As filed with the Securities and Exchange Commission on November 14, 2000.

                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, 2000

                                       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>

                                      INDEX

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

                                    FORM 10-Q

                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000

<TABLE>
<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, 2000
                       (unaudited) and December 31, 1999..................................................5

                    Consolidated Statements of Operations for the three and
                       nine months ended September 30, 2000
                       (unaudited) and 1999 (unaudited)...................................................7

                    Consolidated Statements of Stockholder's Equity
                       for the nine months ended September 30, 2000
                       (unaudited) and 1999 (unaudited)...................................................8

                    Consolidated Statements of Cash Flows for the nine
                       months ended September 30, 2000 (unaudited)
                       and 1999 (unaudited)...............................................................9

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

         Item 2.    Management's Discussion and Analysis of Financial
                    Condition and Results of Operations...................................................16

         Item 3.    Quantitative and Qualitative Disclosures About
                    Market Risk...........................................................................31

PART II.  OTHER INFORMATION

         Item 1.    Legal Proceedings.....................................................................31

         Item 6.    Exhibits and Reports on Form 8-K......................................................31

         Other items are omitted, as they are not applicable.

SIGNATURES................................................................................................32
</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. In this Quarterly Report, in
addition to historical information, we state 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," or "continue" or the negative of those
words and other comparable words. You should be aware that those statements are
only our predictions and are subject to risks and uncertainties. Actual events
or results may differ materially. 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 Private Securities
Litigation Reform Act of 1995.

-    Material adverse changes in the economic conditions in the markets we
     serve;
-    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 Telecommunications Act of 1996; the outcome
     of litigation relative thereto; and the impact of regulatory changes
     relating to access reform;
-    Our responses to competitive products, services and pricing, including
     pricing pressures, technological developments, alternative routing
     developments, and the ability to offer combined service packages that
     include local, cable and Internet services; the extent and pace at which
     different competitive environments develop for each segment of our
     business; the extent and duration for which competitors from each segment
     of the telecommunications industry 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; and 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 and relevant
     appeals with respect to interconnection agreements; and our ability to
     purchase unbundled network elements or wholesale services from ILECs at a
     price sufficient to permit the profitable offering of local exchange
     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 access services, Internet (consumer and
     business) services and wireless services; start-up costs associated with
     entering new markets, including advertising and promotional efforts;
     successful deployment of new systems and applications to support new
     initiatives; and local conditions and obstacles;
-    Uncertainties inherent in new business strategies, new product launches and
     development plans, including local access services, Internet services,
     wireless services, digital video services, cable modem services, and
     transmission services;
-    Rapid technological changes;
-    Development and financing of telecommunication, local access, 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;
-    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;
-    Other risks detailed from time to time in our periodic reports filed with
     the Securities and Exchange Commission.


                                       3
<PAGE>
These forward-looking statements (and such risks, uncertainties and other
factors) are made only as of the date of this report and we expressly disclaim
any obligation or undertaking to disseminate any updates or revisions to any
forward-looking statement contained in this document 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. Readers are
cautioned not to put undue reliance on such forward-looking statements.


                                       4
<PAGE>
PART I.  FINANCIAL INFORMATION
ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
                           GCI, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                                                        (Unaudited)
                                                                                       September 30,    December 31,
                            ASSETS                                                         2000             1999
----------------------------------------------------------------------------------    --------------- -----------------
                                                                                           (Amounts in thousands)
<S>                                                                                 <C>                      <C>
Current assets:
    Cash and cash equivalents                                                       $       11,420            13,734
                                                                                      --------------- -----------------

    Receivables:
        Trade                                                                               43,405            48,145
        Other                                                                                  407               269
                                                                                      --------------- -----------------
                                                                                            43,812            48,414
        Less allowance for doubtful receivables                                              3,085             2,833
                                                                                      --------------- -----------------
           Net receivables                                                                  40,727            45,581
                                                                                      --------------- -----------------

    Refundable deposit                                                                         ---             9,100
    Prepaid and other current assets                                                         2,695             2,224
    Deferred income taxes, net                                                               1,601             2,972
    Inventories                                                                              4,985             3,754
    Property held for sale                                                                  10,877               ---
    Notes receivable with related parties                                                      510               449
                                                                                      --------------- -----------------

           Total current assets                                                             72,815            77,814
                                                                                      --------------- -----------------

Property and equipment in service, net of depreciation                                     342,469           302,762
Construction in progress                                                                     9,851             2,898
                                                                                      --------------- -----------------
           Net property and equipment                                                      352,320           305,660
                                                                                      --------------- -----------------

Cable franchise agreements, net of amortization of $20,219,000 and $16,347,000
   at September 30, 2000 and December 31, 1999, respectively                               186,273           190,145
Goodwill, net of amortization of $5,639,000 and $4,563,000 at September 30, 2000
   and December 31, 1999, respectively                                                      40,317            41,391
Other intangible assets, net of amortization of $599,000 and $269,000 at
   September 30, 2000 and December 31, 1999, respectively                                    4,170             4,402
Property held for sale                                                                       1,550            10,877
Deferred loan and senior notes costs, net of amortization                                    8,528             8,863
Notes receivable with related parties                                                        2,737             2,067
Other assets, at cost, net of amortization                                                   2,728             1,932
                                                                                      --------------- -----------------
           Total other assets                                                              246,303           259,677
                                                                                      --------------- -----------------
           Total assets                                                             $      671,438           643,151
                                                                                      =============== =================
</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 STOCKHOLDERS' EQUITY                                          2000             1999
----------------------------------------------------------------------------------    --------------- -----------------
                                                                                           (Amounts in thousands)
<S>                                                                                 <C>                      <C>
Current liabilities:
    Current maturities of obligations under capital leases                          $        1,689               574
    Accounts payable                                                                        31,025            25,321
    Accrued interest                                                                         4,873             7,985
    Accrued payroll and payroll related obligations                                         10,427             8,601
    Deferred revenue                                                                         8,708             8,173
    Accrued liabilities                                                                      3,823             3,152
    Due to related party                                                                     1,522               ---
    Subscriber deposits and other current liabilities                                        1,430             1,314
                                                                                      --------------- -----------------
        Total current liabilities                                                           63,497            55,120

Long-term debt, excluding current maturities                                               329,400           339,400
Obligations under capital leases, excluding current maturities                              47,205               747
Obligations under capital leases due to related party, excluding current
    maturities                                                                                 239               353
Deferred income taxes, net of deferred income tax benefit                                   22,079            30,861
Other liabilities                                                                            3,721             3,052
                                                                                      --------------- -----------------
        Total liabilities                                                                  466,141           429,533
                                                                                      --------------- -----------------

Stockholder's equity:
    Class A. Authorized 10,000 shares; issued and outstanding 100 shares at
       September 30, 2000 and December 31, 1999, respectively                              206,622           206,622
    Paid-in capital                                                                         28,558            25,503
    Retained deficit                                                                       (29,883)          (18,507)
                                                                                      --------------- -----------------
        Total stockholder's equity                                                         205,297           213,618
                                                                                      --------------- -----------------
        Commitments and contingencies
        Total liabilities and stockholder's equity                                  $      671,438           643,151
                                                                                      =============== =================
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.


                                       6
<PAGE>
<TABLE>
                           GCI, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
                                                              (Unaudited)                        (Unaudited)
                                                           Three Months Ended                 Nine Months Ended
                                                              September 30,                     September 30,
                                                           2000           1999                2000            1999
                                                     -------------- --------------       --------------- --------------
                                                              (Amounts in thousands, except per share amounts)
<S>                                                <C>                  <C>                 <C>              <C>

Revenues                                           $      75,906         67,340              215,609         212,337

Cost of sales and services                                29,948         30,233               89,243          92,445
Selling, general and administrative                       27,052         24,442               77,439          73,216
Depreciation and amortization                             13,296         10,757               38,890          32,481
                                                     -------------- --------------       --------------- --------------
     Operating income                                      5,610          1,908               10,037          14,195
                                                     -------------- --------------       --------------- --------------

Interest expense                                           9,760          8,181               29,172          24,253
Interest income                                              196            571                  554           1,523
                                                     -------------- --------------       --------------- --------------
  Interest expense, net                                    9,564          7,610               28,618          22,730
                                                     -------------- --------------       --------------- --------------
     Net loss before income taxes and
       cumulative effect of a change in
       accounting principle                               (3,954)        (5,702)             (18,581)         (8,535)

Income tax benefit                                         1,602          2,165                7,205           2,968
                                                     -------------- --------------       --------------- --------------
     Net loss before cumulative effect of a
       change in accounting principle                     (2,352)        (3,537)             (11,376)         (5,567)

Cumulative effect of a change in accounting
   principle, net of income tax benefit of $245              ---            ---                  ---             344
                                                     -------------- --------------       --------------- --------------
     Net loss                                      $      (2,352)        (3,537)             (11,376)         (5,911)
                                                     ============== ==============       =============== ==============

Basic and diluted net loss per common share:
   Loss before cumulative effect of a change in
     accounting principle                          $     (23,520)       (35,370)            (113,760)        (55,670)
   Cumulative effect of a change in accounting
     principle                                               ---            ---                  ---           3,440
                                                     -------------- --------------       --------------- --------------
       Net loss                                    $     (23,520)       (35,370)            (113,760)        (59,110)
                                                     ============== ==============       =============== ==============
</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, 2000 AND 1999

<CAPTION>
                                                            Shares of
(Unaudited)                                               Class A Common   Class A Common     Paid-in        Retained
(Amounts in thousands)                                        Stock             Stock         Capital         Deficit
                                                         -----------------------------------------------------------------
<S>                                                            <C>           <C>               <C>           <C>
Balances at December 31, 1998                                  100           $ 206,622          2,933         (8,980)
Net loss                                                       ---                 ---            ---         (5,911)
Contribution from General Communication, Inc.                  ---                 ---         22,075            ---
                                                         -----------------------------------------------------------------
Balances at September 30, 1999                                 100           $ 206,622         25,008        (14,891)
                                                         =================================================================

