As filed with the Securities and Exchange Commission on November 13, 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 September 30, 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 SEPTEMBER 30, 2002
<CAPTION>

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

PART I.  FINANCIAL INFORMATION

         Item l.    Consolidated Balance Sheets as of September 30, 2002
                       (unaudited) and December 31, 2001..................................................5

                    Consolidated Statements of Operations for the
                       three and nine months ended September 30, 2002
                       (unaudited) and 2001 (unaudited)...................................................7

                    Consolidated Statements of Stockholder's Equity
                       for the nine months ended September 30, 2002
                       (unaudited) and 2001 (unaudited)...................................................8

                    Consolidated Statements of Cash Flows for the nine
                       months ended September 30, 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...................................................20

         Item 3.    Quantitative and Qualitative Disclosures About
                    Market Risk...........................................................................39

         Item 4.    Controls and Procedures...............................................................40

PART II.  OTHER INFORMATION

         Item 1.    Legal Proceedings.....................................................................40

         Item 6.    Exhibits and Reports on Form 8-K......................................................40

         Other items are omitted, as they are not applicable.

SIGNATURES................................................................................................41
</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, including the continuing
         impact of the current depressed telecommunications industry due to high
         levels of competition in the long-distance market resulting in
         pressures to reduce prices, an oversupply of long-haul capacity,
         excessive debt loads; several high-profile company failures and
         potentially fraudulent accounting practices by some companies;
     -   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 long-distance, 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;


                                       3
<PAGE>
     -   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;
     -   The risks associated with technological requirements, technology
         substitution and changes and other technological developments;
     -   Prolonged service interruptions which could affect our business;
     -   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 ("RCA"), 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;
     -   The financial, credit and economic impacts of WorldCom, Inc.'s
         ("WorldCom") bankruptcy filing on the industry in general and on us in
         particular;
     -   A conversion of WorldCom's bankruptcy petition to Chapter 7, an
         unfavorable classification of our service provider status for post July
         21, 2002 services, unfavorable reauthorization of our pre-filing
         contracts and agreements with WorldCom, or a migration of WorldCom's
         traffic off our network without it being replaced by other common
         carriers that interconnect with our network;
     -   The effect on us of pricing pressures, new program offerings and market
         consolidation in the markets served by our major customers, WorldCom
         and Sprint Corporation ("Sprint"); 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

                                                                                 (Unaudited)
                                                                                September 30,    December 31,
                            ASSETS                                                  2002             2001
---------------------------------------------------------------------------    ---------------- ---------------
                                                                                    (Amounts in thousands)
<S>                                                                          <C>                    <C>
Current assets:
    Cash and cash equivalents                                                $       8,821           11,097
                                                                               --------------- ----------------

    Receivables:
        Trade                                                                       72,947           58,895
        Employee                                                                       382              358
        Other                                                                        2,468            1,678
                                                                               --------------- ----------------
                                                                                    75,797           60,931
        Less allowance for doubtful receivables                                     14,753            4,166
                                                                               --------------- ----------------
           Net receivables                                                          61,044           56,765
                                                                               --------------- ----------------

    Deferred income taxes, net                                                       4,525            4,690
    Inventories                                                                      4,704            3,462
    Prepaid and other current assets                                                 2,148            3,061
    Property held for sale                                                           1,037              481
    Notes receivable with related parties                                              108              182
                                                                               --------------- ----------------
           Total current assets                                                     82,387           79,738
                                                                               --------------- ----------------

Property and equipment in service, net of depreciation                             401,814          395,887
Construction in progress                                                            13,769            8,121
                                                                               --------------- ----------------
           Net property and equipment                                              415,583          404,008
                                                                               --------------- ----------------

Cable certificates, net of amortization of  $26,884,000 at September 30,
   2002 and December 31, 2001                                                      191,132          191,132
Goodwill, net of amortization of $7,200,000 at September 30, 2002 and
   December 31, 2001                                                                41,191           40,940
Other intangible assets, net of amortization of $1,625,000 and $1,252,000
   at September 30, 2002 and December 31, 2001, respectively                         2,820            3,387
Deferred loan and senior notes costs, net of amortization of $7,017,000 and
   $5,568,000 at September 30, 2002 and December 31, 2001, respectively              6,344            7,630
Notes receivable with related parties                                                5,625            3,246
Other assets, at cost, net of amortization of $19,000 and $70,000 at
   September 30, 2002 and December 31, 2001, respectively                            5,629            4,598
                                                                               --------------- ----------------
           Total other assets                                                      252,741          250,933
                                                                               --------------- ----------------
           Total assets                                                      $     750,711          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)
                                                                                September 30,    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                                                               $        1,557            7,346
    Accounts payable                                                                36,917           36,464
    Deferred revenue                                                                16,040           11,129
    Accrued payroll and payroll related obligations                                 10,745           15,289
    Accrued liabilities                                                              5,424            4,697
    Due to related party                                                             5,022            5,160
    Accrued interest                                                                 3,256            8,049
    Subscriber deposits                                                                934            1,121
                                                                              ---------------- ----------------
        Total current liabilities                                                   79,895           89,255

Long-term debt, excluding current maturities                                       360,125          346,000
Obligations under capital leases, excluding current maturities                      44,843           44,933
Obligations under capital leases due to related party, excluding
  current maturities                                                                   709              703
Deferred income taxes, net of deferred income tax benefit                           29,251           25,069
Other liabilities                                                                    5,617            4,339
                                                                              ---------------- ----------------
        Total liabilities                                                          520,440          510,299
                                                                              ---------------- ----------------
Stockholder's equity:
  Class A common stock.  Authorized 10,000 shares; issued 100 shares at
     September 30, 2002 and December 31, 2001                                      206,622          206,622
  Paid-in capital                                                                   45,208           44,902
  Retained deficit                                                                 (20,980)         (27,152)
  Accumulated other comprehensive income (loss)                                       (579)               8
                                                                              ---------------- ----------------
        Total stockholder's equity                                                 230,271          224,380
  Commitments and contingencies
                                                                              ---------------- ----------------
        Total liabilities and stockholder's equity                          $      750,711          734,679
                                                                              ================ ================
</TABLE>

See accompanying notes to interim condensed consolidated financial statements.


                                       6
<PAGE>
<TABLE>
                                               GCI, INC. AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                                      (Unaudited)
<CAPTION>
                                                           Three Months Ended                Nine Months Ended
                                                              September 30,                    September 30,
                                                           2002           2001              2002            2001
                                                     -------------- --------------     --------------- --------------
                                                                         (Amounts in thousands)
<S>                                                <C>                   <C>               <C>             <C>
Revenues                                           $      94,550         88,019            275,500         270,471

Cost of sales and services                                30,375         32,743             92,473         108,660
Selling, general and administrative expenses              32,209         30,106             96,095          84,723
Bad debt expense                                           1,677            851             12,874           3,676
Depreciation and amortization expense                     14,257         14,127             43,255          41,767
                                                     -------------- --------------     --------------- --------------
     Operating income                                     16,032         10,192             30,803          31,645
                                                     -------------- --------------     --------------- --------------

Interest expense                                           7,477          7,510             20,304          24,467
Interest income                                              107             35                335             297
                                                     -------------- --------------     --------------- --------------
     Interest expense, net                                 7,370          7,475             19,969          24,170
                                                     -------------- --------------     --------------- --------------

     Net income before income taxes                        8,662          2,717             10,834           7,475

Income tax expense                                         3,599          1,190              4,662           3,359
                                                     -------------- --------------     --------------- --------------

     Net income                                    $       5,063          1,527              6,172           4,116
                                                     ============== ==============     =============== ==============
</TABLE>

See accompanying notes to interim condensed consolidated financial statements.


                                       7
<PAGE>
<TABLE>
                                                     GCI, INC. AND SUBSIDIARIES
                                              CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                                               NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

                                                        Shares of                                           Accumulated
                                                         Class A        Class A                                Other
(Unaudited)                                              Common         Common       Paid-in   Retained     Comprehensive
(Amounts in thousands)                                    Stock          Stock       Capital    Deficit     Income (Loss)    Total
                                                       -----------------------------------------------------------------------------
<S>                                                        <C>         <C>            <C>       <C>             <C>        <C>
Balances at December 31, 2000                              100         $206,622       29,941    (31,741)         ---       204,822
  Net income                                               ---              ---          ---      4,116          ---         4,116
  Fair value of cash flow hedge, net of income tax
     benefit of $59                                        ---              ---          ---        ---          (89)          (89)
                                                                                                                         -----------
      Comprehensive income                                                                                                   4,027
Contribution from General Communication, Inc.              ---              ---       15,275        ---          ---        15,275
                                                       -----------------------------------------------------------------------------
Balances at September 30, 2001                             100         $206,622       45,216    (27,625)         (89)      224,124
                                                       =============================================================================
Balances at December 31, 2001                              100         $206,622       44,902    (27,152)           8       224,380
Components of comprehensive income:
   Net income                                              ---              ---          ---      6,172          ---         6,172
   Fair value of cash flow hedge, net of income tax
     liability of $390                                     ---              ---          ---        ---         (587)         (587)
                                                                                                                         -----------
      Comprehensive income                                                                                                   5,585
Contribution from General Communication, Inc.              ---              ---          306        ---          ---           306
                                                       -----------------------------------------------------------------------------
Balances at September 30, 2002                             100         $206,622       45,208    (20,980)        (579)      230,271
                                                       =============================================================================
</TABLE>
 See accompanying notes to interim condensed consolidated financial statements.



