As filed with the Securities and Exchange Commission on May 15, 2002.

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              --------------------

                                    FORM 10-Q

                                   (Mark One)

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2002

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

         For the transition period from          to

                           Commission File No. 0-5890

                                    GCI, INC.
             (Exact name of registrant as specified in its charter)


      STATE OF ALASKA                                      91-1820757
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                         Identification No.)

      2550 Denali Street
      Suite 1000
      Anchorage, Alaska                                       99503
(Address of principal executive offices)                    (Zip Code)

       Registrant's telephone number, including area code: (907) 265-5600


Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .

        Securities registered pursuant to Section 12(b) of the Act: None
           Securities registered pursuant to Section 12(g) of the Act:

                 $180,000,000 9.75% Senior Notes due August 2007


                                       1
<PAGE>
<TABLE>
                                            INDEX

                                           GCI, INC.
                      A WHOLLY OWNED SUBSIDIARY OF GENERAL COMMUNICATION, INC.

                                           FORM 10-Q

                                FOR THE QUARTER ENDED MARCH 31, 2002

<CAPTION>
                                                                                                    Page No.
                                                                                                    --------
<S>                                                                                                      <C>
Cautionary Statement Regarding Forward-Looking Statements.................................................3

PART I.  FINANCIAL INFORMATION

         Item l.    Consolidated Balance Sheets as of March 31, 2002
                       (unaudited) and December 31, 2001..................................................5

                    Consolidated Statements of Operations for the
                       Three months ended March 31, 2002
                       (unaudited) and 2001 (unaudited)...................................................7

                    Consolidated Statements of Stockholder's Equity
                       for the three months ended March 31, 2002
                       (unaudited) and 2001 (unaudited)...................................................8

                    Consolidated Statements of Cash Flows for the three
                       months ended March 31, 2002 (unaudited)
                       and 2001 (unaudited)...............................................................9

                    Notes to Interim Condensed Consolidated Financial
                       Statements.........................................................................10

         Item 2.    Management's Discussion and Analysis of Financial
                    Condition and Results of Operations...................................................18

         Item 3.    Quantitative and Qualitative Disclosures About
                    Market Risk...........................................................................32

PART II.  OTHER INFORMATION

         Item 1.    Legal Proceedings.....................................................................32

         Item 6.    Exhibits and Reports on Form 8-K......................................................33

         Other items are omitted, as they are not applicable.

SIGNATURES................................................................................................34
</TABLE>


                                       2
<PAGE>
            Cautionary Statement Regarding Forward-Looking Statements


You should carefully review the information contained in this Quarterly Report,
but should particularly consider any risk factors that we set forth in this
Quarterly Report and in other reports or documents that we file from time to
time with the Securities and Exchange Commission ("SEC"). In this Quarterly
Report, in addition to historical information, we state our future strategies,
plans, objectives or goals and our beliefs of future events and of our future
operating results, financial position and cash flows. In some cases, you can
identify those so-called "forward-looking statements" by words such as "may,"
"will," "should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "project," or "continue" or the negative of those words
and other comparable words. All forward-looking statements involve known and
unknown risks, uncertainties and other important factors that may cause our
actual results, performance, achievements, plans and objectives to differ
materially from any future results, performance, achievements, plans and
objectives expressed or implied by these forward-looking statements. In
evaluating those statements, you should specifically consider various factors,
including those outlined below. Those factors may cause our actual results to
differ materially from any of our forward-looking statements. For these
statements, we claim the protection of the safe harbor for forward-looking
statements provided by the Securities Reform Act. Such risks, uncertainties and
other factors include but are not limited to those identified below.

-  Material adverse changes in the economic conditions in the markets we serve
   and in general economic conditions;
-  The efficacy of the rules and regulations to be adopted by the Federal
   Communications Commission ("FCC") and state public regulatory agencies to
   implement the provisions of the 1996 Telecom Act; the outcome of litigation
   relative thereto; and the impact of regulatory changes relating to access
   reform;
-  Our responses to competitive products, services and pricing, including
   pricing pressures, technological developments, alternative routing
   developments, and the ability to offer combined service packages that include
   local, cable and Internet services;
-  The extent and pace at which different competitive environments develop for
   each segment of our business;
-  The extent and duration for which competitors from each segment of the
   telecommunication industries are able to offer combined or full service
   packages prior to our being able to do so;
-  The degree to which we experience material competitive impacts to our
   traditional service offerings prior to achieving adequate local service
   entry;
-  Competitor responses to our products and services and overall market
   acceptance of such products and services;
-  The outcome of our negotiations with incumbent local exchange carriers
   ("ILECs") and state regulatory arbitrations and approvals with respect to
   interconnection agreements;
-  Our ability to purchase network elements or wholesale services from ILECs at
   a price sufficient to permit the profitable offering of local telephone
   service at competitive rates;
-  Success and market acceptance for new initiatives, many of which are
   untested;
-  The level and timing of the growth and profitability of new initiatives,
   particularly local telephone services expansion, Internet (consumer and
   business) services expansion and wireless services;
-  Start-up costs associated with entering new markets, including advertising
   and promotional efforts;
-  Risks relating to the operations of new systems and technologies and
   applications to support new initiatives;
-  Local conditions and obstacles;
-  The impact of oversupply of capacity resulting from excessive deployment of
   network capacity;
-  Uncertainties inherent in new business strategies, new product launches and
   development plans, including local telephone services, Internet services,
   wireless services, digital video services, cable modem services, digital
   subscriber line services, and transmission services and the offering of these
   services in geographic areas with which we are unfamiliar;


                                       3
<PAGE>
-  The risks associated with technological requirements, technology substitution
   and changes and other technological developments;
-  Development and financing of telecommunication, local telephone, wireless,
   Internet and cable networks and services;
-  Future financial performance, including the availability, terms and
   deployment of capital; the impact of regulatory and competitive developments
   on capital outlays, and the ability to achieve cost savings and realize
   productivity improvements and the consequences of increased leverage;
-  Availability of qualified personnel;
-  Changes in, or failure, or inability, to comply with, government regulations,
   including, without limitation, regulations of the FCC, the Regulatory
   Commission of Alaska, and adverse outcomes from regulatory proceedings;
-  Uncertainties in federal military spending levels and military base closures
   in markets in which we operate;
-  The ongoing global and domestic trend towards consolidation in the
   telecommunications industry, which trend may be the effect of making the
   competitors larger and better financed and afford these competitors with
   extensive resources and greater geographic reach, allowing them to compete
   more effectively; and
-  Other risks detailed from time to time in our periodic reports filed with the
   SEC.

You should not place undue reliance on any such forward-looking statements.
Further, any forward-looking statement, and such risks, uncertainties and other
factors speak, only as of the date on which they were originally made and we
expressly disclaim any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statement to reflect any change in our
expectations with regard to those statements or any other change in events,
conditions or circumstances on which any such statement is based, except as
required by law. New factors emerge from time to time, and it is not possible
for us to predict what factors will arise or when. In addition, we cannot assess
the impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.


                                       4
<PAGE>
PART I.  FINANCIAL INFORMATION
ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
                                        GCI, INC. AND SUBSIDIARIES
                                        CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                                                 (Unaudited)
                                                                                  March 31,      December 31,
                            ASSETS                                                  2002             2001
---------------------------------------------------------------------------    ---------------- ---------------
                                                                                    (Amounts in thousands)
<S>                                                                           <C>                   <C>
Current assets:
    Cash and cash equivalents                                                 $     13,368           11,097
                                                                               --------------- ----------------

    Receivables:
        Trade                                                                       59,145           58,895
        Employee and other                                                             996            1,587
                                                                               --------------- ----------------
                                                                                    60,141           60,482
        Less allowance for doubtful receivables                                      4,280            4,166
                                                                               --------------- ----------------
           Net receivables                                                          55,861           56,316
                                                                               --------------- ----------------

    Deferred income taxes, net                                                       5,386            4,690
    Inventories                                                                      4,021            3,462
    Prepaid and other current assets                                                 2,578            3,061
    Property held for sale                                                             517              481
    Notes receivable with related parties                                              146              182
                                                                               --------------- ----------------
           Total current assets                                                     81,877           79,289
                                                                               --------------- ----------------

Property and equipment in service, net of depreciation                             391,981          395,887
Construction in progress                                                            14,211            8,121
                                                                               --------------- ----------------
           Net property and equipment                                              406,192          404,008
                                                                               --------------- ----------------

Cable certificates, net of amortization of $26,884,000 at March 31,
   2002 and December 31, 2001                                                      191,132          191,132
Goodwill, net of amortization of $7,200,000 at March 31, 2002 and December
   31, 2001                                                                         41,205           40,940
Other intangible assets, net of amortization of $1,431,000 and $1,252,000
   at March 31, 2002 and December 31, 2001, respectively                             3,182            3,387
Deferred loan and senior notes costs, net of amortization of $6,325,000
   and $5,568,000 at March 31, 2002 and December 31, 2001, respectively              6,654            7,630
Notes receivable with related parties                                                5,388            3,246
Other assets, at cost, net of amortization of $72,000 and $70,000 at March
   31, 2002 and December 31, 2001, respectively                                      5,567            5,047
                                                                               --------------- ----------------
           Total other assets                                                      253,128          251,382
                                                                               --------------- ----------------
           Total assets                                                       $    741,197          734,679
                                                                               =============== ================
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.


