Quarterlytics / Communication Services / Telecommunications Services / General Communication Inc. / FY1999 Annual Report

General Communication Inc.
Annual Report 1999

GNCMA · NASDAQ Communication Services
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FY1999 Annual Report · General Communication Inc.
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                                    FORM 10-K                                  UNITED STATES                       SECURITIES AND EXCHANGE COMMISSION                             Washington, D.C. 20549            (X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE                         SECURITIES EXCHANGE ACT OF 1934                   For the fiscal year ended December 31, 1999                                       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. 0-15279                           GENERAL COMMUNICATION, INC.             (Exact name of registrant as specified in its charter)          ALASKA                                                92-0072737(State or other jurisdiction of                              (I.R.S. Employer incorporation or organization)                              Identification No.) 2550 Denali Street Suite 1000  Anchorage, Alaska                  99503   (Address of principal executive offices)                      (Zip Code)       Registrant's telephone number, including area code: (907) 265-5600        Securities registered pursuant to Section 12(b) of the Act: None           Securities registered pursuant to Section 12(g) of the Act:           Class A common stock                  Class B common stock             (Title of class)                      (Title of class)Indicate by check mark whether the registrant (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months, and (2) has been subject to such filing requirementsfor the past 90 days. Yes X No .Indicate by check mark if disclosure of delinquent filers pursuant to Item 405of Regulation S-K is not contained herein, and will not be contained, to thebest of registrant's knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. [X]The aggregate market value of the voting stock held by non-affiliates of theregistrant, computed by reference to the average bid and asked prices of suchstock as of the close of trading on February 28, 2000 was approximately$215,690,967.        The number of shares outstanding of the registrant's common stock                          as of February 29, 2000, was:                 Class A common stock - 47,395,894 shares; and                    Class B common stock - 3,909,014 shares.                       DOCUMENTS INCORPORATED BY REFERENCECertain portions of the registrant's definitive Proxy Statement to be filedpursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended,in connection with the Annual Meeting of Stockholders of the registrant to beheld on June 8, 2000 are incorporated by reference into Part III of this report.                                       1                           GENERAL COMMUNICATION, INC.                         1999 ANNUAL REPORT ON FORM 10-K                                TABLE OF CONTENTS                                                                                                                     Page                                                                                                                     ----                                                                                                                            Glossary................................................................................................................3Cautionary statement regarding forward-looking statements...............................................................9Part I.................................................................................................................11   Item 1.  Business...................................................................................................11     General...........................................................................................................11     Financial information about industry segments.....................................................................11     Historical development of our business during the past fiscal year................................................11     Narrative description of our business.............................................................................15     Environmental regulations.........................................................................................32     Patents, trademarks, licenses, certificates of public convenience and necessity, and military franchises..........32     Regulation, franchise authorizations and tariffs..................................................................33     Financial information about our foreign and domestic operations and export sales..................................44     Seasonality.......................................................................................................44     Customer-sponsored research.......................................................................................44     Backlog of orders and inventory...................................................................................44     Geographic concentration and alaska economy.......................................................................44     Employees.........................................................................................................46     Other.............................................................................................................47   Item 2.   Properties................................................................................................47   Item 3.   Legal proceedings.........................................................................................49   Item 4.   Submission of matters to a vote of security holders.......................................................49Part II................................................................................................................50   Item 5.  Market for the registrant's common equity and related stockholder matters..................................50   Item 6.  Selected financial data....................................................................................51   Item 7.  Management's discussion and analysis of financial condition and results of operations......................52   Item 7a. Quantitative and qualitative disclosures about market risk.................................................67   Item 8.  Consolidated financial statements and supplementary data...................................................68   Item 9.  Changes in and disagreements with accountants on accounting and financial disclosure.......................68Part III...............................................................................................................68Part IV...............................................................................................................101   Item 14.  Exhibits, consolidated financial statement schedules, and reports on form 8-k............................101This Annual Report on Form 10-K is for the year ending December 31, 1999. ThisAnnual Report modifies and supersedes documents filed prior to this AnnualReport. The SEC allows us to "incorporate by reference" information that we filewith them, which means that we can disclose important information to you byreferring you directly to those documents. Information incorporated by referenceis considered to be part of this Annual Report. In addition, information that wefile with the SEC in the future will automatically update and supersedeinformation contained in this Annual Report.                                       2                                    GLOSSARYACCESS CHARGES -- Expenses incurred by an IXC and paid to LECs for accessing thelocal networks of the LECs in order to originate and terminate long-distancecalls and provide the customer connection for private line services.ALASKA UNITED -- Alaska United Fiber System Partnership -- a Alaska partnershipwholly owned by The Company. Alaska United was organized to construct andoperate a new fiber optic cable connecting various locations in Alaska and thelower 49 states and foreign countries through Seattle, Washington.ATM -- Asynchronous Transfer Mode -- An international ISDN high-speed,high-volume, packet switching transmission protocol standard. ATM uses short,uniform, 53-byte cells to divide data into efficient, manageable packets forvery fast switching through a high-performance communications network. The53-byte cells contain 5-byte destination address headers and 48 data bytes. ATMis the first packet-switched technology designed from the ground up to supportintegrated voice, video, and data communication applications. It is well suitedto high-speed WAN transmission bursts. ATM currently accommodates transmissionspeeds from 64 kbps to 622 mbps. ATM may support gigabit speeds in the future.BASIC SERVICE -- The basic service tier includes, at a minimum, all signals ofdomestic television broadcast stations provided to any subscriber, any public,educational, and governmental programming required by the franchise to becarried on the basic tier, and any additional video programming service added tothe basic tier by the cable operator.BOC -- BELL SYSTEM OPERATING COMPANY -- A LEC owned by any of the remaining fiveRegional Bell Operating Companies, which are holding companies establishedfollowing the AT&T Divestiture Decree to serve as parent companies for the BOCs.BACKBONE -- A centralized high-speed network that interconnects smaller,independent networks.BANDWIDTH -- The number of bits of information that can move through acommunications medium in a given amount of time.BRI -- Basic Rate Interface -- An ISDN offering that allows two 64 kbps "B"channels and one 16 kbps "D" channel to be carried over one typical single pairof copper wires. This is the type of service that would be used to connect asmall branch or home office to a remote network. Through the use of Bonding(bandwidth on Demand) the two 64 kbps channels can be combined to create morebandwidth as it becomes necessary. For data services such as Internet access,these channels can be bonded together to provide 2B+D transmission at a rate of128 kbps. New technology increases the bandwidth of ISDN BRI connections to 230kbps.BROADBAND -- A high-capacity communications circuit/path, usually implying aspeed greater than 1.544 mbps.CAP -- Competitive Access Provider -- A company that provides its customers withan alternative to the LEC for local transport of private line and special accesstelecommunications services.CENTRAL OFFICES -- The switching centers or central switching facilities of theLECs.CLEC -- Competitive Local Exchange Carrier. -- A company that provides itscustomers with an alternative to the ILEC for local transport oftelecommunications services, as allowed under the 1996 Telecom Act.CO-CARRIER STATUS -- A regulatory scheme under which the incumbent LEC isrequired to integrate new, competing providers of local exchange service, intothe systems of traffic exchange, inter-carrier compensation, and otherinter-carrier relationships that already exist among LECs in most jurisdictions.                                       3COLLOCATION -- The ability of a CAP to connect its network to the LEC's centraloffices. Physical collocation occurs when a CAP places its network connectionequipment inside the LEC's central offices. Virtual collocation is analternative to physical collocation pursuant to which the LEC permits a CAP toconnect its network to the LEC's central offices on comparable terms, eventhough the CAP's network connection equipment is not physically located insidethe central offices.THE COMPANY -- GCI and its direct and indirect subsidiaries, also referred to as"we," "us" and "our."COMPRESSION / DECOMPRESSION -- A method of encoding/decoding signals that allowstransmission (or storage) of more information than the media would otherwise beable to support. Both compression and decompression require processing capacity,but with many products, the time is not noticeable.CPS -- a Cable Programming Service -- (also known as CPST, Cable ProgrammingService Tier). CPS includes any video programming provided over a cable system,regardless of service tier, including installation or rental of equipment usedfor the receipt of such video programming, other than (1) video programmingcarried on the basic service tier, (2) video programming offered on apay-per-channel or pay-per-programming basis, or (3) a combination of multiplechannels of pay-per-channel or pay-per-programming basis so long as the combinedservice consists of commonly-identified video programming and is not bundledwith any regulated tier of service.DAMA -- Demand Assigned Multiple Access -- The Company's digital satellite earthstation technology that allow calls to be made between remote villages usingonly one satellite hop thereby reducing satellite delay and capacityrequirements while improving quality.DARK FIBER -- An inactive fiber-optic strand without electronics or optronics.Dark fiber is not connected to transmitters, receivers and regenerators.DBS -- Direct Broadcast Satellite -- Subscription television service obtainedfrom satellite transmissions using frequency bands that are internationallyallocated to the broadcast satellite services. Direct-to-home service such asDBS has its origins in the large direct-to-home satellite antennas that werefirst introduced in the 1970's for the reception of video programmingtransmitted via satellite. Because these first-generation direct-to-homesatellites operated in the C-band frequencies at low power, direct-to-homesatellite antennas, or dishes, as they are also known, generally needed to beseven to ten feet in diameter in order to receive the signals being transmitted.More recently, licensees have been using the Ku and extended Ku-bands to providedirect-to-home services enabling subscribers to use a receiving home satellitedish less than one meter in diameter.DS-3 -- A data communications circuit that is equivalent to 28 multiplexed T-1channels capable of transmitting data at 44.736 mbps (sometimes called a T-3).DEDICATED -- Telecommunications lines dedicated or reserved for use byparticular customers.DIGITAL -- A method of storing, processing and transmitting information throughthe use of distinct electronic or optical pulses that represent the binarydigits 0 and 1. Digital transmission and switching technologies employ asequence of these pulses to represent information as opposed to the continuouslyvariable analog signal. The precise digital numbers minimize distortion (such asgraininess or snow in the case of video transmission, or static or otherbackground distortion in the case of audio transmission).DLC -- Digital Loop Carrier -- A digital transmission system designed forsubscriber loop plant. Multiplexes a plurality of circuits onto very few wiresor onto a single fiber pair.EQUAL ACCESS -- Connection provided by a LEC permitting a customer to beautomatically connected to the IXC of the customer's choice when the customerdials "1". Also refers to a generic concept under which the BOCs must provideaccess services to AT&T's competitors that are equivalent to those provided toAT&T.FCC -- Federal Communications Commission -- A federal regulatory body empoweredto establish and enforce rules and regulations governing public utilitycompanies and others, such as the Company.                                       4FRAME RELAY -- A wideband (64 kilobits per second to 1.544 mbps) packet-baseddata interface standard that transmits bursts of data over WANs. Frame-relaypackets vary in length from 7 to 1024 bytes. Data oriented, it is generally notused for voice or video.FTC -- Federal Trade Commission -- A federal regulatory body empowered toestablish and enforce rules and regulations governing companies involved intrade and commerce.GCC -- GCI Communication Corp., an Alaska corporation and a wholly ownedsubsidiary of Holdings.GCI  -- General Communication, Inc., an Alaska corporation and the Registrant.GCI, Inc. -- a wholly owned subsidiary of GCI, an Alaska corporation and issuerof $180 million of publicly traded bonds.HOLDINGS -- a wholly owned subsidiary of GCI, Inc., an Alaska corporation andparty to The Company's Senior Holdings Loan.HSD -- Home Satellite Dish - see DBS.INBOUND "800" or "888" Service -- A service that assesses long-distancetelephone charges to the called party.ILEC -- Incumbent Local Exchange Carrier -- with respect to an area, the LECthat -- (A) on the date of enactment of the Telecommunications Act of 1996,provided telephone exchange service in such area; and (B)(i) on such date ofenactment, was deemed to be a member of the exchange carrier associationpursuant to section 69.601(b) of the FCC's regulations (47 C.F.R. 69.601(b)); or(ii) is a person or entity that, on or after such date of enactment, became asuccessor or assign of a member described in clause (i).INTEREXCHANGE -- Communication between two different LATAs.ISDN -- Integrated Services Digital Network -- A set of standards fortransmission of simultaneous voice, data and video information over fewerchannels than would otherwise be needed, through the use of out-of-bandsignalling. The most common ISDN system provides one data and two voice circuitsover a traditional copper wire pair, but can represent as many as 30 channels.Broadband ISDN extends the ISDN capabilities to services in the Gigabit range.(See BRI and PRI)ISP -- Internet Service Provider -- a company providing retail and/or wholesaleInternet services.INTERNET -- A global collection of interconnected computer networks which useTCP/IP, a common communications protocol.IXC -- Interexchange Carrier -- A long-distance carrier providing servicesbetween local exchanges.LAN -- Local Area Network -- The interconnection of computers for the purpose ofsharing files, programs and various devices such as printers and high-speedmodems. LANs may include dedicated computers or file servers that provide acentralized source of shared files and programs.LATA -- Local Access And Transport Area -- The approximately 200 geographicareas defined pursuant to the AT&T Divestiture Decree. The BOCs are generallyprohibited from providing long-distance service between the LATA in which theyprovide local exchange services, and any other LATA.LEC -- Local Exchange Carrier -- A company providing local telephone services.Each BOC is a LEC.LINE COSTS -- Primarily includes the sum of access charges and transportcharges.LMDS -- Local Multipoint Distribution System -- LMDS uses microwave signals(millimeterwave signals) in the 28 GHz spectrum to transmit voice, video, anddata signals within small cells 3-10 miles in diame-                                       5ter. LMDS allows license holders to control up to 1.3 GHz of wireless spectrumin the 28 GHz Ka-band. The 1.3 GHz can be used to carry digital data at speedsin excess of one gigabit per second. LMDS uses a specific band in the microwavespectrum, known as millimeter waves or the 28 GHz "Ka-band." More tangibly, ifLMDS were used on a point-to-point basis the beam would be about as wide as apencil lead (about a millimeter) and would have a frequency of approximately 28billion cycles per second. The extremely high frequency used and the need forpoint to multipoint transmissions limits the distance that a receiver can befrom a transmitter. This means that LMDS will be a "cellular" technology, basedon multiple, contiguous, or overlapping cells. LMDS is expected to providecustomers with multichannel video programming, telephony, video communications,and two-way data services. Incumbent LECs and cable companies may not obtain thein-region 1150 MHz license for three years. Within 10 years, licenses will berequired to provide 'substantial service' in their service regions.LOCAL EXCHANGE -- A geographic area generally determined by a PUC, in whichcalls generally are transmitted without toll charges to the calling or calledparty.LOCAL NUMBER PORTABILITY -- The ability of an end user to change Local ExchangeCarriers while retaining the same telephone number.LOWER 48 STATES or LOWER 48 -- refers to the 48 contiguous states south of orbelow Alaska.LOWER 49 STATES OR LOWER 49 -- refers to Hawaii and the 48 contiguous statessouth of or below Alaska.MAN -- Metropolitan Area Network -- LANs interconnected within roughly a 50-mileradius. MANs typically use fiber optic cable to connect various wire LANs.Transmission speeds may vary from 2 to 100 Mbps.MDU -- Multiple Dwelling Unit -- MDUs include multiple-family buildings, such asapartment and condominium complexes.MMDS -- Multichannel Multipoint Distribution Service - also known as wirelesscable. The FCC established the Multipoint Distribution Service (MDS) in 1972.Originally the Commission thought MDS would be used primarily to transmitbusiness data. However, the service became increasingly popular in transmittingentertainment programming. Unlike conventional broadcast stations whosetransmissions are received universally, MDS programming is designed to reachonly a subscriber based audience. In 1983 the Commission reassigned eightchannels from the Instructional Television Fixed Service (ITFS) to MDS. Theseeight channels make up the MMDS. Frequently, MDS and MMDS channels are used incombination with ITFS channels to provide video entertainment programming tosubscribers.NARROWBAND -- A voice grade low-capacity communications circuit/path. It usuallyimplies a speed of 56 kilobits per second or less.NETWORK SWITCHING CENTER -- A location where installed switching equipmentroutes long-distance calls and records information with respect to calls such asthe length of the call and the telephone numbers of the calling and calledparties.NETWORK SYSTEMS INTEGRATION -- Involves the creation of turnkeytelecommunications networks and systems including: (i) route and site selection;(ii) rights of way and legal authorizations and/or acquisition; (iii) design andengineering of the system, including technology and vendor assessment andselection, determining fiber optic circuit capacity, and establishingreliability/flexibility standards; and (iv) project and construction management,including contract negotiations, purchasing and logistics, installation as wellas testing.NPT -- a New Product Tier -- a cable programming service tier offered tosubscribers at prices set by the cable operator.OCC -- Other Common Carrier -- A long-distance carrier other than the Company.                                       6PCS -- Personal Communication Services -- PCS encompasses a range of advancedwireless mobile technologies and services. It promises to permit communicationsto anyone, anyplace and anytime while on the move. The CellularTelecommunications Industry Association (CTIA) defines PCS as a "wide range ofwireless mobile technologies, chiefly cellular, paging, cordless, voice,personal communications networks, mobile data, wireless PBX, specialized mobileradio, and satellite-based systems." The FCC defines PCS as a "family of mobileor portable radio communications services that encompasses mobile and ancillaryfixed communications services to individuals and businesses and can beintegrated with a variety of competing networks."PBX -- Private Branch Exchange -- A customer premise communication switch usedto connect customer telephones (and related equipment) to LEC central officelines (trunks), and to switch internal calls within the customer's telephonesystem. Modern PBXs offer numerous software-controlled features such as callforwarding and call pickup. A PBX uses technology similar to that used by acentral office switch (on a smaller scale). (The acronym PBX originally stoodfor "Plug Board Exchange.")POP -- Point of Presence -- The physical access location interface between a LECand a IXC network. The point to which the telephone company terminates asubscriber's circuit for long-distance service or leased line communications.PRI -- Primary Rate Interface -- An ISDN circuit transmitting at T1 (DS-1) speed(equivalent to 24 voice-grade channels). One of the channels ("D") is used forsignaling, leaving 23 ("B") channels for data and voice communication.PRIVATE LINE -- Uses dedicated circuits to connect customer's equipment at bothends of the line. Does not provide any switching capability (unless supported bycustomer premise equipment). Usually includes two local loops and an IXCcircuit.PRIVATE NETWORK -- A communications network with restricted (controlled) accessusually made up of private lines (with some PBX switching).PUBLIC SWITCHED NETWORK -- That portion of a LEC's network available to allusers generally on a shared basis (i.e., not dedicated to a particular user).Traffic along the public switched network is generally switched at the LEC'scentral offices.RBOC -- Regional Bell Operating Company -- Any of the remaining five regionalBell holding companies which the AT&T Divestiture Decree established to serve asparent companies for the BOCs.RCA -- REGULATORY COMMISSION OF ALASKA -- A state regulatory body empowered toestablish and enforce rules and regulations governing public utility companiesand others, such as The Company, within the state of Alaska (sometimes referredto as Public Service Commissions, or PSCs, or Public Utility Commissions, orPUCs). Previously known as the Alaska Public Utilities Commission (APUC).RECIPROCAL COMPENSATION -- The same compensation of a new CLEC for terminationof a local call by the BOC on its network, as the new competitor pays the BOCfor termination of local calls on the BOC network.SCHOOLACCESS(TM) -- The Company's Internet and related services offering toschools in Alaska. The federal mandate through the 1996 Telecom Act to provideuniversal service resulted in schools across Alaska qualifying for varyinglevels of discounts to support the provision of Internet services. The UniversalService Administrative Company through its Schools and Libraries Divisionadministers this federal program.SDN -- Software Defined Network -- A switched long-distance service for verylarge users with multiple locations. Instead of putting together their ownnetwork, large users can get special usage rates for calls carried on regularswitched long-distance lines.SECURITIES REFORM ACT - The Private Securities Litigation Reform Act of 1995.                                       7SENIOR HOLDINGS LOAN -- Holding's $150,000,000 and $50,000,000 creditfacilities. You should see note 5(b) to the accompanying Notes to ConsolidatedFinancial Statements included in Part II of this Report for more information.SETTLEMENT RATES -- The rates paid to foreign carriers by United Statesinternational carriers to terminate outbound (from the United States) switchedtraffic and by foreign carriers to United States international carriers toterminate inbound (to the United States) switched traffic.SLC -- Subscriber Line Charge -- A charge for the telephone line that connects alocal telephone company to the subscriber's telephone system or medium.SMATV -- Satellite Master Antenna Television -- (also known as "private cablesystems") are multichannel video programming distribution systems that serveresidential, multiple-dwelling units ("MDUs"), and various other buildings andcomplexes. A SMATV system typically offers the same type of programming as acable system, and the operation of a SMATV system largely resembles that of acable system -- a satellite dish receives the programming signals, equipmentprocesses the signals, and wires distribute the programming to individualdwelling units. The primary difference between the two is that a SMATV systemtypically is an unfranchised, stand-alone system that serves a single buildingor complex, or a small number of buildings or complexes in relatively closeproximity to each other.SONET -- Synchronous Optical Network -- A 1984 standard for optical fibertransmission on the public network. 52 mbps to 13.22 Gigabits per second,effective for ISDN services including ATM.TCP/IP -- Transmission Control Protocol/Internet Protocol -- A suite of networkprotocols that allows computers with different architectures and operatingsystem software to communicate with other computers on the Internet.T-1 -- A data communications circuit capable of transmitting data at 1.5 mbps.TARIFF -- The schedule of rates and regulations set by communications commoncarriers and filed with the appropriate federal and state regulatory agencies;the published official list of charges, terms and conditions governing provisionof a specific communications service or facility, which functions in lieu of acontract between the subscriber or user and the supplier or carrier.TOKEN RING -- A local area network technology used to interconnect personalcomputers, file servers, printers, and other devices. Token Ring LANs typicallyoperate at either 4 mbps or 16 mbps.TRANSPORT CHARGES -- Expenses paid to facilities-based carriers for transmissionbetween or within LATAs.TRS SERVICES -- Telecommunications Relay Services -- Enables telephoneconversations between people with and without hearing or speech disabilities.TRS relies on communications assistants ("CA") to relay the content of callsbetween users of text telephones ("TTYs") and users of traditional handsets(voice users). For example, a TTY user may telephone a voice user by calling aTRS provider where a CA will place the call to the voice user and relay theconversation by transcribing spoken content for the TTY user and reading textaloud for the voice user.WAN -- Wide Area Network - A remote computer communications system. WANs allowfile sharing among geographically distributed workgroups (typically at highercost and slower speed than LANs or MANs). WANs typically use common carriers'circuits and networks. WANs may serve as a customized communication backbonethat interconnects all of an organization's local networks with communicationstrunks that are designed to be appropriate for anticipated communication ratesand volumes between nodes.WORLD WIDE WEB or WEB -- A collection of computer systems supporting acommunications protocol that permits multi-media presentation of informationover the Internet.1984 CABLE ACT -- The Cable Communications Policy Act of 1984.                                       81992 CABLE ACT -- The Cable Television Consumer Protection and Competition Actof 1992.1996 TELECOM ACT -- The Telecommunications Act of 1996 - The 1996 Telecom Actwas signed into law February 8, 1996. Under its provisions, BOCs were allowed toimmediately begin manufacturing, research and development; GTE Corp. could beginproviding interexchange services through its telephone companies nationwide;laws in 27 states that foreclosed competition were knocked down; co-carrierstatus for CLECs was ratified; and the physical collocation of competitors'facilities in LECs central offices was allowed.The legislation breaks down the old barriers that prevented three groups ofcompanies, the LECs, including the BOCs, the long-distance carriers, and thecable TV operators, from competing head-to-head with each other. The Actrequires LECs to let new competitors into their business. It also requires theLECs to open up their networks to ensure that new market entrants have a fairchance of competing. The bulk of the legislation is devoted to establishing theterms under which the LECs, and more specifically the BOCs, must open up theirnetworks.The 1996 Telecom Act substantially changed the competitive and regulatoryenvironment for telecommunications providers by significantly amending theCommunications Act including certain of the rate regulation provisionspreviously imposed by the Cable Television Consumer Protection and CompetitionAct of 1992 (the "1992 Cable Act"). The 1996 Telecom Act eliminated rateregulation of the cable programming service tier in 1999. Further, theregulatory environment will continue to change pending, among other things, theoutcome of legal challenges and FCC rulemaking and enforcement activity inrespect of the 1992 Cable Act and the completion of a significant number of FCCrulemakings under the 1996 Telecom Act.            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSYou should carefully review the information contained in this Annual Report, butshould particularly consider any risk factors that we set forth in this AnnualReport and in other reports or documents that we file from time to time with theSEC. In this Annual Report, in addition to historical information, we state ourbeliefs of future events and of our future operating results, financial positionand cash flows. In some cases, you can identify those so-called "forward-lookingstatements" 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 awarethat those statements are only our predictions and are subject to risks anduncertainties. Actual events or results may differ materially. In evaluatingthose statements, you should specifically consider various factors, includingthose outlined below. Those factors may cause our actual results to differmaterially from any of our forward-looking statements. For these statements, weclaim the protection of the safe harbor for forward-looking statements providedby the Securities Reform Act.    - Material adverse changes in the economic conditions in the markets we      serve;    - The efficacy of the rules and regulations to be adopted by the FCC and      state public regulatory agencies to implement the provisions of the 1996      Telecom Act; the outcome of litigation relative thereto; and the impact of      regulatory changes relating to access reform;    - Our responses to competitive products, services and pricing, including      pricing pressures, technological developments, alternative routing      developments, and the ability to offer combined service packages that      include local, cable and Internet services; the extent and pace at which      different competitive environments develop for each segment of our      business; the extent and duration for which competitors from each segment      of the 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 ILECs and state regulatory      arbitrations and approvals with respect to interconnection agreements; and      our ability to purchase unbundled network                                        9      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      RCA, and adverse outcomes from regulatory proceedings;    - The remaining cost of our year 2000 compliance efforts;    - 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.These forward-looking statements (and such risks, uncertainties and otherfactors) are made only as of the date of this report and we expressly disclaimany obligation or undertaking to disseminate any updates or revisions to anyforward-looking statement contained in this document to reflect any change inour expectations with regard to those statements or any other change in events,conditions or circumstances on which any such statement is based. Readers arecautioned not to put undue reliance on such forward-looking statements.                                       10                                     PART IItem 1.  BUSINESS.GeneralIn this Annual Report, "we," "us" and "our" refer to General Communication, Inc.and its direct and indirect subsidiaries.GCI was incorporated in 1979 under the laws of the State of Alaska and has itsprincipal executive offices at 2550 Denali Street, Suite 1000, Anchorage, AK99503 (telephone number 907-265-5600). Internet users can access informationabout GCI and its services at http://www.GCI.com/ andhttp://www.alaskaunited.com/. The Company hosts Internet services athttp://www.GCI.net/.GCI is primarily a holding company and together with its direct and indirectsubsidiaries, is a diversified telecommunications provider with a leadingposition in facilities-based long-distance service in the State of Alaska and isAlaska's leading cable television and Internet services provider.We are the first significant provider in Alaska of an integrated package oflong-distance, local and wireless telecommunications services, cable televisionservices and Internet services and are well positioned to take advantage ofgrowth opportunities in the communications, data and entertainment markets.Financial information about industry segmentsWe have four reportable segments: long-distance services, cable services, localaccess services and Internet services.We offer a full range of common carrier long-distance and othertelecommunication services to business, government, other telecommunicationscompanies and consumer customers, through our networks of fiber optic cables,digital microwave, and fixed and transportable satellite earth stations.Individually insignificant business units including network solutions, cellularresale and product sales are included in the "other" industry segment. None ofthese business units have ever met the quantitative thresholds for determiningreportable segments.We provide cable television services to residential, commercial and governmentusers in the State of Alaska. Our cable systems serve 26 communities and areasin Alaska, including the state's three largest urban areas, Anchorage, Fairbanksand Juneau. Cable plant upgrades have enabled us to complement existing servicesby offering digital cable television services in Anchorage and Fairbanks,enhanced analog services in Juneau, and retail cable modem service (through ourInternet segment) in Anchorage, Fairbanks and Juneau. We plan to expand ourproduct offerings as plant upgrades in other communities in Alaska arecompleted.We have provided facilities based competitive local exchange services inAnchorage since 1997, and plan to provide similar competitive local exchangeservices in Alaska's other major population centers. Access to other majorpopulation centers depends on RCA approvals and negotiation and implementationof interconnection agreements with ILECs.We have offered wholesale and retail Internet services since 1998. Deployment ofthe new undersea fiber optic cable described below has allowed us to offerenhanced services with high-bandwidth requirements.You should see Note 10 to our Notes to Consolidated Financial Statementsincluded in Part II of this Report for information about our operations byindustry segment.Historical development of our business during the past fiscal yearAlaska United Project. We undertook a major construction project (referred to asAlaska United) with the goal of significantly increasing our communicationsbandwidth to and from locations in Alaska and                                        11the lower 49 states and through interconnection agreements with other carriers,to foreign locations. After a preliminary route survey was completed and initialcost components determined, we commissioned a detailed sea floor survey that wascompleted in 1996. The results of this survey pinpointed the exact route thatthe Alaska United fiber would take. We entered into a contract with TycoSubmarine Systems, Ltd. ("TSS"), one of the world's leading submarine cablevendors that has installed more than 150,000 miles of undersea cable. TSS wasengaged to design, engineer, manufacture, and install the undersea cable. Thecable was laid during the period from August to December 1998. Testing occurredafter that and services commenced in late January 1999 for our Anchorage toFairbanks segment and early February 1999 for the complete system. Withconstruction of Alaska United complete, we transitioned traffic from leasedsatellite, terrestrial and microwave facilities to Alaska United facilitiesduring the first quarter of 1999.The Alaska United project provides a high capacity fiber optic link betweenpoints in Alaska and the lower 48 states through Seattle, Washington. AlaskaUnited lands at our cable terminal stations in Whittier, Valdez and Juneau,Alaska. From Whittier, the fiber follows the Alaska railroad, highway, andover-land rights-of-ways to Anchorage. Between Whittier and Valdez, weconstructed a second undersea fiber optic cable. The cable connects in Valdezwith a fiber constructed by Kanas Telecom, Inc. ("Kanas"). We exchanged DarkFiber with Kanas to obtain fiber facilities from Valdez to Fairbanks.Kanas' largest customer filed notice of termination of its contract with Kanas.Since that time, the ownership structure of Kanas has been reorganized, with MCIWorldCom, Inc. becoming the principal owner and we now provide operationalsupport. We continue to use the Kanas fiber facilities to carry our traffic toand from Fairbanks. We are unable to determine the ultimate resolution of theseissues at this time. However we have alternative network facilities available toreroute any affected traffic.In Juneau and Seattle, Alaska United connects through terminal stations to ourexisting network. The cable terminal stations house the power feed equipmentnecessary to power the undersea fiber optic cable system and the SONET equipmentthat transports data across the terrestrial network and the undersea fibernetwork.Our Alaska United system is 2,331 miles long (1,995 miles undersea and 336 overland) and has a total design capacity of 10 billion bits per second (22 timeswhat was previously available). It can route traffic in different directions inthe event of equipment failures, and users have route diversity to achievemultiple fiber paths for back-up purposes when paired with our existing capacityon the North Pacific Cable. It currently delivers a minimum of 32,256simultaneous clear channel voice or data circuits at transmission speeds of 2.5billion bits per second. As demand increases, capacity can be quadrupled tosupport a minimum of 129,024 simultaneous clear channel voice or data circuitsat speeds of 10 billion bits per second.Financing for the Alaska United undersea fiber project included $75 millionthrough a separate bank credit agreement dated January 27, 1998 and $50 millionfrom funds obtained through the 1997 issuance of senior notes. You should seenote 5 to the accompanying Notes to Consolidated Financial Statements includedin Part II of this Report for more information.Satellite Transponders. We entered into a purchase and lease-purchase optionagreement in August 1995 for the acquisition of satellite transponders to meetour long-term satellite capacity requirements. The launch of the satellite inAugust 1998 failed. We did not assume launch risk and the launch was rescheduledfor the first quarter of 2000.The replacement Galaxy XR satellite was successfully launched January 24, 2000from Arianespace Space Center in Kourou, French Guiana, and was made availableto us March 5, 2000. We continue to transition our satellite communicationstraffic to Galaxy XR, and upon final acceptance, intend to finalize a long-termlease purchase transaction. We will continue to lease transponder capacity untilall telecommunications traffic is successfully transitioned to the newsatellite. The satellite increases our satellite capacity and provideslong-distance voice, fax, Internet and data traffic capabilities primarily forour customers in rural Alaska. We will use six C- and one Ku-band transponderson Galaxy XR once it achieves in-orbit check-                                       12out. The seven transponders represent a capital lease investment ofapproximately $48 million. Each transponder is capable of carrying a minimum of1,800 simultaneous voice or data calls.The Ku-band transponder will be used to carry high-speed Internet traffic tomore than half of Alaska schools, as well as voice and data services to remotefishing, mining and logging operations. Voice/fax, Internet, telemedicine anddistance education applications will be delivered over both C-band and Ku-band.Local Access Services. We began offering local exchange services in Anchorage inSeptember 1997 and provided service to approximately 45,100, 28,300 and 3,300lines at December 31, 1999, 1998 and 1997, respectively.Our local access services segment face significant competition from AlaskaCommunications Systems, Inc.'s subsidiaries ("ACS") and AT&T Alascom, Inc.The sale of Anchorage Telephone Utility ("ATU") to ACS, our primary ILECcompetitor, was completed in May 1999. Subsequent to the sale and as a result ofa settlement agreement between us and ACS, our relations have normalizedsomewhat with greater cooperation at operational levels resulting in someimprovement in order processing and repair activity interfaces and procedures.Electronic access to certain of the ILEC's systems, while a scheduled term ofthe settlement agreement, has yet to be realized as software developmentallowing such access is still under development by ACS. Efforts to complete thedevelopment of software interfaces continued throughout the first quarter of2000. In the interim ACS has agreed to process our residential and smallbusiness orders in a timelier manner, significantly reducing order deliveryintervals for:     - new and additional lines,    - move orders,    - orders for feature additions or changes, and    - switch orders that move ACS subscribers to our service.On March 4, 1999, an Alaska Superior Court Judge determined that the APUC (nowRCA) erred in reaching its prior decision to deny our request to provide fulllocal telephone service in Fairbanks and Juneau, Alaska. This service would beprovided in competition against PTI (now a subsidiary of ACS), the existingmonopoly provider. Among other things, the Court instructed the APUC tocorrectly assign the burden of proof to PTI rather than us, and to decide on ourspecific requests to provide service in Fairbanks and Juneau based on criteriaestablished in the 1996 Telecom Act. The Court remanded the case back to theAPUC for proceedings leading to their ruling. On July 1, 1999, the APUC ruledthat the rural exemptions from local competition in Juneau, Fairbanks and NorthPole would not be continued, which allowed us to negotiate for unbundledelements for the provision of competitive local service in these markets. TheILEC moved for reconsideration of this decision, and on October 11, 1999 the newRCA issued an order also allowing the rural exemptions in the Fairbanks andJuneau markets to expire. The ILEC has appealed these decisions. See Part I,Item 1. Business, Regulation, franchise authorizations and tariffs for moreinformation. We believe this decision is important to bring about the benefitsof competition to other communities in Alaska. We are currently in arbitrationwith the ILEC for interconnection and unbundled network elements for theprovisioning of competitive local assess services in these markets. We expectthe RCA to approve an interconnection agreement for unbundled elements bySeptember 2000.In early 2001 we anticipate we will be competing with ACS subsidiaries inFairbanks, Juneau, Fort Wainwright and Eielson Air Force Base (military basesnear Fairbanks), and in North Pole. You should see Part I, Item 1. Business,Historical development of the Company's business during the past fiscal year -Local Access Services for more information. We also compete against AT&T in theAnchorage service area. AT&T offers local exchange service only to residentialcustomers through total service resale. We expect further competitors in theAnchorage, Fairbanks and Juneau marketplaces, as Alaska Fiber Star and DSLnethave filed bonafide requests for interconnection with ACS. The Company expectscompetition from these latter entrants in the business customer telephonyaccess, Internet access, DSL and private line markets. We believe ourlong-standing presence in Alaska and the strength of our brand (as well asACS's) will make competitive entry difficult for these new entrants.                                       