                                       8
<PAGE>
<TABLE>
                                           GCI, INC. AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                                                             (Unaudited)
                                                                                          Nine Months Ended
                                                                                            September 30,
                                                                                         2002           2001
                                                                                    -------------- --------------
                                                                                      (Amounts in thousands)
        <S>                                                                       <C>                 <C>
        Operating activities:
          Net income                                                              $      6,172          4,116
            Adjustments to reconcile net income to net cash provided by
              operating activities:
                Depreciation and amortization                                           43,255         41,767
                Amortization charged to selling, general and administrative                ---             26
                Non-cash cost of sale                                                      ---         10,877
                Deferred income tax expense                                              4,757          3,359
                Bad debt expense, net of write-offs                                     10,587          2,127
                Deferred compensation and compensatory stock options                       870          1,081
                Employee Stock Purchase Plan expense funded with issuance of
                  General Communication, Inc. Class A common stock                         497            ---
                Write-off of capitalized interest                                          ---            170
                Other noncash income and expense items                                      36              2
                Change in operating assets and liabilities                             (19,078)            96
                                                                                    -------------- --------------
                  Net cash provided by operating activities                             47,096         63,621
                                                                                    -------------- --------------
        Investing activities:
           Purchases of property and equipment                                         (51,989)       (46,663)
           Advances and billings to Kanas Telecom, Inc.                                    ---         (5,632)
           Payment of deposit                                                              ---         (1,200)
           Notes receivable issued to related parties                                   (3,055)          (525)
           Payments received on notes receivable with related parties                      946            772
           Purchases of other assets                                                    (1,563)        (1,154)
          Cash received upon acquisition of Kanas Telecom, Inc.                            ---            228
                                                                                    -------------- --------------
                  Net cash used by investing activities                                (55,661)       (54,174)
                                                                                    -------------- --------------
        Financing activities:
          Repayments of long-term borrowings and capital lease obligations              (6,802)       (13,000)
          Long-term borrowings - bank debt                                              14,000         10,000
          Cash contribution from (to) General Communication, Inc.                         (527)         2,907
          Payment of debt issuance costs                                                  (382)          (130)
                                                                                    -------------- --------------
                  Net cash provided (used) by financing activities                       6,289           (223)
                                                                                    -------------- --------------

                  Net decrease in cash and cash equivalents                             (2,276)         9,224

                  Cash and cash equivalents at beginning of period                      11,097          5,962
                                                                                    -------------- --------------

                  Cash and cash equivalents at end of period                      $      8,821         15,186
                                                                                    ============== ==============

        See accompanying notes to interim condensed consolidated financial statements.
</TABLE>

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

The accompanying unaudited interim condensed consolidated financial statements
include the accounts of GCI, Inc. and its subsidiaries and have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. They should be read in conjunction
with our audited consolidated financial statements for the year ended December
31, 2001, filed as part of our annual report on Form 10-K. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The results of operations
for the interim periods ended September 30, 2002 and 2001, are not necessarily
indicative of the results that may be expected for an entire year or any other
period.

(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 94.4% controlling interest in GCI Fiber
             Communication Co., Inc. ("GFCC"), 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"). Effective October 31, 2002
             GCI Fiber Co., Inc. and Fiber Hold Co., Inc. became wholly-owned
             subsidiaries of GCI Holdings, Inc. All significant intercompany
             transactions have been eliminated.


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

       (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 system 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 system capacity sale to repay
             $11.7 million of the Fiber Facility debt and to fund capital
             expenditures and working capital.

             The fiber system 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
             system capacity sale as a sales-type lease. We recognized $19.5
             million in revenue and $10.9 million in cost of sales from the
             fiber system capacity sale during the first quarter of 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 system capacity, if any, over
             the term the capacity is provided.

       (e)   Concentrations of Credit Risk
             Financial instruments that potentially subject us to concentrations
             of credit risk are primarily cash and cash equivalents and accounts
             receivable. Excess cash is invested in high quality short-term
             liquid money instruments issued by highly rated financial
             institutions. At September 30, 2002 and December 31, 2001,
             substantially all of our cash and cash equivalents were invested in
             short-term liquid money instruments.

             We have two major customers, WorldCom (see note 5) and Sprint. We
             may experience increased risk associated with these customers'
             accounts receivable balances. Our remaining customers are located
             primarily throughout Alaska. Because of this geographic
             concentration, our growth and operations depend upon economic
             conditions in Alaska. The economy of Alaska is dependent upon the
             natural resources industries, and in particular oil production, as
             well as tourism, government, and United States military spending.
             Though limited to one geographical area and except for WorldCom and
             Sprint, the concentration of credit risk with respect to our
             receivables is minimized due to the large number of customers,
             individually small balances, and short payment terms.

       (f)   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


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

             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.

             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.


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

             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.
             Unamortized bank fees and other expenses totaling $2.4 million
             associated with the refinancing of the Senior Holdings Loan and the
             Fiber Facility as previously discussed will not be classified as an
             extraordinary item and will be charged to expense in the fourth
             quarter of 2002. We are currently assessing any further impact of
             this statement on our results of operations, financial position and
             cash flows.

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

(2)    Consolidated Statements of Cash Flows Supplemental Disclosures
<TABLE>
       Changes in operating assets and liabilities consist of (amounts in
       thousands):
<CAPTION>
             Nine month periods ended September 30,                                        2002          2001
                                                                                       ------------- ------------
              <S>                                                                    <C>                <C>
              Increase in accounts receivables                                       $   (14,678)       (8,819)
              (Increase) decrease in inventories                                          (1,242)        2,119
              (Increase) decrease in prepaid and other current assets                      1,018        (1,517)
              Increase in accounts payable                                                   453         7,134
              Increase in deferred revenues                                                3,911         1,038
              Increase (decrease) in accrued payroll and payroll related obligations      (4,544)        2,821
              Decrease in accrued interest                                                (4,793)       (4,127)
              Increase in accrued liabilities                                                728         1,397
              Increase (decrease) in subscriber deposits                                    (187)          150
              Increase (decrease) in components of other long-term liabilities               256          (100)
                                                                                       ------------- ------------
                                                                                     $   (19,078)           96
                                                                                       ============= ============
</TABLE>
       We paid interest totaling approximately $25,097,000 and $28,594,000
       during the nine months ended September 30, 2002 and 2001, respectively.

       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 an income tax payment and refund reflects the consolidated
       group's activity. We received an income tax refund of approximately
       $95,000 and $0 during the nine months ended September 30, 2002 and 2001,
       respectively. We paid income taxes totaling approximately $0 and $61,000
       during the nine months ended September 30, 2002 and 2001, respectively.

       During the nine months ended September 30, 2002 we funded the employer
       matching portion of Employee Stock Purchase Plan contributions by GCI's
       issuance of its Class A common stock valued at $497,000. We purchased
       such shares on the open market during the nine months ended September 30,
       2001.

       We financed the purchase of telephony distribution equipment pursuant to
       a long-term capital lease arrangement with a leasing company during the
       nine month period ended September 30, 2002 at a cost of approximately $1
       million.


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

       We acquired certain minority shareholder's interests in GFCC by issuing
       15,000 shares of GCI Class A common stock in July 2002.

(3)    Intangible Assets
<TABLE>
       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 and nine months ended September 30, 2001
       (amounts in thousands):
<CAPTION>
                                                            Three Months           Nine Months
                                                               Ended                 Ended
                                                            September 30,         September 30,
                                                                2001                  2001
                                                          ----------------    -------------------
          <S>                                            <C>                         <C>
          Net income, as reported                        $     1,527                 4,116
          Add cable certificate amortization, net of
            income taxes                                         712                 2,136
          Add goodwill amortization, net of income
            taxes                                                183                   533
                                                          ----------------    -------------------
               Adjusted net income                       $     2,422                 6,785
                                                          ================    ===================
</TABLE>
       Cable certificates are allocated to our cable services reportable
       segment. Goodwill is primarily allocated to the cable services segment
       and the remaining amount is not allocated to a reportable segment, but is
       included in the All Other category in note 4.
<TABLE>
       Amortization expense for amortizable intangible assets for the three and
       nine months ended September 30, 2002 and 2001 follow:
<CAPTION>
                                                              Three Months Ended         Nine Months Ended
                                                                 September 30,             September 30,
                                                                2002       2001           2002       2001
                                                             ---------- -----------    ---------- ----------
          <S>                                               <C>            <C>            <C>        <C>
          Amortization expense for intangible assets        $   180        1,801          567        5,355
                                                             ========== ===========    ========== ==========
</TABLE>
       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 and no indicators of impairment have
       occurred since the impairment testing was performed.