                                       5                             (Continued)
<PAGE>
<TABLE>
                                        GCI, INC. AND SUBSIDIARIES
                                        CONSOLIDATED BALANCE SHEETS
                                               (Continued)
<CAPTION>
                                                                                 (Unaudited)
                                                                                  March 31,      December 31,
              LIABILITIES AND STOCKHOLDER'S EQUITY                                  2002             2001
---------------------------------------------------------------------------    ---------------- ---------------
                                                                                    (Amounts in thousands)
<S>                                                                           <C>                   <C>
Current liabilities:
    Current maturities of obligations under long-term debt and capital
       leases                                                                 $     17,391            7,346
    Accounts payable                                                                35,275           36,464
    Deferred revenue                                                                11,396           11,129
    Accrued payroll and payroll related obligations                                 10,587           15,289
    Due to related party                                                             5,031            5,160
    Accrued interest                                                                 4,433            8,049
    Accrued liabilities                                                              5,417            4,697
    Subscriber deposits                                                              1,407            1,121
                                                                              ---------------- ----------------
        Total current liabilities                                                   90,937           89,255

Long-term debt, excluding current maturities                                       345,000          346,000
Obligations under capital leases, excluding current maturities                      44,913           45,016
Obligations under capital leases due to related party, excluding
  current maturities                                                                   593              620
Deferred income taxes, net of deferred income tax benefit                           27,521           25,069
Other liabilities                                                                    5,360            4,339
                                                                              ---------------- ----------------
        Total liabilities                                                          514,324          510,299
                                                                              ---------------- ----------------

Stockholder's equity:
  Class A common stock. Authorized 10,000 shares; issued and outstanding 100
       shares at March 31, 2002 and December 31, 2001                              206,622          206,622
  Paid-in capital                                                                   45,078           44,902
  Retained deficit                                                                 (24,940)         (27,152)
  Accumulated other comprehensive income                                               113                8
                                                                              ---------------- ----------------
        Total stockholder's equity                                                 226,873          224,380
  Commitments and contingencies
                                                                              ---------------- ----------------
        Total liabilities and stockholder's equity                           $     741,197          734,679
                                                                              ================ ================
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.


                                       6
<PAGE>
<TABLE>
                                   GCI, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
                                                                                    (Unaudited)
                                                                                 Three Months Ended
                                                                                     March 31,
                                                                                2002           2001
                                                                          -------------- ----------------
                                                                              (Amounts in thousands)
      <S>                                                                <C>                  <C>
      Revenues                                                           $     88,210         96,917

      Cost of sales and services                                               31,237         42,086
      Selling, general and administrative expenses                             31,882         27,850
      Depreciation and amortization expense                                    14,715         13,939
                                                                          -------------- ----------------
           Operating income                                                    10,376         13,042
                                                                          -------------- ----------------

      Interest expense                                                          6,591          8,883
      Interest income                                                              73            163
                                                                          -------------- ----------------
           Interest expense, net                                                6,518          8,720
                                                                          -------------- ----------------

           Net income before income taxes                                       3,858          4,322

      Income tax expense                                                        1,646          1,899
                                                                          -------------- ----------------
           Net income                                                    $      2,212          2,423
                                                                          ============== ================
</TABLE>
      See accompanying notes to interim condensed consolidated financial
      statements.


                                       7
<PAGE>
<TABLE>
                                                        GCI, INC. AND SUBSIDIARIES
                                              CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                                                THREE MONTHS ENDED MARCH 31, 2002 AND 2001

<CAPTION>
                                                        Shares of                                         Accumulated
                                                         Class A      Class A                                Other
(Unaudited)                                              Common       Common      Paid-in    Retained    Comprehensive
(Amounts in thousands)                                    Stock       Stock       Capital     Deficit        Income          Total
                                                       -----------------------------------------------------------------------------
<S>                                                        <C>       <C>           <C>        <C>              <C>          <C>
Balances at December 31, 2000                              100       $206,622      29,941     (31,741)         ---          204,822
Net income                                                 ---            ---         ---       2,423          ---            2,423
Contribution from General Communication, Inc.              ---            ---       3,529         ---          ---            3,529
                                                       -----------------------------------------------------------------------------
Balances at March 31, 2001                                 100       $206,622      33,470     (29,318)         ---          210,774
                                                       =============================================================================

Balances at December 31, 2001                              100       $206,622      44,902     (27,152)           8          224,380
Components of comprehensive income:
   Net income                                              ---            ---         ---       2,212          ---            2,212
   Fair value of cash flow hedge, net of income tax
     benefit of $72                                        ---            ---         ---         ---          105              105
                                                                                                                         -----------
      Comprehensive income                                                                                                    2,317
Contribution from General Communication, Inc.              ---            ---         176         ---          ---              176
                                                       -----------------------------------------------------------------------------
Balances at March 31, 2002                                 100       $206,622      45,078     (24,940)         113          226,873
                                                       =============================================================================
</TABLE>
 See accompanying notes to interim condensed consolidated financial statements


                                       8
<PAGE>
<TABLE>
                                     GCI, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                                                             (Unaudited)
                                                                                         Three Months Ended
                                                                                              March 31,
                                                                                         2002           2001
                                                                                    -------------- --------------
                                                                                       (Amounts in thousands)
        <S>                                                                        <C>                <C>
        Operating activities:
          Net income                                                               $     2,212          2,423
            Adjustments to reconcile net income to net cash provided by
              operating activities:
                Depreciation and amortization                                           14,715         13,939
                Amortization charged to selling, general and administrative                ---              9
                Non-cash cost of sale                                                      ---         10,877
                Deferred income tax expense                                              1,646          1,899
                Bad debt expense, net of write-offs                                        124            544
                Deferred compensation and compensatory stock options                       251            242
                Other noncash income and expense items                                     110            (84)
                Change in operating assets and liabilities                              (6,809)         1,393
                                                                                    -------------- --------------
                  Net cash provided by operating activities                             12,249         31,242
                                                                                    -------------- --------------

        Investing activities:
           Purchases of property and equipment                                         (16,069)       (13,522)
           Advances and billings to Kanas Telecom, Inc.                                    ---         (2,716)
           Payment of deposit                                                              ---         (1,200)
           Notes receivable issued to related parties                                   (5,669)          (121)
           Payments received on notes receivable with related parties                    3,587            146
           Purchases of other assets                                                      (428)          (796)
                                                                                    -------------- --------------
                  Net cash used by investing activities                                (18,579)       (18,209)
                                                                                    -------------- --------------

        Financing activities:
          Repayments of long-term borrowings and capital lease obligations                 (86)       (12,140)
          Long-term borrowings - bank debt                                               9,000            ---
          Cash contribution from (to) General Communication, Inc.                         (313)           511
                                                                                    -------------- --------------
                  Net cash provided (used) by financing activities                       8,601        (11,629)
                                                                                    -------------- --------------
                  Net increase in cash and cash equivalents                              2,271          1,404

                  Cash and cash equivalents at beginning of period                      11,097          5,962
                                                                                    -------------- --------------
                  Cash and cash equivalents at end of period                       $    13,368          7,366
                                                                                    ============== ==============
</TABLE>
        See accompanying notes to interim condensed consolidated financial
        statements.


                                       9
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

(1)    General
       In the following discussion, GCI, Inc. and its direct and indirect
       subsidiaries are referred to as "we," "us" and "our."

       Basis of Presentation
       We were incorporated in 1997 to effect the issuance of senior notes. As a
       wholly owned subsidiary of General Communication, Inc. ("GCI"), we
       received through our initial capitalization all ownership interests in
       subsidiaries previously held by GCI.

       (a)   Business
             We offer the following services:
             -   Long-distance telephone service between Anchorage, Fairbanks,
                 Juneau, and other communities in Alaska and the remaining
                 United States and foreign countries
             -   Cable television services throughout Alaska
             -   Facilities-based competitive local access services in
                 Anchorage, Fairbanks and Juneau, Alaska
             -   Internet access services
             -   Termination of traffic in Alaska for certain common carriers
             -   Private line and private network services
             -   Managed services to certain commercial customers
             -   Broadband services, including our SchoolAccess(TM) offering to
                 rural school districts and a similar offering to rural
                 hospitals and health clinics
             -   Sales and service of dedicated communications systems and
                 related equipment
             -   Lease and sales of capacity on two undersea fiber optic cables
                 used in the transmission of interstate and intrastate private
                 line, switched message long-distance and Internet services
                 between Alaska and the remaining United States and foreign
                 countries

       (b)   Principles of Consolidation
             The interim condensed consolidated financial statements include the
             accounts of GCI, Inc., GCI, Inc.'s wholly-owned subsidiary GCI
             Holdings, Inc., GCI Holdings, Inc.'s wholly-owned subsidiaries GCI
             Communication Corp., GCI Cable, Inc., and GCI Transport Co., Inc.,
             GCI Holdings, Inc.'s 85% controlling interest in GCI Fiber
             Communication Co., Inc., GCI Communication Corp.'s wholly-owned
             subsidiary Potter View Development Co., Inc., GCI Cable, Inc.'s
             wholly-owned subsidiary GCI American Cablesystems, Inc., GCI
             American Cablesystems, Inc.'s wholly-owned subsidiary GCI
             Cablesystems of Alaska, Inc., GCI Transport Co., Inc.'s
             wholly-owned subsidiaries GCI Satellite Co., Inc., GCI Fiber Co.,
             Inc. and Fiber Hold Co., Inc. and GCI Fiber Co., Inc.'s and Fiber
             Hold Co., Inc.'s wholly-owned partnership Alaska United Fiber
             System Partnership ("Alaska United").

       (c)   Earnings Per Share and Common Stock
             We are a wholly owned subsidiary of GCI and, accordingly, we are
             not required to present earnings per share. Our common stock is not
             publicly traded.

       (d)   Sale of Fiber Optic Cable System Capacity
             During the first quarter of 2001 we completed a $19.5 million sale
             of long-haul capacity in the Alaska United undersea fiber optic
             cable system ("fiber capacity sale") in a cash transaction. The
             sale included both capacity within Alaska, and between Alaska and
             the 48 contiguous states south of or below Alaska ("Lower 48"). We
             used the proceeds from the fiber capacity sale to repay $11.7
             million of the Fiber Facility debt and to fund capital expenditures
             and working capital.