Balances at December 31, 1999                                  100           $ 206,622         25,503        (18,507)
Net loss                                                       ---                 ---            ---        (11,376)
Contribution from General Communication, Inc.                  ---                 ---          3,055           ---
                                                         -----------------------------------------------------------------
Balances at September 30, 2000                                 100           $ 206,622         28,558        (29,883)
                                                         =================================================================
</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,
                                                                                                2000            1999
                                                                                          --------------- --------------
                                                                                               (Amounts in thousands)
   <S>                                                                                  <C>                   <C>
   Cash flows from operating activities:
     Net loss                                                                           $     (11,376)         (5,911)
       Adjustments to reconcile net loss to net cash provided (used) by operating
         activities:
          Depreciation and amortization                                                        38,890          32,481
          Amortization charged to selling, general and administrative                             534           1,339
          Deferred income tax benefit                                                          (7,205)         (3,213)
          Deferred compensation and compensatory stock options                                    484             501
          Non-cash cost of sales                                                                  ---           3,703
          Bad debt expense, net of write-offs                                                   1,204           2,109
          Employee Stock Purchase Plan expense funded with General Communication, Inc.
           Class A common stock issued and issuable                                             2,115           1,836
          Write-off of capitalized interest                                                     1,955             ---
          Write-off of unamortized start-up costs                                                 ---             589
          Write-off of deferred debt issuance costs upon modification of Senior
           Holdings Loan                                                                          ---             472
          Other noncash income and expense items                                                 (251)             17
          Change in operating assets and liabilities                                            8,650         (12,211)
                                                                                          --------------- --------------
             Net cash provided by operating activities                                         35,000          21,712
                                                                                          --------------- --------------

   Cash flows from investing activities:
      Purchases of property and equipment, including construction period interest
                                                                                              (33,362)        (28,627)
      Refund of deposit                                                                         8,806             ---
      Purchase of property held for sale                                                       (1,550)            ---
      Purchases of other assets                                                                (1,385)           (574)
      Notes receivable issued to related parties                                               (1,101)           (454)
      Payments received on notes receivable with related parties                                  617             263
                                                                                          --------------- --------------
             Net cash used in investing activities                                            (27,975)        (29,392)
                                                                                          --------------- --------------

   Cash flows from financing activities:
     Long-term borrowings - bank debt                                                             ---          13,776
     Repayments of long-term borrowings and capital lease obligations                         (10,714)        (24,111)
     Payment of debt issuance costs and loan commitment fees                                     (127)           (648)
     Increase in due to related party                                                           1,522             ---
     Cash contribution from (to) General Communication, Inc.                                      (20)         20,131
                                                                                          --------------- --------------
             Net cash provided (used) by financing activities                                  (9,339)          9,148
                                                                                          --------------- --------------

             Net increase (decrease) in cash and cash equivalents                              (2,314)          1,468

             Cash and cash equivalents at beginning of period                                  13,734          12,008
                                                                                          --------------- --------------

             Cash and cash equivalents at end of period                                 $      11,420          13,476
                                                                                          =============== ==============
</TABLE>
   See accompanying notes to interim condensed consolidated financial
   statements.


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

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

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

         (a) Business
             GCI, Inc. and its direct and indirect subsidiaries 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, Alaska
               -  Internet access services
               -  Termination of traffic in Alaska for certain common carriers
               -  Private line services
               -  Managed services to certain commercial customers
               -  Sales and service of dedicated communications systems and
                  related equipment
               -  Private network point-to-point data and voice transmission
                  services between Alaska and the western contiguous United
                  States
               -  Own and lease 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 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 Company, Inc., GCI Transport Co.,
             Inc.'s wholly-owned subsidiaries GCI Satellite Co., Inc., GCI Fiber
             Co., Inc. and Fiber Hold Company, Inc. and GCI Fiber Co., Inc.'s
             and Fiber Hold Company, Inc.'s wholly-owned partnership Alaska
             United Fiber System Partnership ("Alaska United"). GCI
             Communication Services, Inc. and its wholly owned subsidiary GCI
             Leasing Co. were merged into GCI Communication Corp. effective
             January 1, 2000. GCI Cable/Fairbanks, Inc. and GCI Cable/Juneau,
             Inc. were merged into GCI Cable, Inc. effective January 1, 2000.

             All significant intercompany balances and transactions have been
             eliminated in consolidation.

         (c) Net Loss Per Common Share
<TABLE>
             Shares used to calculate net loss per common share consist of the
             following (amounts in thousands):
<CAPTION>
                                                                  Three Months Ended            Nine Months Ended
                                                                    September 30,                 September 30,
                                                                  2000         1999             2000         1999
                                                               ------------ ------------    ------------- ------------
                    <S>                                            <C>          <C>              <C>          <C>
                    Weighted average common shares outstanding     100          100              100          100
                    Common equivalent shares outstanding           ---          ---              ---          ---
                                                               ------------ ------------    ------------- ------------
                                                                   100          100              100          100
                                                               ============ ============    ============= ============
</TABLE>
             Basic and diluted loss per share calculations for the three-month
             and nine-month periods ended September 30, 2000 and 1999 are based
             on GCI, Inc.'s weighted average outstanding shares of


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

             common stock which are not publicly traded. GCI, Inc. has no
             outstanding common stock equivalents or weighted average shares
             associated with outstanding stock options.

         (d) Cumulative Effect of a Change in Accounting Principle
             The American Institute of Certified Public Accountants issued
             Statement of Position ("SOP") 98-5, "Reporting on the Costs of
             Start-Up Activities", which provides guidance on the financial
             reporting of start-up costs and organization costs and requires
             costs of start-up activities and organization costs to be expensed
             as incurred. A one-time expense of $344,000 (net of income tax
             benefit of $245,000) associated with the write-off of unamortized
             start-up costs was recognized in the first quarter of 1999 upon
             adoption of SOP 98-5.

         (e) Reclassifications
             Reclassifications have been made to the 1999 financial statements
             to make them comparable with the 2000 presentation.

         (f) Other
             The accompanying unaudited interim condensed consolidated financial
             statements have been prepared in accordance with generally accepted
             accounting principles for interim financial information and with
             the instructions to Form 10-Q and Article 10 of Regulation S-X.
             Accordingly, they do not include all of the information and
             footnotes required by generally accepted accounting principles for
             complete financial statements. The interim condensed consolidated
             financial statements include the consolidated accounts of GCI, Inc.
             and its wholly owned subsidiaries with all significant intercompany
             transactions eliminated. In the opinion of management, all
             adjustments (consisting of normal recurring accruals) considered
             necessary for a fair presentation have been included. Operating
             results for the three-month and nine-month periods ended September
             30, 2000 are not necessarily indicative of the results that may be
             expected for the year ended December 31, 2000. For further
             information, refer to the financial statements and footnotes
             thereto included in our annual report on Form 10-K for the year
             ended December 31, 1999.

(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,                                     2000          1999
                                                                                       ------------- ------------
                 <S>                                                                 <C>               <C>
                 (Increase) decrease in receivables                                  $     3,677        (3,765)
                 Decrease in income tax receivable                                           ---         1,965
                 Increase in prepaid and other current assets                               (580)       (1,232)
                 Increase in inventory                                                    (1,126)         (710)
                 Increase (decrease) in accounts payable                                   5,704        (3,875)
                 Increase (decrease) in accrued liabilities                                  671           (46)
                 Increase  in accrued payroll and payroll related obligations              2,302           368
                 Decrease in accrued interest                                             (3,112)       (4,678)
                 Increase (decrease)  in subscriber deposits and other current
                     liabilities                                                             116           (22)
                 Increase in deferred revenues                                               535           299
                 Increase (decrease) in other long-term liabilities                          463          (515)
                                                                                       ------------- ------------
                                                                                     $     8,650       (12,211)
                                                                                       ============= ============
</TABLE>
         We paid no income taxes during the nine-month periods ended September
         30, 2000 and 1999. We received income tax refunds of $0 and $1,965,000
         during the nine-month periods ended September 30, 2000 and 1999,
         respectively.

         We paid interest totaling $31,130,000 and $28,652,000 during the
         nine-month periods ended September 30, 2000 and 1999, respectively.


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

         We recorded $206,000 and $86,000 during the nine-month periods ended
         September 30, 2000 and 1999, respectively, in paid-in capital in
         recognition of the income tax effect of excess stock compensation
         expense for tax purposes over amounts recognized for financial
         reporting purposes.

         During the nine-month periods ended September 30, 2000 and 1999 we
         funded the employer matching portion of Employee Stock Purchase Plan
         through GCI's issuance of or commitment to issue its Class A Common
         Stock valued at $2,115,000 and $1,836,000, respectively.

         We financed the purchase of satellite transponders pursuant to a
         long-term capital lease arrangement with a leasing company during the
         nine-month period ended September 30, 2000 at a cost of $48.2 million.

(3)      Industry Segments Data
         Our reportable segments are business units that offer different
         products. The reportable segments are each managed separately because
         they manage 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 26 communities and areas in Alaska, including the
            state's three largest urban areas, Anchorage, Fairbanks and Juneau.
            Cable plant upgrades in 1999 and 1998 enabled us to offer digital
            cable television services in Anchorage and Fairbanks and retail
            cable modem service (through our Internet services segment) in
            Anchorage, Fairbanks and Juneau, complementing our existing service
            offerings. 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 and plan to provide similar
            competitive local exchange services in Alaska's other major
            population centers.

            Internet services. We began offering wholesale and retail Internet
            services in 1998. Deployment of the new undersea fiber optic cable
            allowed us to offer enhanced services with high-bandwidth
            requirements.

         Included in the "Other" segment in the tables that follow are our
         managed services, product sales, cellular telephone services, and
         management services for Kanas Telecom, Inc., a company that owns and
         operates a fiber optic cable system constructed along the trans-Alaska
         oil pipeline corridor extending from Prudhoe Bay to Valdez, Alaska.
         None of these business units have ever met the quantitative thresholds
         for determining reportable segments. Also included in the Other segment
         in 1999 is a $19.5 million sale of undersea fiber optic cable system
         capacity, and corporate related expenses including marketing, customer
         service, management information systems, accounting, legal and
         regulatory, human resources and other general and administrative
         expenses.

