Total revenues            |   | $        | 123,513 |   |           |   | 81,533 |       |   |   | 56,953            |   |   |                 | 16,660 |   |                      |   | 1,995 |   |   |   | 280,654 |   |
| Adjusted EBITDA           |   | $        | 25,677  |   |           |   | 41,813 |       |   |   | 10,021            |   |   |                 | 5,615  |   |                      |   | 359 |   |   |   | 83,485 |   |

|   | A reconciliation of reportable segment revenues to consolidated revenues follows (amounts in thousands): |
|--------|----------------------------------------------------------------------------------------------------------|

|                                                   |   | Three Months Ended |    |   | Six Months Ended |   |
|--------------------------------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                                                   |   | June 30,           |    |   | June 30,         |   |
|                                                   |   | 2009               |    |   | 2008             |   |   | 2009 |   |   | 2008 |   |
| Reportable segment revenues                            |   | $                  | 150,486 |   |             |   | 144,330 |   |   |   | 300,910 |   |   |   | 280,654 |   |
| Less intersegment revenues eliminated in consolidation |   |               | 1,690   |   |             |   | 1,869 |   |   |   | 3,425 |   |   |   | 3,519 |   |
| Consolidated revenues                                  |   | $                  | 148,796 |   |             |   | 142,461 |   |   |   | 297,485 |   |   |   | 277,135 |   |

|   | A reconciliation of reportable segment earnings from adjusted EBITDA to consolidated income before income taxes follows (amounts in thousands): |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                   |   | Three Months Ended |   |   | Six Months Ended |   |
|--------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                   |   | June 30,           |   |   | June 30,         |   |
|                                                   |   | 2009               |   |   | 2008             |   |   | 2009 |   |   | 2008 |   |
| Reportable segment adjusted EBITDA                     |   | $                  | 51,236 |   |             |   | 44,292 |   |   |   | 97,684 |   |   |   | 83,485 |   |
| Less depreciation and amortization expense             |   |               | 31,170 |   |             |   | 27,708 |   |   |   | 61,904 |   |   |   | 54,951 |   |
| Less share-based compensation expense                  |   |               | 1,427  |   |             |   | 1,593 |   |   |   | 3,229 |   |   |   | 2,853 |   |
| Less non-cash contribution adjustment                  |   |               | 80     |   |             |   | --- |   |   |   | 480 |   |   |   | --- |   |
| Less net loss attributable to non-controlling interest |   |               | ---    |   |             |   | 946 |   |   |   | --- |   |   |   | 1,922 |   |
| Consolidated operating income                          |   |               | 18,559 |   |             |   | 14,045 |   |   |   | 32,071 |   |   |   | 23,759 |   |
| Less other expense, net                                |   |               | 13,262 |   |             |   | 11,376 |   |   |   | 25,901 |   |   |   | 20,203 |   |
| Consolidated income before income tax expense          |   | $                  | 5,297  |   |             |   | 2,669 |   |   |   | 6,170 |   |   |   | 3,556 |   |

|   |   |
|--------|--------|

----

| (7) | Commitments and Contingencies |
|-----|-------------------------------|

|   | Litigation, Disputes, and Regulatory Matters |
|--------|----------------------------------------------|

|   | We are involved in various lawsuits, billing disputes, legal proceedings, and regulatory matters that have arisen from time to time in the normal course of business. While the ultimate results of these items cannot be predicted with certainty we do not expect at this time the resolution of them to have a material adverse effect on our financial position, results of operations or liquidity. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In the third quarter of 2008, Alaska DigiTel received a request for documents pursuant to a notification of investigation from the FCC’s Office of the Inspector General in connection with its review of Alaska DigiTel’s compliance with program rules and requirements under certain USF programs. The request covers the period beginning January 1, 2004 through August 31, 2008, and relates to amounts receivedby Alaska DigiTel and its affiliates during that period.  Alaska DigiTel was an Alaska based wireless communications company of which we acquired an 81.9% equity interest on January 2, 2007 and the remaining 18.1% equity interest on August 18, 2008 and subsequently dissolved in April 2009.  Prior to August 18, 2008, our control over the operations of Alaska DigiTel was limited as required by the FCC upon its approval of our initial acquisition completed in January 2007.  We have beenand intend to continue fully complying with this request on behalf of Alaska DigiTel and the GCI companies as affiliates.  This request has not had a material impact on our income statement, financial position or cash flows but given the preliminary nature of this request we are unable to assess the ultimate resolution of this matter. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Alaska Communications Systems (“ACS”) Access Service Pricing |
|--------|--------------------------------------------------------------------------|

|   | On May 22, 2006, the ACS subsidiary serving Anchorage filed a petition with the FCC, seeking forbearance from regulation of interstate broadband and access services. On August 20, 2007, the FCC granted in part and denied in part the requested relief, requiring that ACS comply with certain safeguards to ensure the relief granted would not result in harm to consumers or competition.  On October 22, 2008, ACS fileda petition to convert to price cap regulation the access services it provides in each of its operating areas.   The petition was granted on April 17, 2009, rescinding the forbearance relief previously granted.  While we currently cannot predict with certainty the effect of these matters on our cost of purchasing ACS services, we believe the new ACS rates will reduce the cost of switched access services provided by ACS. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Universal Service |
|--------|-------------------|