                                       10                            (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

             The fiber capacity sale contract gave the purchaser an indefeasible
             right to use a certain amount of fiber system capacity and expires
             on February 4, 2024. The term may be extended if the actual useful
             life of the fiber system capacity extends beyond the estimated
             useful life of twenty-five years. The fiber system capacity sold is
             integral equipment because it is attached to real estate. Because
             all of the benefits and risks of ownership have been transferred to
             the purchaser upon full receipt of the purchase price and other
             terms of the contract meet the requirements of Statement of
             Financial Accounting Standard ("SFAS") No. 66, "Accounting for
             Sales of Real Estate" we accounted for the fiber capacity sale as a
             sales-type lease. We recognized $19.5 million in revenue from the
             fiber capacity sale. We recognized $10.9 million as cost of sales
             during the three months ended March 31, 2001.

             The accounting for the sale of fiber system capacity is currently
             evolving and accounting guidance may become available in the future
             which could require us to change our policy. If we are required to
             change our policy, it is likely the effect would be to recognize
             the gain from future sales of fiber capacity, if any, over the term
             the capacity is provided.

       (e)   New Accounting Pronouncements
             In July 2001, the Financial Accounting Standards Board ("FASB")
             issued SFAS No. 141, "Business Combinations." SFAS No. 141 requires
             that the purchase method of accounting be used for all business
             combinations initiated after June 30, 2001. Use of the
             pooling-of-interests method will be prohibited on a prospective
             basis only. Adoption of SFAS No. 141 has not had a significant
             impact on our results of operations, financial position or cash
             flows.

             In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
             Intangible Assets." SFAS No. 142 provides accounting and reporting
             standards for intangible assets acquired individually, with a group
             of other assets, or as part of a business combination. This
             statement addresses how acquired goodwill and other intangible
             assets are recorded upon their acquisition as well as how they are
             to be accounted for after they have been initially recognized in
             the financial statements. Under this statement, goodwill and other
             intangibles with indefinite useful lives, on a prospective basis,
             will no longer be amortized, however will be tested for impairment
             at least annually, based on a fair value comparison. Intangibles
             that have finite useful lives will continue to be amortized over
             their respective useful lives. This statement also requires
             expanded disclosure for goodwill and other intangible assets.

             In October 2001, the FASB issued SFAS No. 144, "Accounting for the
             Impairment or Disposal of Long-Lived Assets". SFAS No. 144 replaces
             SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
             and for Long-Lived Assets to Be Disposed Of. However it retains the
             fundamental provisions of SFAS No. 121 for recognition and
             measurement of the impairment of long-lived assets to be held and
             used and for measurement of long-lived assets to be disposed of by
             sale. This statement applies to all long-lived assets, including
             discontinued operations, and replaces the provisions of APB Opinion
             No. 30, Reporting Results of Operations-Reporting the Effects of
             Disposal of a Segment of a Business, for the disposal of segments
             of a business. This statement requires that those long-lived assets
             be measured at the lower of carrying amount or fair value less cost
             to sell, whether reported in continuing operations or in
             discontinued operations. Adoption of SFAS No. 144 has not had a
             significant impact on our results of operations, financial position
             or cash flows.


                                       11                            (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

       (f)   Reclassifications
             Reclassifications have been made to the 2001 financial statements
             to make them comparable with the 2002 presentation.

       (g)   Other
             The accompanying unaudited interim condensed consolidated financial
             statements have been prepared in accordance with generally accepted
             accounting principles for interim financial information and with
             the instructions to Form 10-Q and Article 10 of Regulation S-X.
             Accordingly, they do not include all of the information and
             footnotes required by generally accepted accounting principles for
             complete financial statements. The interim condensed consolidated
             financial statements include the consolidated accounts of GCI, Inc.
             and its wholly owned subsidiaries with all significant intercompany
             transactions eliminated. In the opinion of management, all
             adjustments (consisting of normal recurring accruals) considered
             necessary for a fair presentation have been included. Operating
             results for the three-month period ended March 31, 2002 are not
             necessarily indicative of the results that may be expected for the
             year ended December 31, 2002. For further information, refer to the
             financial statements and footnotes thereto included in our annual
             report on Form 10-K for the year ended December 31, 2001.

(2)    Consolidated Statements of Cash Flows Supplemental Disclosures
<TABLE>
       Changes in operating assets and liabilities consist of (amounts in
       thousands):
<CAPTION>
              Three month periods ended March 31,                                           2002         2001
                                                                                       ------------- ------------
              <S>                                                                     <C>               <C>
              Decrease in accounts receivables                                        $      519         3,100
              Increase in inventories                                                       (559)         (193)
              Decrease in prepaid and other current assets                                   588            96
              Increase (decrease) in accounts payable                                     (1,189)          672
              Increase in deferred revenues                                                  267           490
              Increase (decrease) in accrued payroll and payroll related obligations      (4,702)          657
              Decrease in accrued interest                                                (3,616)       (4,191)
              Increase in accrued liabilities                                                720           824
              Increase (decrease) in subscriber deposits                                     286           (55)
              Increase (decrease) in components of other long-term liabilities               877            (7)
                                                                                       ------------- ------------
                                                                                      $   (6,809)        1,393
                                                                                       ============= ============
</TABLE>
       We paid interest totalling approximately $10,207,000 and $13,074,000
       during the three-month periods ended March 31, 2002 and 2001,
       respectively.


                                       12                            (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

(3)    Intangible Assets
       Effective with the adoption of SFAS No. 142, "Goodwill and Other
       Intangible Assets" on January 1, 2002, goodwill and cable certificates
       (certificates of convenience and public necessity) are no longer
       amortized. The following pro forma financial information reflects net
       income as if goodwill and cable certificates were not subject to
       amortization for the three months ended March 31, 2001 (amounts in
       thousands):

                                                                Net Income
                                                              -------------
          Net income, as reported                            $    2,423
          Add cable certificate amortization, net of
            income taxes                                            724
          Add goodwill amortization, net of income taxes            177
                                                              -------------
               Adjusted net income                           $    3,324
                                                              =============

       Cable certificates are allocated to our cable services reportable
       segment. Goodwill is not allocated to a reportable segment, but is
       included in the All Other category in note 5.

       Amortization expense for amortizable intangible assets for the three
       months ended March 31, 2002 and 2001 was approximately $965,000 and
       $2,094,000 (inclusive of goodwill and cable certificate amortization
       expense), respectively. 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,
            2002       $ 760
            2003         374
            2004         229
            2005         123
            2006         119

       No intangible assets have been impaired based upon impairment testing
       performed as of January 1, 2002.

(4)    Long-term Debt
       We expect to refinance the Senior Holdings Loan and the Fiber Facility in
       the second or third quarter of 2002. Upon completion of the refinancing
       we expect to recognize $2.7 million to $2.9 million as an extraordinary
       loss before income tax effect.

(5)    Industry Segments Data
       Our reportable segments are business units that offer different products.
       The reportable segments are each managed separately and offer distinct
       products with different production and delivery processes.

       We have four reportable segments as follows:

         Long-distance services. We offer a full range of common-carrier
         long-distance services to commercial, government, other
         telecommunications companies and residential customers, through our
         networks of fiber optic cables, digital microwave, and fixed and
         transportable satellite earth


                                       13                            (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

         stations and our SchoolAccess(TM) offering to rural school districts
         and a similar offering to rural hospitals and health clinics.

         Cable services. We provide cable television services to residential,
         commercial and government users in the State of Alaska. Our cable
         systems serve 33 communities and areas in Alaska, including the state's
         three largest urban areas, Anchorage, Fairbanks and Juneau. We offer
         digital cable television services in Anchorage, Fairbanks, Juneau and
         Kenai and retail cable modem service (through our Internet services
         segment) in Anchorage, Fairbanks, Juneau and several other communities
         in Alaska. We plan to expand our product offerings as plant upgrades
         are completed in other communities in Alaska.

         Local access services. We offer facilities based competitive local
         exchange services in Anchorage, Fairbanks and Juneau and plan to
         provide similar competitive local exchange services in other locations
         pending regulatory approval.

         Internet services. We offer wholesale and retail Internet services. We
         offer cable modem service in Anchorage, Fairbanks, Juneau and several
         other communities in Alaska and plan to provide cable modem service in
         other areas in 2002. Our undersea fiber optic cable allows us to offer
         enhanced services with high-bandwidth requirements.

       Included in the "All Other" category in the tables that follow are our
       managed services, product sales, cellular telephone services, and, during
       the three months ended March 31, 2001, management services for Kanas, a
       related party. None of these business units has ever met the quantitative
       thresholds for determining reportable segments. Also included in the All
       Other category are corporate related expenses including management
       information systems, accounting, legal and regulatory, human resources
       and other general and administrative expenses. In 2001, the All Other
       category includes revenues and costs associated with the sale of undersea
       fiber optic cable system capacity (see note 1(d)).