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

(4)    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 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,
         Kenai and Soldotna 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 2003. 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 nine months ended September 30, 2001, management services for Kanas
       Telecom, Inc. ("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)). The September 30, 2001 Form 10-Q "Industry Segments
       Data" reported marketing expenses in the "All Other" category. Such 2001
       expenses have been reclassified to the applicable four reportable
       segments in the September 30, 2002 Form 10-Q.

       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.


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

<TABLE>
       Summarized financial information for our reportable segments and for the
       All Other category for the nine months ended September 30, 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                $  16,578      1,543    7,498     7,179       32,798          558     33,356
         External                      156,221     65,322   23,510    11,412      256,465       19,035    275,500
                                     ------------------------------------------------------------------------------
            Total revenues           $ 172,799     66,865   31,008    18,591      289,263       19,593    308,856
                                     ==============================================================================
       Earnings (loss) from
         operations before
         depreciation,
         amortization, net interest
         expense and income taxes    $  73,440     30,528    2,178    (8,444)      97,702      (22,937)    74,765
                                     ==============================================================================

       Operating income (loss)       $  53,134     18,472     (369)  (11,111)      60,126      (28,616)    31,510
                                     ==============================================================================

             2001
       Revenues:
         Intersegment                $  14,982      1,189    6,024     4,264       26,459          169     26,628
         External                      149,979     56,032   18,538     8,772      233,321       37,150    270,471
                                     ------------------------------------------------------------------------------
            Total revenues           $ 164,961     57,221   24,562    13,036      259,780       37,319    297,099
                                     ==============================================================================
       Earnings (loss) from
         operations before
         depreciation,
         amortization, net interest
         expense and income taxes    $  65,475     25,400    3,881    (9,001)      85,755      (11,630)    74,125
                                     ==============================================================================

       Operating income (loss)       $  48,144     10,361    1,341   (11,060)      48,786      (16,428)    32,358
                                     ==============================================================================
</TABLE>
<TABLE>
       A reconciliation of reportable segment revenues to consolidated revenues
       follows (amounts in thousands):
<CAPTION>
                 Nine months ended September 30,                                   2002           2001
                                                                               ------------- --------------
                 <S>                                                           <C>               <C>
                 Reportable segment revenues                                   $  289,263        259,780
                 Plus All Other revenues                                           19,593         37,319
                 Less intersegment revenues eliminated in consolidation           (33,356)       (26,628)
                                                                               ------------- --------------
                      Consolidated revenues                                    $  275,500        270,471
                                                                               ============= ==============
</TABLE>

                                       16                            (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>
                 Nine months ended September 30,                                    2002           2001
                                                                               -------------- --------------
                 <S>                                                           <C>               <C>
                 Reportable segment earnings from operations before
                   depreciation, amortization, net interest expense and
                   income taxes                                                $   97,702         85,755
                 Less All Other loss from operations before depreciation,
                   amortization, net interest expense and income taxes            (22,937)       (11,630)
                 Less intersegment contribution eliminated in consolidation          (707)          (713)
                                                                               -------------- --------------
                      Consolidated earnings from operations before
                        depreciation, amortization, net interest expense
                        and income taxes                                           74,058         73,412
                 Less depreciation and amortization expense                        43,255         41,767
                                                                               -------------- --------------
                      Consolidated operating income                                30,803         31,645
                 Less interest expense, net                                        19,969         24,170
                                                                               -------------- --------------
                      Consolidated net income before income taxes              $   10,834          7,475
                                                                               ============== ==============
</TABLE>
<TABLE>
       A reconciliation of reportable segment operating income to consolidated
       net income before income taxes follows (amounts in thousands):
<CAPTION>
                 Nine months ended September 30,                                    2002           2001
                                                                               -------------- -------------
                 <S>                                                           <C>               <C>
                 Reportable segment operating income                           $   60,126         48,786
                 Less All Other operating loss                                    (28,616)       (16,428)
                 Less intersegment contribution eliminated in consolidation          (707)          (713)
                                                                               -------------- -------------
                      Consolidated operating income                                30,803         31,645
                 Less interest expense, net                                        19,969         24,170
                                                                               -------------- -------------
                      Consolidated net income before income taxes              $   10,834          7,475
                                                                               ============== =============
</TABLE>
(5)    WorldCom Chapter 11 Bankruptcy Filing
       We provide long-distance and other services to WorldCom, a related party
       and a major customer. We earned revenues from WorldCom, net of discounts,
       totaling approximately $68.7 million for the nine months ended September
       30, 2002. As a percentage of total revenues, WorldCom revenues totaled
       24.9% for the nine months ended September 30, 2002. On July 21, 2002
       WorldCom and substantially all of its active U.S. subsidiaries filed
       voluntary petitions for reorganization under Chapter 11 of the U.S.
       Bankruptcy Code in the United States Bankruptcy Court. Chapter 11 allows
       a company to continue operating in the ordinary course of business in
       order to maximize recovery for the company's creditors and shareholders.
       The filings have enabled WorldCom to continue to conduct business while
       it develops a reorganization plan.

       During the three and nine months ended September 30, 2002 we have
       recognized $1.2 million and $11.0 million in bad debt expense for
       uncollected amounts due from WorldCom, respectively. At September 30,
       2002 the bad debt reserve for uncollected amounts due from WorldCom
       ("WorldCom reserve") totaled $11.6 million and consisted of all billings
       for services rendered prior to July 21, 2002


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

       that were not paid or deemed recoverable as of September 30, 2002 and
       which have not been subsequently paid through the date of this report.
       The WorldCom reserve includes approximately $655,000 in reserves
       recognized prior to the bankruptcy in addition to the $11.0 million in
       bad debt expense previously discussed. Any payments received on amounts
       included in the WorldCom reserve will reduce the reserve and bad debt
       expense in the period of receipt. We currently cannot predict the timing
       or ultimate amount that WorldCom will pay on outstanding balances due us
       as of their bankruptcy filing date of July 21, 2002. WorldCom has made
       timely payments for services rendered subsequent to July 21, 2002.

(6)    Commitments and Contingencies

       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.

(7)    Subsequent Event
       On November 1, 2002 we closed a $225.0 million bank facility ("Senior
       Facility") to refinance the Senior Holdings Loan and Fiber Facility. The
       Senior Holdings Loan and Fiber Facility had balances of approximately
       $120.1 million and $60.0 million, respectively, at September 30, 2002.
       The Senior Facility includes a term loan of $175.0 million and a
       revolving credit facility of $50.0 million. The Senior Facility matures
       on November 1, 2004 and bears interest at LIBOR plus 6.50%. We are
       required to pay a commitment fee equal to 1.5% per annum on the unused
       portion of the commitment. If the outstanding debt is less than $112.5
       million the commitment fee increases to 2.0% per annum on the unused
       portion of the commitment.

       On November 30, 2003 we are required to prepay the term loan in an amount
       equal to 50% of the amount by which earnings before interest, taxes,
       depreciation, and amortization exceeds certain fixed charges as defined
       in the Senior Facility agreement ("Excess Cash Flow") during the year
       ended September 30, 2003. On May 30, 2004 we are required to prepay the
       term loan in an amount equal to 50% of the Excess Cash Flow during the
       six months ended March 31, 2004.

       The Senior Facility contains, among others, covenants limiting additional
       indebtedness and prohibits any direct or indirect distribution, dividend,
       redemption or other payment to any person on account of any general or
       limited partnership interest in, or shares of capital stock or other
       securities of GCI, Inc. and subsidiaries. Under the Senior Facility we
       may not allow the:

           - Total leverage ratio (as defined) to be greater than 4.5:1,
           - Senior secured leverage ratio (as defined) to be greater than
             2.25:1, and
           - Interest coverage ratio (as defined) to be less than 2.50:1.

       Capital expenditures, other than those incurred to build additional fiber
       optic cable system capacity, in any of the years ended September 30,
       2003, March 31, 2004 and September 30, 2004 may not exceed:

           - $25.0 million plus,
           - 50% of any Excess Cash Flow during the applicable period less any
             permitted Investments (as defined) of up to $5.0 million during the
             applicable period.


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

       $3.0 million of the Senior Facility has been used to provide a letter of
       credit to secure payment of certain access charges associated with our
       provision of telecommunications services within the State of Alaska.

       In connection with the funding of the Senior Facility, we paid bank fees
       and other expenses of approximately $104,000 and $304,000 during the
       three and nine months ended September 30, 2002 which will be charged to
       amortization expense over the life of the agreement. Remaining
       unamortized bank fees and other expenses totaling $2.4 million associated
       with the Senior Holdings Loan and the Fiber Facility will be charged to
       expense in the fourth quarter of 2002.