|   | The USF pays subsidies to ETCs to support the provision of local service in high-cost areas. Under FCC regulations, we have qualified as a competitive ETC in the Anchorage, Fairbanks, Juneau, Matanuska Telephone Association (“MTA”), Mukluk, Ketchikan, Fort Wainwright/Eielson, Interior Telephone Company, and Glacier State study areas. Without ETC status, we would not qualify for USF subsidies in these areasor other rural areas where we propose to offer wireline and wireless local services, and our revenue for providing local services in these areas would be materially adversely affected. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On May 1, 2008, the FCC issued an order adopting the recommendation of the Joint Board to impose a state-by-state interim cap on high cost funds to be distributed to competitive ETCs.  As part of the revised policy, the FCC adopted a limited exception from the cap for competitive ETCs serving tribal lands or Alaska Native regions.  While the operation of the cap will generally reduce the high costfund amounts available to competitive ETCs as new competitive ETCs are designated and as existing competitive ETCs acquire new customers, providers like us who serve tribal lands or Alaska Native regions were provided some relief.  On March 5, 2009, the FCC issued an additional order waiving a previously adopted limitation to the exception, the result of which is to provide uncapped support for all lines served by competitive ETCs for tribal lands or Alaska Native regions during the time the interimcap is in effect.  The uncapped support for tribal lands or Alaska Native regions and the cap for all other regions will be in place until the FCC takes action on proposals for long term reform.  On April 8, 2009, the FCC issued a Notice of Inquiry to review aspects of its high cost support program.  Comments were filed on May 8, 2009, and replies were filed on June 8, 2009.  We cannot predict at this time the outcome of this proceeding or its affect on high cost support availableto us. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Dobson Resale Agreement |
|--------|-------------------------|

|   | AT&T Mobility, LLC (“AT&T Mobility”) acquired Dobson Communications Corporation (“Dobson”), including its Alaska properties, on November 15, 2007. In December 2007 we signed an agreement with AT&T Mobility that provides for an orderly transition of our wireless customers from the Dobson/AT&T network in Alaska to our wireless facilities that we began building in 2008 and areexpected to be substantially completed in 2010 or 2011.  The agreement required our customers to be on our wireless network by June 30, 2009, but allows our customers to use the AT&T Mobility network for roaming during the transition period.  We successfully migrated all but 200 customers from the AT&T Mobility network to our network as of June 30, 2009.  The four-year transition period, which expires June 30, 2012, provides us adequate time to replace the Dobson/AT&Tnetwork in Alaska with our own wireless facilities. Under the agreement, AT&T Mobility’s obligation to purchase network services from us terminated as of July 1, 2008. AT&T Mobility provided us with a large block of wireless network usage at no charge to facilitate the transition of our customers to our facilities.  We will pay for usage in excess of that base transitional amount.  Under the previous agreement with Dobson, our margin was fixed.  Under the new agreementwith AT&T Mobility, we will pay for usage in excess of the block of free minutes on a per minute basis.  The block of wireless network usage at no charge is expected to substantially reduce our wireless product Cost of Goods Sold during the approximate four year period beginning June 4, 2008 and ending June 30, 2012. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Subsequent Event |
|-----|------------------|

----

2

MANAGEMENT’S 

----

|                       | Reportable Segments |
|----------------------------|---------------------|
| Services and Products      | Consumer            | Network Access | Commercial | Managed Broadband | Regulated Operations |
| Voice:                     |                |   |   |   |   |
| Long-distance              | X                   | X | X |   | X |
| Local Access               | X                   | X | X |   | X |
| Directories                |                |   | X |   |   |
|                       |                |   |   |   |   |
| Video                      | X                   |   | X |   |   |
|                       |                |   |   |   |   |
| Data:                      |                |   |   |   |   |
| Internet                   | X                   | X | X | X | X |
| Data Networks              |                | X | X | X |   |
| Managed Services           |                |   | X | X |   |
| Managed Broadband Services |                |   |   | X |   |
|                       |                |   |   |   |   |
| Wireless                   | X                   | X | X |   | X |