       We evaluate performance and allocate resources based on (1) earnings or
       loss from operations before depreciation, amortization, net interest
       expense and income taxes, and (2) operating income or loss. The
       accounting policies of the reportable segments are the same as those
       described in the summary of significant accounting policies in note 1.
       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 of America. All of our long-lived assets are located within
       the United States of America.
<TABLE>
       Summarized financial information for our reportable segments and for the
       All Other category for the three months ended March 31, 2002 and 2001
       follows (amounts in thousands):
<CAPTION>
                                                       Reportable Segments
                                     --------------------------------------------------------
                                          Long-               Local                  Total
                                         Distance   Cable     Access   Internet    Reportable      All
                                         Services  Services  Services  Services     Segments      Other      Total
                                     ------------------------------------------------------------------------------
       <S>                           <C>            <C>        <C>      <C>          <C>         <C>        <C>
                   2002
       Revenues:
         Intersegment                $     5,329       496     2,673     2,143       10,641         186      10,827
         External                         50,068    21,346     7,308     3,573       82,295       5,915      88,210
                                     ------------------------------------------------------------------------------
            Total revenues           $    55,397    21,842     9,981     5,716       92,936       6,101      99,037
                                     ==============================================================================
</TABLE>

                                       14                            (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       Reportable Segments
                                     --------------------------------------------------------
                                          Long-               Local                  Total
                                         Distance   Cable     Access   Internet    Reportable      All
                                         Services  Services  Services  Services     Segments      Other      Total
                                     ------------------------------------------------------------------------------
       <S>                           <C>            <C>        <C>      <C>          <C>         <C>        <C>
       Earnings (loss) from
         operations before
         depreciation,
         amortization, net interest
         expense and income taxes    $    24,548     9,884       844    (2,935)      32,341      (7,026)     25,315
                                     ==============================================================================

       Operating income (loss)       $    17,850     5,713        34    (3,825)      19,772      (9,172)     10,600
                                     ==============================================================================

                   2001
       Revenues:
         Intersegment                $     4,835       377     1,635     1,210        8,057         203       8,260
         External                         46,236    18,046     5,958     2,619       72,859      24,058      96,917
                                     ------------------------------------------------------------------------------
            Total revenues           $    51,071    18,423     7,593     3,829       80,916      24,261     105,177
                                     ==============================================================================

       Earnings (loss) from
         operations before
         depreciation,
         amortization, net interest
         expense and income taxes    $    18,755     8,425     1,146    (2,967)      25,359       1,854      27,213
                                     ==============================================================================

       Operating income (loss)       $    12,759     3,415       339    (3,580)      12,933         341      13,274
                                     ==============================================================================
</TABLE>
<TABLE>
       A reconciliation of reportable segment revenues to consolidated revenues
       follows (amounts in thousands):
<CAPTION>
                 Three months ended March 31,                                       2002           2001
                                                                               ------------- --------------
                 <S>                                                          <C>                 <C>
                 Reportable segment revenues                                  $    92,936         80,916
                 Plus All Other revenues                                            6,101         24,261
                 Less intersegment revenues eliminated in consolidation           (10,827)        (8,260)
                                                                               ------------- --------------
                      Consolidated revenues                                   $    88,210         96,917
                                                                               ============= ==============
</TABLE>

                                       15                            (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

<TABLE>
       A reconciliation of reportable segment earnings from operations before
       depreciation, amortization, net interest expense and income taxes to
       consolidated net income before income taxes follows (amounts in
       thousands):
<CAPTION>
                 Three months ended March 31,                                       2002           2001
                                                                               -------------- --------------
                 <S>                                                          <C>                 <C>
                 Reportable segment earnings from operations before
                   depreciation, amortization, net interest expense and
                   income taxes                                               $    32,341         25,359
                 Plus (less) All Other loss from operations before
                   depreciation, amortization, net interest expense and
                   income taxes                                                    (7,026)         1,854
                 Less intersegment contribution eliminated in consolidation          (224)          (232)
                                                                               -------------- --------------
                      Consolidated earnings from operations before
                        depreciation, amortization, net interest expense
                        and income taxes                                           25,091         26,981
                 Less depreciation and amortization expense                        14,715         13,939
                                                                               -------------- --------------
                      Consolidated operating income                                10,376         13,042
                 Less interest expense, net                                         6,518          8,720
                                                                               -------------- --------------
                      Consolidated net income before income taxes             $     3,858          4,322
                                                                               ============== ==============
</TABLE>
<TABLE>
       A reconciliation of reportable segment operating income to consolidated
       net income before income taxes follows (amounts in thousands):
<CAPTION>
                 Three months ended March 31,                                       2002           2001
                                                                               -------------- -------------
                 <S>                                                          <C>                 <C>
                 Reportable segment operating income                          $    19,772         12,933
                 Plus (less) All Other operating loss                              (9,172)           341
                 Less intersegment contribution eliminated in consolidation          (224)          (232)
                                                                               -------------- -------------
                      Consolidated operating income                                10,376         13,042
                 Less interest expense, net                                         6,518          8,720
                                                                               -------------- -------------
                      Consolidated net income before income taxes             $     3,858          4,322
                                                                               ============== =============
</TABLE>
(6)    Commitments and Contingencies

       Bid to Purchase Fiber Optic Cable System Assets
       The assets of WCI Cable, Inc. and its subsidiaries ("WCIC"), a competing
       fiber optic cable system connecting Alaska to the Lower 48 states, were
       offered for sale following its bankruptcy filing and reorganization. We
       were not the successful bidder and we expect to continue to pursue other
       opportunities to secure facilities to supplement our existing backup
       facilities.

       Litigation and Disputes
       We are routinely involved in various lawsuits, billing disputes, legal
       proceedings and regulatory matters that have arisen 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 our liquidity.


                                       16                            (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

       Internal Revenue Service Examination
       GCI, Inc., as a wholly owned subsidiary and member of the GCI controlled
       group of corporations, files its income tax returns as part of the
       consolidated group of corporations under GCI. GCI's U.S. income tax
       return for 1999 was selected for examination by the Internal Revenue
       Service during 2001. The examination commenced during the third quarter
       of 2001. We believe this examination will not have a material adverse
       effect on our financial position, results of operations or our liquidity.


                                       17
<PAGE>
PART I.
ITEM 2.

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
                                   (Unaudited)

In the following discussion, GCI, Inc. and its direct and indirect subsidiaries
are referred to as "we," "us" and "our."

Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. On an on-going basis, we evaluate our estimates and
judgments, including those related to unbilled revenues, allowance for doubtful
accounts, depreciation and amortization periods, intangible assets, income
taxes, and contingencies and litigation. We base our estimates and judgments on
historical experience and on various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. See also our Cautionary
Statement Regarding Forward-Looking Statements.

GCI, Inc. was incorporated in 1997 to effect the issuance of senior notes. GCI,
Inc., a wholly owned subsidiary of GCI, received through its initial
capitalization all ownership interests in subsidiaries previously held by GCI.
Shares of GCI's Class A common stock are traded on the Nasdaq National Market
tier of the Nasdaq Stock Market under the symbol GNCMA. Shares of GCI's Class B
common stock are traded on the Over-the-Counter market.

General Overview
We have experienced significant growth in recent years through strategic
acquisitions, deploying new business lines and expansion of our existing
businesses. We have historically met our cash needs for operations, regular
capital expenditures and maintenance capital expenditures through our cash flows
from operating activities. Cash requirements for significant acquisitions and
major capital expenditures have been provided largely through our financing
activities.

Long-Distance Services Overview
During the first quarter of 2002 long-distance services revenue represented
56.8% of consolidated revenues. Our provision of interstate and intrastate
long-distance services to residential, commercial and governmental customers and
to other common carriers (principally WorldCom, Inc. ("WorldCom"), a related
party, and Sprint), provision of private line and leased dedicated capacity
services and broadband services accounted for 96.1% of our total long-distance
services revenues during the first quarter of 2002.

Factors that have the greatest impact on year-to-year changes in long-distance
services revenues include the rate per minute charged to customers, usage
volumes expressed as minutes of use, and the number of private line, leased
dedicated service and broadband products in use.

Long-distance services face significant competition from AT&T Alascom, Inc.,
long-distance resellers, and from local telephone companies that have entered
the long-distance market. We believe our approach to


                                       18
<PAGE>
developing, pricing, and providing long-distance services and bundling different
business segment services will continue to allow us to be competitive in
providing those services.

Our contract to provide interstate and intrastate long-distance services to
Sprint was amended in March 2002 extending its term to March 2007 with two
one-year automatic extensions to March 2009. The amendment reduced the rate to
be charged by us for certain Sprint traffic over the extended term of the
contract.

Other common carrier traffic routed to us for termination in Alaska is largely
dependent on traffic routed to WorldCom and Sprint by their customers. Pricing
pressures, new program offerings and market consolidation continue to evolve in
the markets served by WorldCom and Sprint. If, as a result, their traffic is
reduced, or if their competitors' costs to terminate or originate traffic in
Alaska are reduced, our traffic will also likely be reduced, and our pricing may
be reduced to respond to competitive pressures. We are unable to predict the
effect on us of such changes, however given the materiality of other common
carrier revenues to us, a significant reduction in traffic or pricing could have
a material adverse effect on our financial position, results of operations and
liquidity.

Cable Services Overview
During the first quarter of 2002, cable television revenues represented 24.2% of
consolidated revenues. The cable systems serve 33 communities and areas in
Alaska, including the state's three largest population centers, Anchorage,
Fairbanks and Juneau.

We generate cable services revenues from four primary sources: (1) digital and
analog programming services, including monthly basic or premium subscriptions
and pay-per-view movies or other one-time events, such as sporting events; (2)
equipment rentals or installation; (3) advertising sales; and (4) cable modem
services (shared with our Internet services segment). During the first quarter
of 2002 programming services generated 78.0% of total cable services revenues,
equipment rental and installation fees accounted for 9.8% of such revenues,
cable modem services accounted for 7.8% of such revenues, advertising sales
accounted for 3.6% of such revenues, and other services accounted for the
remaining 0.8% of total cable services revenues.

The primary factors that contribute to year-to-year changes in cable services
revenues are average monthly subscription and pay-per-view rates, the mix among
basic, premium and pay-per-view services and digital and analog services, the
average number of cable television and cable modem subscribers during a given
reporting period, and revenues generated from new product offerings.

Cable services face competition from alternative methods of receiving and
distributing television signals and from other sources of news, information and
entertainment. We believe our cable television services will continue to be
competitive by providing, at reasonable prices, a greater variety of programming
and other communication services than are available off-air or through other
alternative delivery sources and upon superior technical performance and
responsive local customer service.