       The refinancing agreement resulted in the classification of all Senior
       Holdings Loan and Fiber Facility debt as long-term at September 30, 2002.
       At June 30, 2002 the current portion of such debt was $36.6 million.



                                       19
<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 third quarter of 2002 long-distance services revenue represented
56.9% 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, a related party, (see note 5 to
the Interim Condensed Consolidated Financial Statements for a discussion of
WorldCom's Chapter 11 bankruptcy filing) and Sprint), provision of private line
and leased dedicated capacity services and broadband services accounted for
95.7% of our total long-distance services revenues during the third 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


                                       20
<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 replaced in March 2002 extending its term to March 2007 with two
one-year automatic extensions to March 2009. Beginning in April 2002 the new
contract 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, general economic deterioration, new program offerings, business
failures, 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 third quarter of 2002, cable television revenues represented 23.3% 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) cable modem services (shared with our
Internet services segment); and (4) advertising sales. During the third quarter
of 2002 programming services generated 76.9% of total cable services revenues,
equipment rental and installation fees accounted for 9.3% of such revenues,
cable services' allocable share of cable modem services accounted for 9.6% of
such revenues, advertising sales accounted for 3.3% of such revenues, and other
services accounted for the remaining 0.9% 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 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. During the third quarter of 2002 local exchange
services revenues represented 8.6% 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


                                       21
<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 providing service in the Juneau market 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) Internet services'
allocable share of cable modem services (a portion of cable modem revenue is
also recognized by our cable services segment). During the third quarter of 2002
Internet services segment revenues represented 4.1% of consolidated revenues.

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 4 in the
accompanying Notes to Interim Condensed Consolidated Financial Statements
include our managed services, product sales, and cellular telephone services.

Revenues included in the All Other category represented 7.1% of total revenues
in the third quarter of 2002 and include managed services revenues totaling $5.4
million and product sales and cellular telephone services revenues totaling $1.3
million.


                                       22
<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 (unaudited, underlying
data rounded to the nearest thousands):
<CAPTION>

                                                         Three Months Ended                  Nine Months Ended
                                                            September 30,                      September 30,
                                                                          Percentage                          Percentage
                                                                          Change(1)                           Change(1)
                                                                           2002 vs.                            2002 vs.
                                                     2002       2001         2001        2002       2001        2001
                                                     ----       ----         ----        ----       ----        ----
      <S>                                           <C>       <C>         <C>           <C>       <C>         <C>
      Statement of Operations Data:
      Revenues
          Long-distance services                     56.9%      61.2%       (0.2%)       56.7%      55.5%        4.2%
          Cable services                             23.3%      21.7%       15.4%        23.7%      20.7%       16.6%
          Local access services                       8.6%       7.3%       26.6%         8.5%       6.9%       26.8%
          Internet services                           4.1%       3.4%       30.1%         4.2%       3.2%       30.1%
          All Other services                          7.1%       6.4%       19.5%         6.9%      13.7%      (48.8%)
                                                 -----------------------------------------------------------------------
             Total revenues                         100.0%     100.0%        7.4%       100.0%     100.0%        1.9%
      Cost of sales and services                     32.1%      37.2%       (7.2%)       33.6%      40.2%      (14.9%)
      Selling, general and administrative
        expenses                                     34.1%      34.2%        7.0%        34.9%      31.3%       13.4%
      Bad debt expense                                1.8%       1.0%       97.1%         4.6%       1.4%      250.2%
      Depreciation and amortization                  15.1%      16.0%        0.9%        15.7%      15.4%        3.6%
                                                 -----------------------------------------------------------------------
             Operating income                        16.9%      11.6%       57.3%        11.2%      11.7%       (2.7%)
             Net income before income taxes           9.2%       3.1%      218.8%         3.9%       2.8%       44.9%
             Net income                               5.4%       1.7%      231.6%         2.2%       1.5%       50.0%

      Other Operating Data:

      Long-distance services operating income (2)    43.3%      31.1%       38.9%        34.0%      30.4%       16.5%
      Cable services operating income (3)            29.0%      17.8%       88.0%        28.3%      18.5%       78.3%
      Local access services operating (loss)
        income (4)                                  (10.2%)     48.4%     (126.8%)       (1.6%)     20.9%     (109.5%)
      Internet services operating loss (5)          (93.7%)   (127.8%)       4.6%       (97.4%)   (126.1%)      (0.5%)
<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>
                                       23
<PAGE>
Three Months Ended September 30, 2002 ("2002") Compared To Three Months Ended
September 30, 2001 ("2001").

Revenues
Total revenues increased 7.4% from $88.0 million in 2001 to $94.6 million in
2002.

Long-distance services revenues from residential, commercial, governmental, and
other common carrier customers decreased 0.2% to $53.8 million in 2002. The
decrease was largely due to a 17.6% decrease in message telephone service
revenues from residential, commercial, and governmental customers to $13.7
million due to the following:

     -   A 15.3% decrease in retail minutes carried for residential, commercial,
         and governmental customers to 75.5 million minutes,
     -   A 10.2% decrease in the average rate per minute on minutes carried for
         residential, commercial, and governmental customers to $0.123 per
         minute due to our promotion of and customers' enrollment in calling
         plans offering a certain number of minutes for a flat monthly fee, and
     -   A decrease of 0.5% in the number of active residential, small business
         and commercial customers billed to 87,100 at September 30, 2002.

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

     -   An increase of 9.3% in message telephone service revenues from other
         common carriers (principally WorldCom and Sprint) to $24.5 million in
         2002 resulting from a 11.4% increase in wholesale minutes carried for
         other common carriers to 224.5 million minutes. After excluding certain
         low-margin wholesale minutes no longer carried for other common
         carriers, comparable wholesale minutes carried for other common
         carriers increased 17.3% over the prior year. The increase in wholesale
         minutes carried for other common carriers was partially off-set by a
         1.8% decrease in the average rate per minute on minutes carried for
         other common carriers due to a reduced rate charged by us for certain
         Sprint traffic due to a new contract commencing April 2002. After
         excluding certain 2001 low-margin wholesale minutes not carried in 2002
         for other common carriers, the comparable average rate per minute
         decreased 6.0% from the prior year, and
     -   An increase of 10.8% in private line and private network transmission
         services revenues to $9.0 million in 2002 due to an increased number of
         leased circuits in service.

Revenues from and minutes carried for WorldCom have increased in 2002 as
compared to 2001.

Cable services revenues increased 15.4% to $22.1 million in 2001. Programming
services revenues increased 11.5% to $17.0 million in 2002 and average gross
revenue per average basic subscriber per month increased $2.76 or 5.2% in 2002
resulting from the following:

     -   Basic subscribers served increased approximately 11,600 to
         approximately 134,600 at September 30, 2002 as compared to September
         30, 2001 (the 2002 increase includes 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 Rogers
         subscribers resulted in approximately 14,900 additional homes passed, a
         8.2% increase from 2001, and
     -   Digital subscriber counts increased 33.8% to approximately 28,500 at
         September 30, 2002 as compared to September 30, 2001.

The cable services segment's share of cable modem revenue (offered through our
Internet services segment) increased $803,000 to $2.1 million in 2002 due to an
increased number of cable modems deployed.


                                       24
<PAGE>
Local access services revenues increased 26.6% in 2002 to $8.1 million primarily
due to growth in the average number of customers served. At September 30, 2002
an estimated 95,000 to 100,000 lines were in service as compared to
approximately 73,300 lines in service at September 30, 2001. At September 30,
2002 approximately 2,500 additional lines were awaiting connection. The increase
in local access services revenues described above was partially off-set by the
following:

     -   The FCC Multi-Association Group ("MAG") reform order reducing the
         access rates paid by interexchange carriers to local exchange carriers
         ("LECs"), and
     -   A reduction in interstate access rates charged by us to interexchange
         carriers in response to an FCC order forcing a competitor to reduce
         their interstate access rates.

Internet services revenues increased 30.1% to $3.9 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 September 30, 2002 as
compared to approximately 67,900 at September 30, 2001. We expect the number of
active residential, commercial and small business retail dial-up Internet
subscribers may decline slightly in future quarters due to their conversion to
cable modem subscribers. We had approximately 33,000 active residential,
commercial and small business retail cable modem subscribers at September 30,
2002 as compared to approximately 21,500 at September 30, 2001. Approximately
850 cable modem subscribers were added with the Rogers acquisition on November
19, 2001.

The 19.5% increase in All Other revenues to $6.7 million in 2002 is primarily
due to a 14.0% increase in managed services revenues in 2002 to $5.4 million
primarily due to the provision of additional services to and increased revenues
from a certain customer.

Cost of Sales and Service
Total cost of sales and services decreased 7.2% to $30.4 million in 2002. As a
percentage of total revenues, total cost of sales and services decreased from
37.2% in 2001 to 32.1% in 2002.