         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 included in
         our annual report on Form 10-K at December 31, 1999. Intersegment sales
         are recorded at cost plus an agreed upon intercompany profit.


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

         We earn all revenues through sales of services and products within the
         United States of America. All of our long-lived assets are located
         within the United States of America.
<TABLE>
         Summarized financial information for our reportable segments for the
         nine-months ended September 30, 2000 and 1999 follows (amounts in
         thousands):
<CAPTION>
                                                      Long-                     Local
                                                     Distance      Cable        Access     Internet
                                                     Services     Services     Services    Services     Other       Total
                                                   ------------------------------------------------------------------------
              <S>                                   <C>             <C>         <C>         <C>        <C>         <C>
                              2000
                              ----
              Revenues:
                Intersegment                        $   11,148       1,108       4,885       2,156         ---      19,297
                External                               136,660      49,298      14,545       5,919       9,187     215,609
                                                   ------------------------------------------------------------------------
                   Total revenues                   $  147,808      50,406      19,430       8,075       9,187     234,906
                                                   ========================================================================
              Earnings (loss) from operations
                 before depreciation, amortization,
                 net interest expense and income
                 taxes                              $   57,775      23,873       2,808      (7,123)    (28,167)     49,166
                                                   ========================================================================
              Operating income (loss)               $   39,769       9,967        (596)     (8,446)    (30,418)     10,276
                                                   ========================================================================

                              1999
                              ----
              Revenues:
                Intersegment                        $    6,283       1,565       2,570          88         ---      10,506
                External                               122,297      45,189      11,323       3,447      30,081     212,337
                                                   ------------------------------------------------------------------------
                   Total revenues                   $  128,580      46,754      13,893       3,535      30,081     222,843
                                                   ========================================================================
              Earnings (loss) from operations
                 before depreciation, amortization,
                 net interest expense, income taxes
                 and cumulative effect of a change
                 in accounting principle            $   48,623      24,555         232      (9,019)    (17,227)     47,164
                                                   ========================================================================
              Operating income (loss)               $   36,517      11,386      (2,218)     (9,821)    (21,181)     14,683
                                                   ========================================================================
</TABLE>
<TABLE>
         A reconciliation of total segment revenues to consolidated revenues
         follows:
<CAPTION>
                 Nine-months ended September 30,                                    2000           1999
                                                                               ------------- --------------
                 <S>                                                               <C>            <C>
                 Total segment revenues                                        $   234,906        222,843
                 Less intersegment revenues eliminated in consolidation            (19,297)       (10,506)
                                                                               ------------- --------------
                      Consolidated revenues                                    $   215,609        212,337
                                                                               ============= ==============
</TABLE>

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

<TABLE>
         A reconciliation of total segment earnings from operations before
         depreciation, amortization, net interest expense, income taxes and
         cumulative effect of a change in accounting principle to consolidated
         net loss before income taxes and cumulative effect of a change in
         accounting principle follows:
<CAPTION>
                 Nine-months ended September 30,                                    2000           1999
                                                                               -------------- --------------
                 <S>                                                           <C>                <C>
                 Total segment earnings from operations before depreciation,
                   amortization, net interest expense, income taxes and
                   cumulative effect of a change in
                   accounting principle                                        $   49,166         47,164
                 Less intersegment contribution eliminated in consolidation          (239)          (488)
                                                                               -------------- --------------
                      Consolidated earnings from operations before
                        depreciation, amortization, net interest expense,
                        income taxes and cumulative effect of a change in
                        accounting principle                                       48,927         46,676
                 Depreciation and amortization                                     38,890         32,481
                                                                               -------------- --------------
                      Consolidated operating income                                10,037         14,195
                 Interest expense, net                                             28,618         22,730
                                                                               -------------- --------------
                      Consolidated net loss before income taxes and
                        cumulative effect of a change in accounting
                        principle                                              $  (18,581)        (8,535)
                                                                               ============== ==============
</TABLE>
<TABLE>
           A reconciliation of total segment operating income to consolidated
           net loss before income taxes and cumulative effect of a change in
           accounting principle follows:

                 Nine-months ended September 30,                                    2000           1999
                                                                               -------------- -------------
                 <S>                                                           <C>                <C>
                 Total segment operating income                                $   10,276         14,683
                 Less intersegment contribution eliminated in consolidation          (239)          (488)
                                                                               -------------- -------------
                      Consolidated operating income                                10,037         14,195
                 Interest expense, net                                             28,618         22,730
                                                                               -------------- -------------
                      Consolidated net loss before income taxes and
                        cumulative effect of a change in accounting
                        principle                                              $  (18,581)        (8,535)
                                                                               ============== =============
</TABLE>
(4)      Commitments and Contingencies

         Satellite Transponders Capital Lease
         We entered into a purchase and lease-purchase option agreement in
         August 1995 for the acquisition of satellite transponders to meet our
         long-term satellite capacity requirements. The satellite was
         successfully launched in January 2000 and delivered to us on March 5,
         2000. In March 2000 we agreed to finance the satellite transponders
         pursuant to a long-term capital lease arrangement with a leasing
         company. The base term of the lease is one year from the closing date
         with the option for eight one-year lease term renewals. The capital
         lease includes certain covenants requiring maintenance of specific
         levels of operating cash flow to indebtedness and limitations on
         additional indebtedness.

         We took ownership of the satellite transponders on April 1, 2000. The
         satellite transponders are recorded at a cost of $48.2 million and will
         be depreciated over nine years with a remaining residual value of $14.3
         million.


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

         Future Fiber Capacity Sale
         We entered into an agreement effective July 1999 for a second $19.5
         million sale of fiber capacity. The agreement requires that the buyer
         acquire the capacity during the 18-month period following the effective
         date of the contract. Costs associated with the capacity to be sold
         have been classified as current and non-current Property Held for Sale
         in the accompanying interim condensed consolidated financial statements
         at September 30, 2000 and December 31, 1999, respectively.

         Deferred Compensation Plan
         Our non-qualified, unfunded deferred compensation plan provides a means
         by which certain employees may elect to defer receipt of designated
         percentages or amounts of their compensation and provides a means for
         certain other deferrals of compensation. We may, at our discretion,
         contribute matching deferrals equal to the rate of matching selected by
         us. Participants immediately vest in all elective deferrals and all
         income and gain attributable thereto. Matching contributions and all
         income and gain attributable thereto vest over a six-year period.
         Participants may elect to be paid in either a single lump sum payment
         or annual installments over a period not to exceed 10 years. Vested
         balances are payable upon termination of employment, unforeseen
         emergencies, death and total disability. Participants are our general
         creditors with respect to deferred compensation plan benefits.
         Compensation deferred pursuant to the plan totaled approximately
         $30,000 and $60,000 during the nine-month periods ended September 30,
         2000 and 1999, respectively.

         Self-Insurance
         We are self-insured for losses and liabilities related primarily to
         health and welfare claims up to predetermined amounts above which third
         party insurance applies. A reserve of $645,000 and $600,000 was
         recorded at September 30, 2000 and December 31, 1999, respectively, to
         cover estimated reported losses, estimated unreported losses based on
         past experience modified for current trends, and estimated expenses for
         investigating and settling claims. Actual losses will vary from the
         recorded reserve. While management uses what it believes is pertinent
         information and factors in determining the amount of reserves, future
         additions to the reserves may be necessary due to changes in the
         information and factors used.

         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, management does not expect at this time the
         resolution of them to have a material adverse effect on our financial
         position, results of operations or liquidity.

         Cable Service Rate Reregulation
         Effective March 31, 1999, the rates for cable programming services
         (service tiers above basic service) are no longer regulated. This
         regulation ended pursuant to provisions of the Telecommunications Act
         of 1996 and the regulations adopted pursuant thereto by the FCC.
         Federal law still permits regulation of basic service rates. However,
         Alaska law provides that cable television service is exempt from
         regulation by the RCA unless 25% of a system's subscribers request such
         regulation by filing a petition with the RCA. At September 30, 2000,
         only the Juneau system is subject to RCA regulation of its basic
         service rates. No petition requesting regulation has been filed for any
         other system. (The Juneau system serves 8.1% of our total basic service
         subscribers at September 30, 2000.) On July 27, 2000 the RCA approved
         in full a requested rate increase for the Juneau system, to be
         effective October 1, 2000.

         Asset Purchase
         We signed an asset purchase agreement with G.C. Cablevision, Inc. of
         Fairbanks, Alaska in October 2000. G.C. Cablevision, Inc. will receive
         $2.3 million of cash and GCI Class A common stock valued at $10.00 per
         share. The transaction is expected to close by the second quarter of
         2001 pending regulatory approvals.


                                       15
<PAGE>
PART I.
ITEM 2.

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

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

The following discussion and analysis should be read in conjunction with our
Interim Condensed Consolidated Financial Statements and the notes thereto. See -
Cautionary Statement Regarding Forward-Looking Statements.

GCI, Inc. was incorporated in 1997 to effect the issuance of Senior Notes as
further described in GCI, Inc.'s annual report on Form 10-K at December 31,
1999. 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.

                                    OVERVIEW

We have experienced significant growth in recent years through expansion and
development of our new and existing businesses and products. We have
historically met our cash needs for operations through our cash flows from
operating activities. Cash requirements for acquisitions and capital
expenditures have been provided largely through our financing activities.

Long-distance services. Our provision of interstate and intrastate long-distance
services to residential, commercial and governmental customers and to other
common carriers (principally WorldCom, Inc. ("WorldCom") and Sprint Corporation
("Sprint")), and provision of private line and leased dedicated capacity
services accounted for 96.7% of our total long-distance services revenues during
the third quarter of 2000. Factors that have the greatest impact on year-to-year
changes in long-distance services revenues include the rate per minute charged
to customers and usage volumes, usually expressed as minutes of use.