Local Access Services Overview
We generate local access services revenues from three primary sources: (1)
business and residential basic dial tone services; (2) business private line and
special access services; and (3) business and residential features and other
charges, including voice mail, caller ID, distinctive ring, inside wiring and
subscriber line charges. Local exchange services revenues totaled $7.3 million
in the first quarter of 2002 representing 8.3% of consolidated revenues.

The primary factors that contribute to year-to-year changes in local access
services revenues are the average number of business and residential subscribers
to our services during a given reporting period, the average


                                       19
<PAGE>
monthly rates charged for non-traffic sensitive services and the number and type
of additional premium features selected.

Our local access services segment faces significant competition in Anchorage,
Fairbanks, and Juneau from the ILEC Alaska Communications Systems, Inc. ("ACS")
and AT&T Alascom, Inc. We began marketing efforts in the Juneau market in the
fourth quarter of 2001 and began provisioning service in the first quarter of
2002. We believe our approach to developing, pricing, and providing local access
services and bundling different business segment services will allow us to be
competitive in providing those services.

Internet Services Overview
We generate Internet services revenues from three primary sources: (1) access
product services, including commercial, Internet service provider, and retail
dial-up access; (2) network management services; and (3) cable modem services (a
portion of cable modem revenue is also recognized by our cable services
segment). Internet services segment revenues totaled $3.6 million representing
4.0% of total revenues in the first quarter of 2002.

The primary factors that contribute to year-to-year changes in Internet services
revenues are the average number of subscribers to our services during a given
reporting period, the average monthly subscription rates, and the number and
type of additional premium features selected.

Marketing campaigns continue to be deployed targeting residential and commercial
customers featuring bundled Internet products. Our Internet offerings are
coupled with our long-distance and local access services offerings and provide
free basic Internet services or discounted premium Internet services if certain
long-distance or local access services plans are selected. Value-added premium
Internet features are available for additional charges.

We compete with a number of Internet service providers in our markets. We
believe our approach to developing, pricing, and providing Internet services
allows us to be competitive in providing those services.

All Other Services Overview
Revenues reported in the All Other category as described in note 5 in the
accompanying Notes to Interim Condensed Consolidated Financial Statements
include our managed services, product sales, cellular telephone services, and,
during the first quarter of 2001, management services for Kanas, a related
party. During the first quarter of 2001, the All Other category also includes
revenues of $19.5 million associated with the sale of undersea fiber optic cable
system capacity.

Revenues included in the All Other category represented 6.7% of total revenues
in the first quarter of 2002 and include managed services revenues totaling $4.8
million and product sales and cellular telephone services revenues totaling $1.1
million.


                                       20
<PAGE>
                              RESULTS OF OPERATIONS
<TABLE>
The following table sets forth selected Statement of Operations data as a
percentage of total revenues for the periods indicated (underlying data rounded
to the nearest thousands):
<CAPTION>
                                                                                               Percentage
                                                                        Three Months Ended      Change(1)
                                                                             March 31,          2002 vs.
              (Unaudited)                                                2002        2001         2001
                                                                         ----        ----         ----
              <S>                                                      <C>         <C>           <C>
              Statement of Operations Data:
              Revenues
                  Long-distance services                                 56.8%       47.7%         8.3%
                  Cable services                                         24.2%       18.6%        18.3%
                  Local access services                                   8.3%        6.1%        22.7%
                  Internet services                                       4.0%        2.7%        36.4%
                  All Other services                                      6.7%       24.9%       (75.4%)
                                                                      --------------------------------------
                     Total revenues                                     100.0%      100.0%        (9.0%)
              Cost of sales and services                                 35.4%       43.4%       (25.8%)
              Selling, general and administrative expenses               36.1%       28.7%        14.5%
              Depreciation and amortization                              16.7%       14.4%         5.6%
                                                                      --------------------------------------
                     Operating income                                    11.8%       13.5%       (20.4%)
                     Net income before income taxes                       4.4%        4.5%       (10.7%)
                     Net income                                           2.5%        2.5%        (8.7%)

              Other Operating Data:
              Long-distance services operating income (2)                35.6%       27.5%        40.0%
              Cable services operating income (3)                        26.8%       18.9%        67.3%
              Local access services operating income (4)                  0.5%        5.7%       (90.0%)
              Internet services operating loss (5)                     (107.1%)    (136.7%)       (6.8%)
<FN>
--------------------------
1  Percentage change in underlying data.
2  Computed as a percentage of total external long-distance services revenues.
3  Computed as a percentage of total external cable services revenues.
4  Computed as a percentage of total external local access services revenues.
5  Computed as a percentage of total external Internet services revenues.
--------------------------
</FN>
</TABLE>
Three Months Ended March 31, 2002 ("2002") Compared To Three Months Ended March
31, 2001 ("2001").

Revenues
Total revenues decreased 9.0% from $96.9 million in 2001 to $88.2 million in
2002. Excluding the fiber optic cable capacity sale of $19.5 million in 2001 as
described in note 1(d) in the accompanying Notes to Interim Condensed
Consolidated Financial Statements, total revenues increased 14.0%.


                                       21
<PAGE>
Long-distance services revenues from residential, commercial, governmental, and
other common carrier customers increased 8.3% to $50.1 million in 2002. The
increase was largely due to the following:

     -   An increase of 17.4% in private line and private network transmission
         services revenues to $8.8 million in 2002 due to an increased number of
         leased circuits in service,
     -   An increase of 15.6% in message telephone service revenues from other
         common carriers (principally WorldCom and Sprint) to $20.8 million in
         2002,
     -   An increase of 68.3% to $4.4 million in 2002 revenues from our packaged
         telecommunications offering to rural hospitals and health clinics and
         our SchoolAccess(TM) offering to rural school districts. The increase
         is primarily due to an increase in circuits and services sold to rural
         hospitals and health clinics and the provision of SchoolAccess(TM)
         services to an additional nine school districts located in Arizona and
         New Mexico beginning in July 2001, and
     -   An increase of 10.3% in total minutes of use to 268.3 million minutes
         primarily due to a 17.9% increase in wholesale minutes carried for
         other common carriers.

Long-distance services revenue increases described above were partially offset
by the following:

     -   A 1.9% decrease in the average rate per minute on minutes carried for
         other common carriers due to a reduced rate charged by us for certain
         WorldCom traffic due to a contract amendment commencing March 2001, and
     -   A 2.5% decrease in our total average rate per minute to $0.115 per
         minute in 2002 attributed to our promotion of and customers' enrollment
         in calling plans offering a certain number of minutes for a flat
         monthly fee.

Cable services revenues increased 18.3% to $21.3 million in 2001. Programming
services revenues increased 13.7% to $16.6 million in 2002 and average gross
revenue per average basic subscriber per month increased $0.19 or 0.3% in 2002
resulting from the following:

     -   Basic subscribers served increased approximately 11,600 to
         approximately 132,600 at March 31, 2002 as compared to March 31, 2001
         (the 2002 increase includes approximately 1,000 basic subscribers
         acquired from G.C. Cablevision, Inc. on March 31, 2001 and
         approximately 7,000 basic subscribers acquired from Rogers American
         Cablesystems, Inc. ("Rogers") on November 19, 2001),
     -   New facility construction efforts in 2002 and the acquisition of GC
         Cablevision, Inc. and Rogers subscribers resulted in approximately
         15,400 additional homes passed, a 8.7% increase from 2001, and
     -   Digital subscriber counts increased 50.3% to approximately 26,000 at
         March 31, 2002 as compared to March 31, 2001.

The cable services segment's share of cable modem revenue (offered through our
Internet services segment) increased $696,000 to $1.7 million in 2002.

Local access services revenues increased 22.7% in 2002 to $7.3 million primarily
due to growth in the average number of customers served. At March 31, 2002
approximately 89,800 lines were in service as compared to approximately 65,000
lines in service at March 31, 2001.

Internet services revenues increased 36.4% to $3.6 million in 2002 primarily due
to growth in the average number of customers served and the number of cable
modems deployed. We had approximately 71,400 active residential, commercial and
small business retail dial-up Internet subscribers at March 31, 2002 as compared
to approximately 65,000 at March 31, 2001. We had approximately 30,200 active
residential, commercial and small business retail cable modem subscribers at
March 31, 2002 as compared to


                                       22
<PAGE>
approximately 18,500 at March 31, 2001. Approximately 850 cable modem
subscribers were acquired from Rogers on November 19, 2001.

The 75.4% decrease in All Other revenues to $5.9 million in 2002 is primarily
due to the $19.5 million fiber capacity sale in 2001 as previously described
off-set by increased revenues from managed services in 2002.

Cost of Sales and Service
Total cost of sales and services decreased 25.8% to $31.2 million in 2002. As a
percentage of total revenues, total cost of sales and services decreased from
43.4% in 2001 to 35.4% in 2002. Excluding the fiber capacity sale in 2001, total
cost of sales and services as a percentage of total revenues decreased from
40.3% in 2001 to 35.4% in 2002.

Long-distance services cost of sales and services decreased 10.9% to $16.2
million in 2001. Long-distance services cost of sales as a percentage of
long-distance services revenues decreased from 39.4% in 2001 to 32.4% in 2002
primarily due to the following:

     -   Reductions in access costs due to distribution and termination of our
         traffic on our own local services network instead of paying other
         carriers to distribute and terminate our traffic. The reduced access
         cost per minute is estimated to be from $0.037 to $0.063 for interstate
         traffic and from $0.087 to $0.142 for intrastate traffic. We expect
         cost savings to continue to occur as long-distance traffic originated,
         carried, and terminated on our own facilities grows, and
     -   The FCC Multi-Association Group order reform reducing the access rates
         paid by interexchange carriers to LECs.

Offsetting the 2002 decrease in long-distance services cost of sales as a
percentage of long-distance services revenues described above is a decrease in
the average rate per minute billed to customers without a comparable decrease in
access charges paid by us.