13Cable Services Expansion. We completed $7.2 and $11.5 million upgrades to ourcable infrastructure in 1999 and 1998, respectively. These expendituressignificantly increased the capacity and reliability of our systems, makingpossible two-way applications such as cable modems (as further described below)and digital cable television programming, and provided capacity for additionalprogram offerings.Digital cable television services were offered in Anchorage in 1998, offeringenhanced picture and audio quality, over 100 channels of programs, 40 channelsof digital music, and many channels of premium and pay-per-view products.Digital cable service allows us to use digital compression to substantiallyincrease the capacity of our cable communications systems, improve picturequality and provide CD quality audio. Digital cable subscriber counts increasedfrom 1,200 at December 31, 1998 to 5,800 at December 31, 1999.We introduced cable modem services in 1998, providing high-speed, dedicatedaccess to the Internet through our coaxial cable network. Cable modemsubscribers increased from 200 at December 31, 1998 to 5,700 at December 31,1999. We believe our cable modem penetration rate is among the highest in thenation. Approximately 80 percent of our cable customers are able to receivecable modem service.Internet Services. Our statewide SchoolAccess(TM) services (Internet access andrelated products and services for Alaska schools) commenced January 1998, withrecent upgrades of 47 sites doubling access speeds to 128 kbps. Schoolsutilizing the SchoolAccess(TM) product are increasingly integrating the Internetinto their educational programs. We provided SchoolAccess(TM) and other Internetservices to approximately 257 schools in Alaska at the end of the fourth quarterof 1999. Our Internet access service is now used by more than half of thestudents in the state of Alaska.We began a limited rollout of our dial-up Internet service in April 1998, whichallowed us to test our new state-of-the-art Internet platform. We began ourbroad based offering in October 1998 and initiated major promotions in February1999. Services were initially offered to residents of Anchorage, Fairbanks,Kodiak, Juneau, Kenai, Soldotna, Palmer and Wasilla, Alaska. Other Alaskacommunities were added over the next several months and continue to be added.Our GCI.net service supports 56 kbps dial-up connections with support for bothV.90 and Kflex technologies, and supports cable modem services currentlyavailable at speeds up to 512 kbps. We believe our service has one of the bestfirst-try connect rates and the fastest speeds available of any provider inAlaska. We plan to introduce additional service upgrades and promotionalofferings in the future. Our dial-up Internet subscribers increased from lessthan 7,000 at December 31, 1998 to 44,900 at December 31, 1999.Rural Equal Access. In 1996 we constructed 56 new earth stations in Western andNorthern Alaska. As construction of those DAMA stations were completed, werequested Equal Access from the LECs serving those communities. Under FederalCommunications Commission rules, substantially all LECs have three years tocomply with an equal access request. The three-year time period expired for manyof those locations. LECs started implementing the equal access conversionprocess in late 1998 and continued to convert locations though March 1999. As aresult, approximately 34 rural DAMA-served communities were converted duringthis period to equal access enabling our customers to access our network withoutdialing extra digits.PCS and LMDS licenses. We began developing plans for PCS wireless communicationsservice deployment in 1995 and subsequently conducted a technical trial of ourcandidate technology. We have invested approximately $2.2 million in our PCSlicense at December 31, 1999. PCS licensees are required to offer service to atleast one-third of their market population within five years or risk losingtheir licenses. Service must be extended to two-thirds of the population within10 years. We invested approximately $275,000 in our LMDS license in 1998. LMDSlicensees are required to provide 'substantial service' in their service regionswithin 10 years. We are in the design/build phase of our wireless implementationplan that we believe will allow retention of our PCS and LMDS licenses pursuantto their terms.At the end of the license period, a renewal application must be filed. Webelieve renewal will generally be granted on a routine basis upon showing ofcompliance with FCC regulations and continuing service to the public. Licensesmay be revoked and license renewal applications may be denied for cause.                                       14Narrative description of our businessGeneralWe operate a broadband communications network that permits the delivery of aseamless integrated bundle of communications, entertainment and informationservices. We offer a wide array of consumer communications and entertainmentservices--including local telephone, long-distance and wireless communications,cable television, consulting services, network and desktop computing outsourcedservices, and dial-up and cable modem Internet access services at a wide rangeof speeds--all under the GCI brand name.Our management believes that the size and growth potential of the voice, videoand data market, the increasing deregulation of telecommunication services, andthe increased convergence of telephony, wireless, and cable services offer usconsiderable opportunities to integrate our telecommunication, Internet andcable services and expand into communications markets both within and,longer-term, outside of Alaska. We expect the rate of growth in industry-widetelecommunication revenues to continue to increase as the historical dominanceof monopoly providers is challenged as a result of deregulation. Considerablederegulation has already taken place in the United States as a result of the1996 Telecom Act with the barriers to competition between long-distance, localexchange and cable providers being lowered. We believe our acquisition of cabletelevision systems and our development of local exchange service, Internetservices, and wireless services leave us well positioned to take advantage ofderegulated markets.We are one of Alaska's leading providers of telecommunication, Internet andcable television services and maintain a strong competitive position. There isactive competition in the sale of substantially all products and services weoffer.Alaska Voice, Video and Data MarketsFor calendar year 1999, we estimate that the aggregate telecommunications, cabletelevision, and Internet markets in Alaska generated revenues of approximately$1 billion. Of this amount, approximately $485 million was attributable tointerstate and intrastate long-distance service, $365 million was attributableto local exchange services, $75 million was attributed to cable television, and$75 million was attributable to all other services, including wireless andInternet services.The Alaskan voice, video and data markets are unique within the United States.Alaska is physically distant from the rest of the United States and ischaracterized by large geographical size and relatively small, dense populationclusters (with the exception of population centers such as Anchorage, Fairbanksand Juneau). It lacks a well-developed terrestrial transportationinfrastructure, and the majority of Alaska's communities are accessible only byair or water. As a result, Alaska's telecommunication networks are differentfrom those found in the lower 49 states.Alaska today relies extensively on satellite-based long-distance transmissionfor intrastate calling between remote communities where investment in aterrestrial network would be uneconomic or impractical. Also, given theremoteness of Alaska's communities and lack, in many cases, of major civicinstitutions such as hospitals, libraries and universities, Alaskans aredependent on telecommunications to access the resources and information of largemetropolitan areas in the rest of the U.S. and elsewhere. In addition tosatellite-based communications, the telecommunications infrastructure in Alaskaincludes fiber optic cables between Anchorage, Fairbanks, and Juneau,traditional copper wire, and digital microwave radio on the Kenai Peninsula andother locations. For interstate and international communication, Alaska isconnected to the Lower 48 states by three fiber optic cables.Fiber optics is the preferred method of carrying Internet, voice, video and datacommunications, eliminating the delay commonly found in satellite connections.Widespread use of high capacity fiber optic facilities will allow continuedexpansion of business, government and educational infrastructure in Alaska.Long-Distance ServicesIndustry. With the Communications Act of 1934, telecommunications wasestablished as a regulated industry. The main objective of this act was tocreate an affordable and universal telephone service for the American people. Asa result, AT&T was granted exclusive rights to serve the telecommunicationsindustry. The next several decades brought significant improvements intechnology. New advances                                        15created opportunities for providers of lower-cost services to enter the market,and in order to facilitate the entry of these new competitors, regulatorypolicies were changed. The government stepped into the market on January 1,1984, and broke-up AT&T's near monopoly. The government's objective was toprovide for greater competition in the telecommunications industry, as well asmake room for the creation of more diversified products.The FCC set price caps in 1989 to regulate the prices AT&T could charge fortheir services. Yet, by 1991 the market had become so much more competitive withregards to both long-distance and local calls that the FCC decided to deregulatemost of AT&T's services.The United States Congress passed the 1996 Telecom Act that permitted the localphone companies, the long-distance companies, and the cable service firms topenetrate each other's market. This has provided the telecommunications industrywith new capabilities resulting in an industry that is more competitive thanever before. To reduce the burden and facilitate competitive advantages,companies are merging and acquiring other telecommunication and cable televisionfirms.The communications market is currently reported to be a $270 billion market inthe U.S. and is expected to grow at over 10% annually for the next five years.Backbone infrastructure services, inter-city and local wholesale transportservices, and local access services reportedly are among the most rapidlygrowing components of the current telecommunications sector with forecast growthat approximately 18% annually for the next five years. Analysts estimate thatthe addressable market for these products and services in the United States tobe $30 billion in 1999, expanding to $80 billion by 2005.Advancements within the next few years are expected to combine services directedtoward voice communication with other activities such as data sharing, on-screencollaboration, faxing, Internet access, and game playing, among many otherthings.We believe that federal and state regulators will continue to impact thetelecommunications industry in 2000. Consummation of mergers betweenlong-distance companies, local access services companies, and cable televisioncompanies is expected continue to blur the distinction between product lines andcompetitors. Synergies developed through mergers and acquisitions and obtainingend-to-end connectivity with customers is expected to drive profitability andsuccess in penetrating new markets. Industry analysts believe that successfulcompetitors will be the companies that can minimize regulatory battles and beginto offer a full suite of integrated services to their customers, using a networkthat is largely under their control.Growth in data is expected to be a key component of continuing industry revenuegrowth. We believe that the data telecommunications business will eventuallyrival and perhaps become larger than the traditional voice telephony market.ISPs have become major customers and many long-distance companies have acquiredISPs and web-hosting companies.General. We supply a full range of common carrier long-distance and othertelecommunication products and services. We operate a state-of-the-art,competitive telecommunications network employing the latest digital transmissiontechnology based upon fiber optic and digital microwave facilities within andbetween Anchorage, Fairbanks and Juneau, including a self-constructed andfinanced digital fiber optic cable and additional owned capacity on anotherundersea fiber optic cable, both linking Alaska to the networks of othercarriers in the lower 49 states, and the use of satellite transmission to remoteareas of Alaska (and for certain inter-state traffic as well). Virtually allswitched services are computer controlled, digitally switched, andinterconnected by a packet switched signaling network.We provide interstate and intrastate long-distance services throughout Alaskausing our own facilities or facilities leased from other carriers. We alsoprovide (or join in providing with other carriers) telecommunication services toand from Alaska, Hawaii, the lower 48 states, and many foreign nations andterritories.We offer cellular services by reselling other cellular providers' services. Weexpect to offer wireless services over our own facilities, and have purchased inFCC auctions PCS and LMDS wireless broadband licenses covering markets inAlaska. We are required by the FCC to provide adequate broadband PCS                                        16service to at least one-third of the population in our licensed areas withinfive years of being licensed and two-thirds of the population in our licensedareas within ten years of being licensed. We are required by the FCC to provide`substantial service' in our service region within 10 years to retain our LMDSlicense. The licenses are granted for ten-year terms from the original date ofissuance and may be renewed by meeting the FCC's renewal criteria and uponcompliance with the FCC's renewal procedures.Products. Our long-distance services industry segment is engaged in thetransmission of interstate and intrastate-switched MTS and private line andprivate network communication service between the major communities in Alaska,and the remaining United States and foreign countries. Our message toll servicesinclude intrastate, interstate and international direct dial, toll-free 800, 888and 877 services, 900 services, GCI calling card, debit card, operator andenhanced conference calling, frame relay, SDN, ISDN technology based services,as well as termination of northbound toll service for MCI WorldCom, Sprint andseveral large resellers who do not have facilities of their own in Alaska. Wealso provide origination of southbound calling card and toll-free 800, 888 and877 toll services for MCI WorldCom and Sprint. Regulated telephone relayservices for the deaf, hard-of-hearing and speech impaired are provided throughour operator service center in Wasilla, Alaska. We offer our message services tocommercial, residential, and government subscribers. Subscribers may generallycancel service at any time. Toll related services account for approximately57.2%, 64.0%, and 69.4% of our 1999, 1998, and 1997 revenues, respectively.Private line and private network services utilize voice and data transmissioncircuits, dedicated to particular subscribers, which link a device in onelocation to another in a different location.We have positioned ourselves as a price and customer service leader in theAlaska telecommunication market. Rates charged for our long-distance servicesare designed to be equal to or below those for comparable services provided byour competitors.In addition to providing communication services, we also design, sell, serviceand operate, on behalf of certain customers, dedicated communication andcomputer networking equipment and provide field/depot, third party, technicalsupport, telecommunications consulting and outsourcing services through ourNetwork Solutions business. We also supply integrated voice and datacommunication systems incorporating interstate and intrastate digital privatelines, point-to-point and multipoint private network and small earth stationservices. Our Network Solutions sales and services revenue totaled $11.3, $12.1and $10.3 million in the years ended December 31, 1999, 1998 and 1997,respectively, or approximately 4.0%, 4.9% and 4.6% of total revenues,respectively. Presently, there are 18 competing companies in Alaska thatactively sell and maintain data and voice communication systems. Twelve arelocated in Anchorage, four in Fairbanks and two in Juneau.Our ability to integrate telecommunications networks and data communicationequipment has allowed us to maintain our market position on the basis of "valueadded" support services rather than price competition. These services areblended with other transport products into unique customer solutions, includingmanaged services and outsourcing.Facilities. Our telecommunication facilities include a fiber optic cableconnecting Anchorage, Whittier, Valdez, Fairbanks and Juneau, Alaska andSeattle, Washington, which was placed into service in February 1999. We also owna portion of an additional undersea fiber optic cable. The fiber optic cablesallow us to carry our Anchorage, Eagle River, Wasilla, Palmer, Kenai Peninsula,Valdez, Whittier, Glenallen, Fairbanks, and Juneau, Alaska traffic to and fromthe contiguous lower 48 states over terrestrial circuits, eliminating theone-quarter second delay associated with satellite circuits. The Company'spreferred routing for this traffic is via undersea fiber optic cable, whichmakes available satellite capacity to carry the Company's rural interstate andintrastate traffic.Other facilities include major earth stations at Eagle River, Fairbanks, Juneau,Prudhoe Bay, Kodiak, Sitka, Ketchikan, Unalaska, Barrow, Bethel, Nome,Dillingham, Kotzebue, King Salmon, Adak, and Cordova, all in Alaska, and atIssaquah, Washington, serving the communities in their vicinity. The Eagle Riverand Fairbanks earth stations are linked by digital microwave facilities todistribution centers in Anchorage and Fairbanks, respectively. We expect tocomplete construction of a fiber optic cable system from the Anchoragedistribution center to the Eagle River central office in second quarter of 2000.The Issaquah earth station is connected with the Seattle distribution center bymeans of diversely routed fiber optic cable transmission systems, each havingthe capability to restore the other in the event of failure.                                        17The Juneau earth station and distribution centers are colocated. We also havedigital microwave facilities serving the Kenai Peninsula communities.We use our DAMA facilities to serve 56 additional locations throughout Alaska.The digital DAMA system allows calls to be made between remote villages usingonly one satellite hop thereby reducing satellite delay and capacityrequirements while improving quality. We obtained the necessary RCA and FCCapprovals waiving current prohibitions against construction of competitivefacilities in rural Alaska, allowing for deployment of DAMA technology in 56sites in rural Alaska on a demonstration basis. In addition, over 80 very smallaperture terminal ("VSAT") facilities provide dedicated Internet access to ruralpublic schools throughout Alaska.Our Anchorage, Fairbanks, and Juneau distribution centers contain electronicswitches to route calls to and from local exchange companies and, in Seattle, toobtain access to MCI WorldCom, Sprint and other facilities to distribute oursouthbound traffic to the remaining 49 states and international destinations. InAnchorage, a Lucent digital host switch is connected with fiber to six remotefacilities that are co-located in the ILEC's switching centers, to provide bothlocal and long distance service. An extensive local fiber network in Anchoragesupports both cable television service and telephony services. The Anchorage,Fairbanks, and Juneau facilities also include digital access cross-connectsystems, frame relay data switches, Internet platforms, and in Anchorage, aco-location facility for interconnecting and hosting equipment for othercarriers. We also maintain an operator service center in Wasilla, Alaska.As described previously, we completed construction and placed into service inFebruary 1999 a fiber optic cable connecting Anchorage, Whittier, Valdez,Fairbanks and Juneau, Alaska and Seattle Washington. We also own a portion of anadditional undersea fiber optic cable. The fiber optic cables allow us to carryour Anchorage, Eagle River, Wasilla, Palmer, Kenai Peninsula, Valdez, Whittier,Glenallen, Fairbanks, and Juneau area traffic to and from the contiguous lower48 states over terrestrial circuits, eliminating the one-quarter second delayassociated with satellite circuits. Our preferred routing for this traffic isvia undersea fiber optic cable, which makes available satellite capacity tocarry our rural interstate and intrastate traffic.We employ satellite transmission for rural intrastate traffic and certain othermajor routes and use advanced digital transmission technology throughout oursystems. Pursuant to a purchase and lease-purchase option agreement entered intoin August 1995 we lease C-band transponders on Hughes Communications Galaxy,Inc. (now PanAmSat Corporation ("PanAmSat")) Galaxy IX satellite and have agreedto acquire satellite transponders on PanAmSat Galaxy XR satellite to meet ourlong-term satellite capacity requirements. The Galaxy XR satellite wassuccessfully launched in January 2000, with services being transitioned fromleased transponders on the Galaxy IX (C-band) and SBS-5 (Ku-band) satellites tothe new satellite during the first quarter of 2000.We employ advanced transmission technologies to carry as many voice circuits aspossible through a satellite transponder without sacrificing voice quality.Other technologies such as terrestrial microwave systems, metallic cable, andfiber optics tend to be favored more for point-to-point applications where thevolume of traffic is substantial. With a sparse population spread over a widegeographic area, neither terrestrial microwave nor fiber optic transmissiontechnology is considered to be economically feasible in rural Alaska in theforeseeable future.Customers. We had approximately 90,800, 82,000 and 89,000 active Alaskasubscribers to our message telephone service at December 31, 1999, 1998 and1997, respectively. Approximately 12,500, 12,100 and 11,500 of these werebusiness and government users at December 31, 1999, 1998 and 1997, respectively,and the remainders were residential customers. Reductions in our residentialcustomer counts were primarily attributed to new competitive pressures inAnchorage and other markets we serve. MTS revenues (excluding operator servicesand private line revenues) averaged approximately $10.5 million per month during1999.Equal access conversions have been completed in all communities served withowned facilities. We estimate that we carry over 45% of business and residentialtraffic as a statewide average for both originating interstate and intrastateMTS traffic.                                       18A summary of our switched MTS traffic (in minutes) follows:                                       Interstate Minutes                             ---------------------------------------                                                                                 Combined                                                                                Interstate                                                                      Inter-    and Inter-     Intra-                                 South-       North-       Calling   national    national       state       TotalFor Quarter ended                bound (1)    bound         Card     Minutes     Minutes       Minutes     Minutes----------------------------------------------------------------------------------------------------------------------                                                              (Amounts in thousands)                                                                                                                       March 31, 1997                  83,284       56,588        8,110     1,741      149,723        32,020     181,743 June 30, 1997                   85,933       58,420        7,189     1,795      153,337        34,405     187,742 September 30, 1997              93,510       60,390        5,530     1,842      161,272        34,755     196,027 December 31, 1997               87,657       61,992        5,157     1,703      156,509        31,962     188,471                             -----------------------------------------------------------------------------------------     Total 1997                 350,384      237,390       25,986     7,081      620,841       133,142     753,983                             ========================================================================================= March 31, 1998                  86,899       64,116        4,810     1,889      157,714        33,082     190,796 June 30, 1998                   93,817       67,296        4,353     1,910      167,376        34,890     202,266 September 30, 1998             103,423       61,690        4,227     1,940      171,280        35,748     207,028 December 31, 1998               90,792       61,514        4,197     1,706      158,209        33,598     191,807                             -----------------------------------------------------------------------------------------     Total 1998                 374,931      254,616       17,587     7,445      654,579       137,318     791,897                             ========================================================================================= March 31, 1999                  94,623       57,039        3,694     1,578      156,934        34,950     191,884 June 30, 1999                  128,623       52,954        3,383     1,649      186,609        37,241     223,850 September 30, 1999             146,473       56,577        3,273     1,680      208,003        38,078     246,081 December 31, 1999              137,077       64,823        3,204     1,609      206,713        36,055     242,768                             -----------------------------------------------------------------------------------------     Total 1999                 506,796      231,393       13,554     6,516      758,259       146,324     904,583                             =========================================================================================-------------------1 The 1999 Interstate Southbound minutes include traffic carried from Washingtonto Oregon by us on behalf of an OCC.All minutes data were taken from our internal billing statistics reports.In 1993, we entered into a significant business relationship with MCI (now MCIWorldCom) that includes the following agreements.    - We agreed to terminate all Alaska-bound MCI long-distance traffic and MCI      agreed to terminate all of our long-distance traffic terminating in the      lower 49 states excluding Washington, Oregon and Hawaii;    - MCI allowed us to license certain service marks for use in Alaska;    - MCI, in connection with providing to us credit enhancement to permit us to      purchase a portion of an undersea cable linking Seward, Alaska, with      Pacific City, Oregon, leased from us all of the capacity we owned on the      undersea fiber optic cable and we leased such capacity back from MCI;    - MCI purchased certain of our service marks; and    - The parties agreed to share some communications network resources and      various marketing, engineering and operating resources. We also carry      MCI's 800, 888 and 877 traffic originating in Alaska and terminating in      the lower 49 states and handle traffic for MCI's calling card customers      when they are in Alaska. Concurrently with these agreements, MCI purchased      approximately 31% (18.7% as of December 31, 1999) of GCI's Common Stock      and presently controls nominations to two seats on the Board. In      conjunction with the Cable Acquisition Transactions, MCI purchased an      additional two million shares at a premium to the then current market      price for $13 million or $6.50 per share.                                       19Revenues attributed to MCI WorldCom in 1999, and MCI in 1998 and 1997 totaled$40.4 million, $36.0 million and $33.5 million, or 14.5%, 14.6% and 15.0% oftotal revenues, respectively. The contract was amended in March 1996 extendingits term three years to March 31, 2001. The amendment also reduced the rate tobe charged by us for certain MCI WorldCom traffic for the period April 1, 1996through July 1, 1999 and thereafter. The amendment expanded the scope of thecontract to include all of the affiliates of the MCI Worldcom merged companies.In 1993 we entered into a long-term agreement with Sprint, pursuant to which weagreed to terminate all Alaska-bound Sprint long-distance traffic and Sprintagreed to handle substantially all of our international traffic. Servicesprovided pursuant to the contract with Sprint resulted in revenues in 1999, 1998and 1997 of approximately $19.8 million, $25.2 million and $23.0 million, orapproximately 7.1%, 10.2% and 10.3% of total revenues, respectively.The contract was amended in April 1999 extending its term three years to April2002. The amendment also reduced the rate in dollars we charge for certainSprint traffic for the period March 1999 through January 2001 and thereafter.With the contracts and amendment described above, we are assured that MCIWorldCom and Sprint, our two largest customers, will continue to make use of ourservices during the extended term. Both MCI WorldCom and Sprint are majorcustomers of our long-distance services industry segment. Loss of one or both ofthese customers would have a significant detrimental effect on our revenues andcontribution. There are no other individual customers, the loss of which wouldhave a material impact on our revenues or gross profit.Other common carriers traffic routed to us for termination in Alaska is largelydependent on traffic routed to MCI WorldCom and Sprint by their customers.Pricing pressures, new program offerings and market consolidation continue toevolve in the markets served by MCI WorldCom and Sprint. If, as a result, theirtraffic is reduced, or if their competitors' costs to terminate or originatetraffic in Alaska are reduced, our traffic will also likely be reduced, and wemay have to reduce our pricing to respond to competitive pressures. We areunable to predict the effect of such changes on our business, however given themateriality of other common carriers revenues to us; a significant reduction intraffic or pricing could have a material adverse effect on our financialposition, results of operations and liquidity.We provided private line and private network communication products andservices, including SchoolAccess(TM) private line facilities, to approximately1,673 commercial and government accounts in 1999. These products and servicesgenerated approximately 7.9%, 7.9% and 7.1% of total revenues during the yearsended December 31, 1999, 1998 and 1997, respectively.Although we have several agreements to facilitate the origination andtermination of international toll traffic, we have neither foreign operationsnor export sales (see Part I, Item 1. Business, Foreign and Domestic Operationsand Export Sales).Competition. The long-distance industry is intensely competitive, rapidlyevolving and subject to constant technological change. Competition is based uponprice and pricing plans, the types of services offered, customer service,billing services, performance, perceived quality, reliability and availability.Certain of our competitors are substantially larger than us and have greaterfinancial, technical and marketing resources than we have. Although we believewe have the human and technical resources to pursue our strategy and competeeffectively in this competitive environment, our success will depend upon ourability to profitably provide high quality, high value services at pricesgenerally competitive with, or lower than, those charged by our competitors.In the long-distance market, we compete against AT&T Alascom, ACS, the MatanuskaTelephone Cooperative, certain smaller rural LEC affiliates, and may in thefuture compete against new market entrants. AT&T Alascom, our principalcompetitor in long-distance services, has substantially greater resources andaccess to capital than we have. This competitor's interstate rates areintegrated with those of AT&T Corp. and are regulated in part by the FCC. Whilewe initially competed based upon offering substantial discounts, those discountshave been eroded in recent years due to lowering of prices by AT&T Alascom andentry of other competitors into the long-distance markets we serve. Under theterms of AT&T's                                        20acquisition of Alascom, AT&T Alascom rates and services must mirror thoseoffered by AT&T, so changes in AT&T prices indirectly affect our rates andservices. AT&T's and AT&T Alascom's interstate prices are regulated under aprice cap plan whereby their rate of return is not regulated or restricted.Price increases by AT&T and AT&T Alascom generally improve our ability to raiseprices while price decreases pressure us to follow. We believe we have, so far,successfully adjusted our pricing and marketing strategies to respond to AT&Tand other competitors' pricing practices. However, if competitors significantlylower their rates, we may be forced to reduce our rates, which could have amaterial adverse effect on us.As allowed under the 1996 Telecom Act, ATU (now ACS) and other LECs entered theinterstate and international long-distance market, and pursuant to RCAauthorization, entered the intrastate long-distance market in 1997. ACS andother LECs generally resell other carriers' services in the provision of theirinterstate and intrastate long-distance services.Another carrier completed construction of fiber optic facilities connectingpoints in Alaska to the lower 48 states in 1999. The additional fiber systemprovides direct competition to services we provide on our owned fiber opticfacilities. We believe we can successfully compete with products and servicesoffered by the competing carrier.In the wireless communications services market, we expect our PCS business tocompete against the cellular subsidiaries of AT&T and ACS and resellers of thoseservices in Anchorage and other markets. The wireless communications industrycontinues to experience significant consolidation. AT&T has acquired wirelesscompanies and negotiated roaming arrangements that give it a national presence.The mergers or joint ventures of Bell Atlantic/GTE/Vodafone AirTouch, MCIWorldCom/Sprint and SBC/Ameritech will create large, well-capitalizedcompetitors with substantial financial, technical, marketing and otherresources. These competitors may be able to offer nationwide services and plansmore quickly and more economically than we can, and obtain roaming rates thatare more favorable than those that we obtain.Our long-distance services sales efforts are primarily directed towardincreasing the number of subscribers we serve, selling bundled services, andgenerating incremental revenues through product and feature upsaleopportunities. We sell our long-distance communications services throughtelemarketing, direct mail advertising, door-to-door selling, and local mediaadvertising.Cable ServicesIndustry. The programmed video services industry includes traditional broadcasttelevision, cable television, wireless cable, and DBS systems. Technologyconvergence may also soon allow programmed video via the internet but reluctanceto change the current delivery structure will likely limit the availability ofprogramming in the near term. In the mean time, cable television providers haveadded non-broadcast programming, utilized improved technology to increasechannel capacity and expanded service markets to include more densely populatedareas and those communities in which off-air reception is not problematic.Broadcast television stations including network affiliates and independentstations generally serve the urban centers. One or more local televisionstations may serve smaller communities. Rural communities may not receive localbroadcasting or have cable systems but may receive direct broadcast programmingvia a satellite dish.In Alaska, cable television was introduced in the 1970s to provide televisionsignals to communities with few or no available off-air television signals andto communities with poor reception or other reception difficulties caused byterrain interference. Since that time, as on the national level, the cabletelevision providers in Alaska have added non-broadcast programming.Advancements in technology, facility upgrades and network expansions to enablemigration to digital programming are expected to have a significant impact oncable services in the future. We expect that changing federal, state and localregulations, intense competition, and uncertain technologies and standards willchallenge the industry.Acquisitions and mergers are shaping the cable industry in a technologicalconvergence similar to what is happening in the telecommunications industry.AT&T completed its $48 billion takeover of cable television providerTele-Communications Inc. in February 1999, gaining the last mile connection to                                       21homeowners with fiber and coaxial cable over which it is expected to sell onlineaccess and Internet phone service. AT&T is also negotiating with other cablecompanies for access to their lines.Convergence of TV and the Internet isn't expected to become a widespreadphenomenon until after 2000. Analysts expect that as many as 5 million cablesubscribers may sign up in 1999 for high-speed cable modems that will give themaccess to the Internet. We are currently offering such high-speed cable modemaccess in Anchorage, Fairbanks, and Juneau.We expect basic cable to be impacted by two forces: possible reimposition ofrate regulations, and additional competition from wireless cable providers.After averaging 3.4% growth for the last five years, industry analysts projectthat cable subscriber growth in 1999 may slow to 1.8%, or 66.6 million homes.Industry analysts predict that cable providers may see a 12% hike in adrevenues, to $6.9 billion.Direct-broadcast satellite operators increased their subscriptions byapproximately 39% in 1998, to 8.9 million, according to industry analysts. Theindustry is expected to add 2.6 million subscribers in 1999. With digitaltransmissions and compression, cable operators are better able to offer avariety and quality of channels to rival DBS, with pay-per-view choices that canapproximate video-on-demand.Digital video is projected to grow significantly over the next three to fouryears as cable network upgrade efforts are completed and the cost of digitalset-top technology decreases. Margins related to digital programming areexpected to climb due to the ability to reuse programming at low or noincremental cost.Analysts believe data services will be an additional opportunity for cableproviders in the next three to five years and that cable will be the most widelyavailable, most cost efficient way to access the Internet at very high speedsand with high video quality. The incremental opportunity for cable from data mayrival that of digital video according to industry analysts. Additionalopportunities are expected in voice-over cable applications that will allowcable providers to offer local telephone service to cable subscribers.The market for programmed video services in Alaska includes traditionalbroadcast television, cable television, wireless cable, and DBS systems.Broadcast television stations including network affiliates and independentstations serve the urban centers in Alaska. Seven, four and two broadcaststations serve Anchorage, Fairbanks and Juneau, respectively. In addition,several smaller communities such as Bethel are served by one local televisionstation that is typically a PBS affiliate. Other rural communities without cablesystems receive a single state sponsored channel of television by a satellitedish and a low power transmitter.General. As a result of acquisitions completed effective October 31, 1996, wehave become Alaska's leading cable television service provider to residential,commercial and government users in the State of Alaska. Our cable televisionsystems serve 26 communities and areas in Alaska, including the state's threelargest urban areas, Anchorage, Fairbanks, and Juneau. Our statewide cablesystems consist of approximately 1,806 miles of installed cable plant having 330to 550 MHz of channel capacity.We completed a $12.5 million upgrade in 1998 that significantly increased thecapacity and reliability of our Anchorage and Juneau cable systems. We deployedmore than 200 miles of fiber optic cable in Anchorage and increased the carryingcapacity of 900 miles of cable television line from 450 MHz to 550 MHz.The result of these upgrades is an increase in channel capacity and systemreliability, facilitating the delivery of additional video programming and newservices such as enhanced video, high-speed Internet access and telephony, andthe capability to support two-way applications such as cable modems and digitalcable. We completed field-testing and deployed our digital converter cableservice in Anchorage in 1998. Digital compression has enabled us to increase thechannel capacity of our Anchorage cable communications systems to more than 100channels, provide digital audio channels, as well as improve picture and soundquality.Products. Programming services offered to our cable television systemssubscribers differ by system (all information as of December 31, 1999).                                       