Revenues from private line and other data services sales increased 28.2% to $7.4
million during the third quarter of 2000 as compared to the third quarter of
1999 due primarily to increased system capacity and increasing demand for data
services by Internet service providers ("ISP"), commercial and governmental
customers, and others. Demand for data services to and from the lower 48 states
previously exceeded the available supply of capacity, however such demand is
being filled with uncompressed fiber optic capacity on our Alaska United fiber
optic cable system.

Our long-distance cost of sales and services has consisted principally of direct
costs of providing services, including local access charges paid to LECs for
originating and terminating long-distance calls in Alaska, and fees paid to
other long-distance carriers to carry calls terminating in areas not served by
our network. Calls terminating in the lower 49 states are carried over
Worldcom's network and calls terminating in international locations are carried
principally over Sprint's network. During the third quarter of 2000, local
access charges accounted for 67.0% of long-distance cost of sales and services,
fees paid to other long-distance carriers represented 24.1%, satellite
transponder lease and undersea fiber maintenance costs represented 4.5%, and
other costs represented 4.4% of long-distance cost of sales and services.

Our long-distance selling, general, and administrative expenses have consisted
of operating and engineering, customer service, sales and communications,
management information systems, general and administrative, and legal and
regulatory expenses. Most of these expenses consist of salaries, wages and
benefits of personnel and certain other indirect costs (such as rent, travel,
utilities, insurance and property taxes). A significant portion of long-distance
selling, general, and administrative expenses, 40.8% during the third quarter of
2000, represents operating and engineering costs.


                                       16                            (Continued)
<PAGE>
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. The total number of active long-distance residential,
commercial and small business customers increased 3.4% at September 30, 2000 as
compared to September 30, 1999, and increased 0.3% as compared to December 31,
1999. We believe our approach to 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.

Revenues derived from other common carriers increased 20.7% to $19.7 million in
the third quarter of 2000 as compared to the third quarter of 1999. The increase
is due to a 17.6% increase to 185.3 million minutes carried for other common
carriers and a change in the mix of wholesale minutes carried for such
customers, which increased the average rate charged by 2.6%. We secured contract
amendments during the second quarter of 1999 with Worldcom and Sprint. The
amendments provided, among other things, for a three-year contract term
extension for Sprint. The Worldcom contract expires in 2001. Other common
carrier traffic routed to us for termination in Alaska is largely dependent on
traffic routed to Worldcom and Sprint by their customers. Pricing pressures, new
program offerings and market consolidation continue to evolve in the markets
served by Worldcom and Sprint. If, as a result, their traffic is reduced, or if
their competitors' costs to terminate or originate traffic in Alaska are
reduced, our traffic will also likely be reduced, and our pricing may be reduced
to respond to competitive pressures. We are unable to predict the effect on us
of such changes, however given the materiality of other common carrier revenues
to us; a significant reduction in traffic or pricing could have a material
adverse effect on our financial position, results of operations and liquidity.

Cable services. During the third quarter of 2000, cable television revenues
represented 22.0% of consolidated revenues. The cable systems serve 26
communities and areas in Alaska, including the state's three largest population
centers, Anchorage, Fairbanks and Juneau.

In October 2000 we announced the acquisition of G.C. Cablevision, Inc. assets,
with over 900 subscribers in Fairbanks and North Pole, Alaska. The transaction
is expected to close by the second quarter of 2001 following regulatory
approvals.

We generate cable services revenues from three primary sources: (1) 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; and (3) advertising sales. During the third quarter of 2000
programming services generated 78.6% of total cable services revenues, equipment
rental and installation fees accounted for 9.6% of such revenues, cable modem
services accounted for 5.2% of such revenues, advertising sales accounted for
5.3% of such revenues, and other services accounted for the remaining 1.3% 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 subscribers during a
given reporting period, and revenues generated from new product offerings.

The cable systems' cost of sales and selling, general and administrative
expenses have consisted principally of programming and copyright expenses,
labor, maintenance and repairs, marketing and advertising and rental expense.
During the third quarter of 2000 programming and copyright expenses represented
44.6% of total cable cost of sales and selling, general and administrative
expenses, and general and administrative costs represented 50.4% of such total.
Marketing and advertising costs represented approximately 5.0% of such total
expenses.

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

Local access services. 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. Effective March
1999 we transitioned to the "bill and keep" cost settlement method


                                       17                            (Continued)
<PAGE>
for termination of traffic on our facilities and on other's facilities. Local
exchange services revenues totaled $5.2 million representing 6.9% of
consolidated revenues in the third quarter of 2000. 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 and the average monthly rates charged for non-traffic
sensitive services.

Operating and engineering expenses represented approximately 3.5% of total local
access services cost of sales and selling, general and administrative expenses
during the third quarter of 2000. Marketing and advertising costs represented
approximately 7.9% of such total expenses, customer service and general and
administrative costs represented approximately 38.3% of such total expenses, and
local access cost of sales represented approximately 50.3% of such total
expenses.

Our local access services segment faces significant competition in Anchorage
from Alaska Communications Systems, Inc. ("ACS") and AT&T Alascom, Inc. We
believe our approach to developing, pricing, and providing local access services
will allow us to be competitive in providing those services.

Internet services. We began offering Internet services in several markets in
Alaska during 1998. We generate Internet services revenues from two primary
sources: (1) access product services, including commercial DIAS, ISP DIAS, and
retail dial-up service revenues, and (2) network management services. Internet
services segment revenues totaled $2.2 million representing 2.9% of total
revenues in the third quarter of 2000. 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.

Operating and general and administrative expenses represented approximately
49.4% of total Internet services cost of sales and selling, general and
administrative expenses during the third quarter of 2000. Internet cost of sales
represented approximately 36.9% of such total expenses and marketing and
advertising represented approximately 13.7% of such total expenses.

Marketing campaigns continue to be deployed featuring bundled residential and
commercial Internet products. Additional bandwidth was made available to our
Internet segment resulting from completion of our Alaska United undersea fiber
optic cable project. The new 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
will allow us to be competitive in providing those services.

Other services, other expenses and net loss. Telecommunications services
revenues reported in the Other segment as described in note 3 to the
accompanying interim condensed consolidated financial statements include
corporate network management contracts, telecommunications equipment sales and
service, management services for Kanas Telecom, Inc., a company that owns and
operates a fiber optic cable system constructed along the trans-Alaska oil
pipeline corridor extending from Prudhoe Bay to Valdez, Alaska, and other
miscellaneous revenues (including revenues from cellular resale services, from
prepaid and debit calling card sales, and installation and leasing of
customer's very small aperture terminal ("VSAT") equipment).

Other services segment revenues during the third quarter of 2000 include network
solutions and outsourcing revenues totaling $2.7 million, communications
equipment sales totaling $210,000 and cellular resale and other revenues
totaling $639,000.

During the second quarter of 1999 we completed a $19.5 million sale of long-haul
capacity in our Alaska United undersea fiber optic cable system ("fiber capacity
sale") in a cash transaction. The sale includes both capacity within Alaska, and
between Alaska and the lower 49 states. We announced in July 1999 that an
agreement pertaining to a second $19.5 million sale of fiber capacity had been
executed. The agreement


                                       18                            (Continued)
<PAGE>
requires that the buyer acquire additional capacity during the 18-month period
following the effective date of the contract.

We have invested approximately $2.2 million in our PCS license at September 30,
2000. During second quarter 2000 we deployed fixed wireless service in the
Anchorage area. We have incurred expenditures totaling $450,000 in the
deployment at September 30, 2000 and we expect to incur approximately $150,000
in additional expenditures during the remainder of 2000.

Depreciation, amortization and net interest expense on a consolidated basis
increased $4.5 million in the third quarter of 2000 as compared to the third
quarter of 1999 resulting primarily from additional depreciation on 1999 and
2000 capital expenditures, increased interest rates, and additional average
outstanding capital lease obligation balances.

                              RESULTS OF OPERATIONS
<TABLE>
The following table sets forth selected Statement of Operations data as a
percentage of total revenues for the periods indicated and the percentage
changes in such data as compared to the corresponding prior year period:

(Underlying data rounded to the nearest thousands)
<CAPTION>
                                                         Three Months Ended                   Nine Months Ended
                                                            September 30,                       September 30,
                                                                         Percentage                           Percentage
                                                                          Change (1)                           Change (1)
                                                                           2000 vs.                             2000 vs.
      (Unaudited)                                    2000       1999        1999         2000       1999         1999
                                                     ----       ----        ----         ----       ----         ----
      <S>                                           <C>        <C>          <C>         <C>        <C>          <C>
      Revenues
          Long-distance services                     63.5%      64.3%       11.3%        63.4%      57.6%        11.7%
          Cable services                             22.0%      22.6%        9.8%        22.9%      21.3%         9.1%
          Local access services                       6.9%       5.7%       36.2%         6.7%       5.3%        28.5%
          Internet services                           2.9%       1.7%       90.1%         2.7%       1.6%        71.7%
          Other services                              4.7%       5.7%       (6.8%)        4.3%      14.2%       (69.5%)
                                                 -----------------------------------------------------------------------
             Total revenues                         100.0%     100.0%       12.7%       100.0%     100.0%         1.5%
</TABLE>