Cable services cost of sales and services increased 20.7% to $6.0 million in
2002. Cable services cost of sales and services as a percentage of cable
revenues, which is less as a percentage of revenues than are long-distance,
local access and Internet services cost of sales and services, increased from
27.4% in 2001 to 27.9% in 2002. Cable services rate increases did not keep pace
with increases in programming costs in 2002. Programming costs increased for
most of our cable services offerings, and we incurred additional costs on new
programming introduced in 2001 and 2002.

Local access services cost of sales and services increased 50.1% to $4.7 million
in 2002. Local access services cost of sales and services as a percentage of
local access services revenues increased from 52.7% in 2001 to 64.4% in 2002,
primarily due to the following:

     -   Decreased network access services revenues from other carriers as the
         number of customers purchasing both long-distance and local access
         services from us increases,
     -   An increase in the Anchorage loop lease rates paid to ACS,
     -   The effect of offering new local access services customers acquired in
         2002 one to two months of free service while continuing to incur cost
         of sales for such new customers, and
     -   The lease of wholesale circuits from the ILEC in Fairbanks and Juneau
         pending completion of our facilities enabling service transition to
         unbundled network elements ("UNE") facilities and pricing.

The increases in local access services cost of sales as a percentage of local
access services revenues described above are off-set by economies of scale and
more efficient network utilization as local access services revenues increase.


                                       23
<PAGE>
ACS requested and received permission for a 7.7% increase in the UNE loop rate
to $14.92 and a 24% increase in their retail residential loop lease rates
effective in November 2001. The wholesale loop lease rate paid by us is tied to
the retail residential loop lease rate and increased approximately $2.25 per
line. Additionally, the cost of residential features increased 24% to
approximately $1.35 per line. We expect the increased rates will result in a
3.0% to 4.0% increase in our local access services cost of sales as a percentage
of local access services revenue for the year ended December 31, 2002.

Internet services cost of sales and services increased 2.7% to $1.2 million in
2002, and as a percentage of Internet services revenues, totaled 33.4% and 44.4%
in 2002 and 2001, respectively. The decrease as a percentage of Internet
services revenues is primarily due to a $1.3 million increase in Internet's
portion of cable modem revenue that generally has higher margins than do other
Internet products. As Internet services revenues increase, economies of scale
and more efficient network utilization continue to result in reduced Internet
cost of sales and services as a percentage of Internet services revenues.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 14.5% to $31.9 million in
2002 and, as a percentage of total revenues, increased to 36.1% in 2002 from
28.7% in 2001. Excluding the fiber capacity sale in 2001, selling, general and
administrative expenses, as a percentage of total revenues, increased from 34.3%
in 2001 to 36.1% in 2002. The increase in selling, general and administrative
expenses in 2002 is primarily due to increased labor and health insurance costs,
incremental new costs to operate GCI Fiber Communication Co., Inc. and Rogers,
and costs incurred for our unsuccessful bid to purchase certain of the assets of
WCIC, off-set by a decrease in company-wide success sharing bonus costs.

Marketing and advertising expenses as a percentage of total revenues increased
from 3.4% in 2001 to 4.1% in 2002. Excluding the fiber capacity sale in 2001,
marketing and advertising expenses as a percentage of total revenues were 4.3%
in 2001.

Depreciation and Amortization
Depreciation and amortization expense increased 5.6% to $14.7 million in 2002.
The increase is primarily attributable to an increase in depreciation expense
due to our $68.0 million investment in equipment and facilities placed into
service during 2001 for which a full year of depreciation will be recorded
during the year ended December 31, 2002, and the $10.0 million investment in
equipment and facilities placed into service during the first quarter of 2002
for which a partial year of depreciation will be recorded during 2002.

Partially off-setting the increases in depreciation and amortization expense
described above is the discontinuation of amortization of Cable Certificates and
Goodwill upon the adoption of SFAS 142, "Goodwill and Other Intangible Assets"
resulting in a decrease in amortization expense in the first quarter of 2002 of
approximately $1.6 million as compared to the first quarter of 2001.

Interest Expense, Net
Interest expense, net of interest income, decreased 25.2% to $6.5 million in
2002. This decrease resulted primarily from decreased interest rates in 2002 on
our variable rate debt and a $431,000 net interest benefit earned in 2002 from
our two interest rate swap agreements. Partially offsetting these decreases was
an increase in average outstanding indebtedness in 2002.

Income Tax Expense
GCI, Inc., as a wholly owned subsidiary and member of the GCI controlled group
of corporations, files its income tax returns as part of the consolidated group
of corporations under GCI. Accordingly, the following discussions of income tax
benefit and net operating loss carryforwards reflect the consolidated group's
activity and balances.


                                       24
<PAGE>
Income tax expense was $1.6 million in 2002 and $1.9 million in 2001. The change
was due to reduced net income before income taxes in 2002 as compared to 2001,
primarily due to the effect of the fiber capacity sale in 2001. Our effective
income tax rate decreased from 43.9% in 2001 to 42.7% in 2002 due to the effect
of items that are nondeductible for income tax purposes.

At March 31, 2002, we have (1) tax net operating loss carryforwards of
approximately $158.6 million that will begin expiring in 2007 if not utilized,
and (2) alternative minimum tax credit carryforwards of approximately $1.9
million available to offset regular income taxes payable in future years. Our
utilization of remaining net operating loss carryforwards is subject to certain
limitations pursuant to Internal Revenue Code section 382.

Tax benefits associated with recorded deferred tax assets are considered to be
more likely than not realizable through future reversals of existing taxable
temporary differences and future taxable income exclusive of reversing temporary
differences and carryforwards. The amount of deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced. We estimate that our
effective income tax rate for financial statement purposes will be 40% to 45% in
2002.

The Job Creation and Worker Assistance Act of 2002 was signed into law on March
9, 2002 and contains several provisions that are effective for tax years ending
in 2001, one of which relates to net operating losses. The Act amends Internal
Revenue Code ("IRC") Section 172(b)(1) to provide, generally, that a net
operating loss for a tax year ending in 2001 or 2002 can be carried back five
years, rather than the two-year carryback generally allowed by section
172(b)(1)(A). The Act also amends IRC Section 56(d)(1) to allow alternative
minimum tax net operating losses carried forward into tax years ending in 2001
or 2002 to be used without regard to the 90 percent alternative minimum taxable
income limitation that generally applies. In addition, alternative minimum tax
net operating losses generated in 2001 or 2002 and carried back to an earlier
year under IRC Section 172 are not subject to the 90 percent alternative minimum
taxable income limitation. SFAS No. 109 states that a change in tax law or rates
that affects deferred income taxes is recorded in the statement of operations in
the year of enactment. Accordingly the deferred income tax effect of $188,000
was recorded as a reduction of our recorded deferred tax assets in our
consolidated balance sheet at March 31, 2002.

The GCI consolidated group U.S. income tax return for 1999 was selected for
examination by the Internal Revenue Service during 2001. The examination
commenced during the third quarter of 2001. We believe this examination will not
have a material adverse effect on our financial position, results of operations
or our liquidity.


                                       25
<PAGE>
                 FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
<TABLE>
The following chart provides selected unaudited statement of operations data
from our quarterly results of operations during 2002 and 2001:
<CAPTION>
                                                                        (Amounts in thousands)
                                                      -------------------------------------------------------------
                                                        First       Second      Third       Fourth       Total
                                                       Quarter     Quarter     Quarter     Quarter       Year
                                                      -------------------------------------------------------------
     <S>                                             <C>            <C>         <C>         <C>        <C>
     2002
     ----
     Revenues:
       Long-distance services                        $  50,068                                          50,068
       Cable services                                $  21,346                                          21,346
       Local access services                         $   7,308                                           7,308
       Internet services                             $   3,573                                           3,573
       All Other services                            $   5,915                                           5,915
                                                      -------------------------------------------------------------
          Total revenues                             $  88,210                                          88,210
     Operating income                                $  10,376                                          10,376
     Net income before income taxes                  $   3,858                                           3,858
     Net income                                      $   2,212                                           2,212

     2001
     ----
     Revenues:
       Long-distance services                        $  46,236      49,851      53,892      50,715     200,694
       Cable services                                $  18,046      18,873      19,113      20,522      76,554
       Local access services                         $   5,958       6,183       6,397       6,691      25,229
       Internet services                             $   2,619       3,134       3,019       3,224      11,996
       All Other services (1)                        $  24,058       7,494       5,598       5,635      42,785
                                                      -------------------------------------------------------------
          Total revenues                             $  96,917      85,535      88,019      86,787     357,258
     Operating income (1)                            $  13,042       8,411      10,192       7,928      39,573
     Net income before income taxes                  $   4,322         436       2,717       1,184       8,659
     Net income                                      $   2,423         166       1,527         473       4,589
<FN>
     --------------
     1  The first quarter of 2001 includes $19.5 million of revenue and $8.7
        million of operating income from the sale of long-haul capacity in the
        Alaska United undersea fiber optic cable system.
     --------------
</FN>
</TABLE>
Revenues
Total revenues for the quarter ended March 31, 2002 ("first quarter") were $88.2
million, representing a 1.6% increase from $86.8 million for the quarter ended
December 31, 2001 ("fourth quarter"). The first quarter increase resulted
primarily from a 4.0% increase in cable services revenues to $21.3 million
resulting from the following:

     -   We recognized a full quarter of revenue from the 7,000 basic
         subscribers we acquired from Rogers on November 19, 2001 and total
         basic subscribers served increased approximately 600 to approximately
         132,600 at March 31, 2002 as compared to December 31, 2001,
     -   Digital subscriber counts increased 5.7% to approximately 26,000 at
         March 31, 2002 as compared to December 31, 2001, and
     -   The cable services segment's share of cable modem revenue (offered
         through our Internet services segment) increased 14.8% to $1.7 million
         in first quarter.