22Anchorage, Bethel, Kenai and Soldotna systems. Each system offers a basicservice. In addition, Anchorage and Bethel offer a CPS. A NPT is only offered inthe Anchorage cable system. The Anchorage system, which is located in the urbancenter for Alaska, is fully addressable, with all optional services scrambled,aside from the broadcast basic. Kenai, Soldotna, and Bethel had fewer channels,less service options and less an urban orientation, and use traps for programcontrol. As a result, these smaller systems do not have access to pay-per-viewservices.The composition and rates of the levels of service vary between the systems. TheAnchorage cable system offers a basic service that includes 19 channels. TheAnchorage cable system offers a CPS that includes 32 channels at an additionalcost. Subscribers, for an additional cost, receive the six-channel NPT service,which includes TNT, CNN, Discovery, MSNBC, Outdoor Life and the Sci-/Fi Channel.The Bethel cable system offers a basic service of 24 channels and a CPS tier of11 channels for an additional cost per month. Basic service for theKenai/Soldotna cable system consisted of 37 channels. Pay TV services areavailable either individually or as part of a value package. Commercialsubscribers such as hospitals, hotels and motels are charged negotiated monthlyservice fees. Apartment and other multi-unit dwelling complexes receive basicservices at a negotiated bulk rate.Fairbanks, Juneau, Ketchikan and Sitka systems. The programming services wecurrently offer to subscribers are structured so that each cable system offers abasic service and a CPS. Each of the cable systems has different basic servicepackages at different rates. Fairbanks, the second largest city in Alaska, has afully addressable system and offers a 12 channel basic and 35 channel CPS tier.Three channels of pay-per-view are available to basic and CPS subscribers.Fairbanks, North Pole, Fort Wainwright, and Eielson Air Force Base are allserved by the Fairbanks headend and have the same lineup. Fort Greely, a remotemilitary post, is a stand-alone system, which is fully addressable. Fort Greelyhas 8 basic channels, a 21 channel CPS tier, and 1 pay-per-view channelavailable to all subscribers. The reverse path in the Fairbanks market wasactivated during the third quarter of 1999 and we now offer cable modem Internetaccess. We expect to offer digital service in Fairbanks during the secondquarter of 2000.The Juneau cable system offers a 13-channel basic service package and a Tier 1that includes basic service plus an additional 4 channels. The system alsooffers a CPS Tier 2 that consists of basic service plus Tier 1 service andadditional 43 channels. The Ketchikan system offers a 12 channel basic serviceand a preferred level of service that offers an additional 38 channels. TheSitka system offers a 12 channel basic service. Preferred service includes basicservice plus 38 additional channels. The Ketchikan, Sitka, Petersburg and Sitkasystems all launched a digital music service called "DMX." This service offers30 channels of commercial free music and is offered for $7.95 per month.The Juneau system was upgraded in 1998. We expect to upgrade the Ketchikansystem in 2000. The Juneau upgrade consisted of extending the bandwidth to550MHz, activating the reverse and introducing advanced analog set top boxes.The new set tops allowed Juneau subscribers access to impulse pay per viewincluding highly secured 24 hour adult products, 30 channels of CD quality musicand a new on screen navigator.During May of 1999, the Juneau system launched high-speed Internet accessthrough cable modems. The system ended 1999 with 1,100 high-speed cable modemsinstalled.Kodiak, Valdez, Cordova, Petersburg, Wrangell, Kotzebue and Nome systems. Thesesystems offer up to 30 channels of the most popular basic cable channels, aswell as the major broadcast networks, packaged into three levels of service. InNome, Kotzebue and Cordova, basic service consists of three channels, one ofwhich is a PBS channel. PBS service is also included with the 11 channels ofbasic service in Kodiak, 7 in Valdez and 11 each in Wrangell and Petersburg. Inaddition, Wrangell and Petersburg have matching line-ups with 39 additionalchannels in the preferred level of service, and an additional 5 channels ofpremium service. Nome offers a 33 channel CPS Tier 1 and 5 channels of premiumservice. Kotzebue closely matches Nome with the exception of one more channel inthe CPS Tier 1 and one less channel in the premium offering. In addition tobasic service, Cordova offers a 20 channel CPS Tier 1, 10 Channel CPS Tier 2with 3 premium channels available.We completed system upgrades in Kodiak and Valdez in 1998. In Kodiak, 6 channelswere added to basic service. The CPS tier added 8 new channels including Disney,which was formally a premium service. The                                        23NPT tier was reduced to 11 channels with 2 new networks. Premium services wererepackaged for better value. The total available channels are now 47. Valdezadded 5 channels to basic service and expanded the CPS tier with 6 channelsincluding Disney. Although remaining at 9 channels, 5 new services were added tothe NPT tier as traditional services were migrated into the other tiers. Nomeand Kotzebue systems upgrades were completed in March 1999. The upgrade willallow the launch of additional programming and the shift of Disney from premiumto tier service.Seward system. We upgraded the Seward cable system in 1997. Total channels wereincreased to 49, packaged in two levels of service. Basic service was expandedfrom 3 to 8 channels. CPS had 30 channels (including basic service) and wasexpanded to 44. All of the channels, with the exception of local originationprogramming and a single translator channel licensed to the City of Seward, werereceived via satellite. In addition there were five channels of premium payservices. The system is fully addressable. The system provides 12 channels to300 outlets in a State of Alaska correction facility through a separate headend.Homer system. We upgraded the Homer cable system in 1997. Total channels wereincreased to 50, packaged into two levels of service. Basic service was expandedfrom 8 channels to 12. CPS had 36 channels (including basic service channels)and was expanded to 45 channels. All of the channels, with the exception of fourlocal translator channels and local origination programming, are received viasatellite. In addition, five channels of premium pay services are offered. Thesystem is fully addressable.Facilities. Our cable television businesses are located in Anchorage, EagleRiver, Chugiak, Peters Creek, Kenai, Ridgeway, Soldotna, Bethel, FortRichardson, Elmendorf Air Force Base, Fairbanks, Fort Wainwright, North Pole,Fort Greely, Eielson Air Force Base, Juneau, Sitka, Ketchikan, Petersburg,Wrangell, Cordova, Homer, Valdez, Kodiak, Kodiak Coast Guard Air Station,Kotzebue, and Nome, Alaska. Our facilities include cable plant and head-enddistribution equipment. Certain of our head-end distribution centers arecolocated with customer service and administrative offices.Customers. Our cable systems passed approximately 174,000, 171,000, and 167,500homes at December 31, 1999, 1998 and 1997, respectively, and servedapproximately 116,700, 111,900 and 108,000 subscribers at December 31, 1999,1998 and 1997, respectively. Revenues derived from cable television servicestotaled $61.1 million, 57.6 million, and 55.2 million in 1999, 1998 and 1997,respectively.Competition. A number of other cable operators provide cable service in Alaska.All of these companies are relatively small, with the largest having fewer than6,500 subscribers. Cable television systems face competition from alternativemethods of receiving and distributing television signals and from other sourcesof news, information and entertainment such as off-air television broadcastprogramming, newspapers, movie theaters, live sporting events, interactivecomputer services, Internet services and home video products, includingvideotape cassette and video disks. The extent to which a cable televisionsystem is competitive depends, in part, upon the cable system's ability toprovide quality programming and other services at competitive prices.Our Fairbanks system faces significant competition from alternative cabletelevision providers. Upgrades to our Fairbanks facilities, expanded productofferings and increased marketing efforts are expected to increase marketpenetration from 45.6% at December 31, 1999. Our average market penetration ratefor all systems was 61.4% at December 31, 1999.The 1996 Telecom Act authorizes LECs and others to provide a wide variety ofvideo services competitive with services provided by cable systems and toprovide cable services directly to subscribers. Certain LECs in Alaska may seekto provide video services within their telephone service areas through a varietyof distribution methods. Cable systems could be placed at a competitivedisadvantage if the delivery of video services by LECs becomes widespread sinceLECs may not be required, under certain circumstances, to obtain localfranchises to deliver such video services or to comply with the variety ofobligations imposed upon cable systems under such franchises. Issues ofcross-subsidization by LECs of video and telephony services also pose strategicdisadvantages for cable operators seeking to compete with LECs who provide videoservices.                                       24Our Cable Systems face limited additional competition from private SMATV systemsthat serve condominiums, apartment and office complexes and private residentialdevelopments. The operators of these SMATV systems often enter into exclusiveagreements with building owners or homeowners' associations. Due to thewidespread availability of reasonably priced earth stations, SMATV systems nowcan offer both improved reception of local television stations and many of thesame satellite-delivered program services offered by franchised cable systems.The ability of the Cable Systems to compete for subscribers in residential andcommercial developments served by SMATV operators is uncertain. We continue todevelop and deploy competitive packages of services (video, data and telephony)to these residential and commercial developments. The 1996 Telecom Act givescable operators greater flexibility with respect to pricing of cable televisionservices provided to subscribers in multi-dwelling unit residential andcommercial developments. It also broadens the definition of SMATV systems notsubject to regulation as a franchised cable television service.The availability of reasonably-priced HSD earth stations enables individualhouseholds to receive many of the satellite-delivered program services formerlyavailable only to cable subscribers. Furthermore, the 1992 Cable Act containsprovisions, which the FCC has implemented with regulations, to enhance theability of cable competitors to purchase and make available to HSD ownerscertain satellite-delivered cable programs at competitive costs.In recent years, the FCC and the Congress have adopted policies providing a morefavorable operating environment for new and existing technologies that provide,or have the potential to provide, substantial competition to cable systems.These technologies include, among others, DBS services that transmit signals bysatellite to receiving facilities located on the premises of subscribers.Programming is currently available to the owners of DBS facilities throughconventional, medium and high-powered satellites.DBS systems are expected to use video compression technology to increase thechannel capacity of their systems to provide movies, broadcast stations andother program services competitive with those of cable systems. The extent towhich DBS systems are competitive with the service provided by cable systemsdepends, among other things, on the availability of reception equipment atreasonable prices and on the ability of DBS operators to provide competitiveprogramming. DBS services are slowly adding broadcast stations to their productofferings beginning with the largest broadcast markets that eliminates theproblem of having to add a second external off-air antenna. DBS signals aresubject to degradation from atmospheric conditions such as rain and snow. Thereceipt of DBS signals in Alaska currently has the disadvantage of requiringsubscribers to install larger satellite dishes (generally three to six feet indiameter) because of the weaker satellite signals currently available innorthern latitudes, particularly in communities surrounding, and north of,Fairbanks. In addition, existing satellites have a relatively low altitude abovethe horizon when viewed from Alaska, making their signals subject tointerference from mountains, buildings and other structures.Two major companies, DirecTV and Echostar, are currently offering nationwidehigh-power DBS services. Recent launches by Echostar into more favorable westernarc satellite positions have allowed them to offer service in the lower half ofAlaska with antennas less than one meter in diameter. Recently enacted federallegislation establishes, among other things, a permanent compulsory copyrightlicense that permits satellite carriers to retransmit local broadcast televisionsignals to subscribers who reside inside the local television station's market.These companies have already begun transmitting local broadcast signals incertain major televison markets and have announced their intention to expandthis local television broadcast retransmission service to other domesticmarkets. With this legislation, satellite carriers become more competitive tocable communications system operators like us because they are now able to offerprogramming which more closely resembles what we offer. We are unable to predictthe effects this legislation and these competitive developments might have onour business and operations.Our cable television systems also compete with wireless program distributionservices such as MMDS providers that use low-power microwave frequencies totransmit video programming over-the-air to subscribers. There are MMDS andmulti-channel UHF operators who are authorized to provide or are providingbroadcast and satellite programming to subscribers in areas served by several ofour cable systems, including Anchorage, Fairbanks and Juneau. Additionally, theFCC has allocated frequencies in the 28 GHz band for a new multi-channelwireless video service similar to MMDS. Wireless operations have thedisadvantage of requiring line-of-sight access, making their signals subject tointerference from                                        25mountains, buildings and other structures, and are subject to interference fromrain, snow and wind. Recently ACS purchased a controlling interest in amulti-channel UHF service that currently provides service in some portions ofAnchorage and Fairbanks. Although they have currently stopped installing newcustomers, we believe they are preparing to offer digital service in bothmarkets. MMDS is also offered by Alaska Wireless in Fairbanks and includes awireless modem service. WanTV recently sold the Anchorage MMDS license toSprint. This service is no longer accepting new customers. We are unable topredict whether wireless video services will have a material impact on ouroperations.Recently, a number of companies in the lower-49 states, including telephonecompanies and ISP's, have asked local, state and federal governments to mandatethat cable communications systems operators provide capacity on their cableinfrastructure so that these companies and others may deliver Internet servicesdirectly to customers over cable facilities. In response, several localjurisdictions attempted to impose these capacity obligations on several cablecommunications operators. Various cable communications companies have initiatedlitigation challenging these municipal requirements. In addition, two antitrustlawsuits have been filed in federal courts alleging that certain cablecommunications companies have improperly refused to allow their cable facilitiesto be used by certain ISPs to serve their customers. In a 1999 report toCongress, the FCC declined to institute an administrative proceeding to examinethis issue. We expect that the FCC, Congress, and state and local regulatoryauthorities will continue to consider actions in this area.The deployment of Digital Subscriber Line technology, known as DSL, allowsInternet access to subscribers at data transmission speeds equal to or greaterthan that of modems over conventional telephone lines. Numerous companies,including telephone companies, have introduced DSL service and certain telephonecompanies are seeking to provide high-speed broadband services, includinginteractive online services, without regard to present service boundaries andother regulatory restrictions. We are unable to predict the likelihood ofsuccess of competing online services offered by our competitors or what impactthese competitive ventures may have on our business and operations.Other new technologies may become competitive with non-entertainment servicesthat cable television systems can offer. The FCC has authorized televisionbroadcast stations to transmit textual and graphic information useful both toconsumers and businesses. The FCC also permits commercial and non-commercial FMstations to use their subcarrier frequencies to provide non-broadcast servicesincluding data transmissions. The FCC established an over-the-air interactivevideo and data service that will permit two-way interaction with commercial andeducational programming along with informational and data services. LECs andother common carriers also provide facilities for the transmission anddistribution to homes and businesses of interactive computer-based services,including the Internet, as well as data and other non-video services. The FCChas conducted spectrum auctions for licenses to provide PCS. PCS will enablelicense holders, including cable operators, to provide voice and data services.We have acquired a license to provide PCS services in Alaska.Advances in communications technology as well as changes in the marketplace areconstantly occurring. We cannot predict the effect that ongoing or futuredevelopments might have on the telecommunications and cable televisionindustries or on us specifically.Cable television systems generally operate pursuant to franchises granted on anon-exclusive basis. The 1992 Cable Act gives local franchising authoritiesjurisdiction over basic cable service rates and equipment in the absence of"effective competition," prohibits franchising authorities from unreasonablydenying requests for additional franchises and permits franchising authoritiesto operate cable systems. Well-financed businesses from outside the cableindustry (such as the public utilities that own certain of the poles on whichcable is attached) may become competitors for franchises or providers ofcompeting services.Our cable services sales efforts are primarily directed toward increasing thenumber of subscribers we serve, selling bundled services, and generatingincremental revenues through product and feature upsale opportunities. We sellour cable services through telemarketing, direct mail advertising, door-to-doorselling, and local media advertising.                                       26Local Access ServicesIndustry. Use of the Internet and expansion in the use of LANs and WANs havegenerated an increased demand for access lines. In the home, the growing use ofcomputers, faxes, and the Internet led to increases in access lines and usage.The emergence of new services, including digital cellular, personalcommunications services, interactive TV, and video dial tone, has createdopportunities for growth in local loop services. These opportunities are alsolaying the foundation for a restructuring of the newly competitive local loopservices market.Emerging from the new competitive landscape are "data CLECs" who offer Internetaccess and data services to medium and large size businesses. They obtaininterconnection agreements with ILECs for DSL-qualified unbundled networkelement loops. One loop, so qualified and equipped with appropriate accessdevices, enables the delivery of high speed (generally less than 768 kbs butsometimes faster rates), always-connected Internet access, LAN/WANinterconnectivity, and private line and private network circuits.Cable telephony is still not prevalent, as the industry struggles with thequality of service and the increased delay (latency) surrounding deployment offirst generation Voice over Internet Protocol technologies. The cable industrylate in 1999 released its first Packet Cable standards that promise to supporttoll quality Internet protocol telephony.Wireless local loop access technologies (other than fixed rate cellulartelephone service), while developing for international applications, have notyet developed a significant market presence in the United States.General. Our local access services division entered the local services market inAnchorage in 1997, providing services to residential, commercial, and governmentusers. We can access approximately 93% of Anchorage area local loops from ourcollocated remote facilities and DLC installations.Products. We initially began offering local exchange services in Anchorageduring late September 1997. Our ILEC-collocated remote facilities that accessthe ILEC's unbundled network element loops and its DLC systems allows us tooffer full featured, switched-based local service products to both residentialand commercial customers. In areas where we do not have access to loopfacilities, we offer total service resale of the ILEC's local service.Our package offerings are competitively priced and include popular features,such as:        -  enhanced call waiting,          -  caller ID,        -  caller ID on call waiting,      -  free caller ID box,        -  anonymous call rejection,       -  call forwarding,        -  call forward busy,              -  call forward no answer,        -  enhanced call waiting,          -  fixed call forwarding,        -  follow me call,                 -  intercom service forwarding,        -  multi-distinctive ring,         -  per line blocking,        -  selective call forwarding,      -  selective call acceptance,        -  selective call rejection,       -  selective distinctive alert,        -  speed calling,                  -  three way calling,        -  voice mail,                     -  inside wire repair plan,        -  non-listed number,              -  non-published numberFacilities. During 1997 we installed a Lucent host switching system (5ESS). Wealso collocated six remote facilities beside or within the ILEC's localswitching offices to access unbundled loop network elements and installed a DLCsystem beside a smaller, seventh ILEC wire center. These remote and DLCfacilities are interconnected to the host switch via our diversely routed fiberoptic links. During 1998, we expanded our capacity at each of the remotefacilities to allow access to approximately 79,000 Anchorage loops.Additionally, we provided our own facilities-based services to over 100 ofAnchorage's larger business customers through further expansion and deploymentof SONET fiber transmission facilities, leased and HDSL T-1 facilities, and DLCfacilities.                                       27Customers. We had approximately 45,100, 28,300 and 3,300 active lines in servicefrom Anchorage subscribers to our local access services at December 31, 1999,1998 and 1997, respectively. The 1999 line count consists of approximately21,300 residential access lines and 23,800 business access lines, including5,600 Internet service provider access lines. We ended 1999 with significantmarket share gains in all market segments, in particular in the business segmentin which access lines increased by 67% and ISP lines increased by 294% ascompared to December 31, 1998. Without an active media presence, we were able togain residential market share, growing that market segment by 32% as compared to1998. We estimate that our overall local access services market share exceeds25%.1999, 1998 and 1997 revenues derived from local access services totaled $15.5million, $9.9 million and $610,000, respectively, representing approximately5.6%, 4.0% and 0.3% of our total revenues in 1999, 1998 and 1997, respectively.Approximately 750 additional lines were sold and awaiting connection at December31, 1999.Competition. In the local exchange services market, we believe that the 1996Telecom Act, judicial decisions, and state legislative and regulatorydevelopments will increase the likelihood that barriers to local exchangecompetition will be substantially reduced or removed. These initiatives includerequirements that LECs negotiate with entities such as us to provideinterconnection to the existing local telephone network, to allow the purchase,at cost-based rates, of access to unbundled network elements, to establishdialing parity, to obtain access to rights-of-way and to resell services offeredby the ILECs.LECs in Alaska outside of Anchorage have a "rural exemption" from some of theirobligations until and unless the exemption is examined and not continued by theRCA. Certain pricing provisions of the FCC's Interconnection Decisionimplementing the interconnection portions of the 1996 Telecom Act have beenchallenged and were stayed by the U.S. Court of Appeals for the Eighth Circuit,on a jurisdictional basis. The United States Supreme Court, in February 1999,upheld the jurisdictional basis of the FCC's decisions, and has remanded theproceeding back to the Eighth Circuit for further proceedings. In addition the1996 Telecom Act expressly prohibits any legal barriers to competition inintrastate or interstate communications service under state and local laws. The1996 Telecom Act further empowers the FCC, after notice and an opportunity forcomment, to preempt the enforcement of any statute, regulation or legalrequirement that prohibits, or has the effect of prohibiting, the ability of anyentity to provide any intrastate or interstate telecommunications service. Youshould see Part I, Item 1. Business, Regulation, franchise authorizations andtariffs for more information.In the local exchange market we currently compete with an ACS subsidiary inAnchorage. In early 2001 we anticipate we will be competing with ACSsubsidiaries in Fairbanks, Juneau, Fort Wainwright and Eielson Air Force Base(military bases near Fairbanks), and in North Pole. You should see Part I, Item1. Business, Historical development of the Company's business during the pastfiscal year - Local Access Services for more information. We also competeagainst AT&T in the Anchorage service area. AT&T offers local exchange serviceonly to residential customers through total service resale. We expect furthercompetitors in the Anchorage, Fairbanks and Juneau marketplaces, as Alaska FiberStar and DSLnet have filed bonafide requests for interconnection with ACS. TheCompany expects competition from these latter entrants in the business customertelephony access, Internet access, DSL and private line markets. We believe ourlong-standing presence in Alaska and the strength of our brand (as well asACS's) will make competitive entry difficult for these new entrants.We received approval from the RCA in July 1999 to provide local exchangeservices in ACS's existing service areas in Fairbanks, Juneau, Ft Wainwright,Eielson AFB, and North Pole. We are currently involved in arbitration to definethe terms of interconnection with ACS for entry to these markets and areexpecting to conclude those proceedings in the third quarter of 2000. Wecontinue to offer local exchange services to substantially all consumers in theAnchorage service area, primarily through our own facilities and unbundled localloops leased from ACS.On June 30, 1999, the APUC was repealed by an act passed earlier in the year bythe Alaska State Legislature and was immediately reconstituted as the RCA,combining the functions of the APUC and certain other oversight functions. TheGovernor of the state of Alaska appointed new commissioners as a result of thisrestructuring. Established within the commission is a communications carrierssection that is tasked with developing, recommending, and administering policiesand programs with respect to the regulation                                        28of rates, services, accounting, and facilities of communications common carrierswithin the state involving the use of wire, cable, radio, and space satellites.We believe the new commission is generally more responsive to telecommunicationsissues brought to its attention and more supportive of competitivetelecommunication regulatory policy.The 1996 Telecom Act also provides ILECs with new competitive opportunities. Webelieve that we have certain advantages over these companies in providingtelecommunications services, including awareness by Alaskan customers of the GCIbrand-name, our facilities-based telecommunications network, and our priorexperience in, and knowledge of, the Alaskan market. The 1996 Telecom Actprovides that rates charged by ILECs for interconnection to the incumbentcarrier's network are to be nondiscriminatory and based upon the cost ofproviding such interconnection, and may include a "reasonable profit," whichterms are subject to interpretation by regulatory authorities. If ILECs chargeus unreasonably high fees for interconnection to their networks, orsignificantly lower their retail rates for local exchange services, our localservice business could be placed at a significant competitive disadvantage.Our local services sales efforts are primarily directed toward increasing thenumber of commercial and small business subscribers we serve, selling bundledservices, and generating incremental revenues through product and feature upsaleopportunities. We sell our local services through telemarketing, direct mailadvertising, and door-to-door selling.Internet ServicesIndustry. The Internet continues to expand at a significant rate, with thenumber of sites almost doubling over the last several years. Industry analystsestimated that 90 million sites were connected to the Internet worldwide at theend of 1999. Current trends indicate that in a few years the Internet may becomeas commonplace as TV. Analysts predict that the amount of Internet traffic willlikely continue to rise as fast as capacity allows for the foreseeable future.Voice over the Internet may have a major impact on business and the entiretelecommunications industry in the future.The use of Intranets has significantly increased, with an estimated 60 to 70percent of US corporations using an Intranet. Current growth rates suggest that138 million people worldwide will be connected from their desks to an in-houseIntranet by 2001.An Intranet allows information to be decentralized in an organization. It usesInternet-compatible standards, available on virtually any computer. An Intranetis also, by mainframe computer standards, fast and inexpensive to set up. Thisadds to its appeal, particularly for larger companies with complex legacy datasystems.Industry analysts believe that one of the key tools for business advantage overthe next two years will be the Extranet. This is an Intranet (internal, secure,full of sensitive data) connected to trusted customers and suppliers.Implementing an Extranet creates the concept of the virtual enterprise, in whichall the organizations in a supply chain integrate their systems and operations.This concept is not new, but has been achieved in the past using EDI on privatenetworks. Extranets promise to remove many of the obstacles that have preventedfirms from sharing their data (stock levels, production schedules, demandforecasts) with customers and suppliers. However, there are issues of standards,lack of consumer confidence and security.Music is ideally suited for the digital world, with leading record companies andmusic retailers now selling direct over the Internet. New compression algorithmsand technology (such as MP3) allow consumers to purchase and download music oftheir choice to play on their personal computer, handheld device, or CD players.Technology is beginning to turn products into a service, delivered over theInternet. We expect this segment of the retail market to expand significantly.Copyright and related legal concerns are becoming more prevalent due to the easein which electronic media can be distributed and copied.Concerns about Internet-based commerce remain. One serious preoccupation is thatan overloaded Internet might crash. However, capacity on the Internet continuesto increase. Technology enables fiber to carry more data, and more cables andsatellite channels are being introduced. In 1995, the world's entire telecomtraffic amounted to a data rate of a terabit a second. Currently, a singleoptical fiber strand                                        29can carry three times that amount of data with lab research indicating that manytimes more capacity will be possible in the future.Industry analysts expected 43.9 million American households to be able to accessthe Internet in 1999, equaling approximately 43% of the country. Online-shoppingrevenues were projected to increase in 1999 by 69%, to $11.9 billion, whileadvertising revenues were expected to increase by 62%, to $3.3 billion.We believe major court decisions and legislative action will shape the worldwideInternet in 2000 and beyond, including:    - The impact of the U.S. vs. Microsoft antitrust trial,    - Possible recognition that traditional encryption regulation is obsolete,    - Minimum-regulation approaches to information privacy as a new consumer      movement tries to use international privacy law to rein in the behavior of      large corporations in the U.S. economy,    - The potential for continuing increases in inexperienced investors      investing through online brokers and increased instances of investor      losses that lead to arbitration claims against the brokers,    - The impact of more Internet patents preventing others from doing certain      things, such as designing and maintaining certain types of Web sites,    - The legality of hyperlinking without permission,    - Pending re-introduction of database legislation in Congress that would      create a new form of intellectual property in databases,    - Decisions regarding whether cryptographic source code is First Amendment      speech, and hence exportable, or that no program is covered by the First      Amendment,    - Renewed calls by the FBI and others for domestic controls of      obscenity-related cryptography, and    - The development of rating and filtering systems outside the United States.General. Our Internet services division entered the Internet services market in1998, providing retail services to residential, commercial, and government usersand providing wholesale carrier services to other ISPs. Cable network upgradesin the Anchorage area have allowed us to offer high-speed cable modem Internetaccess, the first of its kind in Alaska.Products. We currently offer two types of Internet access for residential use:dial up Internet access and high-speed cable modem Internet access. Our initialresidential high-speed cable modem Internet service offers up to 1024 kbpsaccess speed as compared with up to 56 kbps access through standard copper wiremodem access. We provide free 24-hour customer service and technical support viatelephone or online. The entry level cable modem service also offers free datatransfer up to five gigabytes per month and can be left connected24-hours-a-day, 365-days-a-year, allowing for real-time information and e-mailaccess. Additional cable modem service packages tailored to both heavyresidential and commercial Internet users are also available.We believe cable modem services are the next generation of Internet access. Thisservice is appealing to families, professionals who work-at-home, educators, andthose involved in electronic commerce and people who enjoy interactive computergames. Cable modem access overcomes the limitations of slower dial-up serviceand the higher cost of dedicated Internet services and providesalways-available, high-speed access to the Internet. Cable modems use ourcoaxial cable that provides cable television service, instead of the traditionalILEC copper wire. Coaxial cable has a much greater carrying capacity thantelephone wire and can be used to simultaneously deliver both cable televisionand Internet access services.We currently offer several Internet service packages for commercial use: Dial upaccess, T1 and fractional T1 leased line, frame relay and high-speed cable modemInternet access. Our business high-speed cable modem Internet service offersaccess speeds ranging from 256 kbps to 1024 kbps, free monthly data transfers ofup to 25 gigabytes and free 24-hour customer service and technical support.Business services also include dedicated Internet access, a personalized webpage, domain name services, and e-mail addressing.We introduced significant new marketing campaigns in February and March 1999featuring bundled residential and commercial Internet products. Additionalbandwidth was made available to our Internet segment through the Alaska UnitedProject as previously described. The new Internet offerings are                                        30coupled with our long-distance and local services offerings and provide freebasic Internet services if certain long-distance or local service plans areselected. Value-added Internet features are available for additional charges.We provide Internet access for Alaska schools and health organizations using aplatform including many of the latest advancements in technology. Services aredelivered through a locally available circuit, our existing lines, and/orsatellite earth stations.Facilities. The Internet is an interconnected global public computer network oftens of thousands of packet-switched networks using the Internet protocol. TheInternet is effectively a network of networks routing data throughout the world.We provide access to the Internet using a platform that includes many of thelatest advancements in technology. The physical platform is concentrated inAnchorage and is extended into many remote areas of the state. Our Internetplatform includes:    - Circuits connecting our Anchorage facilities to an Internet access point      in Seattle through multiple, diversely routed networks.    - Routers on each end of the circuits to control the flow of data.    - Our Anchorage facility consists of a main router, a bank of servers that      perform proxy and cache functions, database servers providing      authentication and user demographic data, and access servers for dial-in      users.    - SchoolAccess(TM) Internet service delivery to over 257 schools in rural      Alaska is accomplished by three variations on primary delivery systems:      - In communities where we have terrestrial interconnects or provide        existing service over regional earth stations, we have configured        intermediate distribution facilities. Schools that are within these        service boundaries are connected locally to one of those facilities.      - In communities where we have extended telecommunications services via        our DAMA earth station program, SchoolAccess(TM) is provided via a        satellite circuit to an intermediate distribution facility at the Eagle        River Earth Station.      - In communities or remote locations where we have not extended        telecommunications services, SchoolAccess(TM) is provided via a        dedicated (usually on premise) DAMA VSAT satellite station. The DAMA        connects to an intermediate distribution facility located in Anchorage.In all cases, Internet access is delivered to a router located at the servicepoint. Our Internet management platform constantly monitors this router;continual communication is maintained with all of the routers in the network.The availability and quality of service, as well as statistical information ontraffic loading, are continuously monitored for quality assurance. Themanagement platform has the capability to remotely access the routers,permitting changes in router configuration without the need to physically be atthe service point.GCI.net offers a unique combination of innovative network design and aggressiveperformance management. The new Internet platform has received a certificationthat places it in the top one percent of all service providers worldwide and theonly ISP in Alaska with such designation.We operate and maintain what we believe is the largest, most reliable, andhighest performance Internet network in the State of Alaska.Competition. The Internet industry is intensely competitive, rapidly evolvingand subject to constant technological change. Competition is based upon priceand pricing plans, the types of services offered, customer service, billingservices, perceived quality, reliability and availability. Although we believewe have the human and technical resources to pursue our strategy and competeeffectively in this competitive environment, our success will depend upon ourability to profitably provide high quality, high value bundled services atprices generally competitive with, or lower than, those charged by ourcompetitors.As of December 31, 1999, we competed with more than 25 Alaska based Internetproviders, and competed with other domestic, non-Alaska based providers thatprovide national service coverage. Several of the providers have substantiallygreater financial, technical and marketing resources than we have. We have, sofar, successfully adjusted our pricing and marketing strategies to respond tocompetitors' pricing practices.                                       