                                       19                            (Continued)
<PAGE>
<TABLE>
<CAPTION>
                                                         Three Months Ended                   Nine Months Ended
                                                            September 30,                       September 30,
                                                                         Percentage                           Percentage
                                                                          Change (1)                           Change (1)
                                                                           2000 vs.                             2000 vs.
      (Unaudited)                                    2000       1999        1999         2000       1999         1999
                                                     ----       ----        ----         ----       ----         ----
      <S>                                           <C>       <C>          <C>          <C>       <C>           <C>
      Cost of sales and services                     39.5%      44.9%       (1.0%)       41.4%      43.5%        (3.5%)
      Selling, general and administrative
        Expenses                                     35.6%      36.3%       10.7%        35.9%      34.5%         5.8%
      Depreciation and amortization                  17.5%      16.0%       23.6%        18.0%      15.3%        19.7%
                                                 -----------------------------------------------------------------------
             Operating income                         7.4%       2.8%      272.0%         4.7%       6.7%       (29.3%)
             Net loss before income taxes and
               cumulative effect of a change in
               accounting principle                  (5.2%)     (8.5%)     (30.7%)       (8.6%)     (4.0%)      117.7%
             Net loss before cumulative effect
               of a change in accounting
               principle                             (3.1%)     (5.3%)     (33.5%)       (5.3%)     (2.6%)      104.4%
             Net loss                                (3.1%)     (5.3%)     (33.5%)       (5.3%)     (2.8%)       92.5%

      Other Operating Data (2):
      Cable services operating income (3)            12.2%      11.7%       14.4%        12.9%      14.4%        (2.1%)
      Local services operating loss (4)             (27.4%)    (46.7%)     (20.0%)      (46.1%)    (51.0%)       16.1%
      Internet services operating loss (5)          (44.7%)   (120.9%)     (29.8%)      (62.8%)   (100.8%)        7.0%
<FN>
   --------------------------
   (1)Percentage change in underlying data.
   (2)Includes customer service, marketing and advertising costs.
   (3)Computed as a percentage of total cable services revenues.
   (4)Computed as a percentage of total local services revenues.
   (5)Computed as a percentage of total Internet services revenues.
</FN>
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 2000 ("2000") COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1999 ("1999")

Revenues. Total revenues increased 12.8% from $67.3 million in 1999 to $75.9
million in 2000.

Long-distance revenues from commercial, residential, governmental, and other
common carrier customers increased 11.4% to $48.2 million in 2000. The
long-distance revenue increase in 2000 was largely due to the following:

   -  An increase of 3.4% in the number of active residential, small business
      and commercial customers billed from 88,100 at September 30, 1999 to
      91,100 at September 30, 2000
   -  An increase of 9.7% in total minutes of use to 270.1 million minutes
   -  An increase of 28.2% in private line and private network transmission
      services revenues to $7.4 million in 2000 due to an increased number of
      customers
   -  An increase of 20.7% in revenues from other common carriers (principally
      WorldCom and Sprint) to $19.7 million in 2000

Long-distance revenue increases were offset by a 4.7% reduction in our average
rate per minute on long-distance traffic from $0.128 per minute in 1999 to
$0.122 per minute in 2000. Decreased rates are attributed to our promotion of
and customers' enrollment in calling plans offering discounted rates and length
of service rebates, such plans being prompted in part by our primary
long-distance competitor, AT&T Alascom, reducing its rates, and the entry of
LECs into long-distance markets served by us.

Cable revenues increased 9.8% to $16.7 million in 2000. Programming services
revenues increased 1.0% to $13.1 million in 2000 resulting from an increase of
approximately 3,900 basic subscribers served and


                                       20                            (Continued)
<PAGE>
increased pay-per-view and premium service revenues. New facility construction
efforts in the last three months of 1999 and first nine months of 2000 resulted
in approximately 3,800 additional homes passed which contributed to additional
subscribers and revenues in 2000. Programming services revenue per average basic
subscriber per month increased $3.02, or 7.1%, from 1999 to 2000 due to rate
increases in certain markets and continued growth of new premium products,
including the increase in digital subscribers from 4,100 at September 30, 1999
to 11,000 at September 30, 2000. The cable segment's share of cable modem
revenue increased $774,000 to $871,000 in 2000 after the introduction of such
services in the first quarter of 1999.

Local access services revenues increased 36.2% in 2000 to $5.2 million. At
September 30, 2000 approximately 57,900 lines were in service and approximately
1,000 additional lines were awaiting connection as compared to approximately
40,600 lines in service and approximately 1,400 additional lines awaiting
connection at September 30, 1999.

Internet services revenues increased 90.1% to $2.2 million in 2000 primarily due
to growth in the number of customers served. We have approximately 59,000 active
residential, commercial and small business retail dial-up Internet subscribers
at September 30, 2000 as compared to approximately 38,900 at September 30, 1999.

Cost of sales and services. Cost of sales and services totaled $30.2 million in
1999 and $29.9 million in 2000. As a percentage of total revenues, cost of sales
and services decreased from 44.9% in 1999 to 39.5% in 2000.

Long-distance cost of sales and services decreased from $20.9 million in 1999 to
$19.6 million in 2000. Long-distance cost of sales as a percentage of
long-distance revenues decreased from 48.3% in 1999 to 40.6% in 2000 primarily
due to the effect of reassigning traffic carried by satellite transponders from
leased to owned capacity and 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. Offsetting the 2000
decrease as compared to 1999 is a decrease in the average rate per minute billed
to customers without a comparable decrease in access charges paid by us. We
expect increased cost savings as traffic carried on our own facilities continues
to grow. Additional capacity between Alaska and the lower 48 states now
available on our Alaska United fiber optic cable system has allowed us to carry
significant additional amounts of data services traffic on our own facilities
rather than paying other carriers for leased capacity.

Cable 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 25.6% in 1999 to
26.8% in 2000. Cable services rate increases did not keep pace with increases in
programming and copyright costs in 2000. Programming costs increased for most of
our cable services offerings, and we incurred additional costs on new
programming introduced in 1999 and 2000.

Local access services cost of sales and services as a percentage of local access
services revenues decreased from 56.9% in 1999 to 56.0% in 2000.

Internet services cost of sales and services increased $165,000 from 1999 to
2000. Internet services costs of sales as a percentage of Internet services
revenues totaled 76.9% and 48.0% in 1999 and 2000, respectively. The decrease of
Internet services costs of sales as a percentage of Internet services revenues
is primarily due to a $1.0 million increase in Internet's portion of cable modem
revenue. As Internet revenues have increased, economies of scale and more
efficient network utilization have also resulted in reduced Internet cost of
sales and services as a percentage of Internet revenues.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 10.7% to $27.1 million in 2000. Selling,
general and administrative expenses, as a percentage of total revenues,
decreased from 36.3% in 1999 to 35.6% in 2000. The 2000 increase resulted from
increased levels of effort necessary to support revenue growth and additional
provision for uncollectible accounts.

Depreciation and amortization. Depreciation and amortization expense increased
23.6% to $13.3 million in 2000. The increase is attributable to our $36.6
million investment in equipment and facilities placed into service during 1999
for which a full year of depreciation will be recorded during the year ended


                                       21                            (Continued)
<PAGE>
December 31, 2000, the acquisition of a satellite transponder asset (as
discussed in note 4 to the interim condensed consolidated financial statements)
for which depreciation began in 2000 and the $33.4 million investment in other
equipment and facilities during 2000 for which a partial year of depreciation
will be recorded during 2000.

Interest expense, net. Interest expense, net of interest income, increased 25.7%
to $9.6 million in 2000. This increase resulted primarily from increases in our
average outstanding indebtedness resulting primarily from the capital lease of
satellite transponder capacity, construction of new long-distance and Internet
facilities, expansion and upgrades of cable television facilities, investment in
local access services equipment and facilities, and higher interest rates on
outstanding indebtedness.

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

Income tax benefit decreased from $2.2 million in 1999 to $1.6 million in 2000
due to a decreased net loss before income taxes in 2000 as compared to 1999. Our
effective income tax rate increased from 38.0% in 1999 to 40.5% in 2000 due to
the decreased net loss and the proportional amount of items that are
nondeductible for income tax purposes.

At September 30, 2000, we have (1) tax net operating loss carryforwards of
approximately $119.3 million that will begin expiring in 2008 if not utilized,
and (2) alternative minimum tax credit carryforwards of approximately $2.5
million available to offset regular income taxes payable in future years. Our
utilization of remaining net operating loss carryforwards is subject to certain
limitations pursuant to Internal Revenue Code section 382.

Tax benefits associated with recorded deferred tax assets are considered to be
more likely than not realizable through future reversals of existing taxable
temporary differences and future taxable income exclusive of reversing temporary
differences and carryforwards. The amount of deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced. We estimate that our
effective income tax rate for financial statement purposes will be approximately
39% in 2000.

NINE MONTHS ENDED SEPTEMBER 30, 2000 ("2000") COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1999 ("1999")

Revenues. Total revenues increased 1.5% from $212.3 million in 1999 to $215.6
million in 2000. Excluding $19.5 million of fiber capacity sale revenues in
1999, total revenues increased 11.9% in 2000.

Long-distance revenues from commercial, residential, governmental, and other
common carrier customers increased 11.7% to $136.7 million in 2000. The
long-distance revenue increase in 2000 was largely due to the following:

   -  An increase of 3.4% in the number of active residential, small business
      and commercial customers billed from 88,100 at September 30, 1999 to
      91,100 at September 30, 2000
   -  An increase of 18.3% in total minutes of use to 783.1 million minutes
   -  An increase of 25.0% in private line and private network transmission
      services revenues to $20.2 million in 2000 due to an increased number of
      customers
   -  An increase of 16.9% in revenues from other common carriers (principally
      WorldCom and Sprint) to $53.8 million in 2000

Long-distance revenue increases were offset by a 14.2% reduction in our average
rate per minute on long-distance traffic from $0.141 per minute in 1999 to
$0.121 per minute in 2000. The decrease in rates resulted primarily from a new
category of wholesale minutes carried on our network at a reduced rate per
minute. Decreased rates are also attributed to our promotion of and customers'
enrollment in calling plans offering discounted rates and length of service
rebates, such plans being prompted in part by our primary long-


                                       22                            (Continued)
<PAGE>
distance competitor, AT&T Alascom, reducing its rates, and the entry of LECs
into long-distance markets served by us.