----

----

----

----

|                                         |   |               |   |   | Percent­age |   |   |             |   |   |     |   |   | Percent­age |   |
|----------------------------------------------|--------|--------------------|--------|--------|------------------|--------|--------|------------------|--------|--------|----------|--------|--------|------------------|--------|
|                                         |   | Three Months Ended |   |   | Change 1         |   |   | Six Months Ended |   |   | Change 1 |   |
|                                         |   | June 30,           |   |   | 2009             |   |   | June 30,         |   |   | 2009     |   |
|                                         |   | 2009               |   |   | 2008             |   |   | vs. 2008         |   |   | 2009     |   |   | 2008             |   |   | vs. 2008 |   |
| (Unaudited)                                  |   |               |   |   |             |   |   |             |   |   |     |   |   |             |   |   |   |   |
| Statements of Operations Data:               |   |               |   |   |             |   |   |             |   |   |     |   |   |             |   |   |   |   |
| Revenues:                                    |   |               |   |   |             |   |   |             |   |   |     |   |   |             |   |   |   |   |
| Consumer segment                             |   |               | 49.3   | %      |             |   | 43.6   | %                |   |   | 18.2     | %      |   |             | 48.4   | % |   |   | 44.5 | % |   |   | 16.7 | % |
| Network Access segment                       |   |               | 20.9   | %      |             |   | 29.4   | %                |   |   | (25.7    | %)     |   |             | 21.6   | % |   |   | 29.3 | % |   |   | (20.7 | %) |
| Commercial segment                           |   |               | 18.1   | %      |             |   | 19.3   | %                |   |   | (1.9     | %)     |   |             | 18.5   | % |   |   | 19.5 | % |   |   | 1.6 | % |
| Managed Broadband segment                    |   |               | 7.4    | %      |             |   | 6.4    | %                |   |   | 20.4     | %      |   |             | 7.3    | % |   |   | 6.0 | % |   |   | 29.7 | % |
| Regulated Operations segment                 |   |               | 4.3    | %      |             |   | 1.3    | %                |   |   | 238.9    | %      |   |             | 4.2    | % |   |   | 0.7 | % |   |   | 567.2 | % |
| Total revenues                               |   |               | 100.0  | %      |             |   | 100.0  | %                |   |   | 4.5      | %      |   |             | 100.0  | % |   |   | 100.0 | % |   |   | 7.3 | % |
| Selling, general and administrative expenses |   |               | 34.8   | %      |             |   | 33.9   | %                |   |   | 7.2      | %      |   |             | 36.4   | % |   |   | 34.2 | % |   |   | 14.4 | % |
| Depreciation and amortization expense        |   |               | 21.0   | %      |             |   | 19.5   | %                |   |   | 12.5     | %      |   |             | 20.8   | % |   |   | 19.8 | % |   |   | 12.7 | % |
| Operating income                             |   |               | 12.5   | %      |             |   | 9.9    | %                |   |   | 32.1     | %      |   |             | 10.8   | % |   |   | 8.6 | % |   |   | 35.0 | % |
| Other expense, net                           |   |               | 8.9    | %      |             |   | 8.0    | %                |   |   | 16.6     | %      |   |             | 8.7    | % |   |   | 7.3 | % |   |   | 28.2 | % |
| Income before income taxes                   |   |               | 3.6    | %      |             |   | 1.9    | %                |   |   | 98.5     | %      |   |             | 2.1    | % |   |   | 1.3 | % |   |   | 73.5 | % |
| Net income                                   |   |               | 1.7    | %      |             |   | 0.6    | %                |   |   | 189.4    | %      |   |             | 1.0    | % |   |   | 0.1 | % |   |   | 743.4 | % |
| Net income attributable to GCI               |   |               | 1.7    | %      |             |   | 1.3    | %                |   |   | 40.0     | %      |   |             | 1.0    | % |   |   | 0.8 | % |   |   | 28.7 | % |

----

|                           |   | Second Quarter of |   |   | Percentage |   |
|--------------------------------|--------|-------------------|--------|--------|------------|--------|
|                           |   | 2009              |   |   | 2008       |   |   | Change |   |
| Voice                          |   | $                 | 12,988 |   |       |   | 12,117 |   |   |   | 7.2 | % |
| Video                          |   |              | 27,132 |   |       |   | 25,668 |   |   |   | 5.7 | % |
| Data                           |   |              | 12,166 |   |       |   | 10,386 |   |   |   | 17.1 | % |
| Wireless                       |   |              | 21,113 |   |       |   | 13,942 |   |   |   | 51.4 | % |
| Total Consumer segment revenue |   | $                 | 73,399 |   |       |   | 62,113 |   |   |   | 18.2 | % |

|                                      |   | Second Quarter of |   |   | Percentage |   |
|-------------------------------------------|--------|-------------------|--------|--------|------------|--------|
|                                      |   | 2009              |   |   | 2008       |   |   | Change |   |
| Voice                                     |   | $                 | 3,775  |   |       |   | 4,682 |   |   |   | (19.4 | %) |
| Video                                     |   |              | 11,037 |   |       |   | 9,936 |   |   |   | 11.1 | % |
| Data                                      |   |              | 1,014  |   |       |   | 1,877 |   |   |   | (46.0 | %) |
| Wireless                                  |   |              | 8,185  |   |       |   | 7,194 |   |   |   | 13.8 | % |
| Total Consumer segment Cost of Goods Sold |   | $                 | 24,011 |   |       |   | 23,689 |   |   |   | 1.4 | % |

|                             |   | Second Quarter of |   |   | Percentage |   |
|----------------------------------|--------|-------------------|--------|--------|------------|--------|
|                             |   | 2009              |   |   | 2008       |   |   | Change |   |
| Consumer segment adjusted EBITDA |   | $                 | 22,292 |   |       |   | 13,423 |   |   |   | 66.1 | % |