31Customers. We had approximately 48,300 and 7,200 active residential andcommercial Internet subscribers at December 31, 1999 and 1998, respectively.1999 and 1998 revenues derived from Internet services (includingSchoolAccess(TM)) totaled $9.1 million and $6.1 million, respectively,representing approximately 3.3% and 2.5% of our total 1999 and 1998 revenues,respectively.Our Internet services sales efforts are primarily directed toward increasing thenumber of subscribers we serve, selling bundled services, and generatingincremental revenues through product and feature upsale opportunities. We sellour Internet services through telemarketing, direct mail advertising,door-to-door selling, and local media advertising.Environmental RegulationsWe may undertake activities that, under certain circumstances may affect theenvironment. Accordingly, they are subject to federal, state, and localregulations designed to preserve or protect the environment. The FCC, the Bureauof Land Management, the U.S. Forest Service, and the National Park Service arerequired by the National Environmental Policy Act of 1969 to consider theenvironmental impact prior to the commencement of facility construction. Webelieve that compliance with such regulations has no material effect on ourconsolidated operations. The principal effect of our facilities on theenvironment would be in the form of construction of facilities and networks atvarious locations in Alaska and between Alaska and Seattle Washington. Ourfacilities have been constructed in accordance with federal, state and localbuilding codes and zoning regulations whenever and wherever applicable. Somefacilities may be on lands that may be subject to state and federal wetlandregulation.Uncertainty as to the applicability of environmental regulations is caused inmajor part by the federal government's decision to consider a change in thedefinition of wetlands. Most of our facilities are on leased property, and, withrespect to all of these facilities, we are unaware of any violations of leaseterms or federal, state or local regulations pertaining to preservation orprotection of the environment.Our Alaska United project consists, in part, of deploying land-based andundersea fiber optic cable facilities between Anchorage, Whittier, Valdez, andJuneau, Alaska, and Seattle, Washington. The engineered route passes overwetlands and other environmentally sensitive areas. We believe our constructionmethods used for buried cable have a very minimal impact on the environment. Theagencies, among others, that are involved in permitting and oversight of ourcable deployment efforts are the US Army Corps of Engineers, The National MarineFisheries Service, US Fish & Wildlife, US Coast Guard, National Oceanic andAtmospheric Administration, Alaska Department of Natural Resources, and theAlaska Office of the Governor - Governmental Coordination. We are unaware of anyviolations of federal, state or local regulations or permits pertaining topreservation or protection of the environment.In the course of operating the cable television systems, we have used variousmaterials defined as hazardous by applicable governmental regulations. Thesematerials have been used for insect repellent, locate paint and pole treatment,and as heating fuel, transformer oil, cable cleaner, batteries, and in variousother ways in the operation of those systems. We do not believe that thesematerials, when used in accordance with manufacturer instructions, pose anunreasonable hazard to those who use them or to the environment.Patents, Trademarks, Licenses, Certificates of Public Convenience and Necessity,and Military Franchises We do not hold patents, franchises or concessions for telecommunicationsservices or local access services. We do hold registered service marks for theterms SchoolAccess(TM), Free Fridays for Business(TM) and UnlimitedWeekends(TM). The Communications Act of 1934 gives the FCC the authority tolicense and regulate the use of the electromagnetic spectrum for radiocommunication. We hold licenses through our long-distance services industrysegment for our satellite and microwave transmission facilities for provision oflong-distance services. We acquired a license for use of a 30-MHz block ofspectrum for providing PCS services in Alaska. The PCS license has an initialduration of 10 years. We expect to renew the PCS license for an additional10-year term under FCC rules. We acquired a LMDS license in 1998 for use of a150-MHz block of spectrum in the 28 GHz Ka-band for providing wireless services.The LMDS license has                                       32an initial duration of 10 years. Within 10 years, licensees will be required toprovide 'substantial service' in their service regions. Our operations mayrequire additional licenses in the future.Applications for transfer of control of 15 certificates of public convenienceand necessity held by the acquired cable companies were approved in an RCA orderdated September 23, 1996, with transfers to be effective on October 31, 1996.Such transfer of control allowed us to take control and operate the cablesystems of the acquired cable companies located in Alaska. The approval of thetransfer of these 15 certificates of public convenience and necessity is notrequired under federal law, with one area of limited exception. The cablecompanies operate in part through the use of several radio-band frequencieslicensed through the FCC. These licenses were transferred to us prior to October31, 1996.We obtained consent of the military commanders at the military bases serviced bythe acquired cable systems to the assignment of the respective franchises forthose bases.Regulation, Franchise Authorizations and TariffsThe following summary of regulatory developments and legislation does notpurport to describe all present and proposed federal, state, and localregulation and legislation affecting our businesses. Other existing federal andstate regulations are currently the subject of judicial proceedings, legislativehearings and administrative proposals that could change, in varying degrees, themanner in which these industries operate. We cannot predict at this time theoutcome of these proceedings, their impact on the industries in which weoperate, or their impact on us.Telecommunications Operations. The following is a summary of federal laws,regulations and tariffs, and a description of certain state and local lawspertaining to our telecommunications operations (long-distance, local access andwireless services).General. We are subject to regulation by the FCC and by the RCA as anon-dominant provider of long-distance services. We file tariffs with the FCCfor interstate and international long-distance services, and with the RCA forintrastate service. Such tariffs routinely become effective without interventionby the FCC, RCA or other third parties since we are a non-dominant carrier. Wereceived approval from the RCA in February 1997 permitting us to provide localaccess services throughout ATU's (now ACS) existing service area. Militaryfranchise requirements also affect our ability to provide telecommunications andcable television services to military bases.The 1996 Telecom Act preempts state statutes and regulations that restrict theprovision of competitive local telecommunications services. State commissionscan, however, impose reasonable terms and conditions upon the provision oftelecommunications service within their respective states. Because we areauthorized to offer local access services in Anchorage, we are regulated as aCLEC by the RCA. In addition, we will be subject to other regulatoryrequirements, including certain requirements imposed by the 1996 Telecom Act onall LECs, which requirements include permitting resale of LEC services, numberportability, dialing parity, and reciprocal compensation.As a PCS and LMDS licensee, we are subject to regulation by the FCC, and mustcomply with certain buildout and other conditions of the license, as well aswith the FCC's regulations governing the PCS and LMDS services. On a morelimited basis, we may be subject to certain regulatory oversight by the RCA(e.g., in the areas of consumer protection), although states are not permittedto regulate the rates of PCS, LMDS and other commercial wireless serviceproviders. PCS and LMDS licensees may also be subject to regulatory requirementsof local jurisdictions pertaining to, among other things, the location of towerfacilities.1996 Telecom Act and Related Rulings. A key industry development was passage ofthe 1996 Telecom Act. The Act is intended by Congress to open up the marketplaceto competition and has had a dramatic impact on the telecommunications industry.The intent of the legislation is to break down the barriers that have preventedthree groups of companies, LECs, including RBOCs, long-distance carriers, andcable TV operators, from competing head-to-head with each other. The Actrequires incumbent LECs to let new competitors into their business. It alsorequires incumbent LECs to open up their networks to ensure that                                        33new market entrants have a fair chance of competing. The bulk of the legislationis devoted to establishing the terms under which incumbent LECs must open uptheir networks.Enactment of the bill immediately affected local exchange service markets byrequiring states to authorize local exchange service competition. Competitors,including resellers, are able to market new bundled service packages to attractcustomers. Over the long term, the requirement that incumbent LECs unbundleaccess to their networks may lead to increased price competition. Local exchangeservice competition has not yet occurred in all markets on a national basisbecause interconnection arrangements are not yet in place in many areas. We haveexecuted an interconnection agreement with ACS for the Anchorage market, and arearbitrating with ACS to develop agreements for the Juneau and Fairbanks markets.If we are unable to enter into, or experience a delay in obtaining,interconnection agreements, this inability or delay may materially and adverselyaffect our business and financial prospects.The 1996 Telecom Act requires the FCC to establish rules and regulations toimplement its local competition provisions. In August 1996, the FCC issued rulesgoverning interconnection, resale, unbundled network elements, the pricing ofthose facilities and services, and the negotiation and arbitration proceduresthat would be utilized by states to implement those requirements. These rulesrely on state public utilities commissions to develop the specific rates andprocedures applicable to particular states within the framework prescribed bythe FCC. These rules were vacated in part by a July 1997 ruling of the UnitedStates Court of Appeals for the Eighth Circuit. On January 25, 1999, the UnitedStates Supreme Court issued an opinion upholding the authority of the FCC toestablish rules, including pricing rules, to implement statutory provisionsgoverning both interstate and intrastate services under the 1996 Telecom Act.The Court also upheld rules allowing carriers to select provisions from amongdifferent interconnection agreements approved by state commissions for thecarriers' own agreements and a rule allowing carriers to obtain combinations ofunbundled network elements.The FCC affirmed in a report adopted on April 10, 1998, that Internet serviceproviders would not be subject to regulation as telecommunications carriersunder the 1996 Telecom Act. They thus will not be subject to universal servicesubsidies and other regulations. Further, in August 1998, the FCC proposed newrules that would allow ILECs to provide their own DSL services through separateaffiliates that are not subject to ILEC regulation. On November 18, 1999, theFCC decided to require ILECs to share telephone lines with DSL providers, anaction that may foster competition by allowing competitors to offer DSL serviceswithout their customers having to lease a second telephone line. Whether thisdevelopment will be implemented in an effective way remains to be seen.Moreover, it is impossible to predict whether the FCC or Congress may change therules under which these services are offered and, if such changes are made, theextent of the impact of such changes on our business.The FCC regulates the fees that local telephone companies charge long distancecompanies for access to their local networks. These fees are commonly calledaccess charges.The FCC is currently considering various proposals, each supported by parts ofboth the local and long distance telephone industries that would restructure andlikely reduce access charges. Changes in the access charge structure couldfundamentally change the economics of some aspects of our business.The Supreme Court vacated an FCC rule setting forth the specific unbundlednetwork elements that ILECs must make available, finding that the FCC had failedto apply the appropriate statutory standard. On November 5, 1999, the FCCresponded to the Court's decision by issuing a decision that maintainscompetitors' access to a wide variety of unbundled network elements. Six of theseven unbundled elements the FCC had originally required carriers to provide inits 1996 order implementing the 1996 Telecom Act remain available tocompetitors. These elements are loops, including loops used to providehigh-capacity and advanced telecommunications services; network interfacedevices; local circuit switching, subject to restrictions in major urbanmarkets; dedicated and shared transport; signaling and call-related databases;and operations support systems. The FCC removed access to operator and directoryassistance service from the list of available unbundled network elements. Inaddition, the FCC added to its list certain unbundled network elements that werenot at issue in 1996. These elements include subloops, or portions of loops, anddark fiber loops and transport. The FCC did not, however, require ILECs tounbundle facilities used to provide DSL service. The FCC did not decide, butsought additional information on, the question of whether carriers may combinecertain unbundled network elements to provide special access                                        34services to compete with those provided by the ILECs. The ability to obtainunbundled network elements is an important element of our local access servicesbusiness, and we believe that the FCC's actions in this area have generally beenpositive. However, we cannot predict the extent to which the existing rules willbe sustained in the face of additional legal action and the scope of the rulesthat are yet to be crafted by the FCC.Recurring and non-recurring charges for telephone lines and other unbundlednetwork elements may increase based on the rates proposed by the ILECs andapproved by the RCA from time to time, which could have a material adverseeffect on the results of our operations. Moreover, because the cost-basedmethodology for determining these rates is still subject to judicial review,there is great uncertainty about how these rates will be determined in thefuture.ACS, through subsidiary companies, provides local telephone services inFairbanks and Juneau, Alaska. The ACS subsidiaries are classified as RuralTelephone Companies under the 1996 Telecom Act, which entitles them to anexemption of certain material interconnection terms of the 1996 Telecom Act,until such "rural exemption" is lifted by the State of Alaska. We requested thatcontinuation of the "rural exemption" of the ACS subsidiaries relating to theFairbanks and Juneau markets be examined. In January 1998, the RCA denied ourrequest to terminate the rural exemption. The basis of the RCA's decision wasprimarily that various rulemaking proceedings (including Universal Service andaccess charge reform) must be completed before the exemption would be revoked.Those rulemaking proceedings have been largely completed.On March 4, 1999, an Alaska Superior Court Judge determined that the APUC (nowRCA) erred in reaching its decision to deny our request to provide full localtelephone service in Fairbanks and Juneau, Alaska. This service would beprovided in competition against PTI (now ACS), the existing monopoly provider.Among other things, the Court instructed the APUC to correctly assign the burdenof proof to PTI rather than us, and to decide on our specific requests toprovide service in Fairbanks and Juneau based on criteria established in the1996 Telecom Act. The Court stated "this must be accomplished cognizant of theintent of the 1996 Telecom Act to promote competition in the local market." TheCourt remanded the case back to the APUC for proceedings leading to theirruling. On July 1, 1999, the APUC ruled that the rural exemptions from localcompetition in Juneau, Fairbanks and North Pole have been terminated, whichallows us to negotiate for unbundled elements for the provision of competitivelocal service in these markets. The ILEC appealed this decision, and on October11, 1999 the RCA issued an order terminating rural exemptions in the Fairbanksand Juneau markets. We believe this decision is important to bring about thebenefits of competition to other communities in Alaska. We will continue tonegotiate with the ILEC for unbundled network elements for the provisioning ofcompetitive local assess services in these markets. We expect the RCA to approvean interconnection agreement for unbundled elements by September 2000.A number of LECs, long-distance companies and others have appealed some or allof the FCC's orders. The effective date of the orders has not been delayed, butthe appeals are expected to take a year or more to conclude. The impact of theseFCC decisions on us is difficult to determine. Some BOCs have also challengedthe 1996 Telecom Act restrictions on their entry into long-distance markets asunconstitutional. We are unable to predict the outcome of such rulemakings orlitigation or the effect (financial or otherwise) of the 1996 Telecom Act andthe rulemakings on us. The BOCs continue to challenge the substance of the FCCrules, arguing that the rules do not allow them to fully recover the money theyspent building their networks.Universal Service. In 1997, the FCC issued important decisions on universalservice establishing new funding mechanisms for high-cost, low-income serviceareas to ensure that certain subscribers living in rural and high-cost areas, aswell as certain low-income subscribers, continue to have access totelecommunications and information services at prices reasonably comparable tothose charged for similar services in urban areas.These mechanisms also are meant to foster the provision of advancedcommunications services to schools, libraries and rural health-care facilities.Under the rules adopted by the FCC to implement these requirements, we and allother telecommunications providers are required to contribute to a fund tosupport                                       35universal service. The amount that we contribute to the federal universalservice subsidy will be based on our share of specified definedtelecommunications end-user revenues.The order established significant discounts to be provided to eligible schoolsand libraries for all telecommunications services, internal connections andInternet access. It also established support for rural health care providers sothat they may pay rates comparable to those that urban health care providers payfor similar services. Industry-wide annual costs of the program, estimated atapproximately $2.3 billion, are to be funded out of the Universal Service Fund.The fund administrator on the basis of their interstate end-user revenues wouldassess local and long distance carriers' contributions to the education andhealth care funds. We began contributing to the new funds in 1998 and areallowed to recover our contributions through increased interstate charges.Local Regulation. We may be required to obtain local permits for street openingand construction permits to install and expand fiber optic networks. Localzoning authorities often regulate our use of towers for microwave and othertelecommunications sites. We also are subject to general regulations concerningbuilding codes and local licensing. The 1996 Telecom Act requires that feescharged to telecommunications carriers be applied in a competitively neutralmanner, but there can be no assurance that ILECs and others with whom we will becompeting will bear costs similar to those we will bear in this regard.Other Laws and Regulations. Although the foregoing discussion provides anoverview of the major regulatory issues that confront our business, thisdiscussion does not attempt to describe all current and proposed federal, stateand local rules and initiatives affecting the telecommunications industry. Otherfederal and state laws and regulations are currently the subject of judicialproceedings and proposed additional legislation. In addition, some of the FCC'srules implementing the 1996 Telecom Act will be subject to further judicialreview and could be altered or vacated by courts in the future. We cannotpredict the ultimate outcome of any such further proceedings or legislation.Cable Services. The following is a summary of federal laws and regulationsmaterially affecting the growth and operation of the cable services industry anda description of certain state and local laws affecting our cable servicesbusiness.General. We are subject to federal and state regulation as a cable televisionoperator pursuant to the 1934 Cable Act, the 1984 Cable Act and the 1992 CableAct, as amended by the 1996 Telecom Act. The 1992 Cable Act significantlyexpanded the scope of cable television regulation on an industry-wide basis byimposing rate regulation, carriage requirements for local broadcast stations,customer service obligations and other requirements. The 1992 Cable Act and theFCC's rules implementing that Act generally have increased the administrativeand operational expenses and in certain instances required rate reductions forcable television systems and have resulted in additional regulatory oversight bythe FCC and state or local authorities.Principal responsibility for implementing the policies of the 1934, 1984 and1992 Cable Acts and the 1996 Telecom Act is allocated between the FCC and stateor local franchising authorities. The FCC and state regulatory agencies arerequired to conduct numerous rulemaking and regulatory proceedings to implementthe 1996 Telecom Act, and such proceedings may materially affect the cableindustry.Subscriber Rates. The 1992 Cable Act authorized rate regulation for cablecommunications services and equipment in communities that are not subject to"effective competition," as defined by federal law. Most cable communicationssystems are now subject to rate regulation for basic cable service and equipmentby local officials under the oversight of the FCC, which has prescribed detailedcriteria for such rate regulation. The 1992 Cable Act also requires the FCC toresolve complaints about rates for CPS Tiers (other than programming offered ona per channel or per program basis, which programming is not subject to rateregulation) and to reduce any such rates found to be unreasonable. The 1996Telecom Act eliminates the right of individuals to file CPS Tier rate complaintswith the FCC and requires the FCC to issue a final order within 90 days afterreceipt of CPS Tier rate complaints filed by any franchising authority. The 1992Cable Act limits the ability of cable television systems to raise rates forbasic and certain cable programming services (collectively, the "RegulatedServices").                                       36FCC regulations govern rates that may be charged to subscribers for RegulatedServices. The FCC uses a benchmark methodology as the principal method ofregulating rates for Regulated Services. Cable operators are also permitted tojustify rates using a cost-of-service methodology, which contains a rebuttablepresumption of an industry-wide 11.25% after tax rate of return on an operator'sallowable rate base. Franchising authorities are empowered to regulate the ratescharged for monthly basic service, for additional outlets and for theinstallation, lease and sale of equipment used by subscribers to receive thebasic cable service tier, such as converter boxes and remote control units. TheFCC's rules require franchising authorities to regulate these rates on the basisof actual cost plus a reasonable profit, as defined by the FCC. Cable operatorsrequired to reduce rates may also be required to refund overcharges withinterest. The FCC has also adopted comprehensive and restrictive regulationsallowing operators to modify their regulated rates on a quarterly or annualbasis using various methodologies that account for changes in the number ofregulated channels, inflation and increases in certain external costs, such asfranchise and other governmental fees, copyright and retransmission consentfees, taxes, programming fees and franchise-related obligations. We cannotpredict whether the FCC will modify these "going forward" regulations in thefuture.Rate regulation of non-basic cable programming service tiers ended after March31, 1999. The 1996 Telecom Act also modifies the uniform rate provision of the1992 Cable Act by prohibiting regulation of nonpredatory bulk discount ratesoffered to subscribers in commercial and residential developments and permitsregulated equipment rates to be computed by aggregating costs of broadcategories of equipment at the franchise, system, regional or company level.Anti-Buy Through Provisions. The 1992 Cable Act requires cable systems to permitsubscribers to purchase video programming offered by the operator on a perchannel or a per program basis without the necessity of subscribing to any tierof service, other than the basic cable service tier, unless the system's lack ofaddressable converter boxes or other technological limitations does not permitit to do so. The statutory exemption for cable systems that do not have thetechnological capability to offer programming in the manner required by thestatute is available until a system obtains such capability, but not later thanDecember 2002. The FCC may waive such time periods, if deemed necessary. Many ofour systems do not have the technological capability to offer programming in themanner required by the statute and thus currently are exempt from complying withthe requirement.Must Carry/Retransmission Consent. The 1992 Cable Act contains broadcast signalcarriage requirements that allow local commercial television broadcast stationsto elect once every three years to require a cable system to carry the station,subject to certain exceptions, or to negotiate for "retransmission consent" tocarry the station. A cable system generally is required to devote up toone-third of its activated channel capacity for the carriage of local commercialtelevision stations whether pursuant to the mandatory carriage or retransmissionconsent requirements of the 1992 Cable Act. Local non-commercial televisionstations are also given mandatory carriage rights; however, such stations arenot given the option to negotiate retransmission consent for the carriage oftheir signals by cable systems. Additionally, cable systems are required toobtain retransmission consent for all distant commercial television stations(except for commercial satellite-delivered independent "superstations" such asWGN), commercial radio stations and certain low-power television stationscarried by such systems.The FCC has also initiated an administrative proceeding to consider therequirements, if any, for the mandatory carriage of digital television signalsoffered by local broadcasters. We are unable to predict the outcome of thisproceeding or the impact any new carriage requirements might have on theoperations of our cable systems.Designated Channels. The Communications Act permits franchising authorities torequire cable operators to set aside certain channels for public, educationaland governmental access programming. The 1984 Cable Act also requires a cablesystem with 36 or more channels to designate a portion of its channel capacityfor commercial leased access by third parties to provide programming that maycompete with services offered by the cable operator. The FCC has adopted rulesregulating: (i) the maximum reasonable rate a cable operator may charge forcommercial use of the designated channel capacity; (ii) the terms and conditionsfor commercial use of such channels; and (iii) the procedures for the expeditedresolution of disputes concerning rates or commercial use of the designatedchannel capacity.                                       37Franchise Procedures. The 1984 Cable Act affirms the right of franchisingauthorities (state or local, depending on the practice in individual states) toaward one or more franchises within their jurisdictions and prohibitsnon-grandfathered cable systems from operating without a franchise in suchjurisdictions. The 1992 Cable Act encourages competition with existing cablesystems by (i) allowing municipalities to operate their own cable systemswithout franchises; (ii) preventing franchising authorities from grantingexclusive franchises or from unreasonably refusing to award additionalfranchises covering an existing cable system's service area; and (iii)prohibiting (with limited exceptions) the common ownership of cable systems andcollocated MMDS or SMATV systems. The FCC has relaxed its restrictions onownership of SMATV systems to permit a cable operator to acquire SMATV systemsin the operator's existing franchise area so long as the programming servicesprovided through the SMATV system are offered according to the terms andconditions of the cable operator's local franchise agreement. The 1996 TelecomAct provides that the cable/SMATV and cable/MMDS cross-ownership rules do notapply in any franchise area where the operator faces "effective competition" asdefined by federal law.The Cable Acts also provide that in granting or renewing franchises, localauthorities may establish requirements for cable-related facilities andequipment, but not for video programming or information services other than inbroad categories. The Cable Acts limit the payment of franchise fees to 5% ofrevenues derived from cable operations and permit the cable operator to obtainmodification of franchise requirements by the franchise authority or judicialaction if warranted by changed circumstances. A federal appellate court heldthat a cable operator's gross revenue includes all revenue received fromsubscribers, without deduction, and overturned an FCC order which had held thata cable operator's gross revenue does not include money collected fromsubscribers that is allocated to pay local franchise fees. We cannot predict theultimate resolution of these matters. The 1996 Telecom Act generally prohibitsfranchising authorities from (i) imposing requirements in the cable franchisingprocess that require, prohibit or restrict the provision of telecommunicationsservices by an operator, (ii) imposing franchise fees on revenues derived by theoperator from providing telecommunications services over its cable system, or(iii) restricting an operator's use of any type of subscriber equipment ortransmission technology.The 1984 Cable Act contains renewal procedures designed to protect incumbentfranchisees against arbitrary denials of renewal. The 1992 Cable Act madeseveral changes to the renewal process that could make it easier for afranchising authority to deny renewal. Moreover, even if the franchise isrenewed, the franchising authority may seek to impose new and more onerousrequirements such as significant upgrades in facilities and services orincreased franchise fees as a condition of renewal. Similarly, if a franchisingauthority's consent is required for the purchase or sale of a cable system orfranchise, such authority may attempt to impose more burdensome or onerousfranchise requirements in connection with a request for such consent.Historically, franchises have been renewed for cable operators that haveprovided satisfactory services and have complied with the terms of theirfranchises. We believe that we have generally met the terms of our franchisesand have provided quality levels of service. We anticipate that our futurefranchise renewal prospects generally will be favorable.Various courts have considered whether franchising authorities have the legalright to limit the number of franchises awarded within a community and to imposecertain substantive franchise requirements (e. g. access channels, universalservice and other technical requirements). These decisions have beeninconsistent and, until the US Supreme Court rules definitively on the scope ofcable operators' First Amendment protections, the legality of the franchisingprocess generally and of various specific franchise requirements is likely to bein a state of flux.Ownership Limitations. Pursuant to the 1992 Cable Act, the FCC adopted rulesprescribing national subscriber limits. While a federal district court hasdeclared these limitations to be unconstitutional and delayed its enforcement,the FCC has reconsidered its cable ownership regulations and (i) reaffirmed its30% nationwide subscriber ownership limit, but maintained its voluntary stay onenforcement of that regulation pending further court action, (ii) reaffirmed itssubscriber ownership information reporting requirements, and (iii) modified itsattribution rules that identify when the ownership or management by us or thirdparties of other communications businesses, including cable systems, televisionbroadcast stations and local telephone companies, may be imputed to us forpurposes of determining our compliance with the FCC's ownership restrictions.                                       38Also pending on appeal is a challenge to the statutory and FCC regulatorylimitations on the number of channels that can be occupied on a cable system bya video programmer in which a cable operator has an attributable ownershipinterest. We do not expect the outcome of these judicial and regulatoryproceedings or the impact of any ownership restrictions to have a materialimpact on our business and operations.The 1996 Telecom Act generally prohibits us from owning or operating a SMATV orwireless cable system in any area where we provide franchised cable service. Wemay, however, acquire and operate SMATV systems in our franchised service areasif the programming and other services provided to SMATV subscribers are offeredaccording to the terms and conditions of our franchise agreement.The 1996 Telecom Act eliminated the statutory prohibition on the commonownership, operation or control of a cable system and a television broadcaststation in the same market. While the FCC has eliminated its regulations thatprecluded the cross-ownership of a national broadcasting network and a cablesystem, it has not yet completed its review of other regulations that prohibitthe common ownership of other broadcasting interests and cable systems in thesame geographical areas.LEC Ownership of Cable Systems. The 1996 Telecom Act made far-reaching changesin the regulation of LECs that provide cable services. The 1996 Telecom Acteliminated federal legal barriers to competition in the local telephone andcable communications businesses, preempted legal barriers to competition thatpreviously existed in state and local laws and regulations, and set basicstandards for relationships between telecommunications providers. The 1996Telecom Act eliminated the statutory telephone company/cable televisioncross-ownership prohibition, thereby allowing LECs to offer video services intheir telephone service areas. LECs may provide service as traditional cableoperators with local franchises or they may opt to provide their programmingover unfranchised "open video systems," subject to certain conditions,including, but not limited to, setting aside a portion of their channel capacityfor use by unaffiliated program distributors on a non-discriminatory basis. The1996 Telecom Act generally limits acquisitions and prohibits certain jointventures between LECs and cable operators in the same market.A federal appellate court overturned various parts of the FCC's open videorules, including the FCC's preemption of local franchising requirements for openvideo operators. The FCC has modified its open video rules to comply with thefederal court's decision, but we are unable to predict the impact these rulemodifications may have on our business and operations.Pole Attachment. The Communications Act requires the FCC to regulate the rates,terms and conditions imposed by public utilities for cable systems' use ofutility pole and conduit space unless state authorities can demonstrate thatthey adequately regulate pole attachment rates. In the absence of stateregulation, the FCC administers pole attachment rates on a formula basis. Insome cases, utility companies have increased pole attachment fees for cablesystems that have installed fiber optic cables and that are using such cablesfor the distribution of non-video services.The FCC has concluded that, in the absence of state regulation, it hasjurisdiction to determine whether utility companies have justified their demandfor additional rental fees and that the Communications Act does not permitdisparate rates based on the type of service provided over the equipmentattached to the utility's pole. The FCC's existing pole attachment rate formula,which may be modified by a pending rulemaking, governs charges for utilities forattachments by cable operators providing only cable services. The 1996 TelecomAct and the FCC's implementing regulations modify the current pole attachmentprovisions of the Communications Act by immediately permitting certain providersof telecommunications services to rely upon the protections of the current lawand by requiring that utilities provide cable systems and telecommunicationscarriers with nondiscriminatory access to any pole, conduit or right-of-waycontrolled by the utility. The FCC's current rate formula, which is being reevaluated by the FCC, governsthe maximum rate certain utilities may charge for attachments to their poles andconduit by cable operators providing only cable services and, until 2001, bycertain companies providing telecommunications services. The FCC also adopted asecond rate formula that will be effective in 2001 and will govern the maximumrate certain utilities may charge for attachments to their poles and conduit bycompanies providing telecommunications services, including cable operators.Several parties have requested the FCC to reconsider its new regulations andseveral parties have challenged the new rules in court. A federal appellatecourt recently                                        39upheld the constitutionality of the new statutory provision that requiresutilities provide cable systems and telecommunications carriers withnondiscriminatory access to any pole, conduit or right-of-way controlled by theutility. We are unable to predict the outcome of the legal challenge to theFCC's new regulations or the ultimate impact any revised FCC rate formula or anynew pole attachment rate regulations might have on our business and operations.Other Statutory Provisions. The 1992 Cable Act, the 1996 Telecom Act and FCCregulations preclude any satellite video programmer affiliated with a cablecompany, or with a common carrier providing video programming directly to itssubscribers, from favoring an affiliated company over competitors and requiressuch programmers to sell their programming to other multichannel videodistributors. These provisions limit the ability of program suppliers affiliatedwith cable companies or with common carriers providing satellite-delivered videoprogramming directly to their subscribers to offer exclusive programmingarrangements to their affiliates. In December 1997, the FCC initiated arulemaking to address a number of possible changes to its program access rules.Among the issues on which the FCC has sought comment is whether the FCC hasjurisdiction to extend its program access rules to terrestrially deliveredprogramming, and if it does have such jurisdiction, whether it should expand therules in this fashion. This rulemaking is pending at the FCC.The 1992 Cable Act requires cable operators to block fully both the video andaudio portion of sexually explicit or indecent programming on channels that areprimarily dedicated to sexually oriented programming or alternatively to carrysuch programming only at "safe harbor" time periods currently defined by the FCCas the hours between 10 p. m. to 6 a. m. A three-judge federal district courtdetermined that this provision was unconstitutional. The United States SupremeCourt is currently reviewing the lower court's ruling. The Communications Actalso includes provisions, among others, concerning horizontal and verticalownership of cable systems, customer service, subscriber privacy, marketingpractices, equal employment opportunity, regulation of technical standards andequipment compatibility.Other FCC Regulations. The FCC revised its cable inside wiring rules to providea more specific procedure for the disposition of internal cable wiring thatbelongs to an incumbent cable operator that is forced to terminate its cableservices in a MDU building by the building owner. The FCC is also consideringadditional rules relating to MDU inside wiring that, if adopted, maydisadvantage incumbent cable operators. The FCC has various rulemakingproceedings pending that will implement the 1996 Telecom Act; it also hasadopted regulations implementing various provisions of the 1992 Cable Act andthe 1996 Telecom Act that are the subject of petitions requestingreconsideration of various aspects of its rulemaking proceedings. Other FCCregulations covering such areas as equal employment opportunity, syndicatedprogram exclusivity, network program non-duplication, closed captioning of videoprogramming, registration of cable systems, maintenance of various records andpublic inspection files, microwave frequency usage, origination cablecasting andsponsorship identification, antenna structure notification, marking andlighting, carriage of local sports broadcast programming, application of rulesgoverning political broadcasts, limitations on advertising contained innon-broadcast children's programming, consumer protection and customer service,indecent programming, programmer access to cable systems, programmingagreements, technical standards, consumer electronics equipment compatibilityand DBS implementation. The FCC has the authority to enforce its regulationsthrough the imposition of substantial fines, the issuance of cease and desistorders and/or the imposition of other administrative sanctions, such as therevocation of FCC licenses needed to operate certain transmission facilitiesoften used in connection with cable operations.The FCC has ongoing rulemaking proceedings that may change its existing rules orlead to new regulations. We are unable to predict the impact that any furtherFCC rule changes may have on our business and operations. Other bills andadministrative proposals pertaining to cable communications have previously beenintroduced in Congress or have been considered by other governmental bodies overthe past several years. It is probable that Congress and other governmentalbodies will make further attempts to regulate cable communications services.Copyright. Cable communications systems are subject to federal copyrightlicensing covering carriage of television and radio broadcast signals. Inexchange for filing certain reports and contributing a percentage of theirrevenues to a federal copyright royalty pool, cable operators can obtain blanketpermission to retransmit copyrighted material on broadcast signals. The natureand amount of future payments for                                        40broadcast signal carriage cannot be predicted at this time. In a report toCongress, the Copyright Office recommended that Congress make major revisions ofboth the cable television and satellite compulsory licenses to make them assimple as possible to administer, to provide copyright owners with fullcompensation for the use of their works, and to treat every multichannel videodelivery system the same, except to the extent that technological differences ordifferences in the regulatory burdens placed upon the delivery system justifydifferent copyright treatment. The possible simplification, modification orelimination of the compulsory copyright license is the subject of continuinglegislative review. The elimination or substantial modification of the cablecompulsory license could adversely affect our ability to obtain suitableprogramming and could substantially increase the cost of programming thatremains available for distribution to our subscribers. We cannot predict theoutcome of this legislative activity.Our cable communications systems often utilize music in the programs we provideto subscribers including local advertising, local origination programming andpay-per-view events. The right to use this music is controlled by musicperformance rights societies who negotiate on behalf of their copyright ownersfor license fees covering each performance. The cable industry and one of thesesocieties have agreed upon a standard licensing agreement covering theperformance of music contained in programs originated by cable operators and inpay-per-view events. Negotiations on a similar licensing agreement are inprocess with another music performance rights organization. Rate courtsestablished by a federal court exist to determine appropriate copyright coverageand payments in the event the parties fail to reach a negotiated settlement. Weare unable to predict the outcome of these proceedings or the amount of anylicense fees we may be required to pay for the use of music. We do not believethat the amount of such fees will be significant to our financial position,results of operations or liquidity.State and Local Regulation. Because our cable communications systems use localstreets and rights-of-way, our systems are subject to state and localregulation. Cable communications systems generally are operated pursuant tonon-exclusive franchises, permits or licenses granted by a municipality or otherstate or local government entity. Franchises generally are granted for fixedterms and in many cases are terminable if the franchisee fails to comply withmaterial provisions. The terms and conditions of franchises vary materially fromjurisdiction to jurisdiction. Each franchise generally contains provisionsgoverning cable service rates, franchise fees, franchise term, systemconstruction and maintenance obligations, system channel capacity, design andtechnical performance, customer service standards, franchise renewal, sale ortransfer of the franchise, territory of the franchisee, indemnification of thefranchising authority, use and occupancy of public streets and types of cableservices provided. The 1992 Cable Act immunizes franchising authorities frommonetary damage awards arising from regulation of cable communications systemsor decisions made on franchise grants, renewals, transfers and amendments.Internet Operations. The following is a summary of federal laws, regulations andtariffs, and a description of certain state and local laws pertaining to ourInternet operations.With significant growth in Internet activity and commerce over the past severalyears the FCC and other regulatory bodies have been challenged to develop newmodels that allow them to achieve the public policy goals of competition anduniversal service. Many aspects of regulation and coordination of Internetactivities and traffic are evolving and are facing unclear regulatory futures.Changes in regulations in the future will have a significant impact on ISPs,Internet commerce and Internet services.The Internet has been able to grow and develop outside the existing regulatorystructure because the FCC has made conscious decisions to limit the applicationof its rules. The federal government's efforts have been directed away fromburdening the Internet with regulation. ISPs and other companies in the Internetindustry have not been required to gain regulatory approval for their actions.The 1996 Telecom Act adopts such a position. The 1996 Act states that it is thepolicy of the United States "to preserve the vibrant and competitive free marketthat presently exists for the Internet and other interactive computer services,unfettered by Federal or State regulation."Regulatory policy approaches toward the Internet have focused on several areas:avoiding unnecessary regulation, questioning the applicability of traditionalrules, Internet governance (such as the allocation of domain names),intellectual property, network reliability, privacy, spectrum policy, standards,security, and international regulation.                                       