Cable revenues increased 9.1% to $49.3 million in 2000. Programming services
revenues increased 5.5% to $40.9 million in 2000 resulting from an increase of
approximately 3,900 basic subscribers served and increased pay-per-view and
premium service revenues. New facility construction efforts in the last three
months of 1999 and first nine months of 2000 resulted in approximately 3,800
additional homes passed which contributed to additional subscribers and revenues
in 2000. Programming services revenue per average basic subscriber per month
increased $2.85, or 6.7%, from 1999 to 2000 due to rate increases in certain
markets and continued growth of new premium products, including the increase in
digital subscribers from 4,100 at September 30, 1999 to 11,000 at September 30,
2000. The cable segment's share of cable modem revenue increased $1.3 million to
$1.6 million in 2000 after the introduction of cable modem services in the first
quarter of 1999.

Local access services revenues increased 28.5% in 2000 to $14.6 million. At
September 30, 2000 approximately 57,900 lines were in service and approximately
1,000 additional lines were awaiting connection as compared to approximately
40,600 lines in service and approximately 1,400 additional lines awaiting
connection at September 30, 1999.

Internet services revenues increased from $3.5 million in 1999 to $5.9 million
in 2000 primarily due to growth in the number of customers served. We have
approximately 59,000 active residential, commercial and small business retail
dial-up Internet subscribers at September 30, 2000 as compared to approximately
38,900 at September 30, 1999.

Cost of sales and services. Cost of sales and services totaled $92.4 million in
1999 and $89.2 million in 2000. As a percentage of total revenues, cost of sales
and services decreased from 43.5% in 1999 to 41.4% in 2000.

Long-distance cost of sales and services decreased from $62.9 million in 1999 to
$59.4 million in 2000. Long-distance cost of sales as a percentage of
long-distance revenues decreased from 51.4% in 1999 to 43.5% in 2000 primarily
due to reassigning traffic carried by satellite transponders from leased to
owned capacity and 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. Offsetting the 2000
decrease as compared to 1999 is a decrease in the average rate per minute billed
to customers without a comparable decrease in access charges paid by us. We
expect increased cost savings as traffic carried on our own facilities continues
to grow. Additional capacity between Alaska and the lower 48 states now
available on our Alaska United fiber optic cable system has allowed us to carry
significant additional amounts of data services traffic on our own facilities
rather than paying other carriers for leased capacity.

Cable 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 25.1% in 1999 to
26.7% in 2000. Cable services rate increases did not keep pace with increases in
programming and copyright costs in 2000. Programming costs increased for most of
our cable services offerings, and we incurred additional costs on new
programming introduced in 1999 and 2000.

Local access services cost of sales and services as a percentage of local access
services revenues increased from 52.1% in 1999 to 57.2% in 2000 primarily due to
accruals recorded for disputed billings.

Internet services cost of sales and services increased $950,000 from 1999 to
2000. Internet services costs of sales as a percentage of Internet services
revenues totaled 64.1% and 53.3% in 1999 and 2000, respectively. The decrease in
Internet services costs of sales as a percentage of Internet services revenues
is primarily due to a $2.4 million increase in Internet's portion of cable modem
revenue. As Internet revenues have increased, economies of scale and more
efficient network utilization have also resulted in reduced Internet cost of
sales and services as a percentage of Internet revenues.


                                       23                            (Continued)
<PAGE>
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 5.8% to $77.4 million in 2000. The 2000
increase resulted from:
   -  Internet services operating, engineering, sales, customer service and
      administrative cost increases from $3.9 million in 1999 to $5.3 million in
      2000. Increased costs were necessary to provide the operations,
      engineering, customer service and support infrastructure necessary to
      accommodate expected growth in our Internet services customer base.
   -  An increase in the accrual of a Company-wide success sharing bonus of
      $730,000 in 2000. Success sharing is a bonus paid to all employees when
      our earnings before interest, depreciation, amortization and taxes reach
      new highs.
   -  Reduced long-distance services capitalized labor due to completion of the
      fiber optic cable system construction effort.
The increases above are off-set by a $1.8 million decrease in advertising
expense.

Selling, general and administrative expenses, as a percentage of total revenues,
increased from 34.5% in 1999 to 35.9% in 2000 primarily as a result of the
impact of the 1999 fiber capacity sale.

Depreciation and amortization. Depreciation and amortization expense increased
19.7% to $38.9 million in 2000. The increase is attributable to our $36.6
million investment in equipment and facilities placed into service during 1999
for which a full year of depreciation will be recorded during the year ended
December 31, 2000, the acquisition of a satellite transponder asset (as
discussed in note 4 to the interim condensed consolidated financial statements)
for which depreciation began in the second quarter of 2000, the $33.4 million
investment in other equipment and facilities during 2000 for which a partial
year of depreciation will be recorded during 2000, and a charge of $1.7 million
in first quarter resulting from a change in the estimated remaining lives of
assets that will be replaced in the future.

Interest expense, net. Interest expense, net of interest income, increased 25.9%
to $28.6 million in 2000. This increase resulted primarily from a charge of $2.0
million to interest expense in first quarter to write-off previously capitalized
interest expense, increases in our average outstanding indebtedness resulting
primarily from the capital lease of satellite transponder capacity, construction
of new long-distance and Internet facilities, expansion and upgrades of cable
television facilities, investment in local access services equipment and
facilities, and higher interest rates on outstanding indebtedness. We charged
$470,000 of deferred financing costs to interest expense in 1999 resulting from
the amendment to the Holdings Loan Facilities which reduced borrowing capacity
(see Liquidity and Capital Resources).

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

Income tax benefit increased from $3.0 million in 1999 to $7.2 million in 2000
due to an increased net loss before income taxes in 2000 as compared to 1999.
Our effective income tax rate increased from 34.8% in 1999 to 38.8% in 2000 due
to the increased net loss and the proportional amount of items that are
nondeductible for income tax purposes.

At September 30, 2000, we have (1) tax net operating loss carryforwards of
approximately $119.3 million that will begin expiring in 2008 if not utilized,
and (2) alternative minimum tax credit carryforwards of approximately $2.5
million available to offset regular income taxes payable in future years. Our
utilization of remaining net operating loss carryforwards is subject to certain
limitations pursuant to Internal Revenue Code section 382.

Tax benefits associated with recorded deferred tax assets are considered to be
more likely than not realizable through future reversals of existing taxable
temporary differences and future taxable income exclusive of reversing temporary
differences and carryforwards. The amount of deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced. We estimate that our
effective income tax rate for financial statement purposes will be approximately
39% in 2000.


                                       24                            (Continued)
<PAGE>
                 FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
<TABLE>
The following chart provides selected unaudited statement of operations data
from our quarterly results of operations during 2000 and 1999:
<CAPTION>
                                                            (Amounts in thousands, except per share amounts)
                                                      -------------------------------------------------------------
                                                          First      Second       Third     Fourth        Total
                                                         Quarter     Quarter     Quarter    Quarter        Year
                                                      -------------------------------------------------------------
     <S>                                           <C>               <C>         <C>         <C>        <C>
     2000
     ----
     Revenues:
       Long-distance services                      $      43,620      44,855      48,185                 136,660
       Cable services                              $      15,930      16,660      16,708                  49,298
       Local access services                       $       4,520       4,789       5,236                  14,545
       Internet services                           $       1,713       2,018       2,188                   5,919
       Other services                              $       2,494       3,104       3,589                   9,187
                                                      -------------------------------------------------------------
          Total revenues                           $      68,277      71,426      75,906                 215,609
     Operating income                              $         877       3,550       5,610                  10,037
     Net loss before income taxes                  $      (8,962)     (5,665)     (3,954)                (18,581)
     Net loss                                      $      (5,498)     (3,526)     (2,352)                (11,376)
     Basic and diluted net loss per common
        share                                      $     (54,980)    (35,260)    (23,520)               (113,760)

     1999
     ----
     Revenues:
       Long-distance services                      $      38,469      40,697      43,276      41,601     164,043
       Cable services                              $      15,062      14,909      15,218      15,957      61,146
       Local access services                       $       3,714       3,764       3,845       4,220      15,543
       Internet services                           $       1,042       1,109       1,151       1,497       4,799
       Other services                              $       3,051      23,180       3,850       3,567      33,648
                                                      -------------------------------------------------------------
          Total revenues                           $      61,338      83,659      67,340      66,842     279,179
     Operating income (loss)                       $        (368)     12,655       1,908       1,555      15,750
     Net income (loss) before income taxes and
       cumulative effect of a change in
       accounting principle                        $      (7,328)      4,495      (5,702)     (6,331)    (14,866)
     Net income (loss) before cumulative effect
       of a change in accounting principle         $      (4,521)      2,491      (3,537)     (3,616)     (9,183)
     Net income (loss)                             $      (4,865)      2,491      (3,537)     (3,616)     (9,527)
     Basic and diluted net income (loss) per
        common share:
       Net income (loss) before cumulative
          effect of a change in accounting
          principle                                $     (45,210)     24,910     (35,370)    (36,160)    (91,830)
       Cumulative effect of a change in
          accounting principle                     $       3,440         ---         ---         ---       3,440
                                                      -------------------------------------------------------------
       Net income (loss)                           $     (48,650)     24,910     (35,370)    (36,160)    (95,270)
                                                      =============================================================
</TABLE>
Revenues. Total revenues for the quarter ended September 30, 2000 ("third
quarter") were $75.9 million, representing a 6.3% increase from $71.4 million
for the quarter ended June 30, 2000 ("second quarter"). The third quarter
increase resulted from a 7.4% increase in long-distance services revenue to
$48.2 million in third quarter primarily due to a 12.2% increase in revenues
from other common carriers to $19.7 million and a 10.4% increase in private line
revenues to $7.4 million. Long distance minutes increased 4.9% to 270.1 million
minutes, due to a 8.7% increase in OCC minutes (principally Worldcom and Sprint)
off-set by a 2.7% decrease in non-OCC minutes of traffic carried. The
long-distance average rate per minute was $.121 and $.122 in the second and
third quarters, respectively.