|                                             |   | June 30, |    |   | Percentage |   |
|--------------------------------------------------|--------|----------|---------|--------|------------|--------|
|                                             |   | 2009     |    |   | 2008       |   |   | Change |   |
| Voice:                                           |   |     |    |   |       |   |   |   |   |
| Long-distance subscribers1                       |   |     | 88,600  |   |       |   | 89,800 |   |   |   | (1.3 | %) |
| Long-distance minutes carried (in millions)      |   |     | 28.3    |   |       |   | 32.0 |   |   |   | (11.4 | %) |
| Total local access lines in service2             |   |     | 81,200  |   |       |   | 78,100 |   |   |   | 4.0 | % |
| Local access lines in service on GCI facilities2 |   |     | 70,300  |   |       |   | 60,500 |   |   |   | 16.2 | % |
|                                             |   |     |    |   |       |   |   |   |   |   |   |   |
| Video:                                           |   |     |    |   |       |   |   |   |   |   |   |   |
| Basic subscribers3                               |   |     | 129,700 |   |       |   | 130,300 |   |   |   | (0.5 | %) |
| Digital programming tier subscribers4            |   |     | 76,200  |   |       |   | 68,200 |   |   |   | 11.7 | % |
| HD/DVR converter boxes5                          |   |     | 74,400  |   |       |   | 56,900 |   |   |   | 30.8 | % |
| Homes passed                                     |   |     | 230,400 |   |       |   | 226,900 |   |   |   | 1.5 | % |
| Average monthly gross revenue per subscriber6    |   | $        | 69.59   |   |       | $      | 65.86 |   |   |   | 5.7 | % |
|                                             |   |     |    |   |       |   |   |   |   |   |   |   |
| Data:                                            |   |     |    |   |       |   |   |   |   |   |   |   |
| Cable modem subscribers7                         |   |     | 94,900  |   |       |   | 91,000 |   |   |   | 4.3 | % |
|                                             |   |     |    |   |       |   |   |   |   |   |   |   |
| Wireless:                                        |   |     |    |   |       |   |   |   |   |   |   |   |
| Wireless lines in service8                       |   |     | 103,600 |   |       |   | 77,000 |   |   |   | 34.6 | % |

----

| Average monthly gross revenue per subscriber9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $ | 57.88 |   |   | $ | 57.39 |   |   |   | 0.9 | % |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|-------|--------|--------|---|-------|--------|--------|--------|-----|---|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| 1 A long-distance customer is defined as a customer account that is invoiced a monthly long-distance plan fee or has made a long-distance call during the month.2 A local access line in service is defined as a revenue generating circuit or channel connecting a customer to the public switched telephone network.3 A basic cable subscriber is defined as one basic tier of service delivered to an address or separate subunits thereof regardless of the number of outlets purchased. On January 1, 2009, our Consumer segment transferred 2,900 basic cable subscribers to our Commercialsegment.4 A digital programming tier subscriber is defined as one digital programming tier of service delivered to an address or separate subunits thereof regardless of the number of outlets or digital programming tiers purchased. Digital programming tier subscribers are asubset of basic subscribers.5 A high definition/digital video recorder (“HD/DVR”) converter box is defined as one box rented by a digital programming or basic tier subscriber. A digital programming or basic tier subscriber is not required to rent an HD/DVR converter box to receiveservice.6 Quarter-to-date average monthly consumer video revenues divided by the average of consumer video basic subscribers at the beginning and end of the period.7 A cable modem subscriber is defined by the purchase of cable modem service regardless of the level of service purchased. If one entity purchases multiple cable modem service access points, each access point is counted as a subscriber. Cable modem subscribers may alsobe video basic subscribers though basic cable service is not required to receive cable modem service. On January 1, 2009, our Consumer segment transferred 1,400 cable modem subscribers to our Commercial segment.8 A wireless line in service is defined as a revenue generating wireless device.9 Quarter-to-date average monthly consumer wireless revenues divided by the average of consumer wireless subscribers at the beginning and end of the period. |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |

|   | · | A 4.7% increase in programming services revenue to $21.5 million in the second quarter of 2009 primarily resulting from an increase in digital programming tier subscribers in the second quarter of 2009, and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A 11.3% increase in equipment rental revenue to $5.3 million in the second quarter of 2009 primarily resulting from our customers’ increased use of our HD/DVR converter boxes. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                 |   | Second Quarter of |   |   | Percentage |   |
|--------------------------------------|--------|-------------------|--------|--------|------------|--------|
|                                 |   | 2009              |   |   | 2008       |   |   | Change |   |
| Voice                                |   | $                 | 13,444 |   |       |   | 23,213 |   |   |   | (42.1 | %) |
| Data                                 |   |              | 16,073 |   |       |   | 17,988 |   |   |   | (10.7 | %) |
| Wireless                             |   |              | 1,603  |   |       |   | 690 |   |   |   | 132.3 | % |
| Total Network Access segment revenue |   | $                 | 31,120 |   |       |   | 41,891 |   |   |   | (25.7 | %) |

|                                            |   | Second Quarter of |   |   | Percentage |   |
|-------------------------------------------------|--------|-------------------|--------|--------|------------|--------|
|                                            |   | 2009              |   |   | 2008       |   |   | Change |   |
| Voice                                           |   | $                 | 4,464  |   |       |   | 8,226 |   |   |   | (45.7 | %) |
| Data                                            |   |              | 1,726  |   |       |   | 2,830 |   |   |   | (39.0 | %) |
| Wireless                                        |   |              | 366    |   |       |   | 473 |   |   |   | (22.6 | %) |
| Total Network Access segment Cost of Goods Sold |   | $                 | 6,556  |   |       |   | 11,529 |   |   |   | (43.1 | %) |

|                                   |   | Second Quarter of |   |   | Percentage |   |
|----------------------------------------|--------|-------------------|--------|--------|------------|--------|
|                                   |   | 2009              |   |   | 2008       |   |   | Change |   |
| Network Access segment adjusted EBITDA |   | $                 | 15,671 |   |       |   | 21,676 |   |   |   | (27.7 | %) |