41Government may influence the evolution of the Internet in many ways, includingdirectly regulating, participating in technical standards development, providingfunding, restricting anti-competitive behavior by dominant firms, facilitatingindustry cooperation otherwise prohibited by antitrust laws, promoting newtechnologies, encouraging cooperation between private parties, representing theUnited States in international intergovernmental bodies, and large-scalepurchasing of services.There are many ways Internet growth could be negatively impacted which mayrequire future regulation and oversight. Moving toward proprietary standards orclosed networks would reduce the degree to which new services could leverage theexisting infrastructure. The absence of competition in the ISP market, or thetelecommunications infrastructure market, could reduce incentives forinnovation. Excessive or misguided government intervention could distort theoperation of the marketplace, and lead companies to expend valuable resourcesworking through the regulatory process. Insufficient government involvement mayalso, however, have negative consequences. Some issues may require a degree ofcentral coordination, even if only to establish the initial terms of adistributed, locally-controlled system. The end result, in the absence ofcollective action, may be an outcome that no one favors. In addition, thefailure of the federal government to identify Internet-related areas that shouldnot be subject to regulation leaves open opportunities for state, local, orinternational bodies to regulate excessively and/or inconsistently.There is no one entity or organization that governs the Internet. Eachfacilities-based network provider that is interconnected with the globalInternet controls operational aspects of their own network. Certain functions,such as domain name routing and the definition of the TCP/IP protocol, arecoordinated by an array of quasi-governmental, intergovernmental, andnon-governmental bodies. The United States government, in many cases, has handedover responsibilities to these bodies through contractual or other arrangements.In other cases, entities have emerged to address areas of need such as theInternet Society ("ISOC"), a non-profit professional society founded in 1992.ISOC organizes working groups and conferences, and coordinates some of theefforts of other Internet administrative bodies. The Internet Engineering TaskForce ("IETF"), an open international body mostly comprised of volunteers, isprimarily responsible for developing Internet standards and protocols. The workof the IETF is coordinated by the Internet Engineering Steering Group, and theInternet Architecture Board, which are affiliated with ISOC. The InternetAssigned Numbers Authority handles Internet addressing matters under a contractbetween the Department of Defense and the Information Sciences Institute at theUniversity of Southern California.The legal authority of any of these bodies is unclear. Most of the underlyingarchitecture of the Internet was developed under the auspices, directly orindirectly, of the United States government. The government has not, however,defined whether it retains authority over Internet management functions, orwhether these responsibilities have been delegated to the private sector. Thedegree to which any existing body can lay claim to representing "the Internetcommunity" is also unclear. Membership in the existing Internet governanceentities is drawn primarily from the research and technical communities.The 1996 Telecom Act provides little direct guidance as to whether the FCC hasauthority to regulate Internet-based services. Section 223 concerns access byminors to obscene, harassing, and indecent material over the Internet and otherinteractive computer networks, and sections 254, 706, and 714 address mechanismsto promote the availability of advanced telecommunications services, possiblyincluding Internet access. Section 230 states a policy goal "to preserve thevibrant and competitive free market that presently exists for the Internet andother interactive computer services, unfettered by Federal or State regulation."None of these sections, however, specifically addresses the FCC's jurisdiction.Nothing in the 1996 Telecom Act expressly limits the FCC's authority to regulateservices and facilities connected with the Internet, to the extent that they arecovered by more general language in any section of the Act. Moreover, it is notclear what such a limitation would mean even if it were adopted. TheCommunications Act directs the FCC to regulate "interstate and foreign commercein communication by wire and radio," and the FCC and state public utilitycommissions indisputably regulate the rates and conditions under which ISPspurchase services and facilities from telephone companies. Given the absence ofclear statutory guidance, the FCC must determine whether or not it has theauthority or the obligation to exercise regulatory jurisdiction over specificInternet-based activities. The FCC may also decide whether                                        42to forebear from regulating certain Internet-based services. Forbearance allowsthe FCC to decline to adopt rules that would otherwise be required by statute.Under section 401 of the 1996 Telecom Act, the FCC must forbear if regulationwould not be necessary to prevent anticompetitive practices and to protectconsumers, and forbearance would be consistent with the public interest.Finally, the FCC could consider whether to preempt state regulation of Internetservices that would be inconsistent with achievement of federal goals.The FCC has not attempted to regulate the companies that provide the softwareand hardware for Internet telephony, or the access providers that transmit theirdata, as common carriers or telecommunications service providers. In March 1996,America's Carriers Telecommunication Association ("ACTA"), a trade associationprimarily comprised of small and medium-size interexchange carriers, filed apetition with the FCC asking the FCC to regulate Internet telephony. ACTA arguesthat providers of software that enables real-time voice communications over theInternet should be treated as common carriers and subject to the regulatoryrequirements of Title II. The FCC has sought comment on ACTA's request. Othercountries are considering similar issues.The FCC has not considered whether any of the rules that relate to radio andtelevision broadcasters should also apply to analogous Internet-based services.The vast majority of Internet traffic today travels over wire facilities, ratherthan the radio spectrum. As a policy matter, however, a continuous, live,generally-available music broadcast over the Internet may appear similar to atraditional radio broadcast, and the same arguments may be made about streamingvideo applications. The FCC will need to consider the underlying policyprinciples that, in the language of the Act and in FCC decisions, have formedthe basis for regulation of the television and radio broadcast industries.The FCC does not regulate the prices charged by ISPs or Internet backboneproviders. However, the vast majority of users connect to the Internet overfacilities of existing telecommunications carriers. Those telecommunicationscarriers are subject to varying levels of regulation at both the federal and thestate level. Thus, regulatory decisions exercise a significant influence overthe economics of the Internet market. Economics is expected to drive thedevelopment of both the Internet and of other communications technologies.Internet access is understood to be an enhanced service under FCC rules;therefore ISPs are treated as end users, rather than carriers, for purposes ofthe FCC's interstate access charge rules. This distinction was created when theFCC established the access charge system in 1983. Thus, when ISPs purchase linesfrom LECs, the ISPs buy those lines under the same tariffs that any businesscustomer would use -- typically voice grade measured business lines or23-channel ISDN primary rate interface (PRI). Although these services generallyinvolve a per-minute usage charge in addition to a monthly fee, the usage chargeis assessed only for outbound calls. ISPs, however, exclusively use these linesto receive calls from their customers, and thus effectively pay flat monthlyrates. By contrast, IXCs that interconnect with LECs are considered carriers,and thus are required to pay interstate access charges for the services theypurchase. Most of the access charges that carriers pay are usage-sensitive inboth directions. Thus, IXCs are assessed per-minute charges for both originatingand terminating calls. The FCC concluded in the Local Competition Order that therate levels of access charges appear to significantly exceed the incrementalcost of providing these services. The FCC in December 1996 launched acomprehensive proceeding to reform access charges in a manner consistent witheconomic efficiency and the development of local competition.The revenue effects of Internet usage today depend to a significant extent onthe structure of state tariffs. Internet usage generates less revenue for LECsin states where flat local service rates have been set low, with compensatingrevenues in the form of per-minute intrastate toll charges. Because ISPs onlyreceive local calls, they do not incur these usage charges. By contrast, instates where flat charges make up a higher percentage of LEC revenues, ISPs willhave a less significant revenue effect. ISP usage is also affected by therelative pricing of services such as ISDN Primary Rate Interface (PRI), framerelay, and fractional T-1 connections, which are alternatives to analog businesslines. Prices for these services, and the price difference on aper-voice-channel basis between the options available to ISPs, vary widelyacross different states. In many cases, tariffs for these and other dataservices are based on assumptions that do not reflect the realities of theInternet access market today. The scope of local calling areas also affects thearchitecture of Internet access services. In states with larger unmeasured localcalling areas, ISPs need fewer POPs in order to serve the same customers througha local call.                                       43We are presently unable to determine what the impact of potential Internetregulatory actions and decisions will be on our liquidity, results of operationsand cash flows.Financial information about our foreign and domestic operations and export salesAlthough we have several agreements to help originate and terminateinternational toll traffic, we do not have foreign operations or export sales.We conduct our operations throughout the western contiguous United States,Alaska and Hawaii and believe that any subdivision of our operations intodistinct geographic areas would not be meaningful. Revenues associated withinternational toll traffic were $4.2 million, $7.0 million and $7.6 million forthe years ended December 31, 1999, 1998 and 1997, respectively.SeasonalityOur long-distance revenues have historically been highest in the summer monthsas a result of temporary population increases attributable to tourism andincreased seasonal economic activity such as construction, commercial fishing,and oil and gas activities. Our 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. Our local service and Internetoperations are not expected to exhibit significant seasonality, with theexception of SchoolAccess(TM) Internet services that are reduced during thesummer months. Our ability to implement construction projects is also reducedduring the winter months because of cold temperatures, snow and short daylighthours.Customer-sponsored researchWe have not expended material amounts during the last three fiscal years oncustomer-sponsored research activities.Backlog of Orders and InventoryAs of December 31, 1999 and 1998, our long-distance services segment had abacklog of equipment sales orders of approximately $101,000 and $202,000,respectively. The decrease in backlog as of December 31, 1999 can be attributedprimarily to reduced equipment sales activity at the end of the fourth quarterin 1999 as compared to 1998. Many of our customers delayed equipment orders sothat their systems would be stable at the turn of the century, resulting inreduced sales activity and order backlog. We expect that all of the orders inbacklog at the end of 1999 will be delivered during 2000.Geographic Concentration and Alaska EconomyWe offer voice and data telecommunication and video services to customersprimarily throughout Alaska. As a result of this geographic concentration,growth of our business and our operations depend upon economic conditions inAlaska. 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 thesemarkets could have an adverse impact on us. Oil revenues are now the thirdlargest source of state revenues, following investment income and federal funds.Alaska's investment earnings will supply 33% of the state's projected revenuesin fiscal 2001, with federal funding comprising 27% of the total and oilrevenues 24% of the total. Much of the investment income and all of the federalfunding is restricted or dedicated for specific purposes, however, leaving oilrevenues as the primary funding source (75%) of general operating expenditures.The volume of oil transported by the TransAlaska Oil Pipeline System over thepast 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% fromthe fiscal 1988 level, and down 25% from the fiscal 1997 level. The two largestproducers of oil in Alaska (the primary users of the TransAlaska Oil PipelineSystem) continue to explore, develop and produce new oil fields and to enhancerecovery from existing fields to offset the decline in production from thePrudhoe Bay field. Both companies have invested large sums of money indeveloping and implementing oil recovery techniques at the Prudhoe Bay field andother nearby fields. The state now forecasts a temporary reversal of theproduction rate decline and a slight increase in the production rate during theperiod from fiscal 2003 to 2005. This forecasted increase is attributed to newdevelopments at the Alpine, Liberty and Northstar fields, as well as newproduction from Prudhoe Bay and other fields.                                       44Market prices for North Slope oil declined to below $10 per barrel in 1998, andaveraged $12.70 in fiscal 1999, well below the average price used by the stateto budget its oil related revenues. The prices have since increased to over $30per barrel in March 2000, with a year-to-date fiscal 2000 average price perbarrel of $22.78. Over the past decade, the rolling 60-month average price forNorth Slope crude oil has been between $16.39 and $17.74 per barrel 95 percentof the time.The state's forecast for fiscal 2001 shows the price for North Slope crudeaveraging $18.28 and then declining to the low-$18 and high-$17 range for thenext five years. Recent higher prices are largely due to the Organization ofPetroleum Exporting Countries ("OPEC") March 1999 agreement to cut production toforce prices higher. The OPEC agreement called for production cuts from January1999 levels of a little more than 2 million barrels per day. Although OPECtrimmed output by about 1.75 million barrels, or nearly 85 percent of targetedreductions, October 1999 OPEC production has increased by 400,000 barrels perday. This reduces current compliance to 65 percent of targeted cuts. Historysuggests 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 willoccur. The response of non-OPEC production to higher prices is uncertain. Theproduction policy of OPEC and its ability to continue to act in concertrepresents a key uncertainty in the state's revenue forecast.The state of Alaska maintains the Constitutional Budget Reserve Fund that isintended to fund budgetary shortfalls. Based on the state's oil price andproduction forecasts, and considering the state's other revenues, the AlaskaDepartment of Revenue expects the state will need to draw less than $500 millionfrom the Constitutional Budget Reserve Fund in Fiscal 2000 and about $700million in Fiscal 2001 to balance the state's budget, down substantially fromthe $1 billion fiscal 2000 draw expected in their spring 1999 forecast. If thestate's current projections are realized, the Constitutional Budget Reserve Fundwill be depleted in 2004. If the fund is depleted, aggressive state action willbe necessary to increase revenues and reduce spending in order to balance itsbudget. The Governor of the State of Alaska and the Alaska Legislature arepursuing cost cutting and revenue enhancing measures.Oil companies and service providers announced cost cutting measures to offset aportion of the declining oil revenues in 1999, resulting in a reduction of oilindustry jobs of over 1,400. Projects that are underway are reportedly notaffected by the cutbacks, however BP Amoco p.l.c. ("BP" or "BP Amoco") didnotify state officials that it would delay its exploration of the Genesee testsite east of Prudhoe.Although oil prices have a substantial effect on Alaska's economy, analystsbelieve that tourism, air cargo, and service sectors are strong enough to offseta portion of the expected downturn. These industries have helped offset theprevailing pattern of oil industry downsizing that has occurred during much ofthe last several years. Three other factors that support Alaska's economy arethe healthy national economy, lower interest rates, and low inflation. We expectconstruction to remain strong over the next few years. $1.77 billion of federalmoney is expected to be distributed to the state of Alaska for highways andother federally supported projects in fiscal 2000.Effective March 1997, the State of Alaska passed new legislation relaxing stateoil royalties with respect to marginal oil fields that the oil companies claimwould not be economic to develop otherwise. No assurance can be given that oilcompanies doing business in Alaska will be successful in discovering new fieldsor further developing existing fields which are economic to develop and produceoil with access to the pipeline or other means of transport to market, even withthe reduced level of royalties.BP Amoco announced in April 1999 its intention to purchase ARCO for $26.8billion. BP Amoco and ARCO together reportedly own approximately 70 percent ofthe Alaska North Slope oil fields and the company that operates the Trans-AlaskaPipeline System.On February 2, 2000 the FTC voted to fight in federal court to block BP Amoco'spurchase of ARCO citing their concern over:     - the reduction in competition in the sale of Alaska oil to West Coast      independent refineries;    - the reduction in competition in Alaska lease sales, thus reducing state      and federal government revenue from such sales; and    - possible manipulation of futures market prices by the resulting company.                                       45On March 15, 2000 BP Amoco and ARCO announced that they have agreed to sellARCO's Alaskan businesses to Phillips Petroleum Co. ("Phillips") for $7 billion.The sale, which is subject to completion of the ARCO combination, is intended toaddress FTC anti-trust concerns. BP Amoco reported March 16, 2000 that thecompany was at an advanced stage in discussions with the FTC on its proposedcombination with ARCO and was hopeful of a successful outcome "within a matterof weeks."BP Amoco and ARCO have reportedly agreed jointly with the FTC, the US West Coaststates and Alaska to suspend litigation - originally scheduled to begin inCalifornia on March 20 - pending the outcome of those negotiations.The sale to Phillips of all ARCO's Alaskan businesses includes a 21.9 per centinterest in the Prudhoe Bay oil field and 42.6 per cent of the gas cap, as wellas a range of interests in related fields, a 55 per cent interest in the greaterKuparuk area and a 78 per cent stake in the Alpine field. The package alsoincludes 1.1 million net exploration acres, a 22.3 per cent interest in theTrans-Alaska pipeline, and ARCO's crude oil shipping fleet that includes sixtankers in service and three under construction. The booked reserves being soldtotal 1.9 billion barrels of oil equivalent. The $7 billion price for theAlaskan businesses reportedly is made up of approximately $6.5 billion cash forthe field, pipeline and shipping operations and assets, plus a supplementalpayment of $500 million based on a formula tied to the price of crude oil. Therewill also be a payment of some $150 million for crude oil inventories. Thetransaction, which is expected to close early in the second quarter and will beeffective retroactive to January 1, 2000, is subject to approval of the FederalTrade Commission (FTC). The parties are reportedly working with the FTC and thestates of Alaska, California, Oregon and Washington to obtain such approval.Phillips' current Alaskan operations include a 70 percent interest in the KenaiLNG plant that has exported LNG to Japan for 30 years; a 100 percent interest inthe North Cook Inlet field; a less than 2 percent interest in the Prudhoe BayUnit; a 10 percent interest in the Point Thomson field; interests in several ofthe Prudhoe Bay satellites; a small interest in TAPS; and exploration acreage inNPRA and elsewhere.Exxon Mobil Corp. ("Exxon") filed a lawsuit March 24, 2000 to stop Phillip'sacquisition of ARCO's Alaska assets. Exxon contends that it has the right offirst refusal to purchase certain of ARCO's Alaska assets. This lawsuit coulddelay or block the pending sale of ARCO Alaska, Inc. to Phillips. The FCC isexpected to wait for the outcome of the Exxon lawsuit before rendering itsdecision.We are not able to predict the effect on the State of Alaska's economy or on usshould these acquisitions and sales transactions not be consummated, or shouldthe expected efficiencies and cost savings not be realized.Should new discoveries or developments not materialize or the price of oilreturn to its prior depressed levels, the long term trend of continued declinein oil production from the Prudhoe Bay field area is inevitable with acorresponding adverse impact on the economy of the state, in general, and ondemand for telecommunications and cable television services, and, therefore, onus, in particular.We have, since our entry into the telecommunication marketplace, aggressivelymarketed our services to seek a larger share of the available market. Thecustomer base in Alaska is limited, however, with a small population ofapproximately 620,000 people. 42% of are located in the Anchorage area, 14% arelocated in the Fairbanks area, 5% are located in the Juneau area, and the restare spread out over the vast reaches of Alaska. No assurance can be given thatthe driving forces in the Alaska economy, and in particular, oil production,will continue at levels to provide an environment for expanded economicactivity.EmployeesWe employed 949 persons as of March 03, 2000, and are not parties to unioncontracts with our employees. We believe our future success will depend upon ourcontinued ability to attract and retain highly skilled and qualified employees.We believe that relations with our employees are satisfactory.                                       46OtherNo material portion of our businesses is subject to renegotiation of profits ortermination of contracts at the election of the federal government.Item 2.  PROPERTIESGeneral.Our properties do not lend themselves to description by character or location ofprincipal units. Our investment in property, plant and equipment in ourconsolidated operations consisted of the following at December 31:                                                            1999     1998                                                          -------- --------     Telephone distribution systems                         64.5%    35.9%        Cable television distribution services                 23.1%    22.3%     Support equipment                                      10.2%    10.5%     Property and equipment under capital leases             0.7%     0.7%     Construction in progress                                0.7%    29.8%     Transportation equipment                                0.5%     0.5%     Land and buildings                                      0.3%     0.3%                                                          -------- --------            Total                                            100.0%   100.0%                                                          ======== ========These properties are divided among our operating segments at December 31, 1999as follows: long-distance services, 56.7%; cable services, 24.6%; local accessservices, 7.5%; Internet services, 4.0%; and other, 7.2%.These properties consist primarily of switching equipment, satellite earthstations, fiber-optic networks, microwave radio and cable and wire facilities,cable head-end equipment, coaxial distribution networks, routers, servers,transportation equipment, computer equipment and general office equipment.Substantially all of our properties secure our Senior Holdings Loan and FiberFacility. You should see note 5 to the Notes to Consolidated FinancialStatements included in Part II of this Report for further discussion.Our construction in progress totaled $2.9 million at December 31, 1999,consisting of telecommunications, cable and Internet projects that were notcomplete at December 31, 1999. Construction in progress totaled $119.6 millionat December 31, 1998, of which $114.9 related to Alaska United fiber-opticfacilities connecting Anchorage, Juneau, Fairbanks, Valdez and Whittier, Alaskato Seattle Washington, and $4.7 related to telecommunications and Internetprojects that were not complete at December 31, 1998.Central office equipment, buildings, furniture and fixtures and certainoperating and other equipment are insured under a blanket property insuranceprogram. This program provides substantial limits of coverage against "allrisks" of loss including fire, windstorm, flood, earthquake and other perils notspecifically excluded by the terms of the policies. We currently self-insure allof our cable and fiber optic outside plant against casualty losses.Long-Distance Services. We operate a state-of-the-art, competitivetelecommunications network employing the latest digital transmission technologybased upon fiber optic and digital microwave facilities within and betweenAnchorage, Fairbanks and Juneau. Our network includes digital fiber optic cableslinking Alaska to the contiguous 48 states and providing access to othercarriers' networks for communications around the world. We use satellitetransmission to remote areas of Alaska and for certain interstate traffic.Our long-distance services segment owns properties and facilities includingsatellite earth stations, and distribution, transportation and office equipment.Additionally, in December 1992 we acquired access to capacity on an underseafiber optic cable from Seward, Alaska to Pacific City, Oregon. We completedconstruction of an additional fiber optic cable facility linking Alaska toSeattle, Washington in February 1999, which is owned subject to an outstandingmortgage.                                       47We entered into a purchase and lease-purchase option agreement in August 1995for the acquisition of satellite transponders on the PanAmSat Galaxy XRsatellite to meet our long-term satellite capacity requirements. We intend tooperate the satellite pursuant to a long-term capital lease arrangement with aleasing company. The purchase and lease-purchase option agreement provides forthe interim lease of transponder capacity on the PanAmSat Galaxy IX satellitethrough the delivery of the purchased transponders.We lease our long-distance services industry segment's executive, corporate andadministrative facilities in Anchorage, Fairbanks and Juneau, Alaska. Ouroperating, executive, corporate and administrative properties are in goodcondition. We consider our properties suitable and adequate for our presentneeds and they are being fully utilized.Cable Services. The Cable Systems serve 26 communities and areas in Alaskaincluding Anchorage, Fairbanks and Juneau, the state's three largest urbanareas. As of December 31, 1999 the Cable Systems consisted of approximately1,825 miles of installed cable plant having between 300 to 550 MHz of channelcapacity. Principal physical assets used in our Cable Systems include centralreceiving apparatus, distribution cables, converters, customer service centersand local business offices.We lease our Cable Systems customer service and operating facilities insubstantially all locations. We own the receiving and distribution equipment ofeach system. In order to keep pace with technological advances, we aremaintaining, periodically upgrading and rebuilding the physical components ofour cable communications systems. Such properties are in good condition. Weconsider our properties suitable and adequate for our present and anticipatedfuture needs.Local Access Services. We operate a state-of-the-art, competitive local accesstelecommunications network employing the latest digital transmission technologybased upon fiber optic facilities within Anchorage. Our outside plant consistsof connecting lines (aerial, underground and buried cable) not on customers'premises, the majority of which is on or under public roads, highways orstreets, while the remainder is on or under private property. Central officeequipment primarily consists of digital electronic switching equipment andcircuit equipment. Operating equipment consists of motor vehicles and otherequipment.Substantially all of our local access services' central office equipment,administrative and business offices, and customer service centers are in leasedfacilities. Such properties are in good condition. We consider our propertiessuitable and adequate for our present and anticipated future needs.Internet Services. We operate a state-of-the-art, competitive Internet networkemploying the latest available technology. We provide access to the Internetusing a platform that includes many of the latest advancements in technology.The physical platform is concentrated in Anchorage and is extended into manyremote areas of the state. Our Internet platform includes a trunk connecting theAnchorage POP to an Internet access point in Seattle through multiple, diverselyrouted upstream Internet networks, routers on each end of the frame relay trunkto control the flow of data over the trunk, and various other routers, serversand support equipment.We lease our Internet services industry segment's operating facilities, locatedprimarily in Anchorage. Such properties are in good condition. We consider ourproperties suitable and adequate for our present and anticipated future needs.Capital Expenditures. Capital expenditures consist primarily of (a) grossadditions to property, plant and equipment having an estimated service life ofone year or more, plus the incidental costs of preparing the asset for itsintended use, and (b) gross additions to capitalized software.The total investment in property, plant and equipment has increased from $44.2million at January 1, 1995 to $61.0 million at December 31, 1999, includingconstruction in progress and not including deductions of accumulateddepreciation. Significant additions to property, plant and equipment will berequired                                        48in the future to meet the growing demand for communications, Internet andentertainment services and to continually modernize and improve such services tomeet competitive demands.Our capital expenditures for 1995 through 1999 were as follows (in millions):       1995     $   8.9       1996     $  38.6       1997     $  64.6       1998     $ 149.0       1999     $  36.6We project capital expenditures of approximately $80 to $85 million for 2000,consisting of $48 million for satellite transponders, $15 to $17 million forlong-distance services, $7 to $8 million for cable services, $5 to $6 millionfor local access services, $4 to $5 million for Internet services, and $1million for wireless services. A majority of the expenditures will expand,enhance and modernize our current networks, facilities and operating systems,and will develop wireless and other businesses.During 1999, we funded our normal business capital requirements substantiallythrough internal sources and, to the extent necessary, from external financingsources. We expect expenditures for 2000 to be financed in the same manner,except for the new satellite transponders that will be acquired subject tolong-term lease/purchase financing.Item 3.  LEGAL PROCEEDINGSExcept as set forth in this item, neither The Company, its property nor any ofits subsidiaries or their property is a party to or subject to any materialpending legal proceedings. We are parties to various claims and pendinglitigation as part of the normal course of business. We are also involved inseveral administrative proceedings and filings with the FCC, Department of Laborand state regulatory authorities. In the opinion of management, the nature anddisposition of these matters are considered routine and arising in the ordinarycourse of business which management believes, even if resolved unfavorably tous, would not have a materially adverse affect on our business or financialposition, results of operations or liquidity.Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSNo matters were submitted during the fourth quarter of 1999 to a vote ofsecurity holders, through the solicitation of proxies or otherwise                                       49                                     PART IIItem 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERMATTERSMarket Information for Common Stock. Shares of GCI's Class A common stock aretraded on the Nasdaq National Market tier of The Nasdaq Stock Market under thesymbol GNCMA. Shares of GCI's Class B common stock are traded on theOver-the-Counter market. Each share of Class B common stock is convertible, atthe option of the holder, into one share of Class A common stock. The followingtable sets forth the high and low sales price for the above-mentioned commonstock for the periods indicated. Market price data were obtained from the NasdaqStock Market quotation system. The prices, rounded up to the nearest eighth,represent prices between dealers, do not include retail markups, markdowns, orcommissions, and do not necessarily represent actual transactions.                                                         Class A                         Class B                                              ---------------------------------------------------------------                                                    High            Low            High           Low                                                    ----            ---            ----           ---                                                                                                                     1998:             First Quarter                          8 3/8           6 1/8          8 3/8          6 1/8             Second Quarter                         8               5 1/2          8              5 1/2             Third Quarter                          6 1/8           2 5/8          6 1/8          2 5/8             Fourth Quarter                         5               2 1/2          5              2 1/2        1999:             First Quarter                          5 1/4           4              5 1/4          4             Second Quarter                         8               4              8              4             Third Quarter                          7               4 3/4          7              4 3/4             Fourth Quarter                         6 1/4           3 3/4          6 1/4          3 3/4Holders. As of December 31, 1999 there were 1,868 holders of record of GCI'sClass A common stock and 562 holders of record of GCI's Class B common stock(amounts do not include the number of shareholders whose shares are held ofrecord by brokers, but do include the brokerage house as one shareholder).Dividends. GCI and GCI, Inc. have never paid cash dividends on their commonstock and have no present intention of doing so. Payment of cash dividends inthe future, if any, will be determined by GCI's Board of Directors in light ofour earnings, financial condition and other relevant considerations. Ourexisting bank loan agreements contain provisions that prohibit payment ofdividends, other than stock dividends (you should see note 5 to the ConsolidatedFinancial Statements included in Part II of this Report for more information).Stock Transfer Agent And Registrar. ChaseMellon Shareholder Services, L.L.C. isour stock transfer agent and registrar.                                       50Item 6.  SELECTED FINANCIAL DATAThe following table presents selected historical information relating tofinancial condition and results of operations over the past five years.                                                                            Years ended December 31,                                                             -------------------------------------------------------                                                                 1999       1998       1997       1996       1995                                                                 ----       ----       ----       ----       ----                                                                 (Amounts in thousands except per share amounts)                                                                                                                           Revenues (1)                                           $   279,179    246,795    223,809    164,894    129,279     Net earnings (loss) before income taxes,        extraordinary item and cumulative effect of        a change in accounting principle (2)                 $   (14,866)   (10,920)    (2,235)    12,690     12,601     Loss on early extinguishment of debt, net of                            income tax benefit of $180                           $         0          0        521          0          0     Cumulative effect of a change in accounting                         principal, net of income tax benefit of $245           $       344          0          0          0          0     Net earnings (loss)                                    $    (9,527)    (6,797)    (2,183)     7,462      7,502     Basic net earnings (loss) per common share             $     (0.21)     (0.14)     (0.05)      0.28       0.32     Diluted net earnings (loss) per common share           $     (0.21)     (0.14)     (0.05)      0.27       0.31     Total assets (3)                                       $   643,151    649,445    545,302    447,335     84,765     Long-term debt, including current portion (3)          $   339,400    351,657    250,084    223,242      9,980     Obligations under capital leases, including                         current portion                                      $     1,674      2,186      1,188        746      1,047     Total stockholders' equity (3, 4)                      $   192,548    200,007    204,439    149,554     43,016     Dividends declared per Common share (5)                $      0.00       0.00       0.00       0.00       0.00     --------------------     1   The 1997 revenue increase is primarily attributed to reporting 12         months of cable television service revenues as compared to two months         reported in 1996.     2   Our net losses in 1999, 1998 and 1997 are primarily attributed to         additional depreciation, amortization and interest expense resulting         from the cable company acquisitions in October 1996 and startup losses         from our entry into local access services and Internet services         markets.     3   Increases in our total assets, long-term debt and stockholders' equity         in 1996 as compared to 1995 result in part from the cable company         acquisitions and MCI (now MCI WorldCom) stock issuance described in         note 8 to the Notes to Consolidated Financial Statements included in         Part II of this Report. Increases in assets and long-term debt in 1998         as compared to 1997 result primarily from our construction of a         fiber-optic system connecting points in Alaska with Seattle Washington         as further described in note 9 to the accompanying Notes to         Consolidated Financial Statements included in Part II of this Report.     4   The 1997 increase in stockholders' equity is primarily attributed to         our equity offering in August 1997, described in note 7 to the         accompanying Notes to Consolidated Financial Statements included in         Part II of this Report.     5   We have never paid a cash dividend on our common stock and do not         anticipate paying dividends in the foreseeable future. We intend to         retain our earnings, if any, for the development of our business.         Payment of cash dividends in the future, if any, will be determined by         the board of directors in light of our earnings, financial condition,         credit agreements and other relevant considerations. Our existing bank         loan agreements contain provisions that prohibit payment of dividends,         other than stock dividends, as further described in note 5 to the Notes         to Consolidated Financial Statements included in Part II of this         Report.                                       51Item 7. Management's discussion and analysis of financial condition and resultsof operationsIn the following discussion, General Communication, Inc. and its direct andindirect subsidiaries are referred to as "we," "us" and "our."The following discussion and analysis should be read in conjunction with theCompany's Consolidated Financial Statements and the notes thereto. See -Cautionary Statement Regarding Forward-Looking Statements.                                    OVERVIEWWe have experienced significant growth in recent years through strategicacquisitions, deploying new business lines, and expansion of our existingbusinesses. We have historically met our cash needs for operations through ourcash flows from operating activities. Cash requirements for acquisitions andcapital expenditures have been provided largely through our financingactivities.Long-distance services. Our provision of interstate and intrastate long-distanceservices to residential, commercial and governmental customers and to othercommon carriers (principally MCI WorldCom, Inc. ("MCI WorldCom") and SprintCorporation ("Sprint")), and provision of private line and leased dedicatedcapacity services accounted for 97.0% of our total long-distance servicesrevenues during 1999. Factors that have the greatest impact on year-to-yearchanges in long-distance services revenues include the rate per minute chargedto customers and usage volumes, usually expressed as minutes of use.Revenues from private line and other data services sales increased 13.4% to$22.0 million during 1999 as compared to 1998 due primarily to increased systemcapacity and increasing demand for data services by Internet service providers("ISP"), commercial and governmental customers, and others. Demand for dataservices to and from the lower 48 states previously exceeded the availablesupply capacity, however such demand is beginning to be filled with uncompressedfiber optic capacity on the Alaska United fiber optic cable system.Our long-distance cost of sales and services has consisted principally of directcosts of providing services, including local access charges paid to LECs fororiginating and terminating long-distance calls in Alaska, and fees paid toother long-distance carriers to carry calls terminating in areas not served byour network (principally the lower 49 states, most of which calls are carriedover MCI WorldCom's network, and international locations, which calls arecarried principally over Sprint's network). During 1999, local access chargesaccounted for 52.7% of long-distance cost of sales and services, fees paid toother long-distance carriers represented 30.9%, satellite transponder lease andundersea fiber maintenance costs represented 12.8%, and other costs represented3.6% of long-distance cost of sales and services.Our long-distance selling, general, and administrative expenses have consistedof operating and engineering, customer service, sales and communications,management information systems, general and administrative, and legal andregulatory expenses. Most of these expenses consist of salaries, wages andbenefits of personnel and certain other indirect costs (such as rent, travel,utilities, insurance and property taxes). A significant portion of long-distanceselling, general, and administrative expenses, 28.5% during 1999, represents thecost of our advertising, promotion and market analysis programs.Long-distance services face significant competition from AT&T Alascom, Inc.,long-distance resellers, and from local telephone companies that have enteredthe long-distance market. The number of active long-distance residential,commercial and small business customers increased 10.7% at December 31, 1999 ascompared to December 31, 1998. We believe our approach to developing, pricing,and providing long-distance services and bundling different business segmentservices will continue to allow us to be competitive in providing thoseservices.Revenues derived from other common carriers increased 0.2% in 1999 as comparedto 1998. The low rate of growth is due primarily to reduced rates charged tosuch carriers and a change in the mix of wholesale minutes carried for suchcustomers. We secured contract amendments during the second quarter of 1999 withMCI WorldCom and Sprint. The amendments provided, among other things, for athree-year                                        52contract term extension for Sprint. The MCI WorldCom contract expires in 2001.Other common carrier traffic routed to us for termination in Alaska is largelydependent on traffic routed to MCI WorldCom and Sprint by their customers.Pricing pressures, new program offerings and market consolidation continue toevolve in the markets served by MCI WorldCom and Sprint. If, as a result, theirtraffic is reduced, or if their competitors' costs to terminate or originatetraffic 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 topredict the effect on us of such changes, however given the materiality of othercommon carrier revenues to us, a significant reduction in traffic or pricingcould have a material adverse effect on our financial position, results ofoperations and liquidity. In October 1999 MCI WorldCom and Sprint announcedtheir intention to merge, subject to certain approvals. Both companiesanticipate the merger will close in the second half of 2000. We are unable topredict the outcome or the merger's impact on our operations, liquidity orfinancial condition.Cable services. During 1999, cable television revenues represented 21.9% ofconsolidated revenues. The cable systems serve 26 communities and areas inAlaska, including the state's three largest population centers, Anchorage,Fairbanks and Juneau.We generate cable services revenues from three primary sources: (1) programmingservices, including monthly basic or premium subscriptions and pay-per-viewmovies or other one-time events, such as sporting events; (2) equipment rentalsor installation; and (3) advertising sales. During 1999 programming servicesgenerated 85.5% of total cable services revenues, equipment rental andinstallation fees accounted for 8.8% of such revenues, advertising salesaccounted for 4.6% of such revenues, and other services accounted for theremaining 1.1% of total cable services revenues. The primary factors thatcontribute to year-to-year changes in cable services revenues are averagemonthly subscription and pay-per-view rates, the mix among basic, premium andpay-per-view services, and the average number of subscribers during a givenreporting period.The cable systems' cost of sales and selling, general and administrativeexpenses has consisted principally of programming and copyright expenses, labor,maintenance and repairs, marketing and advertising and rental expense. During1999 programming and copyright expenses represented 32.6% of total cable cost ofsales and selling, general and administrative expenses, and general andadministrative costs represented 47.3% of such total. Marketing and advertisingcosts represented approximately 7.9% of such total expenses.Cable services face competition from alternative methods of receiving anddistributing television signals and from other sources of news, information andentertainment. We believe our cable television services will continue to becompetitive based on providing, at reasonable prices, a greater variety ofprogramming and other communication services than are available off-air orthrough other alternative delivery sources and upon superior technicalperformance and customer service.Local access services. We generate local access services revenues from threeprimary sources: (1) business and residential basic dial tone services; (2)business private line and special access services; and (3) business andresidential features and other charges, including voice mail, caller ID,distinctive ring, inside wiring and subscriber line charges. Effective March1999 we transitioned to the "bill and keep" cost settlement method fortermination of traffic on our facilities and on other's facilities. Localexchange services revenues totaled $15.5 million representing 5.6% ofconsolidated revenues in 1999. The primary factors that contribute toyear-to-year changes in local access services revenues are the average number ofbusiness and residential subscribers to our services during a given reportingperiod and the average monthly rates charged for non-traffic sensitive services.Operating and engineering expenses represented approximately 5.9% of total localaccess services cost of sales and selling, general and administrative expensesduring 1999. Marketing and advertising costs represented approximately 5.3% ofsuch total expenses, customer service and general and administrative costsrepresented approximately 48.7% of such total expenses, and local access cost ofsales represented approximately 40.1% of such total expenses.                                       