Long-distance revenues have historically been highest in the summer months as a
result 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


                                       25                            (Continued)
<PAGE>
months. Local service and Internet access services are not expected to exhibit
significant seasonality. Our ability to implement construction projects is also
hampered during the winter months because of cold temperatures, snow and short
daylight hours.

Cost of sales and services. Cost of sales and services increased from $29.6
million in the second quarter to $29.9 million in the third quarter. As a
percentage of revenues, second and third quarter cost of sales and services
totaled 41.5% and 39.5%, respectively. The decrease in the cost of sales and
services as a percentage of revenues is primarily due to 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.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased $1.3 million in the third quarter as compared
to the second quarter. As a percentage of revenues, third quarter selling,
general and administrative expenses were 35.6% as compared to 36.0% for the
second quarter. The third quarter decrease as a percentage of sales is primarily
a result of increased revenues in third quarter without a corresponding
proportional increase in support costs.

Net loss. We reported a net loss of $2.4 million for the third quarter as
compared to a net loss of $3.5 million for the second quarter.

                         LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities totaled $35.0 million in the nine-month
period ended September 30, 2000 ("2000") as compared to $21.7 million in the
nine-month period ended September 30, 1999 ("1999"), net of changes in the
components of working capital. Other sources of cash during 2000 include the
refund of a $8.8 million deposit and a $1.5 million amount due to a related
party. Our expenditures for property and equipment, including construction in
progress, totaled $33.4 million and $28.6 million in 2000 and 1999,
respectively. Other uses of cash during 2000 included repayment of $10.7 million
of long-term borrowings and capital lease obligations and purchases of $2.9
million of property held for sale and other assets.

Receivables decreased $3.7 million from December 31, 1999 to September 30, 2000
primarily due to decreased OCC trade receivables.

Working capital totaled $10.8 million at September 30, 2000, a $11.9 million
decrease from working capital of $22.7 million as of December 31, 1999. The
decrease in working capital is primarily attributed to our use of current assets
to purchase long-term capital assets and repay long-term debt.

The Holdings $200,000,000 ($150,000,000 as amended) and $50,000,000 credit
facilities mature June 30, 2005. The Holdings Loan facilities were amended in
April 1999 (see below) and bear interest, as amended, at either Libor plus 1.00%
to 2.50%, depending on the leverage ratio of Holdings and certain of its
subsidiaries, or at the greater of the prime rate or the federal funds effective
rate (as defined) plus 0.05%, in each case plus an additional 0.00% to 1.375%,
depending on the leverage ratio of Holdings and certain of its subsidiaries.
$77.7 million and $87.7 million were drawn on the credit facilities as of
September 30, 2000 and December 31, 1999, respectively.

On April 13, 1999, we amended the Holdings credit facilities. These amendments
contained, among other things, provisions for payment of a one-time amendment
fee of 0.25% of the aggregate commitment, an increase in the commitment fee by
0.125% per annum on the unused portion of the commitment, and an increase in the
interest rate of 0.25%. The amended facilities reduce the aggregate commitment
by $50 million to $200 million, and limit capital expenditures to $35 million in
1999 and $35 million in 2000 (excluding a carryforward of unused capacity from
1999) with no limits thereafter (excluding capital expenditures by certain
subsidiaries and the capital lease of the satellite transponder asset). Pursuant
to the Financial Accounting Standards Board Emerging Issues Task Force Issue
98-14, "Debtor's Accounting for Changes in Line-of-Credit or Revolving Debt
Arrangements," we recorded as additional interest expense $470,000 of deferred
financing costs in the second quarter of 1999 resulting from the reduced
borrowing capacity. In connection with the April 1999 amendment, we agreed to
pay all fees and expenses of our lenders, including an amendment fee of 0.25% of
the aggregate commitment, totaling $530,000.


                                       26                            (Continued)
<PAGE>
Holding's credit facilities and GCI, Inc.'s senior notes contain restrictions on
our operations and activities, including requirements that we comply with
certain financial covenants and financial ratios. Under the amended Holding's
credit facility, Holdings may not permit the ratio of senior debt to annualized
operating cash flow (as defined) of Holdings and certain of its subsidiaries to
exceed 2.75 to 1.0 through September 30, 2000 and 2.50 to 1.0 from October 1,
2000 to December 31, 2000, total debt to annualized cash flow to exceed 5.50
times, and annualized operating cash flow to interest expense to be less than
2.0 to 1.0 from April 1, 2000 and thereafter. Certain of the foregoing ratios
decrease in specified increments during the life of the credit facility. The
credit facility requires Holdings to maintain a ratio of annualized operating
cash flow to debt service of Holdings and certain of its subsidiaries of at
least 1.25 to 1.0, and annualized operating cash flow to fixed charges of at
least 1.0 to 1.0 effective January 1, 2001 (which adjusts to 1.05 to 1.0 in
April, 2003 and thereafter). The senior notes impose a requirement that the
leverage ratio of GCI, Inc. and certain of its subsidiaries not exceed 6.0 to
1.0 on an incurrence basis, subject to the ability of GCI, Inc. and certain of
its subsidiaries to incur specified permitted indebtedness without regard to
such ratios.

On January 27, 1998 Alaska United closed a $75 million project finance facility
("Fiber Facility") to construct a fiber optic cable system connecting Anchorage,
Fairbanks, Valdez, Whittier, Juneau and Seattle. At September 30, 2000 and
December 31, 1999 $71.7 million was borrowed under the facility. The Fiber
Facility is a 10-year term loan that is interest only for the first 5 years. The
facility can be extended an additional two years at any time between the second
and fifth anniversary of closing the facility if we can demonstrate projected
revenues from certain capacity commitments will be sufficient to pay all
operating costs, interest, and principal installments based on the extended
maturity. The Fiber Facility bears interest at either Libor plus 3.0%, or at the
lender's prime rate plus 1.75%. The interest rate will decline to Libor plus
2.5%-2.75%, or, at our option, the lender's prime rate plus 1.25%-1.5% after the
project completion date and when the loan balance is $60 million or less.

The Fiber Facility contains, among others, covenants requiring certain
intercompany loans and advances in order to maintain specific levels of cash
flow necessary to pay operating costs, interest and principal installments. All
of Alaska United's assets, as well as a pledge of the partnership interests'
owning Alaska United, collateralize the Fiber Facility.

We expect to use approximately one-half of the Alaska United system capacity in
addition to our existing owned and leased facilities to carry our own traffic.
One of our large commercial customers signed agreements in the first quarter of
1999 for the lease of three DS3 circuits on Alaska United facilities within
Alaska, and between Alaska and the lower 48 states. The lease agreements provide
for three-year terms, with renewal options for additional terms. In the second
quarter of 1999 we completed a sale of capacity in our Alaska United system in a
$19.5 million cash transaction. The sale included both capacity within Alaska,
and between Alaska and the lower 48 states. An agreement was executed in July
1999 for a second $19.5 million sale of fiber capacity. The agreement requires
that the buyer acquire additional capacity during the 18-month period following
the effective date of the contract. We continue to pursue opportunities for sale
or lease of additional capacity on our system.

We entered into a purchase and lease-purchase option agreement in August 1995
for the acquisition of satellite transponders to meet our long-term satellite
capacity requirements. The satellite was successfully launched in January 2000
and delivered to us on March 5, 2000. In March 2000 we agreed to finance the
satellite transponders pursuant to a long-term capital lease arrangement with a
leasing company. At September 30, 2000 $47.9 million was financed under this
capital lease. The base term of the lease is one year from the closing date with
the option for eight one-year lease term renewals. The capital lease includes
certain covenants requiring maintenance of specific levels of operating cash
flow to indebtedness and limitations on additional indebtedness.

Our expenditures for property and equipment, including construction in progress,
totaled $33.4 million and $28.6 million during 2000 and 1999, respectively.
Planned capital expenditures over the next five years include those necessary
for continued expansion of our long-distance, local exchange and Internet
facilities, continuing development of our PCS network and upgrades to our cable
television plant. Sources of funds for these planned capital expenditures are
expected to include internally generated cash flows and borrowings under our
credit facilities.


                                       27                            (Continued)
<PAGE>
Our ability to invest in discretionary capital and other projects will depend
upon our future cash flows and access to borrowings under our credit facilities.
Management anticipates that cash flow generated by us and our borrowings under
our credit facilities will be sufficient to fund capital expenditures and our
working capital requirements. Should cash flows be insufficient to support
additional borrowings, such investment in capital expenditures will likely be
reduced.

GCI issued 20,000 shares of convertible redeemable accreting Preferred Stock on
April 30, 1999. Proceeds totaling $20 million (before payment of expenses) were
contributed to GCI, Inc. and were used for general corporate purposes, to repay
outstanding indebtedness, and to provide additional liquidity.

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

We believe that we will be able to meet our current and long-term liquidity and
capital requirements, including fixed charges and Preferred Stock dividends,
through our cash flows from operating activities, existing cash, cash
equivalents, short-term investments, credit facilities, and other external
financing and equity sources.

                          NEW ACCOUNTING PRONOUNCEMENTS

SFAS No. 133. In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities". Among
other provisions, SFAS No. 133, as amended by SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities and Amendment of
SFAS No. 133", requires that entities recognize all derivatives as either assets
or liabilities in the statement of financial position and measure those
instruments at fair value. Gains and losses resulting from changes in the fair
values of those derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. The effective date of
this standard was delayed via the issuance of SFAS No. 137. The effective date
for SFAS No. 133 is now for fiscal years beginning after June 15, 2000, though
earlier adoption is encouraged and retroactive application is prohibited. This
means that we must adopt the standard no later than January 1, 2001. We do not
expect the adoption of this standard to have a material impact on our results of
operations, financial position or cash flows.

SEC Staff Accounting Bulletin No. 101. SEC Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements", summarizes certain of the SEC
staff's views in applying generally accepted accounting principles to revenue
recognition in financial statements. This bulletin is effective October 1, 2000,
we believe the adoption will not have a material impact on our results of
operations, financial position or cash flows.