----

|                                                                                                                                                                             |   | June 30, |   |   | Percentage |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|------------|--------|
|                                                                                                                                                                             |   | 2009     |   |   | 2008       |   |   | Change |   |
| Voice:                                                                                                                                                                           |   |     |   |   |       |   |   |   |   |
| Long-distance minutes carried (in millions)                                                                                                                                      |   |     | 215.6  |   |       |   | 326.2 |   |   |   | (33.9 | %) |
|                                                                                                                                                                             |   |     |   |   |       |   |   |   |   |   |   |   |
| Data:                                                                                                                                                                            |   |     |   |   |       |   |   |   |   |   |   |   |
| Total Internet service provider access lines in service1                                                                                                                         |   |     | 1,700  |   |       |   | 2,000 |   |   |   | (15.0 | %) |
|                                                                                                                                                                             |   |
| 1 An Internet service provider access line in service is defined as a revenue generating circuit or channel connecting a customer to the public switched telephone network. |   |
|                                                                                                                                                                             |   |

|                             |   | Second Quarter of |   |   | Percentage |   |
|----------------------------------|--------|-------------------|--------|--------|------------|--------|
|                             |   | 2009              |   |   | 2008       |   |   | Change |   |
| Voice                            |   | $                 | 7,701  |   |       |   | 7,280 |   |   |   | 5.8 | % |
| Video                            |   |              | 2,221  |   |       |   | 2,149 |   |   |   | 3.4 | % |
| Data                             |   |              | 15,409 |   |       |   | 16,584 |   |   |   | (7.1 | %) |
| Wireless                         |   |              | 1,580  |   |       |   | 1,431 |   |   |   | 10.4 | % |
| Total Commercial segment revenue |   | $                 | 26,911 |   |       |   | 27,444 |   |   |   | (1.9 | %) |

----

|                                        |   | Second Quarter of |   |   |   |   |
|---------------------------------------------|--------|-------------------|--------|--------|--------|--------|
|                                        |   | 2009              |   |   | 2008   |   |   | Percentage Change |   |
| Voice                                       |   | $                 | 4,898  |   |   |   | 4,809 |   |   |   | 1.9 | % |
| Video                                       |   |              | 506    |   |   |   | 382 |   |   |   | 32.5 | % |
| Data                                        |   |              | 6,696  |   |   |   | 7,481 |   |   |   | (10.5 | %) |
| Wireless                                    |   |              | 877    |   |   |   | 1,240 |   |   |   | (29.3 | %) |
| Total Commercial segment Cost of Goods Sold |   | $                 | 12,977 |   |   |   | 13,912 |   |   |   | (6.7 | %) |

|                               |   | Second Quarter of |   |   | Percentage |   |
|------------------------------------|--------|-------------------|--------|--------|------------|--------|
|                               |   | 2009              |   |   | 2008       |   |   | Change |   |
| Commercial segment adjusted EBITDA |   | $                 | 5,592  |   |       |   | 5,696 |   |   |   | (1.8 | %) |

|   | Selected key performance indicators for our Commercial segment follow: |
|--------|------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | June 30, |   | Percentage |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 2009     |   | 2008       |   | Change |
| Voice:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |     |   |       |   |   |
| Long-distance subscribers1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 9,600    |   | 10,400     |   | (7.7%) |
| Total local access lines in service2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 47,300   |   | 45,400     |   | 4.2% |
| Local access lines in service on GCI facilities 2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 18,400   |   | 16,600     |   | 10.8% |
| Long-distance minutes carried (in millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 31.8     |   | 32.9       |   | (3.4%) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |     |   |       |   |   |
| Data:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |     |   |       |   |   |
| Cable modem subscribers3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 10,400   |   | 9,000      |   | 15.6% |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |     |   |       |   |   |
| Wireless:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |       |   |   |
| Wireless lines in service4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 8,900    |   | 7,100      |   | 25.4% |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |     |   |       |   |   |
| 1  A long-distance customer is defined as a customer account that is invoiced a monthly long-distance plan fee or has made a long-distance call during the month.2  A local access line in service is defined as a revenue generating circuit or channel connecting a customer to the public switched telephone network.3  A cable modem subscriber is defined by the purchase of cable modem service regardless of the level of service purchased. If one entity purchases multiple cable modem service access points, each access point is counted as a subscriber. On January 1, 2009, ourConsumer segment transferred 1,400 cable modem subscribers to our Commercial segment. 4  A wireless line in service is defined as a revenue generating wireless device. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |

----

|                                                                                                                                                                                                                                                                                                                               |   | June 30, |   |   | Percentage |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                               |   | 2009     |   |   | 2008       |   |   | Change |   |
| Voice:                                                                                                                                                                                                                                                                                                                             |   |     |   |   |       |   |   |   |   |
| Long-distance subscribers1                                                                                                                                                                                                                                                                                                         |   |     | 830    |   |       |   | 900 |   |   |   | (6.4 | %) |
| Long-distance minutes carried (in millions)                                                                                                                                                                                                                                                                                        |   |     | 0.3    |   |       |   | 0.1 |   |   |   | 172.5 | % |
| Total local access lines in service (all on GCI facilities)2                                                                                                                                                                                                                                                                       |   |     | 11,600 |   |       |   | 12,200 |   |   |   | (5.2 | %) |
|                                                                                                                                                                                                                                                                                                                               |   |     |   |   |       |   |   |   |   |   |   |   |
| 1 A long-distance subscriber is defined as a customer account that is invoiced a monthly long-distance plan fee or has made a long-distance call during the month.2 A local access line in service is defined as a revenue generating circuit or channel connecting a customer to the public switched telephone network. |   |

----

| ·   | A $1.8 million increase in labor costs, |
|--------------------|-----------------------------------------|

| ·   | $1.3 million in additional expense resulting from our June 1, 2008, acquisition of UUI and Unicom,  and |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | A $654,000 increase in our company-wide success sharing bonus accrual in 2009. |
|--------------------|--------------------------------------------------------------------------------|

| ·   | $1.1 million in additional interest expense resulting from the Galaxy 18 capital lease commencing in May 2008, and |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | A $1.8 million increase in interest expense on our Senior Credit Facility to $4.6 million resulting from additional debt from the Additional Incremental Term Loan agreement beginning in May 2008, the increased interest rate on our Senior Credit Facility beginning in May 2008, and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $1.2 million decrease in capitalized interest. |
|--------------------|--------------------------------------------------|

----

|                           |   |   |    |   | Percentage |   |
|--------------------------------|--------|--------|---------|--------|------------|--------|
|                           |   | 2009   |    |   | 2008       |   |   | Change |   |
| Voice                          |   | $      | 26,903  |   |       |   | 23,978 |   |   |   | 12.2 | % |
| Video                          |   |   | 54,502  |   |       |   | 51,315 |   |   |   | 6.2 | % |
| Data                           |   |   | 23,928  |   |       |   | 20,482 |   |   |   | 16.8 | % |
| Wireless                       |   |   | 38,785  |   |       |   | 27,721 |   |   |   | 39.9 | % |
| Total Consumer segment revenue |   | $      | 144,118 |   |       |   | 123,496 |   |   |   | 16.7 | % |

|                                      |   |   |   |   |   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                      |   | 2009   |   |   | 2008   |   |   | Percentage Change |   |
| Voice                                     |   | $      | 7,492  |   |   |   | 9,735 |   |   |   | (23.0 | %) |
| Video                                     |   |   | 22,359 |   |   |   | 19,866 |   |   |   | 12.6 | % |
| Data                                      |   |   | 2,128  |   |   |   | 3,703 |   |   |   | (42.5 | %) |
| Wireless                                  |   |   | 15,435 |   |   |   | 15,087 |   |   |   | 2.3 | % |
| Total Consumer segment Cost of Goods Sold |   | $      | 47,414 |   |   |   | 48,391 |   |   |   | (2.0 | %) |

|                             |   |   |   |   | Percentage |   |
|----------------------------------|--------|--------|--------|--------|------------|--------|
|                             |   | 2009   |   |   | 2008       |   |   | Change |   |
| Consumer segment adjusted EBITDA |   | $      | 41,070 |   |       |   | 25,677 |   |   |   | 60.0 | % |

----

|                                                                                                                                                                                                                                                                                                                         |   | June 30, |   |   | Percentage |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                         |   | 2009     |   |   | 2008       |   |   | Change |   |
| Voice:                                                                                                                                                                                                                                                                                                                       |   |     |   |   |       |   |   |   |   |
| Long-distance minutes carried (in millions)                                                                                                                                                                                                                                                                                  |   |     | 57.9   |   |       |   | 65.6 |   |   |   | (11.8 | %) |
|                                                                                                                                                                                                                                                                                                                         |   |     |   |   |       |   |   |   |   |   |   |   |
| Video:                                                                                                                                                                                                                                                                                                                       |   |     |   |   |       |   |   |   |   |   |   |   |
| Average monthly gross revenue per subscriber1                                                                                                                                                                                                                                                                                |   | $        | 69.28  |   |       | $      | 66.19 |   |   |   | 4.7 | % |
|                                                                                                                                                                                                                                                                                                                         |   |     |   |   |       |   |   |   |   |   |   |   |
| Wireless:                                                                                                                                                                                                                                                                                                                    |   |     |   |   |       |   |   |   |   |   |   |   |
| Average monthly gross revenue per subscriber2                                                                                                                                                                                                                                                                                |   | $        | 58.59  |   |       | $      | 58.25 |   |   |   | 0.6 | % |
|                                                                                                                                                                                                                                                                                                                         |   |
| 1 Year-to-date average monthly consumer video revenues divided by the average of consumer video basic subscribers at the beginning and end of the period.2 Year-to-date average monthly consumer wireless revenues divided by the average of consumer wireless subscribers at the beginning and end of the period. |   |