53Our local access services face significant competition in Anchorage from ACS andAT&T Alascom, Inc. We believe our approach to developing, pricing, and providinglocal access services will allow us to be competitive in providing thoseservices.Internet services. We began offering Internet services in several markets inAlaska during 1998. We generate Internet services revenues from three primarysources: (1) access product services, including commercial dedicated access("DIAS"), ISP DIAS, and retail dial-up service revenues; (2) SchoolAccess(TM)DIAS and server revenues; and (3) network management services. Internet servicesrevenues totaled $9.1 million representing 3.3% of total revenues in 1999. Theprimary factors that contribute to year-to-year changes in Internet servicesrevenues are the average number of subscribers to our services during a givenreporting period, the average monthly subscription rates, and the number ofadditional premium features selected.Operating and general and administrative expenses represented approximately56.7% of total Internet services cost of sales and selling, general andadministrative expenses during 1999. Internet cost of sales representedapproximately 37.4% of such total expenses and marketing and advertisingrepresented approximately 5.9% of such total expenses.Significant new marketing campaigns have been introduced in 1999 featuringbundled residential and commercial Internet products. Additional bandwidth wasmade available to our Internet segment resulting from completion of the AlaskaUnited undersea fiber optic cable project. The new Internet offerings arecoupled with our long-distance and local access services offerings and providefree basic Internet services or discounted premium Internet services if certainlong-distance or local access services plans are selected. Value-added premiumInternet features are available for additional charges.We compete with a number of Internet service providers in our markets. Webelieve our approach to developing, pricing, and providing Internet serviceswill allow us to be competitive in providing those services.Other services, other expenses and net loss. Telecommunications servicesrevenues reported in the Other segment as described in note 10 to theaccompanying consolidated financial statements include sales of fiber opticsystem capacity (see below), corporate network management contracts,telecommunications equipment sales and service, other miscellaneous revenues(including revenues from cellular resale services, from prepaid and debitcalling cards sales, and installation and leasing of customer's VSAT equipment).During the second quarter of 1999 we completed a $19.5 million sale of long-haulcapacity in the Alaska United undersea fiber optic cable system ("fiber capacitysale") to ACS in a cash transaction. The sale includes both capacity withinAlaska, and between Alaska and the lower 49 states. We announced in July 1999that an agreement pertaining to a second $19.5 million sale of fiber capacity toACS had been executed. The agreement requires ACS to acquire additional capacityduring the 18-month period following the effective date of the contract.In addition to the fiber capacity sale of $19.5 million, Other services segmentrevenues during 1999 include network solutions and outsourcing revenues totaling$5.7 million, telecommunications equipment sales totaling $5.5 million andcellular resale and other revenues totaling $2.9 million.We began developing plans for deploying PCS services in 1995 and subsequentlyconducted a technical trial of our candidate technology. We have investedapproximately $2.2 million in our PCS license at December 31, 1999. PCSlicensees are required to offer service to at least one-third of their marketpopulation within five years or risk losing their licenses. Service must beextended to two-thirds of the population within 10 years. We are in thedesign/build phase of our wireless implementation plan that will allow retentionof the PCS license pursuant to its terms.Depreciation, amortization and interest expense on a consolidated basisincreased $21.5 million in 1999 as compared to 1998 resulting primarily fromadditional depreciation on 1998 and 1999 capital expenditures, additionalaverage outstanding long-term debt and a reduction in the amount of capitalizedconstruction period interest following placement of the Alaska United underseafiber optic cable system into service in early February 1999.                                       54                              RESULTS OF OPERATIONSThe following table sets forth selected Statement of Operations data as apercentage of total revenues for the periods indicated (underlying data roundedto the nearest thousands):                                                        Year Ended December 31,            Percentage Change                                                        -----------------------            -----------------                                                                                           1999         1998                                                                                            vs.          vs.                                                     1999         1998         1997        1998         1997                                                     ----         ----         ----        ----         ----                                                                                                                Statement of Operations Data:  Revenues:    Long-distance services                          57.2%        64.0%        69.4%        1.2%         1.7%    Cable services                                  21.9%        23.3%        24.6%        6.1%         4.5%    Local access services                            5.6%         4.0%         0.3%       56.9%     1,524.3%    Internet services                                3.3%         1.9%         0.1%       98.6%     2,422.5%    Other services                                  12.0%         6.8%         5.6%      100.6%        33.3%                                               ------------------------------------------------------------------      Total revenues                               100.0%       100.0%       100.0%       13.1%        10.3%  Cost of sales and services                        43.9%        47.0%        49.6%        5.5%         4.5%  Selling, general and administrative expenses      35.2%        36.4%        32.9%        9.4%        22.1%  Depreciation and amortization                     15.3%        13.0%        10.6%       33.2%        34.8%                                               ------------------------------------------------------------------      Operating income                               5.6%         3.6%         6.9%       78.1%       (42.5%)      Net loss before income taxes,        extraordinary item and cumulative        change in an accounting principle           (5.3%)       (4.4%)       (1.0%)      36.1%       388.6%      Net loss before extraordinary item and        cumulative change in an accounting        principle                                   (3.3%)       (2.8%)       (0.7%)      35.1%       309.0%      Net loss                                      (3.4%)       (2.8%)       (1.0%)      40.2%       211.4%Other Operating Data:  Cable services operating income (1)               14.7%        12.4%        18.9%       26.2%       (31.7%)  Local access services operating loss (2)         (47.8%)     (112.2%)     (581.8%)     (33.2%)      213.3%  Internet services operating (loss)    income (3)                                      (4.7%)        0.1%       (45.1%)  (8,700.0%)     (106.1%)-----------------------------------------------  1 Computed as a percentage of total cable services revenues.  2 Computed as a percentage of total local access services revenues.  3 Computed as a percentage of total Internet services revenues.Year Ended December 31, 1999 Compared to Year Ended December 31, 1998.Revenues. Total revenues increased 13.1% from $246.8 million in 1998 to $279.2million in 1999. Long-distance revenues from commercial, residential,governmental, and other common carrier customers increased 1.1% from $157.9million in 1998 to $159.7 million in 1999. The increase in long-distancerevenues was due to the following:  - An increase of 10.7% in the number of active residential, small business and    commercial customers billed from 82,000 at December 31, 1998 to 90,800 at    December 31, 1999,  - An increase of 14.4% in total minutes of use to 905.0 million minutes,  - An increase of 13.4% in private line and private network transmission    services revenues from $19.4 million in 1998 to $22.0 million in 1999 due to    an increased number of customers and  - New revenues in 1999 totaling $4.8 million from the lease of three DS3    circuits on Alaska United facilities within Alaska, and between Alaska and    the lower 49 states and maintenance charges related to the portion of fiber    capacity purchased by ACS.                                       55The increase in long-distance revenue was offset by an 18.8% reduction in ouraverage rate per minute on long-distance traffic from $0.168 per minute in 1998to $0.136 per minute in 1999. The decrease in rates resulted from our promotionof and customers' enrollment in calling plans offering discounted rates andlength of service rebates, such plans being prompted in part by our primarylong-distance competitor, AT&T Alascom, reducing its rates, and the entry ofLECs into long-distance markets served by us. Changes in wholesale product mixand reduced rates on other common carrier traffic (principally MCI WorldCom andSprint) offset other common carrier minutes growth of 24.9% resulting in a 0.3%increase in revenues, from $61.3 million in 1998 to $61.5 million in 1999.Common carrier minute growth is attributable, in part, to a new category ofwholesale minutes carried on the Company's network.Cable revenues increased 6.1% from $57.6 million in 1998 to $61.1 million in1999. Programming services revenues increased 5.8% to $52.3 million in 1999resulting from an increase of approximately 4,800 basic subscribers served byus, an increase of $1.31 in average gross revenue per average basic subscriberper month and increased pay-per-view and premium service revenues. New facilityconstruction efforts in the summer of 1999 resulted in approximately 2,800additional homes passed which contributed to additional subscribers and revenuesin 1999. Other factors include the launch of digital cable services in late 1998with an associated marketing and sales effort starting in July 1999 and theintroduction of a customer offering requiring a year commitment in exchange fora discounted price that reduced customer churn. Equipment rental andinstallation revenues increased 18.9% to $5.4 million in 1999 due to an increasein subscribers to our digital service and associated converters that are billedat premium rates.Local access services revenues increased 56.6% from $9.9 million in 1998 to$15.5 million in 1999. Approximately 45,000 lines were in service and 750additional lines were awaiting connection at December 31, 1999.Internet services revenues (including SchoolAccess(TM) services) increased 98.6%from $4.6 million in 1998 to $9.1 million in 1999. We had approximately 48,000and 5,700 active residential, commercial and small business retail and wholesaledial-up and cable modem subscribers to our Internet service at December 31, 1999and 1998, respectively.Other services revenues increased 100.6% from $15.8 million in 1998 to $33.6million in 1999. The 1999 increase was largely due to the fiber capacity sale aspreviously described.Cost of sales and services. Cost of sales and services totaled $116.1 million in1998 and $122.5 million in 1999. As a percentage of total revenues, cost ofsales and services decreased from 47.0% in 1998 to 43.9% in 1999. The decreasein cost of sales and services as a percentage of revenues is primarilyattributed to the impact of the fiber capacity sale and changes in our productmix due to continuing development of new product lines and growth of existingproduct lines (local access services, data services and Internet). The overallmargin improvement was partially offset by increased cable services cost ofsales as a percentage of cable services revenues. Cable cost of sales increasedmore than cable revenues increased in 1999.Long-distance cost of sales and services increased from $79.3 million in 1998 to$81.0 million in 1999. Long-distance cost of sales as a percentage oflong-distance revenues increased from 50.2% in 1998 to 50.7% in 1999 primarilydue to a decrease in the average rate per minute billed to customers without acomparable decrease in access charges paid by us, and a non-recurring refundreceived in the second quarter of 1998 totaling approximately $1.1 million froma local exchange carrier in respect of its earnings that exceeded regulatoryrequirements. Offsetting the 1999 increase as compared to 1998 are reductions inaccess costs due to our distribution and termination of our traffic on our ownlocal services network instead of paying other carriers to distribute andterminate our traffic. We expect increased cost savings as traffic carried onour own facilities continues to grow. Additional capacity between Alaska and thelower 48 states now available on the Alaska United fiber optic cable system hasallowed us to carry significant additional amounts of data services traffic onour own facilities rather than paying other carriers for leased capacity.Cable cost of sales and services as a percentage of revenues, which is less as apercentage of revenues than are long-distance, local access and Internetservices cost of sales and services, increased from 23.3% in 1998 to 25.3% in1999. Cable services rate increases did not keep pace with increases inprogramming and                                        56copyright costs in 1999. Programming costs increased on most ofour cable services offerings, and we incurred additional costs on newprogramming introduced in 1998 and 1999.Local access services cost of sales and services totaled 50.8% and 61.7% as apercentage of 1999 and 1998 local access services revenues, respectively.Internet services cost of sales and services totaled 34.6% and 74.1% as apercentage of the 1999 and 1998 Internet services revenues, respectively. Ourlocal access operations commenced in 1997 and Internet services operationscommenced in 1998. Fluctuations in cost of sales and services as a percentage ofrevenues are expected to continue to occur as these product lines develop andmature.The decrease in 1998 and 1999 other services cost of sales and services as apercentage of other services revenue from 82.5% to 44.5%, respectively, isprimarily due to the fiber capacity sale as previously described.Selling, general and administrative expenses. Selling, general andadministrative expenses increased 9.4% from $89.8 million in 1998 to $98.3million in 1999. The 1999 increase resulted from:   - Increased costs associated with operations and maintenance of the Alaska    United fiber optic cable system that was placed into service in early    February 1999. 1999 costs totaled $3.6 million as compared to $1.1 million    in 1998.  - Internet services operating, engineering, sales, customer service and    administrative cost increases, from $715,000 in 1998 as compared to $5.3    million in 1999. We gradually introduced our Internet services through the    third quarter of 1998 and began aggressive advertising efforts in the fourth    quarter of 1998. 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.  - Increased allowance for doubtful accounts receivable.  - Accrual of a Company-wide success sharing bonus totaling $1.6 million in    1999. Success sharing is a bonus paid to all employees when our earnings    before interest, depreciation, amortization and taxes reach new highs.  - A reduction in long-distance services capitalized labor due to completion of    the fiber optic cable system construction effort.Partially offsetting these increases were a $1.1 million reduction in cablegeneral and administrative costs and a $1.0 million reduction in long-distancemarketing and sales costs in 1999 as compared to 1998.Selling, general and administrative expenses, as a percentage of total revenues,decreased from 36.4% in 1998 to 35.2% in 1999 primarily as a result ofsignificant revenues derived from the fiber capacity sale without aproportionate increase in selling, general and administrative expenses.Depreciation and amortization. Depreciation and amortization expense increased33.2% from $32.0 million in 1998 to $42.7 million in 1999. The increase isattributable to our $58.4 million investment in equipment and facilities placedinto service during 1998 for which a full year of depreciation was recordedduring 1999, the Alaska United undersea fiber optic cable system placed intoservice in the first quarter of 1999 for which 11 months of depreciation wasrecorded during 1999, and the $36.6 million investment in equipment andfacilities during 1999 for which a partial year of depreciation was recorded in1999.Interest expense, net. Interest expense, net of interest income, increased 54.6%from $19.8 million in 1998 to $30.6 million in 1999. This increase resultedprimarily from increases in our average outstanding indebtedness resultingprimarily from construction of new long-distance and Internet facilities,expansion and upgrades of cable television facilities, investment in localaccess services equipment and facilities, and slightly higher interest rates onoutstanding indebtedness. During 1998 interest expense was offset in part bycapitalized construction period interest. The amount of interest capitalized in1999 decreased significantly due to the completion of the Alaska United underseafiber optic cable system in early February 1999. We charged to interest expense$470,000 of deferred financing costs in the second quarter of 1999 resultingfrom the amendment to the Holdings Loan Facilities amendment that reduced ourborrowing capacity (see Liquidity and Capital Resources).                                       57Income tax benefit. Income tax benefit increased from $4.1 million in 1998 to$5.7 million in 1999 due to an increased net loss before income taxes andcumulative effect of a change in accounting principle in 1999 as compared to1998. Our effective income tax rate increased from 37.8% in 1998 to 38.2% in1999 due to the proportional amount of items that are nondeductible for incometax purposes.At December 31, 1999, we have (1) tax net operating loss carryforwards ofapproximately $88.0 million that will begin expiring in 2008 if not utilized,and (2) alternative minimum tax credit carryforwards of approximately $2.5million available to offset regular income taxes payable in future years. Ourutilization of remaining net operating loss carryforwards is subject to certainlimitations pursuant to Internal Revenue Code section 382.Tax benefits associated with recorded deferred tax assets are considered to bemore likely than not realizable through taxable income earned in carrybackyears, future reversals of existing taxable temporary differences, and futuretaxable income exclusive of reversing temporary differences and carryforwards.The amount of deferred tax asset considered realizable, however, could bereduced in the near term if estimates of future taxable income during thecarryforward period are reduced. We estimate that our effective income tax ratefor financial statement purposes will be approximately 38% in 2000. We expectthat our operations will generate net income before income taxes during thecarryforward periods to allow utilization of loss carryforwards for which noallowance has been established.Year Ended December 31, 1998 Compared to Year Ended December 31, 1997.Revenues. Total revenues increased 10.3% from $223.8 million in 1997 to $246.8million in 1998. Long-distance transmission revenues from commercial,residential, governmental, and other common carrier customers increased 1.7%from $155.3 million in 1997 to $157.9 million in 1998. This increase reflected a5.5% increase in total minutes of use to 791.3 million minutes. Long-distancerevenue growth in 1998 was largely due to a 8.5% increase in revenues from othercommon carriers (principally MCI WorldCom and Sprint), from $56.5 million in1997 to $61.3 million in 1998. Private line and private network transmissionservices revenues increased 22.0%, from $15.9 million in 1997 to $19.4 millionin 1998.The long-distance transmission revenue increases described above were offset inpart by a 5.1% reduction in our average rate per minute on long-distance trafficfrom $0.177 per minute in 1997 to $0.168 per minute in 1998. The decrease inrates resulted from our promotion of and customers' enrollment in new callingplans offering discounted rates and length of service rebates, such new plansbeing prompted in part by our primary long-distance competitor, AT&T Alascom,reducing its rates and entry of LECs into long-distance markets served by us.Operator services revenues decreased 14.3% from $7.0 million in 1997 to $6.0million in 1998. Traffic carried by our operator service center decreased inpart from increased usage of prepaid calling cards and cellular telephones bytourists visiting the state of Alaska.Cable revenues increased 4.3% from $55.2 million in 1997 to $57.6 million in1998. Programming services revenues increased 3.1% to $49.4 million in 1998resulting from an increase of 3,900 basic subscribers served and an increase of$0.47 in revenue per average basic subscriber, per month. New facilityconstruction efforts in 1998 resulted in additional homes passed whichcontributed to additional subscribers and revenues. Other factors includedfacility upgrades, which allowed the introduction of digital cable services inAnchorage, increased promotional, and advertising efforts and increases in basicand premium service rates in certain areas. Advertising sales revenues increased31.9% to $2.9 million in 1998 due to increased promotion of our advertising andad insertion capabilities. Equipment rental and installation revenues increased6.2% to $4.5 million in 1998 due to increased equipment rentals and installationservices provided by us. Offsetting these increases were reductions inpay-per-view and premium service revenues.Local access services revenues increased from $610,000 in 1997 to $9.9 millionin 1998. 1998 revenues reflect a full 12 months of local services operations andgrowth as compared to start-up operations in 1997. At December 31, 1998approximately 28,000 lines were in service and approximately 1,000 additionallines were awaiting connection.                                       58Internet services revenues increased from $182,000 in 1997 to $4.6 million in1998. 1998 revenues reflect a full 12 months of Internet services operations andgrowth as compared to start-up operations in 1997. We had approximately 7,200active residential subscribers to our Internet service at February 9, 1999.Other services revenues increased 33.3% from $12.6 million in 1997 to $16.8million in 1998. The 1998 increase was due to increased product and cellularservice sales.Cost of sales and services. Cost of sales and services totaled $111.1 million in1997 and $116.1 million in 1998. As a percentage of total revenues, cost ofsales and services decreased from 49.6% in 1997 to 47.0% in 1998. The decreasein cost of sales and services as a percentage of revenues is primarilyattributed to changes in our product mix due to the addition of new productlines for a full year of operations (local access services and Internetservices), and reduced long-distance cost of sales as a percentage oflong-distance revenues. The margin improvement was partially offset by increasedcable services cost of sales as a percentage of cable services revenues.The decrease in long-distance cost of sales and services as a percentage ofrevenues is primarily attributed to: 1) a refund received in the first quarterof 1998 totaling approximately $1.1 million from a LEC in respect of itsearnings that exceeded regulatory requirements, 2) reductions in access chargespaid by us to other carriers for distribution of our traffic, and 3) avoidanceof access charges resulting from our distribution and termination of our trafficon our own network instead of paying other carriers to distribute and terminateour traffic.Cable cost of sales and services as a percentage of revenues is less as apercentage of revenues than are long-distance, local access and Internetservices cost of sales and services. Cable services rate increases did not keeppace with increases in programming and copyright costs in 1998. Programmingcosts increased on most of our offerings and we incurred additional costs on newprogramming introduced in 1998.Local access services cost of sales and services totaled 61.7% and 43.8% as apercentage of 1998 and 1997 local access services revenues, respectively.Internet services cost of sales and services totaled 74.1% and 132.4% as apercentage of 1998 and 1997 Internet services revenues, respectively. Our localaccess and Internet services operations commenced in 1997. Fluctuations in costof sales and services as a percentage of revenues are expected to occur asstart-up products develop into mature product lines.Selling, general and administrative expenses. Selling, general andadministrative expenses increased 22.1% from $73.6 million in 1997 to $89.8million in 1998, and, as a percentage of revenues, increased from 32.9% in 1997to 36.4% in 1998. This increase resulted from:  - Local access services operating, engineering, sales, customer service and    administrative cost increases, from $3.4 million in 1997 as compared to    $12.3 million in 1998. We initiated local access services in September 1997.    The increase was necessary to provide the operations, engineering, customer    service and support infrastructure necessary to accommodate expected growth    in our local access services customer base.  - Increased long-distance general and administrative expenses of $2.1 million    in 1998 due to increased personnel and other costs in customer service,    engineering, operations, accounting, human resources, legal and regulatory,    and management information services. Increased customer service expenses    were associated with support of increased sales volumes and expenditures    necessary to integrate customer service operations across product lines.  - Increased long-distance sales, advertising, telemarketing, carrier    relations, business development and rural services costs totaling $15.3    million in 1997 compared to $17.6 million in 1998. Increased selling costs    were associated with the introduction of various marketing plans and other    proprietary rate plans and cross promotion of products and services.  - Cable services operating, engineering, sales, customer service and    administrative cost increases, from $18.4 million in 1997 as compared to    $19.8 million in 1998. The increase was primarily incurred to promote and    market our cable services.  - Internet services operating, engineering, sales, customer service and    administrative cost increases, from $23,000 in 1997 as compared to $715,000    in 1998. We initiated our Internet services in 1998. The increase was    necessary to provide the operations, engineering, customer service and                                       59    support infrastructure necessary to accommodate expected growth in our    Internet services customer base.  - Operating, engineering, marketing and administrative costs associated with    the construction of the fiber optic cable by Alaska United totaled $1.1    million in 1998. No costs directly associated with the fiber optic cable    operations were incurred in 1997.Depreciation and amortization. Depreciation and amortization expense increased34.8% from $23.8 million in 1997 to $32.0 million in 1998. The increase isattributable to our $64.6 million of facilities placed into service during 1997for which a full year of depreciation was recorded during the year endingDecember 31, 1998 and the $58.4 million of facilities placed into service in1998 for which a partial year of depreciation was recorded during 1998 onequipment and facilities placed into service in 1998.Interest expense, net. Interest expense, net of interest income, increased 12.5%from $17.6 million in 1997 to $19.8 million in 1998. This increase resultedprimarily from increases in our average outstanding indebtedness resultingprimarily from construction of new long-distance and Internet facilities,expansion and upgrades of cable television facilities, and investment in localaccess services equipment and facilities. Such increases were offset in part byincreases in the amount of interest capitalized during 1998.Income tax benefit. Income tax benefit increased from $600,000 in 1997 to $4.1million in 1998 due to us incurring a larger net loss before income taxes andextraordinary item in 1998 as compared to 1997. Our effective income tax rateincreased from 25.6% in 1997 to 37.8% in 1998 due to the net loss and theproportional amount of items that are nondeductible for income tax purposes.                 FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONSThe following chart provides selected unaudited statement of operations datafrom our quarterly results of operations during 1999 and 1998.                                                            (Amounts in thousands, except per share amounts)                                                      -------------------------------------------------------------                                                        First      Second       Third      Fourth        Total                                                        Quarter     Quarter     Quarter     Quarter       Year                                                      -------------------------------------------------------------                                                                                                                        1999     ----     Revenues:       Long-distance services                        $  37,542      39,272      42,409      40,499      159,722       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                             $   1,969       2,534       2,018       2,599        9,120       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 income (loss) per common share:       Net income (loss) before cumulative          effect of a change in accounting          principle                                  $   (0.09)       0.04       (0.08)      (0.08)       (0.20)       Cumulative effect of a change in          accounting principle                       $   (0.01)        ---         ---         ---        (0.01)                                                      -------------------------------------------------------------       Net income (loss)                             $   (0.10)       0.04       (0.08)      (0.08)       (0.21)                                                      =============================================================                                       60                                                            (Amounts in thousands, except per share amounts)                                                      -------------------------------------------------------------                                                        First      Second       Third      Fourth        Total                                                        Quarter     Quarter     Quarter     Quarter       Year                                                      -------------------------------------------------------------                                                                                                                       Diluted income (loss) per common share:       Net income (loss) before cumulative          effect of a change in accounting          principle (1)                              $   (0.09)       0.04       (0.08)      (0.08)       (0.20)       Cumulative effect of a change in          accounting principle                       $   (0.01)        ---         ---         ---        (0.01)                                                      -------------------------------------------------------------       Net income (loss) (1)                         $   (0.10)       0.04       (0.08)      (0.08)       (0.21)                                                      =============================================================     1998     ----     Revenues:       Long-distance services                        $  38,651      41,366      40,847      36,486      157,350       Cable services                                $  14,201      14,041      14,484      14,914       57,640       Local access services                         $   1,013       2,049       2,744       4,102        9,908       Internet services                             $     903       1,014       1,060       1,614        4,591       Other services                                $   3,384       4,471       3,631       5,820       17,306                                                      -------------------------------------------------------------          Total revenues                             $  58,152      62,941      62,766      62,936      246,795     Operating income                                $   2,437       1,447       1,730       3,230        8,844     Net loss                                        $  (1,616)     (2,066)     (2,076)     (1,039)      (6,797)     Basic loss per common share (1)                 $   (0.03)      (0.04)      (0.04)      (0.02)       (0.14)     Diluted loss per common share (1)               $   (0.03)      (0.04)      (0.04)      (0.02)       (0.14)     --------------     1  Due to rounding, the sum of quarterly loss per common share amounts may        not agree to year-to-date loss per common share amounts.Revenues. Total revenues for the quarter ended December 31, 1999 ("fourthquarter") were $66.8 million, representing a 0.7% decrease from total revenuesin the quarter ended September 30, 1999 ("third quarter") of $67.3 million. Thedecrease in total revenues resulted from decreased revenues from sales to othercommon carriers (principally MCI WorldCom and Sprint) due to a 1.5% decrease inminutes carried, a 4.4% reduction in the long-distance average rate per minuteand a 1.8% reduction in non-OCC minutes of traffic carried. Revenues from othercommon carriers (principally MCI WorldCom and Sprint) totaled $15.4 million inthe fourth quarter and $16.3 million in the third quarter. Partially offsettingthis decrease was an increase in cable services revenues to $16.0 million in thefourth quarter from $15.2 million in the third quarter and an increase inInternet services revenues to $2.6 million in the fourth quarter from $2.0million in the third quarter.Long-distance revenues have historically been highest in the summer months as aresult of temporary population increases attributable to tourism and increasedseasonal economic activity such as construction, commercial fishing, and oil andgas activities. Cable television revenues, on the other hand, are higher in thewinter months because consumers spend more time at home and tend to watch moretelevision during these months. Local service operations are not expected toexhibit significant seasonality. Internet access services are expected toreflect seasonality trends similar to the cable television segment. Our abilityto implement construction projects is also hampered during the winter monthsbecause of cold temperatures, snow and short daylight hours.Cost of sales and services. Cost of sales and services decreased 0.7% from $30.2million in the third quarter to $30.0 million in the fourth quarter. As apercentage of revenues, third and fourth quarter cost of sales and servicestotaled 44.9%.Selling, general and administrative expenses. Selling, general andadministrative expenses increased $600,000 in the fourth quarter as compared tothe third quarter. As a percentage of revenues, fourth quarter selling, generaland administrative expenses were 37.5% as compared to 36.3% for the thirdquarter. The fourth quarter increase as a percentage of sales is primarily aresult of a $700,000 increase                                        61in expenses associated with a Company-wide success sharing program. Successsharing is a bonus paid to all employees when our earnings before interest,depreciation, amortization and taxes reach new highs.Net loss. We reported a net loss of $3.6 million for the fourth quarter ascompared to a net loss of $3.5 million for the third quarter.                         LIQUIDITY AND CAPITAL RESOURCESCash flows from operating activities totaled $33.3 million in 1999, net ofchanges in the components of working capital. Additional sources of cashincluded preferred stock issuance proceeds totaling $20.0 million in 1999, andlong-term borrowings of $13.8 million and $103.2 million in 1999 and 1998,respectively. Our expenditures for property and equipment, includingconstruction in progress, totaled $36.6 million and $149.0 million in 1999 and1998, respectively. Our uses of cash during 1999 also included repayment of$26.6 million of long-term borrowings and capital lease obligations.Net receivables increased $1.9 million from December 31, 1998 to December 31,1999 due to a $5.9 million increase in trade receivables primarily from thelong-distance, cable and local access services product lines and our InternetSchoolAccess(TM) service offering. Partially offsetting the above describedincrease were income tax refunds received totaling $2.0 million and an increasein the allowance for doubtful accounts of $1.9 million.Working capital totaled $22.7 million at December 31, 1999, a $13.5 millionincrease from working capital of $9.2 million as of December 31, 1998. Theincrease in working capital is primarily attributed to:   - Recording the $9.1 million Transponder Deposit as a Refundable Deposit upon    signing a commitment letter for a long-term capital lease of transponder    capacity on the new satellite. We had previously expected to draw down our    senior credit facility to purchase the transponder capacity. The Transponder    Deposit will be refunded when the lease is consummated in 2000.  - Increased net receivables as discussed above.  - Decreased current maturities of long-term debt of $1.8 million due to the    payoff of the undersea fiber and equipment loan.  - Reduced levels of capital expenditures and accruals in 1999 as compared to    1998.The above increases are off-set by a decrease in the current deferred incometaxes of $1.3 million from December 31, 1998 to December 31, 1999 and anincrease of $2.0 million in accrued payroll and payroll related obligations dueto the accrual of a Company-wide success sharing bonus.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 inApril 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 itssubsidiaries, or at the greater of the prime rate or the federal funds effectiverate (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.$87.7 million and $106.7 million were drawn on the credit facilities as ofDecember 31, 1999 and 1998, respectively.On April 13, 1999, we amended the Holdings credit facilities. These amendmentscontained, among other things, provisions for payment of a one-time amendmentfee of 0.25% of the aggregate commitment, an increase in the commitment fee by0.125% per annum on the unused portion of the commitment, and an increase in theinterest rate of 0.25%. The amended facilities reduce the aggregate commitmentby $50 million to $200 million, and limit capital expenditures to $35 million in1999 and $35 million in 2000 with no limits thereafter (excluding amounts paidfor the Alaska United fiber optic cable system). Pursuant to the FinancialAccounting Standards Board Emerging Issues Task Force Issue 98-14, "Debtor'sAccounting for Changes in Line-of-Credit or Revolving Debt Arrangements," werecorded as additional interest expense $470,000 of deferred financing costs inthe second quarter of 1999 resulting from the reduced borrowing capacity. Inconnection with the April 1999 amendment, we agreed to pay all fees and expensesof our lenders, including an amendment fee of 0.25% of the aggregate commitment,totaling $530,000.                                       62Holding's credit facilities and GCI, Inc.'s senior notes contain restrictions onour operations and activities, including requirements that we comply withcertain financial covenants and financial ratios. Under the amended Holding'scredit facility, Holdings may not permit the ratio of senior debt to annualizedoperating cash flow (as defined) of Holdings and certain of its subsidiaries toexceed 3.0 to 1.0 through December 31, 1999, total debt to annualized operatingcash flow to exceed 6.25 to 1.00 through March 31, 2000, and annualizedoperating cash flow to interest expense to be less than 1.5 to 1.0 throughSeptember 30, 1999 and 1.75 to 1.0 from October 1, 1999 through December 31,1999. Each of the foregoing ratios decreases in specified increments during thelife of the credit facility. The credit facility requires Holdings to maintain aratio of annualized operating cash flow to debt service of Holdings and certainof its subsidiaries of at least 1.25 to 1.0, and annualized operating cash flowto fixed charges of at least 1.0 to 1.0 (which adjusts to 1.05 to 1.0 in April,2003 and thereafter). The senior notes impose a requirement that the leverageratio of GCI, Inc. and certain of its subsidiaries not exceed 7.5 to 1.0 priorto December 31, 1999 and 6.0 to 1.0 thereafter, subject to the ability of GCI,Inc. and certain of its subsidiaries to incur specified permitted indebtednesswithout 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 December 31, 1999 $71.7million was borrowed under the facility. The Fiber Facility is a 10-year termloan that is interest only for the first 5 years. The facility can be extendedan additional two years at any time between the second and fifth anniversary ofclosing the facility if we can demonstrate projected revenues from certaincapacity commitments will be sufficient to pay all operating costs, interest,and principal installments based on the extended maturity. The Fiber Facilitybears interest at either Libor plus 3.0%, or at the lender's prime rate plus1.75%. The interest rate will decline to Libor plus 2.5%-2.75%, or, at ouroption, the lender's prime rate plus 1.25%-1.5% after the project completiondate and when the loan balance is $60 million or less.The Fiber Facility contains, among others, covenants requiring certainintercompany loans and advances in order to maintain specific levels of cashflow necessary to pay operating costs, interest and principal installments. Allof Alaska United's assets, as well as a pledge of the partnership interests'owning Alaska United, collateralize the Fiber Facility. Construction of thefiber facility was completed and the facility was placed into service onFebruary 4, 1999. The project was completed on budget.We will use approximately one-half of the Alaska United system capacity inaddition to our existing owned and leased facilities to carry our own traffic.One of our large commercial customers signed agreements in the first quarter of1999 for the immediate lease of three DS3 circuits on Alaska United facilitieswithin Alaska, and between Alaska and the lower 48 states. The lease agreementsprovide for three-year terms, with renewal options for additional terms. In thesecond quarter of 1999 we completed a sale of capacity in the Alaska Unitedsystem to ACS in a $19.5 million cash transaction. The sale includes bothcapacity within Alaska, and between Alaska and the lower 48 states. An agreementwas executed in July 1999 for a second $19.5 million sale of fiber capacity toACS. We continue to pursue opportunities for sale or lease of additional capacity on our system.Our expenditures for property and equipment, including construction in progress,totaled $36.6 million and $149.0 million during 1999 and 1998, respectively.Planned capital expenditures over the next five years include those necessaryfor continued expansion of our long-distance, local exchange and Internetfacilities, the development and construction of a PCS network and continuedupgrades to our cable television plant. Sources of funds for these plannedcapital expenditures are expected to include internally generated cash flows andborrowings under our credit facilities.Our ability to invest in discretionary capital and other projects will dependupon our future cash flows and access to borrowings under our credit facilities.Management anticipates that cash flow generated by us and our borrowings underour credit facilities will be sufficient to fund capital expenditures and ourworking capital requirements. Should cash flows be insufficient to supportadditional borrowings, such investment in capital expenditures will likely bereduced.We entered into a purchase and lease-purchase option agreement in August 1995for the acquisition of satellite transponders to meet our long-term satellitecapacity requirements. The satellite was successfully launched in January 2000and delivered to us on March 5, 2000. In March 2000 we agreed to finance the                                       63satellite transponders pursuant to a long-term capital lease arrangement with aleasing company. We will continue to lease transponder capacity on the PanAmSatGalaxy IX satellite until our communications traffic is successfullytransitioned to the new satellite transponders.We issued 20,000 shares of convertible redeemable accreting preferred stock("Preferred Stock") on April 30, 1999. Proceeds totaling $20 million (beforepayment of expenses) were used for general corporate purposes, to repayoutstanding indebtedness, and to provide additional liquidity. Prior to thefour-year anniversary following closing, dividends are payable semi-annually atthe rate of 8.5%, plus accrued but unpaid dividends, at the Company's option, incash or in additional fully-paid shares of Preferred Stock. Dividends earnedafter the four-year anniversary of closing are payable semi-annually at the rateof 17%, plus accrued but unpaid dividends, in cash only. Dividends totaling$1,158,000 were accrued for the year ended December 31, 1999. Mandatoryredemption is required 12 years from the date of closing.The long-distance, local access, cable, Internet and wireless servicesindustries are experiencing increasing competition and rapid technologicalchanges. Our future results of operations will be affected by our ability toreact to changes in the competitive environment and by our ability to fund andimplement new technologies. We are unable to determine how competition,technological changes and our net operating losses will affect our ability toobtain financing.We believe that we will be able to meet our current and long-term liquidity andcapital requirements, including fixed charges and Preferred Stock dividends,through our cash flows from operating activities, existing cash, cashequivalents, short-term investments, credit facilities, and other externalfinancing and equity sources.                          