                                       26
<PAGE>
The increase in total revenues described above was partially offset by a 1.3%
decrease in long-distance services revenue to $50.1 million primarily due to the
following:

     -   A decrease in the long-distance services average rate per minute from
         $0.118 in the fourth quarter to $0.115 in the first quarter, and
     -   A 3.5% decrease in long-distance minutes of traffic carried for
         customers other than other common carriers to 80.7 million minutes
         primarily due to seasonality.

The decrease in long-distance services revenue described above is partially
offset by the following:

     -   Revenues from other common carriers increased 1.7% to $20.8 million,
         primarily due to a 4.0% increase in minutes carried to 187.6 million
         minutes partially offset by a 2.2% decrease in the average rate per
         minute on minutes carried for other common carriers, and
     -   An increase of 8.9% in private line and private network transmission
         services revenues to $8.8 million in first quarter due to an increased
         number of leased circuits in service.

Long-distance revenues have historically been highest in the summer months
because of temporary population increases attributable to tourism and increased
seasonal economic activity such as construction, commercial fishing, and oil and
gas activities. Cable television revenues, on the other hand, are higher in the
winter months because consumers spend more time at home and tend to watch more
television during these months. Local access and Internet services are not
expected to exhibit significant seasonality. Our ability to implement
construction projects is also hampered during the winter months because of cold
temperatures, snow and short daylight hours.

Cost of Sales and Services
Cost of sales and services increased from $31.1 million in the fourth quarter to
$31.2 million in the first quarter. As a percentage of revenues, fourth and
first quarter cost of sales and services totaled 35.9% and 35.4%, respectively.
The first quarter decrease as a percentage of revenues primarily results from
reductions in access costs due to distribution and termination of traffic on our
own long-distance and local services networks instead of paying other carriers
to distribute and terminate our traffic. We expect cost savings to continue as
traffic carried on our own facilities grows.

Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased 1.6% to $31.9 million in
the first quarter as compared to the fourth quarter. As a percentage of
revenues, first quarter selling, general and administrative expenses were 36.1%
as compared to 37.4% for the fourth quarter. The decrease in selling, general
and administrative expenses in the first quarter as a percentage of revenues as
compared to the fourth quarter is primarily due to increased revenues without a
comparable increase in costs and decreased accrual of the company-wide success
sharing bonus.

Net Income
We reported net income of $2.2 million for the first quarter as compared to a
$473,000 for the fourth quarter. The increase is due to increased operating
income and decreased net interest expense partially offset by increased income
tax expense.

Liquidity and Capital Resources
Cash flows from operating activities totaled $12.2 million in the three month
period ended March 31, 2002 ("2002") as compared to $31.2 million in the three
month period ended March 31, 2001 ("2001"), net of changes in the components of
working capital. The decrease in 2002 is primarily due to the fiber capacity
sale in 2001 offset by increased cash flow from substantially all service
offerings. Uses of cash during 2002 include expenditures for property and
equipment, including construction in progress, totalling $16.1 million


                                       27
<PAGE>
and payment of $5.7 million in notes receivable issued to related parties. Other
sources of cash in 2002 include $9.0 million in long-term borrowings and receipt
of $3.6 million in repayments of notes receivable issued to related parties.

Working capital deficit improved $0.9 million to ($9.1) million at March 31,
2002 as compared to ($10.0) million as of December 31, 2001.

We were not the successful bidder for certain of the assets of WCIC, as
described in note 6 to the Interim Condensed Consolidated Financial Statements,
therefore the December 17, 2001 amendment to the Senior Holdings Loan will not
become effective.

We were in compliance with all loan covenants at March 31, 2002.

We borrowed an additional $9.0 million on our Senior Holdings Loan credit
facilities in 2002. We are scheduled to make $5.7 million and $10.0 million
principal payments on our Senior Holdings Loan credit facilities in the fourth
quarter of 2002 and first quarter of 2003, respectively, though we expect to
refinance the Senior Holdings Loan credit facilities in the second or third
quarter of 2002.

Our expenditures for property and equipment, including construction in progress,
totaled $16.1 million and $13.5 million during 2002 and 2001, respectively. We
expect our expenditures for property and equipment, including construction in
progress, for our core operations to total $65 million - $70 million during the
year ended December 31, 2002. Planned capital expenditures over the next five
years include those necessary for continued expansion of our long-distance,
local exchange and Internet facilities, supplementation of our existing backup
facilities, continuing development of our Personal Communication Services, or
PCS, network, cable telephony, and upgrades to our cable television plant.

The long-distance, local access, cable, Internet and wireless services
industries are experiencing increasing competition and rapid technological
changes. Our future results of operations will be affected by our ability to
react to changes in the competitive environment and by our ability to fund and
implement new technologies. We are unable to determine how competition and
technological changes will affect our ability to obtain financing.

We believe that we will be able to meet our current and long-term liquidity and
capital requirements and fixed charges through our cash flows from operating
activities, existing cash, cash equivalents, short-term investments, credit
facilities, and other external financing and equity sources. Should cash flows
be insufficient to support additional borrowings and principal payments
scheduled under our existing credit facilities, capital expenditures will likely
be reduced.

New Accounting Standards
In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations". SFAS No. 143 provides accounting and reporting standards for costs
associated with the retirement of long-lived assets. This statement requires
entities to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred. When the liability is
initially recorded, the entity capitalizes a cost by increasing the carrying
amount of the related long-lived asset. Over time, the liability is accreted to
its present value each period, and the capitalized cost is depreciated over the
useful life of the related asset. Upon settlement of the liability, an entity
either settles the obligation for its recorded amount or incurs a gain or loss
upon settlement. We will be required to adopt this statement no later than
January 1, 2003 and do not expect this statement to have a material effect on
our results of operations, financial position and cash flows.


                                       28
<PAGE>
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections".
The following summarizes the effects of SFAS No. 145:

     -   SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt",
         which required all gains and losses from extinguishment of debt to be
         aggregated and, if material, classified as an extraordinary item, net
         of related income tax effect is rescinded. Upon adoption of SFAS No.
         145, companies will be required to apply the criteria in Accounting
         Principles Board Opinion No. 30, "Reporting the Results of Operations -
         Reporting the Effects of Disposal of a Segment of a Business, and
         Extraordinary, Unusual and Infrequently Occurring Events and
         Transactions" ("Opinion No. 30"), in determining the classification of
         gains and losses resulting from the extinguishment of debt,
     -   SFAS No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
         Requirements", amended SFAS No. 4 and is no longer necessary since SFAS
         No. 4 has been rescinded,
     -   SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers", was
         issued to establish accounting requirements for the effects of the
         transition to the provisions of the Motor Carrier Act of 1980. Those
         transitions are completed and, therefore, SFAS No. 44 is no longer
         needed, and
     -   SFAS No. 13, "Accounting for Leases", is amended to require that
         certain lease modifications that have economic effects similar to
         sale-leaseback transactions be accounted for in the same manner as
         sale-leaseback transactions.

SFAS No. 145 will be effective for fiscal years beginning after May 15, 2002,
with early adoption of the provisions related to the rescission of Statement No.
4 encouraged. Upon adoption, enterprises must reclassify prior period items that
do not meet the extraordinary item classification criteria in Opinion No. 30. We
are currently assessing the impact of this statement on our results of
operations, financial position and cash flows.

Critical Accounting Policies
We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our interim
condensed consolidated financial statements.

     -   We recognize unbilled revenues based upon minutes of use processed and
         established rates, net of credits and adjustments.
     -   We maintain allowances for doubtful accounts for estimated losses
         resulting from the inability of our customers to make required
         payments. We base our estimates on the aging of our accounts receivable
         balances and our historical write-off experience, net of recoveries. If
         the financial condition of our customers were to deteriorate, resulting
         in an impairment of their ability to make payments, additional
         allowances may be required.
     -   When recording depreciation expense associated with our telephony and
         cable television distribution systems, we use estimated useful lives.
         Because of changes in technology and industry conditions, we
         periodically evaluate the useful lives of our telephony and cable
         television distribution systems. These evaluations could result in a
         change in useful lives in future periods.
     -   When recording amortization expense on intangible assets, we use
         estimated useful lives. We periodically evaluate the useful lives of
         our intangible assets. These evaluations could result in a change in
         useful lives in future periods. Additionally, we periodically review
         the valuation of our intangible assets. These reviews could result in
         write-down of the value of intangible assets.
     -   GCI, Inc., as a wholly owned subsidiary and member of the GCI
         controlled group of corporations, files its income tax returns as part
         of the consolidated group of corporations under GCI. Accordingly, the
         following discussion of income tax benefit reflects the consolidated
         group's activity and balances. We record a valuation allowance to
         reduce our deferred tax assets to the amount that we believe is more
         likely than not to be realized. While we have considered future taxable
         income and ongoing prudent and feasible tax planning strategies in
         assessing the need for the valuation


                                       29
<PAGE>
         allowance, in the event we were to determine that we would not be able
         to realize all or part of our net deferred tax assets in the future, an
         adjustment to the deferred tax assets would be charged to income in the
         period such determination was made.
     -   We have recorded revenues in the first quarter of 2001 associated with
         a cash sale of indefeasible rights to use certain amounts of our fiber
         system capacity. The fiber system capacity sold was treated as integral
         equipment because it is attached to real estate. Because all of the
         benefits and risks of ownership were transferred to the purchaser upon
         full receipt of the purchase price and other terms of the contract meet
         the requirements of SFAS No. 66, "Accounting for Sales of Real Estate,"
         we accounted for the fiber capacity sale as a sales-type lease. The
         accounting for the sale of fiber system capacity is currently evolving
         and accounting guidance may become available in the future which could
         require us to change our policy. If we are required to change our
         policy, it is likely the effect would be to recognize the gain from
         future sales of fiber capacity, if any, over the term the capacity is
         provided.