|   | · | A 4.8% increase in programming services revenue to $43.2 million in 2009 primarily resulting from an increase in digital programming tier subscribers in 2009, and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A 13.6% increase in equipment rental revenue to $10.6 million in 2009 primarily resulting from our customers’ increased use of our HD/DVR converter boxes. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $6.2 million or 212.8% increase in recognized support from the USAC primarily due to increased wireless subscribers and the FCC order issued in March 2009, the result of which provides uncapped support for all lines served by competitive ETCs for tribal lands or Alaska Native regions retroactive to August 2008.  The issuance of this order allowed usto recognize $810,000 in additional USAC support from August 2008 to December 2008 in 2009 that is included in the revenue increase discussed above |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Recognition of $3.1 million to be received from the USAC for interstate common line support for a new local access area for which we received ETC status in May 2009 of which $1.7 million was related to services provided during the year ended December 31, 2008.  Collectability was not reasonably assured until we were awarded ETC status, therefore, we deferredrevenue recognition until such status was confirmed, and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | An increase in the number of wireless subscribers. |
|--------------------|----------------------------------------------------|

----

|                                 |   |   |   |   | Percentage |   |
|--------------------------------------|--------|--------|--------|--------|------------|--------|
|                                 |   | 2009   |   |   | 2008       |   |   | Change |   |
| Voice                                |   | $      | 27,778 |   |       |   | 45,155 |   |   |   | (38.5 | %) |
| Data                                 |   |   | 34,027 |   |       |   | 34,827 |   |   |   | (2.3 | %) |
| Wireless                             |   |   | 2,514  |   |       |   | 1,083 |   |   |   | 132.1 | % |
| Total Network Access segment revenue |   | $      | 64,319 |   |       |   | 81,065 |   |   |   | (20.7 | %) |

|                                            |   |   |   |   | Percentage |   |
|-------------------------------------------------|--------|--------|--------|--------|------------|--------|
|                                            |   | 2009   |   |   | 2008       |   |   | Change |   |
| Voice                                           |   | $      | 8,541  |   |       |   | 15,533 |   |   |   | (45.0 | %) |
| Data                                            |   |   | 4,212  |   |       |   | 5,556 |   |   |   | (24.2 | %) |
| Wireless                                        |   |   | 487    |   |       |   | 694 |   |   |   | (29.8 | %) |
| Total Network Access segment Cost of Goods Sold |   | $      | 13,240 |   |       |   | 21,783 |   |   |   | (39.2 | %) |

|                                   |   |   |   |   | Percentage |   |
|----------------------------------------|--------|--------|--------|--------|------------|--------|
|                                   |   | 2009   |   |   | 2008       |   |   | Change |   |
| Network Access segment adjusted EBITDA |   | $      | 32,590 |   |       |   | 41,813 |   |   |   | (22.1 | %) |

----

|                                        |   | June 30, |   |   | Percentage |   |
|---------------------------------------------|--------|----------|--------|--------|------------|--------|
|                                        |   | 2009     |   |   | 2008       |   |   | Change |   |
| Voice:                                      |   |     |   |   |       |   |   |   |   |
| Long-distance minutes carried (in millions) |   |     | 416.1  |   |       |   | 640.8 |   |   |   | (35.1 | %) |

|                             |   |   |   |   | Percentage |   |
|----------------------------------|--------|--------|--------|--------|------------|--------|
|                             |   | 2009   |   |   | 2008       |   |   | Change |   |
| Voice                            |   | $      | 15,685 |   |       |   | 14,494 |   |   |   | 8.2 | % |
| Video                            |   |   | 4,271  |   |       |   | 3,969 |   |   |   | 7.6 | % |
| Data                             |   |   | 31,924 |   |       |   | 32,793 |   |   |   | (2.7 | %) |
| Wireless                         |   |   | 3,023  |   |       |   | 2,779 |   |   |   | 8.8 | % |
| Total Commercial segment revenue |   | $      | 54,903 |   |       |   | 54,035 |   |   |   | 1.6 | % |

----

|                                        |   |   |   |   |   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                        |   | 2009   |   |   | 2008   |   |   | Percentage Change |   |
| Voice                                       |   | $      | 9,467  |   |   |   | 9,738 |   |   |   | (2.8 | %) |
| Video                                       |   |   | 1,003  |   |   |   | 770 |   |   |   | 30.3 | % |
| Data                                        |   |   | 14,261 |   |   |   | 15,061 |   |   |   | (5.3 | %) |
| Wireless                                    |   |   | 1,601  |   |   |   | 2,414 |   |   |   | (33.7 | %) |
| Total Commercial segment Cost of Goods Sold |   | $      | 26,332 |   |   |   | 27,983 |   |   |   | (5.9 | %) |

|                               |   |   |   | Percentage |
|------------------------------------|--------|--------|--------|------------|
|                               |   | 2009   |   | 2008       |   | Change |
| Commercial segment adjusted EBITDA | $      | 10,893 |   | 10,021     |   |                                8.7% |

|   | Selected key performance indicators for our Commercial segment follow: |
|--------|------------------------------------------------------------------------|

|                                        |   | June 30, |   |   | Percentage |   |
|---------------------------------------------|--------|----------|--------|--------|------------|--------|
|                                        |   | 2009     |   |   | 2008       |   |   | Change |   |
| Voice:                                      |   |     |   |   |       |   |   |   |   |
| Long-distance minutes carried (in millions) |   |     | 64.0   |   |       |   | 65.7 |   |   |   | (2.7 | %) |