NEW ACCOUNTING PRONOUNCEMENTSIn June 1998, the Financial Accounting Standards Board issued SFAS No. 133,"Accounting for Derivative Instruments and Hedging Activities". Among otherprovisions, it requires that entities recognize all derivatives as either assetsor liabilities in the statement of financial position and measure thoseinstruments at fair value. Gains and losses resulting from changes in the fairvalues of those derivatives would be accounted for depending on the use of thederivative and whether it qualifies for hedge accounting. The effective date ofthis standard was delayed via the issuance of SFAS No. 137. The effective datefor SFAS No. 133 is now for fiscal years beginning after June 15, 2000, thoughearlier adoption is encouraged and retroactive application is prohibited. Thismeans that we must adopt the standard no later than January 1, 2001. We do notexpect the adoption of this standard to have a material impact on results ofoperations, financial position or cash flows.                                 ALASKA ECONOMYWe offer voice and data telecommunication and video services to customersprimarily throughout Alaska. As a result of this geographic concentration,growth of our business and our operations depend upon economic conditions inAlaska. 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 thesemarkets could have an adverse impact on us. Oil revenues are now the thirdlargest source of state revenues, following investment income and federal funds.Alaska's investment earnings will supply 33% of the state's projected revenuesin fiscal 2001, with federal funding comprising 27% of the total and oilrevenues 24% of the total. Much of the investment income and all of the federalfunding is restricted or dedicated for specific purposes, however, leaving oilrevenues as the primary funding source (75%) of general operating expenditures.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 fiscal1988. 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 twolargest producers of oil in Alaska (the primary users of the TAPS) continue toexplore, develop and produce new oil fields and to enhance recovery fromexisting fields to offset the decline in production from the Prudhoe Bay field.Both companies have invested large sums of money in developing and implementingoil recovery techniques at the Prudhoe Bay field and other nearby fields. Thestate now forecasts a temporary reversal of the production rate decline and aslight increase in the production rate during the                                        64period from fiscal 2003 to 2005. This forecasted increase is attributed to newdevelopments at the Alpine, Liberty and Northstar fields, as well as newproduction from Prudhoe Bay and other fields.Market prices for North Slope oil declined to below $10 per barrel in 1998, andaveraged $12.70 in fiscal 1999, well below the average price used by the stateto budget its oil related revenues. The prices have since increased to over $30per barrel in March 2000, with a year-to-date fiscal 2000 average price perbarrel of $22.78. Over the past decade, the rolling 60-month average price forNorth Slope crude oil has been between $16.39 and $17.74 per barrel 95 percentof the time.The state's forecast for fiscal 2001 shows the price for North Slope crudeaveraging $18.28 and then declining to the low-$18 and high-$17 range for thenext five years. Recent higher prices are largely due to the OPEC March 1999agreement to cut production to force prices higher. The OPEC agreement calledfor production cuts from January 1999 levels of a little more than 2 millionbarrels per day. Although OPEC trimmed output by about 1.75 million barrels, ornearly 85 percent of targeted reductions, October 1999 OPEC production hasincreased by 400,000 barrels per day. This reduces current compliance to 65percent of targeted cuts. History suggests that market forces lead to lowerprices when oil sells for more than $20 per barrel. What is uncertain is whenand how fast the correction will occur. The response of non-OPEC production tohigher prices is uncertain. The production policy of OPEC and its ability tocontinue to act in concert represents a key uncertainty in the state's revenueforecast.The state of Alaska maintains the Constitutional Budget Reserve Fund that isintended to fund budgetary shortfalls. Based on the state's oil price andproduction forecasts, and considering the state's other revenues, the AlaskaDepartment of Revenue expects the state will need to draw less than $500 millionfrom the Constitutional Budget Reserve Fund in Fiscal 2000 and about $700million in Fiscal 2001 to balance the state's budget, down substantially fromthe $1 billion fiscal 2000 draw expected in their spring 1999 forecast. If thestate's current projections are realized, the Constitutional Budget Reserve Fundwill be depleted in 2004. If the fund is depleted, aggressive state action willbe necessary to increase revenues and reduce spending in order to balance itsbudget. 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 aportion of the declining oil revenues in 1999, resulting in a reduction of oilindustry jobs of over 1,400. Projects that are underway are reportedly notaffected by the cutbacks, however BP Amoco did notify state officials that itwould delay its exploration of the Genesee test site east of Prudhoe.Although oil prices have a substantial effect on Alaska's economy, analystsbelieve that tourism, air cargo, and service sectors are strong enough to offseta portion of the expected downturn. These industries have helped offset theprevailing pattern of oil industry downsizing that has occurred during much ofthe last several years. Three other factors that support Alaska's economy arethe healthy national economy, lower interest rates, and low inflation. We expectconstruction to remain strong over the next few years. $1.77 billion of federalmoney is expected to be distributed to the State of Alaska for highways andother federally supported projects in fiscal 2000.Effective March 1997, the State of Alaska passed new legislation relaxing stateoil royalties with respect to marginal oil fields that the oil companies claimwould not be economic to develop otherwise. No assurance can be given that oilcompanies doing business in Alaska will be successful in discovering new fieldsor further developing existing fields which are economic to develop and produceoil with access to the pipeline or other means of transport to market, even withthe reduced level of royalties.BP Amoco announced in April 1999 its intention to purchase ARCO for $26.8billion. BP Amoco and ARCO together reportedly own approximately 70 percent ofthe Alaska North Slope oil fields and the company that operates the TAPS.On February 2, 2000 the FTC voted to fight in federal court to block BP Amoco'spurchase of ARCO citing their concern over:   - the reduction in competition in the sale of Alaska oil to West Coast    independent refineries;  - the reduction in competition in Alaska lease sales, thus reducing state and    federal government revenue from such sales; and                                       65  - possible manipulation of futures market prices by the resulting company.On March 15, 2000 BP Amoco and ARCO announced that they have agreed to sellARCO's Alaskan businesses to Phillips Petroleum Co. ("Phillips") forapproximately $7 billion. The sale, which is subject to completion of the ARCOcombination, is intended to address FTC anti-trust concerns. BP Amoco reportedMarch 16, 2000 that the company was at an advanced stage in discussions with theFTC on its proposed combination with ARCO and was hopeful of a successfuloutcome "within a matter of weeks."BP Amoco and ARCO have reportedly agreed jointly with the FTC, the US West Coaststates and Alaska to suspend litigation - originally scheduled to begin inCalifornia on March 20 - pending the outcome of those negotiations.The sale to Phillips of all ARCO's Alaskan businesses includes a 21.9 per centinterest in the Prudhoe Bay oil field and 42.6 per cent of the gas cap, as wellas a range of interests in related fields, a 55 per cent interest in the greaterKuparuk area and a 78 per cent stake in the Alpine field. The package alsoincludes 1.1 million net exploration acres, a 22.3 per cent interest in theTrans-Alaska pipeline, and ARCO's crude oil shipping fleet that includes sixtankers in service and three under construction. The booked reserves being soldtotal 1.9 billion barrels of oil equivalent. The approximately $7 billion pricefor the Alaskan businesses reportedly is made up of approximately $6.5 billioncash for the field, pipeline and shipping operations and assets, plus asupplemental payment of $500 million based on a formula tied to the price ofcrude oil. There will also be a payment of some $150 million for crude oilinventories. The transaction, which is expected to close early in the secondquarter and will be effective retroactive to Jan. 1, 2000, is subject toapproval of the FTC. The parties are reportedly working with the FTC and thestates of Alaska, California, Oregon and Washington to obtain such approval.Phillips' current Alaskan operations include a 70 percent interest in the Kenailiquefied natural gas plant that has exported its products to Japan for 30years; a 100 percent interest in the North Cook Inlet field; a less than 2percent interest in the Prudhoe Bay Unit; a 10 percent interest in the PointThomson field; interests in several of the Prudhoe Bay satellites; a smallinterest in TAPS; and exploration acreage in the National Petroleum ReserveAlaska and elsewhere.Exxon Mobil Corp. ("Exxon") filed a lawsuit Friday March 24, 2000 to stopPhillip's acquisition of ARCO's Alaska assets. Exxon contends that it has theright of first refusal to purchase certain of ARCO's Alaska assets. This lawsuitcould delay the pending sale of ARCO Alaska, Inc. to Phillips. The FCC isexpected to wait for the outcome of the Exxon lawsuit before rendering itsdecision.Should new discoveries or developments not materialize or the price of oilreturn to its prior depressed levels, the long term trend of continued declinein oil production from the Prudhoe Bay field area is inevitable with acorresponding adverse impact on the economy of the state, in general, and ondemand for telecommunications and cable television services, and, therefore, onus, in particular.We have, since our entry into the telecommunication marketplace, aggressivelymarketed our services to seek a larger share of the available market. Thecustomer base in Alaska is limited, however, with a small population ofapproximately 620,000 people. 42% of are located in the Anchorage area, 14% arelocated in the Fairbanks area, 5% are located in the Juneau area, and the restare spread out over the vast reaches of Alaska. No assurance can be given thatthe driving forces in the Alaska economy, and in particular, oil production,will continue at levels to provide an environment for expanded economicactivity.No assurance can be given that oil companies doing business in Alaska will besuccessful in discovering new fields or further developing existing fields whichare economic to develop and produce oil with access to the pipeline or othermeans of transport to market, even with the reduced level of royalties. TheCompany is not able to predict the effect of changes in the price and productionvolumes of North Slope oil or the acquisition of ARCO by BP Amoco and Phillipson Alaska's economy or on the Company. You should see Part I, Item 1. Business,Geographic Concentration and Alaska Economy for more information.                                       66                                   SEASONALITYLong-distance revenues have historically been highest in the summer months as aresult of temporary population increases attributable to tourism and increasedseasonal economic activity such as construction, commercial fishing, and oil andgas activities. Cable television revenues, on the other hand, are higher in thewinter months because consumers tend to watch more television, and spend moretime at home, during these months. Our local access services revenues are notexpected to exhibit significant seasonality. Our Internet access services areexpected to reflect seasonality trends similar to the cable television segment.Our ability to implement construction projects is reduced during the wintermonths because of cold temperatures, snow and short daylight hours.                                 YEAR 2000 COSTSWe initiated a company-wide program in 1998 to ensure that our date-sensitiveinformation, telephony, cable, Internet and business systems, and certain otherequipment would properly recognize the Year 2000 as a result of the centurychange on January 1, 2000. The program focused on the hardware, software,embedded chips, third-party vendors and suppliers as well as third-partynetworks that were associated with the identified systems. We substantiallycompleted the program during third quarter 1999, and our systems did notexperience any significant disruptions as a result of the century change. Intotal, we have expensed incremental remediation costs totaling $2.3 millionthrough December 31, 1999, with remaining incremental remediation costs in 2000estimated at approximately $400,000.We did not defer any critical information technology projects because of ourYear 2000 program efforts, which were addressed primarily through a dedicatedteam within our information technology group.                             REGULATORY DEVELOPMENTSYou should see Part I, Item 1 Business, Regulation, Franchise Authorizations andTariffs for more information about regulatory developments affecting us.                                    INFLATIONWe do not believe that inflation has a significant effect on our operations.Item 7A.  Quantitative and qualitative disclosures about market riskWe 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 fortrading purposes.Our Senior Holdings Loan carries interest rate risk. Amounts borrowed under thisAgreement bear interest at Libor plus 1.0% to 2.5%, depending on the leverageratio of Holdings and certain of its subsidiaries, or at the greater of theprime rate or the federal funds effective rate (as defined) plus 0.05%, in eachcase plus an additional 0.0% to 1.375%, depending on the leverage ratio ofHoldings and certain of its subsidiaries. Should the Libor rate, the lenders'base rate or the leverage ratios change, our interest expense will increase ordecrease accordingly. As of December 31, 1999, we have borrowed $87.7 millionsubject to interest rate risk. On this amount, a 1% increase in the interestrate would cost us $877,000 in additional gross interest cost on an annualizedbasis.Our Fiber Facility carries interest rate risk. Amounts borrowed under thisAgreement bear interest at Libor plus 3.0%, or at our choice, the lender's primerate plus 1.75%. The interest rate will decline to Libor plus 2.5%-2.75%, or atour choice, the lender's prime rate plus 1.25%-1.5% when the loan balance is $60million or less. Should the Libor rate, the lenders' base rate or the leverageratios change, our interest expense will increase or decrease accordingly. As ofDecember 31, 1999, 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 inadditional gross interest cost on an annualized basis.                                       67Item 8.  Consolidated financial statements and supplementary dataOur consolidated financial statements are filed under this Item, beginning onPage 69. The financial statement schedules required under Regulation S-X arefiled pursuant to Item 14 of this Report.Item 9. Changes in and disagreements with accountants on accounting andfinancial disclosure.None.                                    PART IIIIncorporated herein by reference from our Proxy Statement for our 2000 AnnualShareholders' meeting.                                       68                          INDEPENDENT AUDITORS' REPORTThe Board of Directors and StockholdersGeneral Communication, Inc.:We have audited the accompanying consolidated balance sheets of GeneralCommunication, Inc. and Subsidiaries as of December 31, 1999 and 1998, and therelated consolidated statements of operations, stockholders' equity and cashflows for each of the years in the three-year period ended December 31, 1999.These consolidated financial statements are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audits.We conducted our audits in accordance with generally accepted auditingstandards. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.In our opinion the consolidated financial statements referred to above presentfairly, in all material respects, the financial position of GeneralCommunication, Inc. and Subsidiaries as of December 31, 1999 and 1998, and theresults of their operations and their cash flows for each of the years in thethree-year period ended December 31, 1999 in conformity with generally acceptedaccounting principles.                                                     /s/                                                     KPMG LLPAnchorage, AlaskaMarch 10, 2000                                       69                  GENERAL COMMUNICATION, INC. AND SUBSIDIARIES                           Consolidated Balance Sheets                                                                                          December 31,                            ASSETS                                                      1999        1998---------------------------------------------------------------------------------    ----------- -----------                                                                                      (Amounts in thousands)                                                                                                         Current assets:    Cash and cash equivalents                                                      $    13,734      12,008                                                                                     ----------- -----------    Receivables:        Trade                                                                           48,145      42,219        Income taxes                                                                       ---       1,965        Other                                                                              269         412                                                                                     ----------- -----------                                                                                        48,414      44,596        Less allowance for doubtful receivables                                          2,833         887                                                                                     ----------- -----------           Net receivables                                                              45,581      43,709                                                                                     ----------- -----------    Prepaid and other current assets                                                     2,224       2,023    Deferred income taxes, net                                                           2,972       4,244    Inventories                                                                          3,754       2,838    Notes receivable                                                                       449         650    Refundable deposit                                                                   9,100         ---                                                                                     ----------- -----------           Total current assets                                                         77,814      65,472                                                                                     ----------- -----------Property and equipment in service, at cost:    Land and buildings                                                                   1,199       1,109    Telephony distribution systems                                                     269,117     144,045    Cable television distribution systems                                               96,620      89,736    Support equipment                                                                   42,576      42,056    Transportation equipment                                                             2,259       2,183    Property and equipment under capital leases                                          2,819       2,819                                                                                     ----------- -----------                                                                                       414,590     281,948    Less accumulated depreciation                                                      111,828      82,972                                                                                     ----------- -----------        Net property and equipment in service                                          302,762     198,976        Construction in progress                                                         2,898     119,645                                                                                     ----------- -----------           Net property and equipment                                                  305,660     318,621                                                                                     ----------- -----------Cable franchise agreements, net of amortization of $16,347 and $11,184 at   December 31, 1999 and 1998, respectively                                            190,145     195,308Goodwill, net of amortization of $4,563 and $3,362 at December 31,   1999 and 1998, respectively                                                          41,391      42,592Other intangible assets, net of amortization of $269 and $95 at    December 31, 1999 and 1998, respectively                                              4,402       3,282Deferred loan and Senior Notes costs, net of amortization                                8,863       9,877Transponder deposit                                                                        ---       9,100Notes receivable                                                                         2,067       1,432Other assets, at cost, net of amortization                                              12,809       3,761                                                                                     ----------- -----------           Total other assets                                                          259,677     265,352                                                                                     ----------- -----------           Total assets                                                            $   643,151     649,445                                                                                     =========== ===========See accompanying notes to consolidated financial statements.                                                                     (Continued)                                       70                  GENERAL COMMUNICATION, INC. AND SUBSIDIARIES                           Consolidated Balance Sheets                                   (Continued)                                                                                          December 31,                       LIABILITIES AND STOCKHOLDERS' EQUITY                             1999        1998--------------------------------------------------------------------------------    ------------ -----------                                                                                      (Amounts in thousands)                                                                                                         Current liabilities:    Current maturities of long-term debt                                           $       ---       1,799    Current maturities of obligations under capital leases                                 574         511    Accounts payable                                                                    25,321      27,550    Accrued interest                                                                     7,985       8,072    Accrued payroll and payroll related obligations                                      8,601       6,555    Deferred revenue                                                                     8,173       6,371    Accrued liabilities                                                                  3,152       3,197    Subscriber deposits and other current liabilities                                    1,314       2,258                                                                                     ----------- -----------           Total current liabilities                                                    55,120      56,313Long-term debt, excluding current maturities                                           339,400     349,858Obligations under capital leases, excluding  current maturities                                                                       747       1,189Obligations under capital leases due to related party, excluding current  maturities                                                                               353         486Deferred income taxes, net of deferred income tax benefit                               30,861      38,275Other liabilities                                                                        4,210       3,317                                                                                     ----------- -----------           Total liabilities                                                           430,691     449,438                                                                                     ----------- -----------Preferred stock. $1,000 par value, authorized 1,000,000 shares; issued  and outstanding 20,000 and 0 shares at December 31, 1999 and 1998,  respectively; convertible into Class A common stock at $5.55 per share   of Class A common stock, redemption price at December 31, 1999 of $1,058              19,912         ---                                                                                     ----------- -----------Stockholders' equity:    Common stock (no par):      Class A.  Authorized 100,000,000 shares; issued and outstanding      46,869,671 and 45,895,415 shares at December 31, 1999 and 1998,      respectively                                                                     176,740     172,708      Class B. Authorized 10,000,000 shares; issued and outstanding      4,048,480 and 4,060,620 shares at December 31, 1999 and      1998, respectively; convertible on a share-per-share basis      into Class A common stock                                                          3,422       3,432      Less cost of 347,958 Class A common shares held in treasury at      December 31, 1999 and 1998                                                        (1,607)     (1,607)    Paid-in capital                                                                      6,343       5,609    Notes receivable issued upon stock option exercise                                  (2,167)       (637)    Retained earnings                                                                    9,817      20,502                                                                                     ----------- -----------           Total stockholders' equity                                                  192,548     200,007                                                                                     ----------- -----------           Commitments and contingencies           Total liabilities and stockholders' equity                              $   643,151     649,445                                                                                     =========== ===========See accompanying notes to consolidated financial statements.                                       71                                        GENERAL COMMUNICATION, INC. AND SUBSIDIARIES                                           Consolidated Statements of Operations                                        Years ended December 31, 1999, 1998 and 1997                                                                           1999              1998             1997                                                                       -------------     ------------     -------------                                                                        (Amounts in thousands except per share amounts)                                                                                                                     Revenues                                                             $     279,179          246,795           223,809Cost of sales and services                                                 122,467          116,073           111,077Selling, general and administrative expenses                                98,282           89,833            73,583Depreciation and amortization expense                                       42,680           32,045            23,767                                                                       -------------     ------------     -------------        Operating income                                                    15,750            8,844            15,382Interest expense, net                                                       30,616           19,764            17,617                                                                       -------------     ------------     -------------        Net loss before income taxes, extraordinary item and           cumulative effect of a change in accounting principle            (14,866)         (10,920)           (2,235)Income tax benefit                                                          (5,683)          (4,123)             (573)                                                                       -------------     ------------     -------------        Net loss before extraordinary item and cumulative effect          of a change in accounting principle                               (9,183)          (6,797)           (1,662)        Loss on early extinguishment of debt, net of income tax          benefit of $180                                                      ---              ---               521        Cumulative effect of a change in accounting principle,          net of income tax benefit of $245                                    344              ---               ---                                                                       -------------     ------------     -------------          Net loss                                                   $      (9,527)          (6,797)           (2,183)                                                                       =============     ============     =============Basic loss per common share:    Net loss before extraordinary item and cumulative effect of       a change in accounting principle                              $       (0.20)           (0.14)            (0.04)    Extraordinary item                                                        0.00             0.00             (0.01)    Cumulative effect of a change in accounting principle                    (0.01)            0.00              0.00                                                                       -------------     ------------     -------------        Net loss                                                     $       (0.21)           (0.14)            (0.05)                                                                       =============     ============     =============Diluted loss per common share:    Net loss before extraordinary item and cumulative effect of       a change in accounting principle                              $       (0.20)           (0.14)            (0.04)    Extraordinary item                                                        0.00             0.00             (0.01)    Cumulative effect of a change in accounting principle                    (0.01)            0.00              0.00                                                                       -------------     ------------     -------------        Net loss                                                     $       (0.21)           (0.14)            (0.05)                                                                       =============     ============     =============See accompanying notes to consolidated financial statements.                                       72                                             GENERAL COMMUNICATION, INC. AND SUBSIDIARIES                                           Consolidated Statements of Stockholders' Equity                                             Years ended December 31, 1999, 1998 and 1997                                                                                      Class A                                                               Class A      Class B   Shares                 Notes                                                               Common       Common    Held in     Paid-in  Receivable  Retained(Amounts in thousands)                                         Stock        Stock     Treasury    Capital    Issued    Earnings                                                             --------------------------------------------------------------------                                                                                                                                    Balances at December 31, 1996                                                             $113,421       3,432      (1,010)     4,229        ---     29,482Net loss                                                          ---         ---         ---        ---        ---     (2,183)Tax effect of excess stock compensation expense for tax   purposes over amounts recognized for financial   reporting purposes                                             ---         ---         ---         65        ---        ---Shares issued upon public offering, net of issuance costs   of $4,024                                                   46,726         ---         ---        ---        ---        ---Shares issued upon conversion of convertible note net of   fees of $16                                                  9,983         ---         ---        ---        ---        ---Shares acquired pursuant to officer deferred compensation   agreement                                                      ---         ---         (29)       ---        ---        ---Shares issued under stock option plan                             192         ---         ---         63        ---        ---Shares issued and issuable under officer stock option   agreements                                                     ---         ---         ---         68        ---        ---                                                             --------------------------------------------------------------------Balances at December 31, 1997                                 170,322       3,432      (1,039)     4,425        ---     27,299Net loss                                                          ---         ---         ---        ---        ---     (6,797)Tax effect of excess stock compensation expense for tax   purposes over amounts recognized for financial   reporting purposes                                             ---         ---         ---        157        ---        ---Shares purchased and held in Treasury                             ---         ---        (568)       ---        ---        ---Shares issued under stock option plan and notes issued   upon stock option exercise                                     827         ---         ---        319       (637)       ---Shares issued to Employee Stock Purchase Plan                   1,574         ---         ---        ---        ---        ---Warrants issued                                                   ---         ---         ---        708        ---        ---Stock offering issuance costs                                     (15)        ---         ---        ---        ---        ---                                                             --------------------------------------------------------------------Balances at December 31, 1998                                 172,708       3,432      (1,607)     5,609       (637)    20,502Net loss                                                          ---         ---         ---        ---        ---     (9,527)Tax effect of excess stock compensation expense for tax   purposes over amounts recognized for financial   reporting purposes                                             ---         ---         ---        211        ---        ---Conversion of Class B to Class A                                   10         (10)        ---        ---        ---        ---Shares issued and issuable under stock option plan and   notes issued upon stock option exercise                      1,595         ---         ---        431     (1,389)       ---Shares issued under officer stock option agreement and   note issued upon stock option exercise                          38         ---         ---        ---       (141)       ---Shares issued to Employee Stock Purchase Plan                   1,770         ---         ---        ---        ---        ---Warrants issued                                                   ---         ---         ---         92        ---        ---Shares issued upon acquisition of customer base                   619         ---         ---        ---        ---        ---Preferred stock dividends                                         ---         ---         ---        ---        ---     (1,158)                                                             --------------------------------------------------------------------Balances at December 31, 1999                                $176,740       3,422      (1,607)     6,343     (2,167)     9,817                                                             ====================================================================See accompanying notes to consolidated financial statements.                                       73                                         GENERAL COMMUNICATION, INC. AND SUBSIDIARIES                                            Consolidated Statements of Cash Flows                                         Years ended December 31, 1999, 1998 and 1997                                                                                 1999             1998            1997                                                                            -------------     -----------     ------------                                                                                         (Amounts in thousands)                                                                                                                       Cash flows from operating activities:    Net loss                                                                $    (9,527)          (6,797)         (2,183)    Adjustments to reconcile net loss to net cash provided by operating       activities:        Depreciation and amortization                                            42,680           32,045          23,767        Amortization charged to costs of sales and service and selling,          general and administrative                                              1,770            1,147              47        Deferred income tax (benefit) expense                                    (5,928)            (744)          4,410        Deferred compensation and compensatory stock options                        675              376             477        Non-cash cost of sales                                                    3,703              ---             ---        Bad debt expense (recovery), net of write-offs                            1,946             (183)            473        Employee Stock Purchase Plan expense funded with Class A common          stock issued and issuable by General Communication, Inc.                2,448            2,278             ---        Write-off of unamortized start-up costs                                     589              ---             ---        Write-off of deferred debt issuance costs upon modification of          Senior Holdings Loan                                                      472              ---             ---        Loss on early extinguishment of debt                                        ---              ---             701        Warrants issued                                                              42              ---             ---        Other noncash income and expense items                                     (114)             154             (54)        Change in operating assets and liabilities                               (5,413)          (5,347)          3,202                                                                            -------------    -------------    ------------           Net cash provided by operating activities                             33,343           22,929          30,840                                                                            -------------    -------------    ------------Cash flows from investing activities:    Acquisition of business, net of cash acquired                                   ---              ---            (547)    Purchases of property and equipment, including construction period       interest                                                                 (36,573)        (148,973)        (64,644)    Restricted cash investment                                                      ---           39,406         (39,406)    Purchases of other assets and intangible assets                              (1,236)          (4,287)         (1,339)    Payment of undersea fiber optic cable deposit                                   ---              ---          (9,094)    Notes receivable issued                                                        (952)          (1,715)           (698)    Payments received on notes receivable                                           653            1,769              32                                                                            -------------    -------------    ------------           Net cash used in investing activities                                (38,108)        (113,800)       (115,696)                                                                            -------------    -------------    ------------Cash flows from financing activities:    Long-term borrowings - senior notes                                             ---              ---         180,000    Long-term borrowings - bank debt                                             13,776          103,224          88,305    Repayments of long-term borrowings and capital lease obligations            (26,620)          (2,017)       (231,021)    Proceeds from equity offering                                                20,000              ---          50,750    Proceeds from common stock issuance                                             103              190             192    Payment of debt and stock issuance costs                                       (768)          (1,706)        (13,642)    Proceeds from warrant issuance                                                  ---              708             ---    Purchase of treasury stock                                                      ---             (568)            (29)                                                                            -------------    -------------    ------------           Net cash provided by financing activities                              6,491           99,831          74,555                                                                            -------------    -------------    ------------           Net increase (decrease) in cash and cash equivalents                   1,726            8,960         (10,301)           Cash and cash equivalents at beginning of year                        12,008            3,048          13,349                                                                            -------------    -------------    ------------           Cash and cash equivalents at end of year                         $    13,734           12,008           3,048                                                                            =============    =============    ============ See accompanying notes to consolidated financial statements.                                       