Long-distance services cost of sales and services decreased 23.2% to $14.9
million in 2002. Long-distance services cost of sales as a percentage of
long-distance services revenues decreased from 36.0% in 2001 to 27.7% 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 statewide average
         cost savings is approximately $.038 and $.078 per minute for interstate
         and intrastate traffic, respectively. We expect cost savings to
         continue to occur as long-distance traffic originated, carried, and
         terminated on our own facilities grows,
     -   The FCC MAG reform order reducing access rates paid by interexchange
         carriers to LECs, and
     -   In the course of business we estimate unbilled long-distance cost of
         sales based upon minutes of use processed through our network and
         established rates. Such estimates are revised when subsequent billings
         are received, payments are made, billing matters are researched and
         resolved, tariffed billing periods lapse, or when disputed charges are
         resolved. In 2002 we had favorable adjustments of $1.5 million.
         Excluding the favorable adjustments in 2002, the long-distance services
         cost of sales as a percentage of long-distance services revenues was
         30.6% in 2002.

Partially offsetting the 2002 decrease in long-distance services cost of sales
as a percentage of long-distance services revenues is a decrease in the average
rate per minute billed to customers as previously described.

Cable services cost of sales and services increased 10.8% to $5.8 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-


                                       25
<PAGE>
distance, local access and Internet services cost of sales and services,
decreased from 27.2% in 2001 to 26.1% in 2002. The decrease is due to increases
in equipment rental and installation, cable services' allocable share of cable
modem services and advertising sales revenues which do not have corresponding
costs of sales and services. Cable services cost of sales and services as a
percentage of cable programming services revenue were 34.0% and 34.2% in 2002
and 2001, respectively.

Local access services cost of sales and services increased 50.4% to $5.3 million
in 2002. Local access services cost of sales and services as a percentage of
local access services revenues increased from 55.4% in 2001 to 65.9% 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 as described
         below,
     -   The effect of offering one to two months of free service to significant
         numbers of new local access services customers acquired in 2002 while
         continuing to incur cost of sales for such new customers,
     -   The FCC Multi-Association Group reform order reducing the access rates
         paid by interexchange carriers to LECs,
     -   A reduction in interstate access rates charged by us to interexchange
         carriers in response to an FCC order forcing a competitor to reduce
         their interstate access rates, and
     -   The lease of wholesale circuits from the ILEC in Fairbanks and Juneau
         pending completion of our own 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 partially offset by further
economies of scale and more efficient network utilization as the number of local
access services subscribers and resulting revenues increase.

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 rates, both effective
in November 2001. The wholesale service rate we pay is tied to the retail
residential rate and increased approximately $2.25 per line. Additionally, the
cost of residential features increased 24% to approximately $1.35 per line. We
estimate that 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 2.9% to $1.2 million in
2002, and as a percentage of Internet services revenues, totaled 31.3% and 39.5%
in 2002 and 2001, respectively. The decrease as a percentage of Internet
services revenues is primarily due to a $1.4 million increase in Internet's
portion of cable modem revenue that generally has higher margins than do other
Internet services products. As Internet services revenues increase, economies of
scale and more efficient network utilization continue to result in reduced cost
of sales and services as a percentage of revenues.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 7.0% to $32.2 million in
2002 primarily due to increased labor and health insurance costs and incremental
new costs to operate GCI Fiber Communication Co., Inc. ("GFCC") and Rogers,
partially offset by a decreased accrual for company-wide success sharing bonus
costs. As a percentage of total revenues, selling, general and administrative
expenses decreased to 34.1% in 2002 from 34.2% in 2001, resulting from increased
revenues without a ratable increase in selling, general and administrative
expenses.

Marketing and advertising expenses as a percentage of total revenues decreased
from 3.5% in 2001 to 3.2% in 2002.


                                       26
<PAGE>
Bad Debt Expense
Bad debt expense increased 97.1% to $1.7 million in 2002 and, as a percentage of
total revenues, increased to 1.8% in 2002 from 1.0% in 2001. The 2002 increase
is primarily due to the provision of an additional $1.2 million in bad debt
expense for uncollected accounts from WorldCom resulting from substantially all
of its active U.S. subsidiaries filing voluntary petitions for reorganization
under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of New York on July 21, 2002. The $1.2 million
WorldCom bad debt expense in 2002 includes all unpaid billings for services
rendered from July 1, 2002 through July 21, 2002, net of a $3.5 million payment
received from a third party obligor that determined it was ultimately liable for
services provided by us to the third party under a contract that had been
assigned to WorldCom, and net of an estimated 10% recovery factor associated
with remaining outstanding WorldCom pre-petition balances.

At September 30, 2002 the WorldCom reserve totaled $11.6 million and consisted
of all billings for services rendered prior to July 21, 2002 that were not paid
or deemed recoverable as of September 30, 2002 and which have not been
subsequently paid through the date of this report. Any payments received on
amounts included in the WorldCom reserve will reduce the reserve and bad debt
expense in the period of receipt.

Depreciation and Amortization
Depreciation and amortization expense increased 0.9% to $14.3 million in 2002.
The increase is primarily attributable to an increase in depreciation expense on
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 $47.3 million investment in equipment and
facilities placed into service during the nine months ended September 30, 2002
for which a partial year of depreciation will be recorded during the year ended
December 31, 2002.

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

Interest Expense, Net
Interest expense, net of interest income, decreased 1.4% to $7.4 million in
2002. This decrease resulted primarily from decreased interest rates in 2002 on
our variable rate debt. Partially offsetting these decreases was additional
interest expense in 2002 resulting from an increase in average outstanding
indebtedness.

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 discussion of income tax
expense reflect the consolidated group's activity and balances.

Income tax expense was $3.6 million in 2002 and $1.2 million in 2001. The change
was due to increased net income before income taxes in 2002 as compared to 2001,
as previously described. Our effective income tax rate decreased from 43.8% in
2001 to 41.5% in 2002 due to the effect of items that are nondeductible for
income tax purposes.


                                       27
<PAGE>
Nine Months Ended September 30, 2002 ("2002") Compared To None Months Ended
September 30, 2001 ("2001").

Revenues
Total revenues increased 1.9% from $270.5 million in 2001 to $275.5 million in
2002. Excluding the fiber optic cable system 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 9.8% in 2002.

Long-distance services revenues from residential, commercial, governmental, and
other common carrier customers increased 4.2% to $156.2 million in 2002. The
increase was largely due to the following:

     -   An increase of 14.4% in message telephone service revenues from other
         common carriers (principally WorldCom and Sprint) to $68.2 million in
         2002 resulting from a 17.8% increase in wholesale minutes carried for
         other common carriers to 629.9 million minutes. After excluding certain
         low-margin wholesale minutes no longer carried for other common
         carriers, comparable wholesale minutes carried for other common
         carriers increased 24.5% over the prior year. The increase in wholesale
         minutes carried for other common carriers was partially off-set by a
         2.9% decrease in the average rate per minute on minutes carried for
         other common carriers due to a reduced rate charged by us for certain
         Sprint traffic due to a new contract commencing April 2002. After
         excluding certain 2001 low-margin wholesale minutes not carried in 2002
         for other common carriers, the comparable average rate per minute
         decreased 7.4% from the prior year, and
     -   An increase in 2002 of 22.6% to $13.3 million in 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.

Long-distance services revenue increases described above were partially offset
by a 8.0% decrease in message telephone service revenues from residential,
commercial, and governmental customers to $42.1 million due to the following:

     -   A 9.7% decrease in retail minutes carried for residential, commercial,
         and governmental customers to 235.2 million minutes,
     -   A 3.1% decrease in the average rate per minute on minutes carried for
         residential, commercial, and governmental customers to $0.127 per
         minute due to our promotion of and customers' enrollment in calling
         plans offering a certain number of minutes for a flat monthly fee, and
     -   A decrease of 0.5% in the number of active residential, small business
         and commercial customers billed to 87,100 at September 30, 2002.

Revenues from and minutes carried for WorldCom have increased in 2002 as
compared to 2001.

Cable services revenues increased 16.6% to $65.3 million in 2002. Programming
services revenues increased 12.3% to $50.5 million in 2002 and average gross
revenue per average basic subscriber per month increased $2.95 or 5.7% in 2002
resulting from the following:

     -   Basic subscribers served increased approximately 11,600 to
         approximately 134,600 at September 30, 2002 as compared to September
         30, 2001 (the 2002 increase includes 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 Rogers
         subscribers resulted in approximately 14,900 additional homes passed, a
         8.2% increase from 2001, and


                                       28
<PAGE>
     -   Digital subscriber counts increased 33.8% to approximately 28,500 at
         September 30, 2002 as compared to September 30, 2001.

The cable services segment's share of cable modem revenue (offered through our
Internet services segment) increased $2.3 million to $5.7 million in 2002 due to
an increased number of cable modems deployed.