                                 YEAR 2000 COSTS

We did not defer any critical information technology projects because of our
Year 2000 program efforts. At September 30, 2000 we have no remaining
incremental remediation costs.

                                 ALASKA ECONOMY

We offer voice and data telecommunication and video services to customers
primarily throughout Alaska. As a result of this geographic concentration,
growth of our business and of our operations depend 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. Oil revenues are now the third
largest source of state revenues, following investment income and federal funds.
Alaska's oil revenues and investment earnings will each supply 32% of the
state's projected revenues in fiscal 2001, with federal funding comprising 25%
of the total. Much of the investment income and all of the federal funding is
restricted or dedicated for specific purposes, however, leaving oil revenues as
the primary funding source (85%) of general operating expenditures.


                                       28                            (Continued)
<PAGE>
The volume of oil transported by the TransAlaska Oil Pipeline System ("TAPS")
over the past 20 years has been as high as 2.0 million barrels per day in fiscal
1988. Production has begun to decline in recent years and is presently down 40%
from the fiscal 1988 level, and down 25% from the fiscal 1997 level. The two
largest producers of oil in Alaska (the primary users of the TAPS) continue to
explore, develop and produce new oil fields and to enhance recovery from
existing fields to offset the decline in production from the Prudhoe Bay field.
Both companies have invested large sums of money in developing and implementing
oil recovery techniques at the Prudhoe Bay field and other nearby fields. The
state now forecasts a temporary reversal of the production rate decline and a
slight increase in the production rate in 2005. This forecasted increase is
attributed to new developments at the Alpine, Liberty and Northstar fields, as
well as new production from Prudhoe Bay and other fields.

Market prices for North Slope oil declined to below $10 per barrel in 1998, and
averaged $12.70 in fiscal 1999, well below the average price used by the state
to budget its oil related revenues. The prices have since increased to a 10-year
high of $35.62 on September 20, 2000, with a fiscal 2000 average price per
barrel of $30.10.

The October 2000 update to the state's spring 2000 forecast for fiscal 2001
forecasts the price for North Slope crude to average $29.30 per barrel despite
promises from OPEC to increase output and releases of emergency crude stocks
from the U.S. Strategic Petroleum Reserve. Oil prices are forecasted to decline
to $22.32 in fiscal 2002 and $18.53 over the following few years. Recent higher
prices are largely due to the March 1999 OPEC agreement to cut production to
force prices higher. The OPEC agreement called for production cuts from January
1999 levels of a little more than 2 million barrels per day. At its March 27,
2000 meeting, nine of the eleven OPEC members agreed to increase production
quotas by a total of 1.452 million barrels per day. Iran did not agree to an
official quota but has been quoted as saying it would increase production
sufficient to maintain its market share. Iraq is not subject to an OPEC quota.
Based on estimates of current production, the new production quotas for the nine
members would represent about a 450,000 barrels per day increase. OPEC members
increased production quotas by an additional 500,000 barrels per day as of
October 31, 2000. History suggests that market forces lead to lower prices when
oil sells for more than $20 per barrel. What is uncertain is when and how fast
the correction will occur. The response of non-OPEC production to higher prices
is uncertain. The production policy of OPEC 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. The state withdrew $256 million from the
Constitutional Budget Reserve Fund in fiscal 2000 and, based on the state's oil
price and production forecasts, and considering the state's other revenues, the
Alaska Department of Revenue expects to draw about $122 million in fiscal 2001
to balance the state's budget, down substantially from the $413 million fiscal
2001 draw expected in their spring 2000 forecast. 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 its
budget. The Governor of the state of Alaska and the Alaska Legislature are
pursuing cost cutting and revenue enhancing measures.

Oil companies and service providers announced cost cutting measures to offset a
portion of the declining oil revenues in 1999, resulting in a reduction of oil
industry jobs of over 1,400. Projects that are underway are reportedly not
affected by the cutbacks, however BP (previously BP Amoco) did notify state
officials that it would delay its exploration of the Genesee test site east of
Prudhoe.

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. Two other factors that support Alaska's economy are the healthy
national economy and low inflation. Economists expect construction to remain
strong over the next few years. $1.69 billion of federal money is expected to be
distributed to the State of Alaska for highways and other federally supported
projects in fiscal 2001.

Should new discoveries or developments not materialize or the price of oil
return to its prior depressed levels, the long term trend of continued decline
in oil production from the Prudhoe Bay field area is inevitable with a


                                       29                            (Continued)
<PAGE>
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.

BP and Atlantic Richfield Company ("ARCO") announced April 13, 2000 that they
received clearance from the Federal Trade Commission for the combination of
their companies, which was completed April 18, 2000.

BP, Exxon Mobil Corporation ("ExxonMobil"), ARCO and Phillips Petroleum
("Phillips") announced April 13, 2000 that they reached an agreement to resolve
outstanding issues relating to the ownership and operation of the Prudhoe Bay
and Point Thomson Units in Alaska. The agreement reportedly is intended to
optimize operations, reduce costs and facilitate new oil and gas development in
the state of Alaska. The agreement aligns the respective equity interests of BP
Exploration (Alaska), ExxonMobil and Phillips in the Prudhoe Bay Unit, and
provides for a single operator at that unit. In addition, the agreement resolves
issues relating to North Slope preferential rights and field operatorship. The
companies stated that the agreement will not only help ensure the efficient and
long-term production of the fields, but will also facilitate future Alaska
development, including gas commercialization.

The aligned oil and gas interests among the major owners will be 26.7% for BP
Exploration (Alaska), 36.8% for ExxonMobil and 36.5% for Phillips. BP
Exploration (Alaska), current operator of the Western Operating Area in the
Prudhoe Bay Unit, will become the single operator. ExxonMobil and BP Exploration
(Alaska) Inc. have also agreed to work towards alignment in the Point Thomson
field area with respective interests of 45% for BP Exploration and 55% for
ExxonMobil.

Phillips became a major new operator of the North Slope Kuparuk and Alpine
fields, following Federal Trade Commission approval and final closing of the
ARCO Alaska acquisition August 1, 2000.

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
620,000 people. 42% of the State's population are located in the Anchorage area,
14% are located in the Fairbanks area, 5% are located in the Juneau area, and
the rest are 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 levels to provide an environment for expanded
economic activity.

Effective March 1997, the State of Alaska passed new legislation relaxing state
oil royalties with respect to marginal oil fields that the oil companies claim
would not be economic to develop otherwise. 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
the reduced level of royalties. We are not able to predict the effect of changes
in the price and production volumes of North Slope oil or the acquisition of
ARCO by BP and Phillips on Alaska's economy or on us.

                                   SEASONALITY

Long-distance revenues have historically been highest in the summer months as a
result 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 tend to watch more television, and spend more
time at home, during these months. Local service and Internet access services
are not expected to exhibit significant seasonality. Our ability to implement
construction projects is reduced during the winter months because of cold
temperatures, snow and short daylight hours.

                                    INFLATION

We do not believe that inflation has a significant effect on our operations.


                                       30
<PAGE>
PART I.
ITEM 3.  QUANTITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET RISK

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

Our Senior Holdings Loan carries interest rate risk. Amounts borrowed under this
Agreement bear interest at either Libor plus 1.0% to 2.5%, depending on the
leverage ratio of Holdings and certain of its subsidiaries, or at the greater of
the prime rate or the federal funds effective rate (as defined) plus 0.05%, in
each case plus an additional 0.0% to 1.375%, depending on the leverage ratio of
Holdings and certain of its subsidiaries. Should the Libor rate, the lenders'
base rate or the leverage ratios change, our interest expense will increase or
decrease accordingly. As of September 30, 2000, we have borrowed $77.7 million
subject to interest rate risk. On this amount, a 1% increase in the interest
rate would cost us $777,000 in additional gross interest cost on an annualized
basis.

Our Fiber Facility carries interest rate risk. Amounts borrowed under this
Agreement bear interest at either Libor plus 3.0%, or at our choice, the
lender's prime rate plus 1.75%. The interest rate will decline to Libor plus
2.5%-2.75%, or at our choice, the lender's prime rate plus 1.25%-1.5% after the
project completion date and when the loan balance is $60,000,000 or less. Should
the Libor rate, the lenders' base rate or the leverage ratios change, our
interest expense will increase or decrease accordingly. As of September 30,
2000, we have borrowed $71.7 million subject to interest rate risk. On this
amount, a 1% increase in the interest rate would cost us $717,000 in additional
gross interest cost on an annualized basis.

Our Satellite Transponder Capital Lease carries interest rate risk. Amounts
borrowed under this Agreement bear interest at Libor plus 3.25%. Should the
Libor rate change, our interest expense will increase or decrease accordingly.
As of September 30, 2000, we have borrowed $47.9 million subject to interest
rate risk. On this amount, a 1% increase in the interest rate would cost us
$479,000 in additional gross interest cost on an annualized basis.

PART II.   OTHER INFORMATION
ITEM 1.    LEGAL PROCEEDINGS

Information regarding pending legal proceedings to which we are a party is
included in Note 4 of Notes to Interim Condensed Consolidated Financial
Statements and is incorporated herein by reference.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)  Exhibits:

                Exhibit 27 - Financial Data Schedule  *

           (b)  Reports on Form 8-K filed during the quarter ended
                September 30, 2000 - None


           ---------------------
           * Filed herewith.


                                       31
<PAGE>
<TABLE>
                                   SIGNATURES


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



                                    GCI, INC.
<CAPTION>
                 Signature                                    Title                                 Date
--------------------------------------      ------------------------------------------       -------------------
<S>                                         <C>                                                <C>

/s/                                         President and Director                             November 10, 2000
--------------------------------------      (Principal Executive Officer)                    -------------------
Ronald A. Duncan

/s/                                         Vice President and Director                        November 10, 2000
--------------------------------------                                                       -------------------
G. Wilson Hughes

/s/                                         Secretary, Treasurer and Director                  November 10, 2000
--------------------------------------      (Principal Financial and Accounting              -------------------
John M. Lowber                              Officer)
</TABLE>


                                       32