----

|                                        |   | June 30, |   |   | Percentage |   |
|---------------------------------------------|--------|----------|--------|--------|------------|--------|
|                                        |   | 2009     |   |   | 2008       |   |   | Change |   |
| Voice:                                      |   |     |   |   |       |   |   |   |   |
| Long-distance minutes carried (in millions) |   |     | 0.7    |   |       |   | 0.1 |   |   |   | 454.5 | % |

----

| ·   | A $5.3 million increase in labor costs, |
|--------------------|-----------------------------------------|

| ·   | $4.3 million in additional expense resulting from our June 1, 2008, acquisition of UUI and Unicom, |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | $1.2 million in additional expense incurred in 2009 for the conversion of our customers' wireless phones to our facilities, and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $1.2 million increase in our company-wide success sharing bonus accrual in 2009. |
|--------------------|------------------------------------------------------------------------------------|

| ·   | $2.8 million in additional interest expense resulting from the Galaxy 18 capital lease commencing in May 2008, |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | A $3.8 million increase in interest expense on our Senior Credit Facility to $8.4 million resulting from additional debt from the Additional Incremental Term Loan agreement beginning in May 2008, the increased interest rate on our Senior Credit Facility beginning in May 2008, and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $1.7 million decrease in capitalized interest. |
|--------------------|--------------------------------------------------|

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|                                                 |   | 2009   |    |   | 2008   |   |
|------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Operating activities                                 |   | $      | 42,747  |   |   |   | 108,657 |   |
| Investing activities                                 |   |   | (59,055 | )      |   |   | (155,177 | ) |
| Financing activities                                 |   |   | 13,835  |   |   |   | 129,149 |   |
| Net increase (decrease) in cash and cash equivalents |   | $      | (2,473  | )      |   |   | 82,629 |   |

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3
Quantitative

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4
Controls

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II

Item
 Legal 

----

|   | Item 4. Submission of Matters to a Vote of Security Holders |
|--------|-------------------------------------------------------------|

| (a)   | The annual shareholders meeting of GCI was held on June 29, 2009. |
|-----------------|-------------------------------------------------------------------|

| (b)   | Not applicable. |
|-----------------|-----------------|

| Description of Matter                                                                                                                               |   | For    |       |   | Against |   |       | Withheld |   |   | Abstentions |   |   | Broker Nonvotes |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|---------|--------|------------|----------|--------|--------|-------------|--------|--------|-----------------|---------|
| 1. Election of Directors:                                                                                                                           |   |
| Stephen M. Brett                                                                                                                                    |   |   | 74,642,474 |   |    |   | 3,001,513  |     |   |   | ----        |   |   |            | ----    |   |   |   | --- |   |
| Ronald A. Duncan                                                                                                                                    |   |   | 76,581,216 |   |    |   | 1,062,771  |     |   |   | ----        |   |   |            | ----    |   |   |   | --- |   |
| Stephen R. Mooney                                                                                                                                   |   |   | 60,223,278 |   |    |   | 17,420,709 |     |   |   | ----        |   |   |            | ----    |   |   |   | --- |   |
| Mark W. Kroloff                                                                                                                                     |   |   | 76,733,827 |   |    |   | 910,160    |     |   |   | ----        |   |   |            | ----    |   |   |   | --- |   |
|                                                                                                                                                |   |   |       |   |    |   |       |     |   |   |        |   |   |            |    |   |   |   |   |   |
| 2. Approving certain amendments to our Amended and Restated 1986 Stock Option Plan to approve a one-time offer of exchange of certain options. |   |
|                                                                                                                                                |   | For    |       |   | Against |   |       | Withheld |   |   | Abstentions |   |   | Broker Nonvotes |    |
|                                                                                                                                                |   |   | 45,832,525 |   |    |   | 25,590,579 |     |   |   | ---         |   |   |            | 993,160 |   |   |   | 5,227,723 |   |

6

| Exhibit No. | Description                                                                                                                                                                                           |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1        | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by our President and Director                                                  |
| 31.2        | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by our Senior Vice President, Chief Financial Officer, Secretary and Treasurer |
| 32.1        | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by our President and Director                                                  |
| 32.2        | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by our Senior Vice President, Chief Financial Officer, Secretary and Treasurer |

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SIGNATURES

| Signature                   |   | Title                                                         |   | Date                  |
|-----------------------------|--------|---------------------------------------------------------------|--------|-----------------------|
|                        |   |                                                          |   |                  |
|                        |   |                                                          |   |                  |
|   /s/ Ronald A. Duncan |   | President and Director                                        |   |   August 7, 2009 |
| Ronald A. Duncan            |   | (Principal Executive Officer)                                 |   |                  |
|                        |   |                                                          |   |                  |
|   /s/ John M. Lowber   |   | Senior Vice President, Chief Financial                        |   |   August 7, 2009 |
| John M. Lowber              |   | Officer, Secretary and Treasurer(Principal Financial Officer) |   |                  |
|                        |   |                                                          |   |                  |
|   /s/ Lynda L. Tarbath |   | Vice President, Chief Accounting                              |   |   August 7, 2009 |
| Lynda L. Tarbath            |   | Officer(Principal Accounting Officer)                         |   |                  |

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