Local access services revenues increased 26.8% in 2002 to $23.5 million
primarily due to growth in the average number of customers served. At September
30, 2002 an estimated 95,000 to 100,000 lines were in service as compared to
approximately 73,300 lines in service at September 30, 2001. At September 30,
2002 approximately 2,500 additional lines were awaiting connection. The increase
in local access services revenues described above was partially off-set by the
following:

     -   The FCC MAG reform order reducing the access rates paid by
         interexchange carriers to LECs, and
     -   A reduction in interstate access rates charged by us to interexchange
         carriers in response to an FCC order forcing a competitor to reduce
         their interstate access rates.

Internet services revenues increased 30.1% to $11.4 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 September 30, 2002 as
compared to approximately 67,900 at September 30, 2001. We expect the number of
active residential, commercial and small business retail dial-up Internet
subscribers may decline slightly in future quarters due to their conversion to
cable modem subscribers. We had approximately 33,000 active residential,
commercial and small business retail cable modem subscribers at September 30,
2002 as compared to approximately 21,500 at September 30, 2001. Approximately
850 cable modem subscribers were added with the Rogers acquisition on November
19, 2001.

The 48.8% decrease in All Other revenues to $19.0 million in 2002 is primarily
due to the $19.5 million fiber system capacity sale in 2001 as previously
described, partially offset by an increase in managed services revenue of $1.3
million to $15.6 million in 2002 primarily due to the provision of additional
services to and increased revenues from a certain customer.

Cost of Sales and Service
Total cost of sales and services decreased 14.9% to $92.5 million in 2002. As a
percentage of total revenues, total cost of sales and services decreased from
40.2% in 2001 to 33.6% in 2002. Excluding the 2001 fiber system capacity sale,
total cost of sales and services as a percentage of total revenues decreased
from 39.0% in 2001 to 33.6% in 2002.

Long-distance services cost of sales and services decreased 18.7% to $45.7
million in 2002. Long-distance services cost of sales as a percentage of
long-distance services revenues decreased from 37.5% in 2001 to 29.3% 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 statewide average
         cost savings is approximately $.038 and $.078 per minute for interstate
         and intrastate traffic, respectively. We expect cost savings to
         continue to occur as long-distance traffic originated, carried, and
         terminated on our own facilities grows,
     -   The FCC MAG reform order reducing the access rates paid by
         interexchange carriers to LECs, and
     -   In the course of business we estimate unbilled long-distance cost of
         sales based upon minutes of use processed through our network and
         established rates. Such estimates are revised when subsequent billings
         are received, payments are made, billing matters are researched and
         resolved, tariffed billing periods lapse, or when disputed charges are
         resolved. In 2002 we had favorable adjustments of $4.0


                                       29
<PAGE>
         million. Excluding the favorable adjustments in 2002, the long-distance
         services cost of sales as a percentage of long-distance services
         revenues was 31.8% in 2002.

Partially offsetting the 2002 decrease in long-distance services cost of sales
as a percentage of long-distance services revenues is a decrease in the average
rate per minute billed to customers as previously described.

Cable services cost of sales and services increased 16.8% to $17.7 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
27.1% in 2001 to 27.2% in 2002. Equipment rental and installation, cable
services' allocable share of cable modem services and advertising sales revenues
do not have corresponding costs of sales and services. Cable services cost of
sales and services as a percentage of cable programming services revenue
increased from 33.8% in 2001 to 35.1% in 2002. Cable services rate increases did
not keep pace with programming cost increases 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 47.0% to $15.0
million in 2002. Local access services cost of sales and services as a
percentage of local access services revenues increased from 54.9% in 2001 to
63.7% 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 as described
         below,
     -   The effect of offering one to two months of free service to significant
         numbers of new local access services customers acquired in 2002 while
         continuing to incur cost of sales for such new customers,
     -   The FCC Multi-Association Group reform order reducing the access rates
         paid by interexchange carriers to LECs,
     -   A reduction in interstate access rates charged by us to interexchange
         carriers in response to an FCC order forcing a competitor to reduce
         their interstate access rates, and
     -   The lease of wholesale circuits from the ILEC in Fairbanks and Juneau
         pending completion of our facilities enabling service transition to UNE
         facilities and pricing.

The increases in local access services cost of sales as a percentage of local
access services revenues described above are partially offset by further
economies of scale and more efficient network utilization as the number of local
access services subscribers and resulting revenues increase.

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 rates, both effective
in November 2001. The wholesale service rate we pay is tied to the retail
residential rate and increased approximately $2.25 per line. Additionally, the
cost of residential features increased 24% to approximately $1.35 per line. We
estimate that 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 decreased 1.1% to $3.6 million in
2002, and as a percentage of Internet services revenues, totaled 31.3% and 41.2%
in 2002 and 2001, respectively. The decrease as a percentage of Internet
services revenues is primarily due to a $4.1 million increase in Internet's
portion of cable modem revenue that generally has higher margins than do other
Internet services 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 revenues.


                                       30
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 13.4% to $96.1 million in
2002 and, as a percentage of total revenues, increased to 34.9% in 2002 from
31.3% in 2001. Excluding the fiber system capacity sale in 2001, selling,
general and administrative expenses, as a percentage of total revenues,
increased from 33.2% in 2001 to 34.9% in 2002. The 2002 increase in selling,
general and administrative expenses is primarily due to increased labor and
health insurance costs, incremental new costs to operate GFCC and Rogers, and
costs incurred for our unsuccessful bid to purchase certain of the assets of
WCIC, partially offset by a decreased accrual for company-wide success sharing
bonus costs.

Marketing and advertising expenses as a percentage of total revenues increased
from 3.2% in 2001 to 3.3% in 2002. Excluding revenues from the fiber system
capacity sale in 2001, marketing and advertising expenses as a percentage of
total revenues were 3.5% in 2001.

Bad Debt Expense
Bad debt expense increased 250.2% to $12.9 million in 2002 and, as a percentage
of total revenues, increased to 4.6% in 2002 from 1.4% in 2001. Excluding
revenues from the fiber system capacity sale in 2001, bad debt expense as a
percentage of total revenues was 1.5% in 2001. The increase in bad debt expense
in 2002 is primarily due to the $11.0 million bad debt expense for uncollected
accounts from WorldCom as previously described.

Depreciation and Amortization
Depreciation and amortization expense increased 3.6% to $43.3 million in 2002.
The increase is primarily attributable to an increase in depreciation expense on
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 $47.3 million investment in equipment and
facilities placed into service during 2002 for which a partial year of
depreciation will be recorded during the year ended December 31, 2002.

Partially offsetting the depreciation expense increases described above is the
discontinuation of amortization of Goodwill and Cable Certificates upon the
adoption of SFAS 142, "Goodwill and Other Intangible Assets" resulting in a
decrease in 2002 amortization expense of approximately $4.9 million as compared
to 2001.

Interest Expense, Net
Interest expense, net of interest income, decreased 17.4% to $20.0 million in
2002. This decrease resulted primarily from decreased interest rates in 2002 on
our variable rate debt and a $1.3 million net interest benefit earned in 2002
from our interest rate swap agreements. In 2001 we earned a $579,000 interest
benefit from our interest rate swap agreement. Partially offsetting these
decreases was additional interest expense in 2002 resulting from an increase in
average outstanding indebtedness.

The interest rate swap agreement which resulted in a net interest benefit was
called at no cost and terminated on August 1, 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 discussion of income tax
expense reflect the consolidated group's activity and balances.

Income tax expense was $4.7 million in 2002 and $3.4 million in 2001. The
increase was due to increased net income before income taxes in 2002 as compared
to 2001, as previously described. Our effective income tax rate decreased from
44.9% in 2001 to 43.0% in 2002 due to the effect of items that are nondeductible
for income tax purposes.


                                       31
<PAGE>
At September 30, 2002, we have (1) tax net operating loss carryforwards of
approximately $172.2 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 which would result in
additional income tax expense. We estimate that our effective income tax rate
for financial statement purposes will be 42% 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.