Geographic Concentration and the Alaska Economy
We offer voice and data telecommunication and video services to customers
primarily throughout Alaska. Because of this geographic concentration, growth of
our business and of our operations depends upon economic conditions in Alaska.
The economy of Alaska is dependent upon the natural resource industries, and in
particular oil production, as well as investment earnings, tourism, government,
and United States military spending. Any deterioration in these markets could
have an adverse impact on us. In fiscal 2001 Alaska's oil revenues and federal
funding supplied 61% and 33%, respectively, of the state's total revenues.
Investment losses negatively affected the state's total revenues in fiscal 2001
due to the recent decline in its stock market investments. Investment losses of
approximately $615.2 million reduced the state's total revenues to approximately
$3.8 billion. All of the federal funding is dedicated for specific purposes,
leaving oil revenues as the primary funding source of general operating
expenditures. In fiscal 2002 state economists forecast that Alaska's federal
funding, oil revenues, and investment earnings will supply 42%, 33% and 10%,
respectively, of the state's total projected revenues.

The volume of oil transported by the TransAlaska Oil Pipeline System over the
past 20 years has been as high as 2.0 million barrels per day in fiscal 1988.
Production has been declining over the last several years with an average of
0.991 million barrels produced per day in fiscal 2001. The state forecasts the
production of 1.011 million barrels per day in fiscal 2002. The state forecasts
a production rate slightly above 1.0 million barrels per day through fiscal 2009
due to future development of recent discoveries in the National Petroleum
Reserve Alaska, further development of heavy oil in both the Kuparuk and Prudhoe
Bay fields, and additional satellite field development.

Market prices for North Slope oil averaged $27.85 in fiscal 2001 and are
forecasted to average $21.50 in fiscal 2002. State economists forecast the
average price of North Slope oil to decline to $20.50 in fiscal 2003. The
closing price per barrel was $21.06 on May 6, 2002. The production policy of the
Organization of Petroleum Exporting Countries and its ability to continue to act
in concert represents a key uncertainty in the state's revenue forecast.

The State of Alaska maintains the Constitutional Budget Reserve Fund that is
intended to fund budgetary shortfalls. If the state's current projections are
realized, the Constitutional Budget Reserve Fund will be depleted in 2004. If
the fund is depleted, aggressive state action will be necessary to increase
revenues and reduce spending in order to balance the budget. The governor of the
State of Alaska and the Alaska legislature continue to pursue cost cutting and
revenue enhancing measures. In May 2002 the Alaska House of Representatives
passed an income tax and an excise tax on alcohol and allowed for the use of
Alaska Permanent Fund earnings to pay for education and the funding of
municipalities in addition to the annual payments to Alaska residents. The House
bills have moved to the Alaska Senate for consideration.


                                       30
<PAGE>
Tourism, air cargo, and service sectors have helped offset the prevailing
pattern of oil industry downsizing that has occurred during much of the last
several years. Funds from federal sources totaling $2.1 billion are expected to
be distributed to the State of Alaska for highways and other federally supported
projects in fiscal 2002.

Should new oil discoveries or developments not materialize or the price of oil
become depressed, the long term trend of continued decline in oil production
from the Prudhoe Bay field area is inevitable with a corresponding adverse
impact on the economy of the state, in general, and on demand for
telecommunications and cable television services, and, therefore, on us, in
particular. In the past year, there has been a renewed effort to allow
exploration and development in the Arctic National Wildlife Refuge ("ANWR"). The
U.S. Department of Energy estimates it could take seven to twelve years after
approval of ANWR exploration for the first production.

Deployment of a natural gas pipeline from the State of Alaska's North Slope to
the Lower 48 states has been proposed to supplement natural gas supplies. A
competing natural gas pipeline through Canada has also been proposed. The
economic viability of a natural gas pipeline depends upon the price of and
demand for natural gas. Either project could have a positive impact on the State
of Alaska's revenues and the Alaska economy. According to their public comments,
neither Exxon Mobil, BP nor Phillips Petroleum, Alaska's large natural gas
owners, believe either natural gas pipeline makes financial sense based upon
their preliminary analysis, though Phillips Petroleum says it will move forward
with permitting of the project if certain federal income tax incentives are
included. The governor of the State of Alaska and certain natural gas
transportation companies continue to support a natural gas pipeline from
Alaska's North Slope by trying to reduce the project's costs and by advocating
for federal tax incentives to further reduce the project's costs. In April 2002
the U.S. Senate passed an energy bill mandating the following:

     -   A North Slope natural gas pipeline will follow the Alaska Highway
         route,
     -   Gas producers will be allowed to take a credit on their federal income
         taxes if prices fall,
     -   Alaskans along the pipeline route will have access to the gas, and
     -   Future gas discoveries will be allowed to move through the pipeline.

We have, since our entry into the telecommunication marketplace, aggressively
marketed our services to seek a larger share of the available market. The
customer base in Alaska is limited, however, with a population of approximately
627,000 people. The State of Alaska's population is distributed as follows:

     -   42% are located in the Municipality of Anchorage,
     -   13% are located in the Fairbanks North Star Borough, and
     -   5% are located in the City and Borough of Juneau.

The remaining population is spread out over the vast reaches of Alaska. No
assurance can be given that the driving forces in the Alaska economy, and in
particular, oil production, will continue at appropriate levels to provide an
environment for expanded economic activity.

No assurance can be given that oil companies doing business in Alaska will be
successful in discovering new fields or further developing existing fields which
are economic to develop and produce oil with access to the pipeline or other
means of transport to market, even with a reduced level of royalties. We are not
able to predict the effect of changes in the price and production volumes of
North Slope oil on Alaska's economy or on us.

Seasonality
Long-distance revenues have historically been highest in the summer months
because of temporary population increases attributable to tourism and increased
seasonal economic activity such as construction, commercial fishing, and oil and
gas activities. Cable television revenues, on the other hand, are higher in the



                                       31
<PAGE>
winter months because consumers spend more time at home and tend to watch more
television during these months. Local access and Internet services are not
expected to exhibit significant seasonality. Our ability to implement
construction projects is also hampered during the winter months because of cold
temperatures, snow and short daylight hours.

PART I.
ITEM 3.
           Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various types of market risk in the normal course of business,
including the impact of interest rate changes. We do not hold derivatives for
trading purposes.

Our Senior Holdings Loan agreement carries interest rate risk. Amounts borrowed
under this agreement bear interest at either Libor plus 1.0% to 2.5%, depending
on the leverage ratio of Holdings and certain of its subsidiaries, or at the
greater of the prime rate or the federal funds effective rate (as defined) plus
0.05%, in each case plus an additional 0.0% to 1.375%, depending on the leverage
ratio of Holdings and certain of its subsidiaries. Should the Libor rate, the
lenders' base rate or the leverage ratios change, our interest expense will
increase or decrease accordingly. As of March 31, 2002, we have borrowed $120.7
million subject to interest rate risk. On this amount, a 1% increase in the
interest rate would cost us $1,207,000 in additional gross interest cost on an
annualized basis.

On January 3, 2001 we entered into an interest rate swap agreement to convert
$50 million in 9.75% fixed rate debt to a variable interest rate equal to the 90
day Libor rate plus 334 basis points. The swap agreement carries interest rate
risk. Should the Libor rate change, our interest expense will increase or
decrease accordingly. A 1% change in the variable interest rate will change the
annualized benefit of the swap by $500,000. As of March 31, 2002, the interest
rate spread between the fixed and swapped variable rate is 4.55%, an annualized
reduction in interest expense of approximately $2,275,000.

On September 21, 2001, we entered into an interest rate swap agreement to
convert $25 million of variable interest rate debt to 3.98% fixed rate debt plus
applicable margin. The swap agreement carries interest rate risk. Should the
Libor rate change, our interest expense will increase or decrease accordingly. A
1% change in the variable interest rate will change the annualized benefit of
the swap by $250,000.

Our Fiber Facility carries interest rate risk. Amounts borrowed under this
Agreement bear interest at either Libor plus 2.5%-2.75%, or at our choice, the
lender's prime rate plus 1.25%-1.5%. Should the Libor rate, the lenders' base
rate or the leverage ratios change, our interest expense will increase or
decrease accordingly. As of March 31, 2002, we have borrowed $60.0 million
subject to interest rate risk. On this amount, a 1% increase in the interest
rate would cost us $600,000 in additional gross interest cost on an annualized
basis.

Our Satellite Transponder Capital Lease carries interest rate risk. Amounts
borrowed under this Agreement bear interest at Libor plus 3.25%. Should the
Libor rate change, our interest expense will increase or decrease accordingly.
As of March 31, 2002, we have borrowed $46.2 million subject to interest rate
risk. On this amount, a 1% increase in the interest rate would cost us $462,000
in additional gross interest cost on an annualized basis.

PART II.   OTHER INFORMATION
ITEM 1.    LEGAL PROCEEDINGS

Information regarding pending legal proceedings to which we are a party is
included in note 6 to the Interim Condensed Consolidated Financial Statements
and is incorporated herein by reference.


                                       32
<PAGE>
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a) Exhibits - None

           (b) Reports on Form 8-K filed during the quarter ended
               March 31, 2002 - None


                                       33
<PAGE>
                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                                   GCI, INC.

<TABLE>
<CAPTION>
                 Signature                                Title                                   Date
--------------------------------------      ----------------------------------------      ----------------------
<S>                                         <C>                                                <C>

/s/                                         President and Director                             May 10, 2002
--------------------------------------      (Principal Executive Officer)                 ----------------------
Ronald A. Duncan

/s/                                         Vice President and Director                        May 10, 2002
--------------------------------------                                                    ----------------------
G. Wilson Hughes

/s/                                         Secretary, Treasurer and Director                  May 10, 2002
--------------------------------------      (Principal Financial and Accounting           ----------------------
John M. Lowber                              Officer)
</TABLE>


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