                 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>
     2002
     Revenues:
       Long-distance services                        $  50,068      52,375      53,778                 156,221
       Cable services                                $  21,346      21,919      22,057                  65,322
       Local access services                         $   7,308       8,106       8,096                  23,510
       Internet services                             $   3,573       3,912       3,927                  11,412
       All Other services                            $   5,915       6,428       6,692                  19,035
                                                      -------------------------------------------------------------
          Total revenues                             $  88,210      92,740      94,550                 275,500
     Operating income (1)                            $  10,376       4,395      16,032                  30,803
     Net income (loss) before income taxes (1)       $   3,858      (1,686)      8,662                  10,834
     Net income (loss) (1)                           $   2,212      (1,103)      5,063                   6,172
</TABLE>

                                       32
<PAGE>
<TABLE>
<CAPTION>
                                                                         (Amounts in thousands)
                                                      -------------------------------------------------------------
                                                        First       Second      Third       Fourth       Total
                                                       Quarter     Quarter     Quarter     Quarter       Year
                                                      -------------------------------------------------------------
     <S>                                             <C>            <C>         <C>         <C>        <C>
     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 (2)                        $  24,058       7,494       5,598       5,635      42,785
                                                      -------------------------------------------------------------
          Total revenues                             $  96,917      85,535      88,019      86,787     357,258
     Operating income (2)                            $  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 second quarter of 2002 includes provision of a $9.7 million bad debt
        expense for estimated uncollectible accounts from WorldCom. The third
        quarter of 2002 includes an additional provision of $1.2 million as
        previously described.
     2  The first quarter of 2001 includes $19.5 million of revenue and $7.3
        million of operating income (after deducting direct operating costs)
        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 September 30, 2002 ("third quarter") were
$94.6 million, representing a 2.0% increase from $92.7 million for the quarter
ended June 30, 2002 ("second quarter"). The third quarter increase resulted
primarily from a 2.7% increase in long-distance services revenues to $53.8
million. The increase in long-distance services revenues primarily resulted from
a 7.1% increase in revenues from other common carriers to $24.5 million
primarily due to the following:

     -   A 3.1% increase in minutes carried to 224.5 million minutes, and
     -   A 3.9% increase in the average rate per minute on minutes carried for
         other common carriers.

Cost of Sales and Services
Cost of sales and services decreased from $30.9 million in the second quarter to
$30.4 million in the third quarter. As a percentage of revenues, second and
third quarter cost of sales and services totaled 33.3% and 32.1%, respectively.
The third quarter decrease as a percentage of revenues primarily results from
the following:

     -   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, and
     -   The FCC MAG reform order further reducing the access rates paid by
         interexchange carriers to LECs as of July 1, 2002. The reduction in our
         long-distance services segment's cost of sales and services as a result
         of the FCC MAG order reform was greater than our local access services
         segment's reduction in revenues caused by the reform order.

Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $376,000 to $32.2 million
in the third quarter as compared to the second quarter. As a percentage of
revenues, third quarter selling, general and administrative expenses were 34.1%
as compared to 35.1% for the second quarter. The third quarter decrease in
selling, general and administrative expenses as a percentage of revenues is due
to increased revenues in the third quarter without a comparable increase in
expenses.


                                       33
<PAGE>
Bad Debt Expense
Bad debt expense decreased $8.9 million to $1.7 million in the third quarter as
compared to the second quarter. As a percentage of revenues, third quarter bad
debt expense was 1.8% as compared to 11.5% for the second quarter. The second
quarter bad debt expense included a $9.7 million bad debt expense for
uncollected accounts from WorldCom as compared to $1.2 million in additional bad
debt expense for uncollected accounts from WorldCom as previously described.

Net Income (Loss)
We reported net income of $5.1 million for the third quarter as compared to net
loss of ($1.1) million for the second quarter. The increase is primarily due to
the effect of the $9.7 million WorldCom bad debt expense in the second quarter
as previously described and increased revenues and decreased cost of sales,
selling, general and administrative expenses in the third quarter, partially
off-set by increased net interest expense and income tax expense in the third
quarter.

Liquidity and Capital Resources
Cash flows from operating activities totaled $47.1 million for the nine months
ended September 30, 2002 ("2002") as compared to $63.6 million for the nine
months ended September 30, 2001 ("2001"), net of changes in the components of
working capital. The decrease in 2002 is primarily due to the effect of the 2001
fiber system capacity sale partially offset by increased cash flow in 2002 from
some of our segments. Uses of cash during 2002 include $52.0 million of
expenditures for property and equipment, including construction in progress, and
payment of $3.1 million in notes receivable issued to related parties. Other
sources of cash in 2002 include $15.0 million in long-term borrowings and
receipt of $946,000 in repayments of notes receivable issued to related parties.

Gross trade receivables increased $14.0 million from December 31, 2001 to
September 30, 2002 primarily due to an increase in balances due from WorldCom
preceding their filing for Chapter 11 bankruptcy reorganization, and additional
broadband trade receivables related to our services to hospitals and health
clinics.

Working capital deficit totaled $2.5 million at September 30, 2002, a $7.0
million decrease in working capital deficit as compared to a deficit of 9.5
million as of December 31, 2001. The deficit decrease is primarily attributed to
classification of $5.7 million of our Senior Holdings Loan as current maturities
of long-term debt as of December 31, 2001. The Senior Holdings Loan and Fiber
Facility were subject to a refinancing agreement on November 1, 2002 as further
described below, resulting in the classification of all such debt as long-term
at September 30, 2002.

On November 1, 2002 we closed our $225.0 million Senior Facility to refinance
the Senior Holdings Loan and Fiber Facility. The Senior Holdings Loan and Fiber
Facility had balances of approximately $120.1 million and $60.0 million,
respectively, at September 30, 2002. The Senior Facility includes a term loan of
$175.0 million and a revolving credit facility of $50.0 million. The Senior
Facility matures on November 1, 2004 and bears interest at LIBOR plus 6.50%. We
are required to pay a commitment fee equal to 1.5% per annum on the unused
portion of the commitment. If the unused revolver is more than $25.0 million the
commitment fee increases to 2.0% per annum on the unused portion of the
commitment.

On November 30, 2003 we are required to prepay the term loan in an amount equal
to 50% of the amount by which earnings before interest, taxes, depreciation, and
amortization exceeds certain fixed charges as defined in the Senior Facility
agreement ("Excess Cash Flow") during the year ended September 30, 2003. On May
30, 2004 we are required to prepay the term loan in an amount equal to 50% of
the Excess Cash Flow during the six months ended March 31, 2004.


                                       34
<PAGE>
The Senior Facility contains, among others, covenants limiting additional
indebtedness and prohibits any direct or indirect distribution, dividend,
redemption or other payment to any person on account of any general or limited
partnership interest in, or shares of capital stock or other securities of GCI,
Inc. and subsidiaries. Under the Senior Facility we may not allow the:

     -   Total leverage ratio (as defined) to be greater than 4.5:1,
     -   Senior secured leverage ratio (as defined) to be greater than 2.25:1,
         and
     -   Interest coverage ratio (as defined) to be less than 2.50:1.

Capital expenditures, other than those incurred to build additional fiber optic
cable system capacity, in any of the years ended September 30, 2003, March 31,
2004 and September 30, 2004 may not exceed:

     -   $25.0 million plus,
     -   50% of any Excess Cash Flow during the applicable period less any
         permitted Investments (as defined) of up to $5.0 million during the
         applicable period.

We expect our 2003 expenditures for property and equipment for our core
operations, including construction in progress, will total $40 million to $55
million.

$3.0 million of the Senior Facility has been used to provide a letter of credit
to secure payment of certain access charges associated with our provision of
telecommunications services within the State of Alaska.

In connection with the funding of the Senior Facility, we paid bank fees and
other expenses of approximately $104,000 and $304,000 during the three and nine
months ended September 30, 2002 which will be charged to amortization expense
over the life of the agreement. We expect to incur additional fees and expenses
totaling approximately $7.0 million during the fourth quarter of 2002 which will
be charged to amortization expense over the life of the agreement. The $7.0
million in additional fees and expenses will become part of the total
outstanding debt balance. Remaining unamortized bank fees and other expenses
totaling $2.4 million associated with the Senior Holdings Loan and the Fiber
Facility will be charged to expense in the fourth quarter of 2002.

On January 3, 2001 we entered into an interest rate swap agreement to convert
$50 million in 9.75% fixed rate to variable rate debt. This interest rate swap
agreement was called at no cost and terminated on August 1, 2002.

We were in compliance with all loan covenants at September 30, 2002.

Our semi-annual Senior Notes interest payment of $8.8 million was due August 1,
2002 and was paid in full at that time out of existing cash balances.

Our expenditures for property and equipment, including construction in progress,
totaled $53.0 million and $46.7 million during 2002 and 2001, respectively. We
expect our 2002 expenditures for property and equipment for our core operations,
including construction in progress, to total $65 million - $68 million. 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 network 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 continue to experience substantial competition and continuing
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

                                       35
<PAGE>
implement new or enhanced technologies. We are unable to determine how
competition, economic conditions and technological changes will affect our
ability to obtain financing.

The telecommunications industry in general is depressed due to high levels of
competition in the long-distance market resulting in pressures to reduce prices,
an oversupply of long-haul capacity, excessive debt loads, several high-profile
company failures and potentially fraudulent accounting practices by some
companies. Our ability to refinance existing debt and to obtain new debt under
acceptable terms and conditions in the long-term may be diminished as a result.

The financial, credit and economic impacts of WorldCom's bankruptcy filing on
the industry in general and on us in particular are not yet fully understood and
are not predictable. We currently cannot predict the timing or amount that
WorldCom will pay on outstanding balances due us as of their bankruptcy filing
date of July 21, 2002. Unpaid balances due from WorldCom for services rendered
prior to their filing date total approximately $12.9 million at September 30,
2002 for which we have reserved $11.6 million. We believe that services provided
to WorldCom subsequent to their bankruptcy filing date will be paid currently,
consistent with our status in WorldCom's filing as a key service provider or
utility to WorldCom's global network.

A conversion of WorldCom's bankruptcy petition to Chapter 7, an unfavorable
classification of our service provider status for post July 21, 2002 services,
unfavorable reauthorization of our pre-filing contracts and agreements with
WorldCom, or a migration of WorldCom's traffic off our network without it being
replaced by other common carriers that interconnect with our network, could have
a materially adverse impact on our financial position, results of operations and
liquidity.

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.

In July 2002, the FASB issued SFAS No 146, "Accounting for Costs Associated with
Exit or Disposal Activities". Upon adoption of SFAS 146, enterprises may only
record exit or disposal costs when they are incurred and can be measured at fair
value. The recorded liability will be subsequently adjusted for changes in
estimated cash flows. SFAS 146 revises accounting for specified employee and
contract terminations that are part of restructuring activities. 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.


                                       36
<PAGE>
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 carried and
         established rates, net of credits and adjustments.
     -   We estimate unbilled long-distance cost of sales based upon minutes of
         use carried through our network and established rates. Such estimates
         are revised when subsequent billings are received, payments are made,
         billing matters are researched and resolved, tariffed billing periods
         lapse, or when disputed charges are resolved.
     -   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.
     -   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 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 system 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 system capacity, if any, over the term
         the capacity is provided.
     -   Potential refundable amounts attributed to ILEC excess earnings are
         accounted for as gain contingencies since we cannot estimate future
         refundable amounts nor do we know if or when we will receive such
         refunds in the future. Such refunds are not recorded until realization
         is a certainty upon receipt.

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.


                                       37
<PAGE>
Investment losses negatively affected the state's total revenues in fiscal 2001
due to a decline in the value of 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, and a production
rate slightly above 1.0 million barrels per day through fiscal 2009. The state
attributes the production rate increase 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 $25.01 on October 30, 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 2002 the Alaska Legislature passed and the Governor signed legislation that,
among other things, increased certain alcohol beverage taxes, increased the
state minimum wage to $7.15 per hour (adjusted for inflation in future years),
and extended the termination date of the RCA one year to June 30, 2003.

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 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 to begin oil field production
after approval of ANWR exploration.

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


                                       38
<PAGE>
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 (primarily those derived from our other common carrier
customers) 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.

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 new Senior Facility carries interest rate risk. Amounts borrowed under this
Agreement bear interest at Libor plus 6.5%. Should the Libor rate change, our
interest expense will increase or decrease accordingly. On September 21, 2001,
we entered into an interest rate swap agreement to convert $25.0 million of
variable interest rate debt to 3.98% fixed rate debt plus applicable margin. As
of November 1, 2002, we have borrowed $187.7 million of which $162.7 million
subject to interest rate risk. On this amount, a 1% increase in the interest
rate would cost us $1,627,000 in additional gross interest cost on an annualized
basis.


                                       39
<PAGE>
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 September 30, 2002, we have borrowed $45.2 million subject to interest
rate risk. On this amount, a 1% increase in the interest rate would cost us
$452,000 in additional gross interest cost on an annualized basis.

PART I.
ITEM 4.
                             Controls and Procedures

Evaluation of disclosure controls and procedures
Within the 90 days prior to the date of this report, we carried out an
evaluation of the effectiveness of the design and operation of our "disclosure
controls and procedures" (as defined in the Securities Exchange Act of 1934
("Exchange Act") Rules 13a-14(c) and 15d-14(c)) under the supervision and with
the participation of our management, including our Chief Executive Officer and
our Chief Financial Officer. Based upon that evaluation, our Chief Executive
Officer and our Chief Financial Officer concluded that our disclosure controls
and procedures are effective.

Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management to allow timely decisions regarding required disclosure.

Changes in internal controls
There were no significant changes in our internal controls or, to our knowledge,
in other factors that could significantly affect our disclosure controls and
procedures subsequent to the date we carried out this evaluation.

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.

PART II.
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)      Exhibits

                    Exhibit 10.101 - Credit, Guaranty, Security and Pledge
                    Agreement between GCI Holdings, Inc. and Credit Lyonnais New
                    York Branch as Administrative Agent, Issuing Bank,
                    Co-Bookrunner and Co-Arranger, General Electric Capital
                    Corporation as Documentation Agent, Co-Arranger and
                    Co-Bookrunner and CIT Lending Services Corporation as
                    Syndication Agent, dated as of November 1, 2002.

                    Exhibit 99.36 - Certifications Pursuant to 18 U.S.C. Section
                    1350, as Adopted Pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002

           (b)      Reports on Form 8-K filed during the quarter ended
                    September 30, 2002 - None


                                       40
<PAGE>
                                   SIGNATURES

<TABLE>
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.

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

/s/ Ronald A. Duncan                        President and Director                           November 8, 2002
--------------------------------------      (Principal Executive Officer)                 ----------------------
Ronald A. Duncan

/s/ G. Wilson Hughes                        Vice President and Director                      November 8, 2002
--------------------------------------                                                    ----------------------
G. Wilson Hughes

/s/ John M. Lowber                          Secretary, Treasurer and Director                November 8, 2002
--------------------------------------      (Principal Financial and Accounting           ----------------------
John M. Lowber                              Officer)
</TABLE>


                                       41
<PAGE>
                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                 AS ADOPTED PURSUANT TO SECTIONS 302 AND 906 OF
                         THE SARBANES-OXLEY ACT OF 2002

I, Ronald A. Duncan, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of GCI, Inc.;

2.  Based on my knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    the quarterly report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly represent in all
    material respects the financial condition, results of operations and cash
    flows of the registrant as of, and for, the periods presented in this
    quarterly report;

4.  The registrant's other certifying officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have;

         a)  designed such disclosure controls and procedures to ensure that
             material information relating to the registrant, including its
             consolidated subsidiaries, is made known to us by others within
             those entities, particularly during the period in which this
             quarterly report is being prepared;

         b)  evaluated the effectiveness of the registrant's disclosure controls
             and procedures as of a date within 90 days prior to the filing date
             of this quarterly report (the "Evaluations Date"); and

         c)  presented in this quarterly report our conclusions about the
             effectiveness of the disclosure controls and procedures based on
             our evaluations as of the Evaluation Date;

5.  The Registrant's other certifying officer and I have disclosed, based on our
    most recent evaluation, to the registrant's auditors and the audit committee
    or registrants board of directors (or persons performing the equivalent
    function);

         a)  all significant deficiencies in the design or operation of internal
             controls which could adversely affect the registrant's ability to
             record, process, summarize and report financial data and have
             identified for the registrant's auditors any material weaknesses in
             internal controls; and

         b)  any fraud, whether or not material, that involves management or
             other employees who have a significant role in the registrant's
             internal controls; and

6.  The registrant's other certifying officer and I have indicated in the
    quarterly report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluations, including
    any corrective actions with regard to significant deficiencies and material
    weaknesses.

Date:  November 8, 2002                /s/ Ronald A. Duncan
                                       Ronald A. Duncan
                                       Chief Executive Officer


                                       42
<PAGE>
                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                 AS ADOPTED PURSUANT TO SECTIONS 302 AND 906 OF
                         THE SARBANES-OXLEY ACT OF 2002


I, John M. Lowber, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of GCI, Inc.;

2.  Based on my knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    the quarterly report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly represent in all
    material respects the financial condition, results of operations and cash
    flows of the registrant as of, and for, the periods presented in this
    quarterly report;

4.  The registrant's other certifying officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have;

         a)  designed such disclosure controls and procedures to ensure that
             material information relating to the registrant, including its
             consolidated subsidiaries, is made known to us by others within
             those entities, particularly during the period in which this
             quarterly report is being prepared;

         b)  evaluated the effectiveness of the registrant's disclosure controls
             and procedures as of a date within 90 days prior to the filing date
             of this quarterly report (the "Evaluations Date"); and

         c)  presented in this quarterly report our conclusions about the
             effectiveness of the disclosure controls and procedures based on
             our evaluations as of the Evaluation Date;

5.  The Registrant's other certifying officer and I have disclosed, based on our
    most recent evaluation, to the registrant's auditors and the audit committee
    or registrants board of directors (or persons performing the equivalent
    function);

         a)  all significant deficiencies in the design or operation of internal
             controls which could adversely affect the registrant's ability to
             record, process, summarize and report financial data and have
             identified for the registrant's auditors any material weaknesses in
             internal controls; and

         b)  any fraud, whether or not material, that involves management or
             other employees who have a significant role in the registrant's
             internal controls; and

6.  The registrant's other certifying officer and I have indicated in the
    quarterly report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluations, including
    any corrective actions with regard to significant deficiencies and material
    weaknesses.

Date:  November 8, 2002                /s/ John M. Lowber
                                       John M. Lowber
                                       Chief Financial Officer


                                       43