74                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements(l)     Business and Summary of Significant Accounting Principles        (a)    Business               General Communication, Inc. ("GCI"), an Alaska corporation, was               incorporated in 1979. GCI and its direct and indirect               subsidiaries (collectively, the "Company") 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 services,                 - Termination of traffic in Alaska for certain common carriers,                 - Interstate and intrastate private line services,                  - Managed services to certain commercial customers,                 - Sales and services of dedicated communications systems and                   related equipment,                 - Private network point-to-point data and voice transmission                   services between Alaska, Hawaii and the western contiguous                   United States are offered and                 - Owns and leases capacity on two undersea fiber optic cables                   used in the transmission of interstate 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, its wholly-owned subsidiary GCI, Inc., GCI, Inc.'s               wholly-owned subsidiary GCI Holdings, Inc., GCI Holding Inc.'s               wholly-owned subsidiaries GCI Communication Corp., GCI               Communication Services, Inc. and GCI Cable, Inc., GCI               Communication Services, Inc.'s wholly-owned subsidiary GCI               Leasing Co., Inc., GCI Transport Company, Inc., GCI Transport               Co., Inc.'s wholly-owned subsidiaries 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"). All significant               intercompany balances and transactions have been eliminated in               consolidation.        (c)    Net Loss Per Common Share               Net loss used to calculate basic and diluted net loss per common               share is increased by preferred stock dividends of $1,158,000 for               the year ended December 31, 1999. Shares used to calculate net               loss per common share consist of the following (amounts in               thousands):                                                                               1999           1998           1997                                                                            -----------    ----------    -----------                                                                                                                                   Weighted average common shares outstanding                    50,326         49,186         44,924                                                                            ===========    ==========    ===========               Common equivalent shares outstanding which are anti-dilutive for               purposes of calculating the net loss per common share for the               years ended December 31, 1999, 1998 and 1997 and are not included               in the diluted net loss per share calculation consist of the               following (amounts in thousands):                                                                               1999           1998           1997                                                                            -----------    ----------    -----------                                                                                                                                     Common equivalent shares outstanding                            587            521            816                                                                            ===========    ==========    ===========                                       75                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements               Weighted average shares associated with outstanding stock options               for the years ended December 31, 1999, 1998 and 1997 which have               been excluded from the diluted loss per share calculations               because the options' exercise price was greater than the average               market price of the common shares consist of the following               (amounts in thousands):                                                                               1999           1998           1997                                                                            -----------    ----------    -----------                                                                                                                                    Weighted average shares associated with outstanding stock                   options                                                     2,182          2,071          1,073                                                                            ===========    ==========    ===========        (d)    Preferred and Common Stock               Following is the statement of preferred and common stock at               December 31, 1999, 1998 and 1997:                                                                    Preferred           Common Stock                    (Shares, in thousands)                            Stock        Class A        Class B                                                                  ------------- ----------------------------                                                                                                                               Balances at December 31, 1996                       ---         36,587          4,074                    Class B shares converted to Class A                 ---             11            (11)                    Shares issued upon public offering                  ---          7,000            ---                    Shares issued upon conversion of convertible                      note                                              ---          1,538            ---                    Shares issued under stock option plan               ---             57            ---                    Shares issued and issuable under officer                      stock option agreements                           ---             86            ---                                                                  ------------- -------------- -------------                    Balances at December 31, 1997                       ---         45,279          4,063                    Class B shares converted to Class A                 ---              2             (2)                    Shares issued under stock option plan               ---            315            ---                    Shares issued to Employee Stock Purchase Plan       ---            299            ---                                                                  ------------- -------------- -------------                    Balances at December 31, 1998                       ---         45,895          4,061                    Class B shares converted to Class A                 ---             13            (13)                    Shares issued under stock option plan               ---            417            ---                    Shares issued under officer stock option                      agreements                                        ---             50            ---                    Shares issued to Employee Stock Purchase Plan       ---            395            ---                    Shares issued upon acquisition of customer                      base                                              ---            100            ---                    Shares issued under Preferred Stock Agreement        20            ---            ---                                                                  ------------- -------------- -------------                        Balances at December 31, 1999                    20         46,870          4,048                                                                  ============= ============== =============        (e)    Cash and Cash Equivalents               Cash equivalents consist of short-term, highly liquid investments               that are readily convertible into cash.        (f)    Inventories               Inventory of merchandise for resale and parts is stated at the               lower of cost or market. Cost is determined using the average               cost method.                                       76                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        (g)    Property and Equipment               Property and equipment is stated at cost. Construction costs of               facilities are capitalized. Equipment financed under capital               leases is recorded at the lower of fair market value or the               present value of future minimum lease payments. Construction in               progress represents distribution systems and support equipment               not placed in service on December 31, 1999; management intends to               place this equipment in service during 2000.               Depreciation is computed on a straight-line basis based upon the               shorter of the estimated useful lives of the assets or the lease               term, if applicable, in the following ranges:                                Asset Category                      Asset Lives                  ---------------------------------------------   --------------                  Telephony distribution systems                   12-20 years                  Cable television distribution systems            10 years                  Support equipment                                5-10 years                  Transportation equipment                         5 years                  Property and equipment under capital leases      5-15 years               Repairs and maintenance are charged to expense as incurred.               Expenditures for major renewals and betterments are capitalized.               Gains or losses are recognized at the time of ordinary               retirements, sales or other dispositions of property.        (h)    Intangible Assets               Intangible assets are valued at unamortized cost. Management               reviews the valuation and amortization of intangible assets on a               periodic basis, taking into consideration any events or               circumstances that might indicate diminished value. The               assessment of the recoverability is based on whether the asset               can be recovered through undiscounted future cash flows.               Cable franchise agreements represent certain perpetual operating               rights to provide cable services and are being amortized on a               straight-line basis over 40 years.               Goodwill represents the excess of cost over fair value of net               assets acquired and is being amortized on a straight-line basis               over periods of 20 to 40 years.               The cost of the Company's PCS license and related financing costs               have been capitalized as an intangible asset. Once the associated               assets are placed into service, the recorded cost of the license               and related financing costs will begin being amortized over a               40-year period using the straight-line method.        (i)    Deferred Loan and Senior Notes Costs               Debt and Senior Notes issuance costs are deferred and amortized               using the straight-line method, which approximates the interest               method, over the term of the related debt and notes. Through               January 1999 (the end of the construction period of the undersea               fiber optic cable) issuance costs were amortized to Construction               in Progress (see note 9). Commencing February 1999 (the month the               fiber optic cable was placed in service) the issuance costs are               being amortized to amortization expense.        (j)    Other Assets               Other assets are recorded at cost and are amortized on a               straight-line basis over periods of 2-20 years.                                       77                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        (k)    Revenue from Services and Products               Revenues generated from long-distance and managed services are               recognized when the services are provided. Revenues from the sale               of equipment are recognized at the time the equipment is               delivered or installed. Technical services revenues are derived               primarily from maintenance contracts on equipment and are               recognized on a prorated basis over the term of the contract.               Cable television, local service, Internet service and private               line telecommunication revenues are billed in advance and are               recognized as the associated service is provided. Other revenues               are recognized when the service is provided.        (l)    Research and Development and Advertising Expense               The Company expenses advertising and research and development               costs as incurred. Advertising expenses were approximately               $4,574,000, $5,028,000 and $2,897,000 for the years ended 1999,               1998 and 1997, respectively. The Company had no research and               development costs for the years ended December 31, 1999, 1998 and               1997.        (m)    Interest Expense               Interest costs incurred during the construction period of               significant capital projects are capitalized. Interest costs               capitalized by the Company totaled $1,260,000, $7,764,000, and               $1,886,000 during the years ended December 31, 1999, 1998 and               1997.        (n)    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. SOP 98-5 is effective for financial               statements for fiscal years beginning after December 15, 1998.               Management of the Company adopted SOP 98-5 in the first quarter               of 1999 resulting in the recognition of 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. Pro forma net loss               and net loss per common share for the years ended December 31,               1998 and 1997 approximate amounts reflected in the accompanying               consolidated financial statements.        (o)    Income Taxes               Income taxes are accounted for using the asset and liability               method. Deferred tax assets and liabilities are recognized for               their future tax consequences attributable to differences between               the financial statement carrying amounts of existing assets and               liabilities and their respective tax bases. Deferred tax assets               and liabilities are measured using enacted tax rates expected to               apply to taxable earnings in the years in which those temporary               differences are expected to be recovered or settled. Deferred tax               assets are recognized to the extent that the benefits are more               likely to be realized than not.        (p)    Stock Option Plan               The Company accounts for its stock option plan in accordance with               the provisions of Accounting Principles Board ("APB") Opinion No.               25, "Accounting for Stock Issued to Employees," and related               interpretations. As such, compensation expense is recorded on the               date of grant only if the current market price of the underlying               stock exceeds the exercise price. The Company has adopted SFAS               123, "Accounting for Stock-Based Compensation," ("SFAS 123")               which permits entities to recognize as expense over the vesting               period the fair value of all stock-based awards on the date of               grant. Alternatively, SFAS 123 also allows entities to continue               to apply the provisions of APB Opinion No. 25 and provide pro               forma net income and pro forma earnings per share disclosures for               employee stock option grants made in 1995 and future years as if               the fair-value-based method defined in SFAS 123 had been applied.               The Company has elected to continue to apply the provisions of               APB Opinion No. 25 and provide the pro forma disclosure               provisions of SFAS 123.                                       78                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        (q)    Use of Estimates               The preparation of financial statements in conformity with               generally accepted accounting principles requires management to               make estimates and assumptions that affect the reported amounts               of assets and liabilities and disclosure of contingent assets and               liabilities at the date of the financial statements and the               reported amounts of revenues and expenses during the reporting               period. Actual results could differ from those estimates.        (r)    Concentrations of Credit Risk               Financial instruments that potentially subject the Company to               concentrations of credit risk are primarily cash and cash               equivalents and accounts receivable. Excess cash is invested in               high quality short-term liquid money instruments issued by highly               rated financial institutions. At December 31, 1999 and 1998,               substantially all of the Company's cash and cash equivalents were               invested in short-term liquid money instruments. The Company's               customers are located primarily throughout Alaska. As a result of               this geographic concentration, the Company's growth and               operations depend upon economic conditions in Alaska. The economy               of Alaska is dependent upon the natural resources industries, and               in particular oil production, as well as tourism, government, and               United States military spending. Though limited to one               geographical area, the concentration of credit risk with respect               to the Company's receivables is minimized due to the large number               of customers, individually small balances, short payment terms               and deposit requirements for certain product lines.        (s)    Fair Value of Financial Instruments               SFAS No. 107, "Disclosures about Fair Value of Financial               Instruments," requires disclosure of the fair value of financial               instruments for which it is practicable to estimate that value.               SFAS No. 107 specifically excludes certain items from its               disclosure requirements. The fair value of a financial instrument               is the amount at which the instrument could be exchanged in a               current transaction between willing parties, other than in a               forced sale or liquidation.        (t)    Impairment of Long-Lived Assets and Long-Lived Assets to Be                Disposed Of               SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets               and for Long-Lived Assets to Be Disposed Of," requires that               long-lived assets and certain identifiable intangibles be               reviewed for impairment whenever events or changes in               circumstances indicate that the carrying amount of an asset may               not be recoverable. Recoverability of assets to be held and used               is measured by a comparison of the carrying amount of an asset to               future net cash flows expected to be generated by the asset. If               such assets are considered to be impaired, the impairment to be               recognized is measured by the amount by which the carrying amount               of the assets exceeds the fair value of the assets. Assets to be               disposed of are reported at the lower of the carrying amount or               fair value less costs to sell.        (u)    Year 2000 Costs               The Company charged incremental Year 2000 assessment and               remediation costs to expense as incurred.        (v)    Reclassifications               Reclassifications have been made to the 1997 and 1998 financial               statements to make them comparable with the 1999 presentation.(2)     Acquisition        Effective December 2, 1997, the Company purchased all of the outstanding        shares of Astrolabe Group, Inc. The $1,324,000 purchase was accounted        for using the purchase method. The purchase price consisted of a payment        of $600,000 and the issuance of options to purchase 100,000 shares of        GCI's Class A common stock for $.01 per share, expiring December 2,        2007. Options were exercised for 10,000 shares in 1999.                                       79                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements (3)    Consolidated Statements of Cash Flows Supplemental Disclosures         Changes in operating assets and liabilities consist of (amounts in        thousands):          Year ended December 31,                                        1999            1998             1997                                                                     ------------    ------------    -------------                                                                                                                          Increase in accounts receivable                          $    (5,783)         (9,054)          (1,540)          (Increase) decrease in income tax receivable                   1,965             490           (3,726)          (Increase) decrease in prepaid and other current assets         (235)            388             (274)          (Increase) decrease in inventories                              (767)            286             (575)          Increase (decrease) in accounts payable                       (2,229)          2,585            1,050          Increase (decrease) in accrued liabilities                       (95)         (1,914)             938          Increase in accrued payroll and payroll related              obligations                                                1,368             171            1,850          Increase (decrease) in accrued income taxes                      ---            (111)             111          Increase in deferred revenue                                   1,802           1,128              528          Increase (decrease) in accrued interest                          (87)            423            4,941          Increase in subscriber deposits and other current              liabilities                                                 (944)            274              (79)           Decrease in components of other long-term liabilities          (408)            (13)             (22)                                                                     ------------    ------------    -------------                                                                   $    (5,413)         (5,347)           3,202                                                                     ============    ============    =============        The acquisition of a business in the year ended December 31, 1997 (see        note 2), net of cash acquired consists of (amounts in thousands):          Fair value of assets acquired, net of            liabilities assumed                                    $     1,259          Deferred credit                                                (712)                                                                    ------------              Net cash used to acquire businesses                 $       547                                                                    ============        The holders of $10 million of convertible subordinated notes exercised        their conversion rights in January 1997 resulting in the exchange of        such notes for 1,538,457 shares of the Company's Class A common stock.        Net income tax refunds received totaled $1,965,000, $4,243,000 and        $1,546,000 during the years ended 1999, 1998 and 1997, respectively.        Interest paid totaled approximately $32,900,000, $29,630,000 and        $17,709,000 during the years ended 1999, 1998 and 1997, respectively.        The Company recorded $211,000, $157,000 and $65,000 during the years        ended 1999, 1998 and 1997, 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 years ended December 31, 1999 and 1998 the Company funded the        employer matching portion of Employee Stock Purchase Plan contributions        by issuing GCI Class A Common Stock valued at $1,770,000 and $1,574,000,        respectively.                                       80                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements (4)    Notes Receivable        Notes receivable consist of the following (amounts in thousands):                                                                                        December 31,                                                                               -----------------------------                                                                                     1999           1998                                                                               --------------- -------------                                                                                                                            Notes receivable from officers bearing interest up to 9% or at                the rate paid by the Company on its senior indebtedness,                unsecured and secured by personal residences                and Company common stock, due through December 1, 2004         $     3,349         1,851               Notes receivable from others bearing interest up to 8.25% or at                the rate paid by the Company on its senior indebtedness,                unsecured and secured by property and                equipment; due through December 31, 2004                               942           613               Interest receivable                                                     392           256                                                                               --------------- -------------                 Total notes receivable                                              4,683         2,719               Less notes receivable issued upon stock option exercise,                classified as a component of stockholders' equity                    2,167           637               Less current portion, including current interest receivable             449           650                                                                               --------------- -------------                Long-term portion, including long-term interest receivable    $      2,067         1,432                                                                               =============== ============= (5)    Long-term Debt        Long-term debt consists of the following (amounts in thousands):                                                                                        December 31,                                                                                ----------------------------                                                                                     1999           1998                                                                                ------------- --------------                                                                                                                      Senior Notes (a)                                                 $   180,000        180,000                     Senior Holdings Loan (b)                                              87,700        106,700              Fiber Facility (c)                                                    71,700         61,224              Undersea Fiber and Equipment Loan Agreement (d)                          ---          3,733                                                                                ------------- --------------                                                                                   339,400        351,657              Less current maturities                                                  ---          1,799                                                                                ------------- --------------              Long-term debt, excluding current maturities                     $   339,400        349,858                                                                                                     ============= ==============        (a)    On August 1, 1997 GCI, Inc. issued $180,000,000 of 9.75% senior               notes due 2007 ("Senior Notes"). The Senior Notes were issued at               face value. Net proceeds to GCI, Inc. after deducting               underwriting discounts and commissions totaled $174,600,000.               Issuance costs of $6,496,000 are being amortized to amortization               expense over the term of the Senior Notes.               The Senior Notes are not redeemable prior to August 1, 2002.               After August 1, 2002 the Senior Notes are redeemable at the               option of GCI, Inc. under certain conditions and at stated               redemption prices. The Senior Notes include limitations on               additional indebtedness and prohibit payment of dividends,               payments for the purchase, redemption, acquisition or retirement               of GCI, Inc.'s stock, payments for early retirement of debt               subordinate to the note, liens on property, and asset sales               (excluding sales of Alaska United assets). GCI, Inc. was in               compliance with all covenants during the year ending December 31,               1999. The Senior Notes are unsecured obligations of the Company.                                       81                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements               Net proceeds from the stock (see note 8) and Senior Note               offerings and initial draws on the new Senior Holdings Loan (see               note 5(b)) facilities were used to repay borrowings outstanding               under the Company's then existing credit facilities and to               provide initial funding for construction of the Alaska United               undersea fiber optic cable (see notes 5(c) and 9).        (b)    The GCI Holdings, Inc., $200,000,000 ($150,000,000 as amended)               and $50,000,000 credit facilities ("Senior Holdings Loan") mature               on June 30, 2005. The Senior 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. Borrowings under the Senior Holdings Loan               facilities totaled $87,700,000 and $106,700,000 at December 31,               1999 and 1998, respectively. The Company is required to pay a               commitment fee equal to 0.50% per annum on the unused portion of               the commitment. Commitment fee expense on the Senior Holdings               Loan totaled $533,000, $512,000 and $240,000 during the years               ended December 31, 1999, 1998 and 1997, respectively.               On April 13, 1999, the Company amended its 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 with no limits thereafter (excluding amounts paid               for the Alaska United fiber optic cable system (see note 9) and               to be paid for purchased satellite transponder facilities, (see               note 13)). During the year ended December 31, 1999 the Company's               capital expenditures net of amounts paid for the Alaska United               fiber optic cable system were $25.4 million. 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," the Company recorded as               additional interest expense $472,000 of deferred financing costs               in the second quarter of 1999 resulting from the reduced               borrowing capacity. In connection with the April 1999 amendment,               the Company agreed to pay all fees and expenses of its lenders,               including an amendment fee of 0.25% of the aggregate commitment,               totaling $530,000.               Proceeds of $19 million from the Preferred Stock issuance (see               note 7) were used to reduce the Senior Holdings Loan outstanding               indebtedness.               While Holdings may elect at any time to reduce amounts due and               available under the Senior Holdings Loan facilities, a mandatory               prepayment is required each quarter if the outstanding borrowings               at the following dates of payment exceed the allowable borrowings               using the following percentages:                                                                              Percentage of                                                                               Reduction of                                                                               Outstanding                             Date Range of Quarterly Payments                   Facilities                  -------------------------------------------------------- -------------------                                                                                                        September 30, 2000 through December 31, 2001                   3.750%                  March 31, 2002 through December 31, 2003                       5.000%                  March 31, 2004 through December 31, 2004                       5.625%                  March 31, 2005                                                 7.500%                  July 31, 2005                                                  7.500% and all remaining                                                                                 outstanding balances                                       82                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements               The facilities contain, among others, covenants requiring               maintenance of specific levels of operating cash flow to               indebtedness and to interest expense, and limitations on               acquisitions and additional indebtedness. The facilities prohibit               any direct or indirect distribution, dividend, redemption or               other payment to any person on account of any general or limited               partnership interest in, or shares of capital stock or other               securities of Holdings or any of its subsidiaries. Holdings was               in compliance with all Senior Holdings Loan facilities covenants               during the year ended December 31, 1999.               Essentially all of Holdings' assets as well as a pledge of               Holdings' stock by GCI, Inc. collateralize the Senior Holdings               Loan facilities.               $3.4 million of the Senior Holdings Loan facilities have been               used to provide a letter of credit to secure payment of certain               access charges associated with the Company's provision of               telecommunications services within the State of Alaska.               In connection with the funding of the Senior Holdings Loan               facilities, Holdings paid bank fees and other expenses of               approximately $3,033,000 that are being amortized to amortization               expense over the life of the agreement.        (c)    On January 27, 1998, the Company, through Alaska United, closed a               $75,000,000 project finance facility ("Fiber Facility") to               construct a fiber optic cable system connecting Anchorage,               Fairbanks, Valdez, Whittier, Juneau and Seattle as further               described in note 9. Borrowings under the Fiber Facility totaled               $71,700,000 and $61,224,000 at December 31, 1999 and 1998,               respectively. The Fiber Facility bears interest at either Libor               plus 3.0%, or at the Company's choice, the lender's prime rate               plus 1.75%. The interest rate will decline to Libor plus               2.5%-2.75%, or at the Company's choice, the lender's prime rate               plus 1.25%-1.5% when the loan balance is $60,000,000 or less. The               Fiber Facility is a 10-year term loan that is interest only for               the first 5 years. The facility can be extended to a 12-year term               loan at any time between the second and fifth anniversary of               closing the facility if the Company can demonstrate projected               revenues from certain capacity commitments will be sufficient to               pay all operating costs, and interest and principal installments               based on the extended maturity.               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 and               interest and principal installments. Alaska United was in               compliance with all covenants during the year ended December 31,               1999.               All of Alaska United's assets, as well as a pledge of the               partnership interests' owning Alaska United, collateralize the               Fiber Facility.               In connection with the funding of the Fiber Facility, Alaska               United paid bank fees and other expenses of $2,183,000 that are               being amortized over the life of the agreement. Through January               1999 (the end of the construction period of the undersea fiber               optic cable system) issuance costs were amortized to Construction               in Progress. Commencing February 1999 (the month the fiber optic               cable was placed in service) the issuance costs are being               amortized to amortization expense.        (d)    On December 31, 1992, Leasing Company entered into a $12,000,000               loan agreement ("Undersea Fiber and Equipment Loan Agreement"),               of which approximately $9,000,000 of the proceeds were used to               acquire capacity on the undersea fiber optic cable system linking               Seward, Alaska and Pacific City, Oregon. Concurrently, Leasing               Company leased the capacity under a ten year all events, take or               pay, contract with MCI (now MCI WorldCom), who subleased the               capacity back to the Company. The lease and sublease agreements               provide for equivalent terms of 10 years and identical monthly               payments of $200,000. The proceeds of the lease agreement with               MCI were pledged as primary security for the financing. The loan                                       83                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements               agreement provides for monthly payments of $170,000 including               principal and interest through the earlier of January 1, 2003, or               until repaid. The loan agreement provides for interest at the               prime rate less one-quarter percent. Additional collateral               includes substantially all of the assets of Leasing Company               including the fiber capacity and a security interest in all of               its outstanding stock. MCI has a second position security               interest in the assets of Leasing Company. The obligation was               fully paid and the lease and sublease were cancelled at December               31, 1999.        (e)    GCI Cable entered into a credit facility totaling $205,000,000               effective October 31, 1996, associated with the acquisition of               the Cable Companies described in the Company's annual report on               Form 10-K for the year ended December 31, 1998. In August 1997,               the Senior GCI Cable Loan was repaid using proceeds from the               Senior Notes (see note 5(a)) and the Senior Holdings Loan (see               note 5(b)).               In connection with the funding of the loan agreement, GCI Cable,               Inc. paid bank fees and other expenses of approximately $764,000               in 1996. The unamortized portion of these bank fees and other               expenses (net of income tax benefit of $180,000) was recognized               as an extraordinary loss on the early extinguishment of debt in               1997.        (f)    The Company entered into a $62,500,000 interim telephony credit               facility with its senior lender during April 1996. In August               1997, the Credit Agreement was repaid using proceeds from the               Senior Notes (see note 5(a)) and the Senior GCI Holdings Loan               (see note 5(b)).        (g)    GCI issued convertible subordinated notes totaling $10,000,000 in               connection with the acquisition of the Cable Companies described               in the Company's annual report on Form 10-K for the year ended               December 31, 1998. During January 1997, the holders of the GCI               subordinated notes exercised a conversion option that allowed               them to exchange their notes for GCI Class A common shares at a               predetermined conversion price of $6.50 per share. As a result,               the former note holders received 1,538,457 shares of GCI Class A               common stock.         (h)   As consideration for MCI's (now MCI WorldCom) role in enabling               Leasing Company to finance and acquire the undersea fiber optic               cable capacity described at note 5(d) above, Leasing Company               agreed to pay MCI $2,040,000 in sixty monthly payments of               $34,000. For financial statement reporting purposes, the               obligation was recorded at its remaining present value, using a               discount rate of 10% per annum. The agreement was secured by a               second position security interest in the assets of Leasing               Company. The obligation was fully paid at December 31, 1997.        As of December 31, 1999 maturities of long-term debt were as follows        (amounts in thousands):                  Year ending December 31,                  2000                                   $     ---                  2001                                         ---                  2002                                         ---                  2003                                      26,986                  2004                                      59,286                  2005 and thereafter                      253,128                                                         -----------                                                         $ 339,400                                                         ===========                                       84                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements(6)     Income Taxes        Total income tax benefit was allocated as follows (amounts in         thousands):                                                                                  Years ended December 31,                                                                                1999        1998        1997                                                                             ---------- ----------- ----------                                                                                                                                 Loss from continuing operations                           $  (5,928)     (4,123)      (573)                  Cumulative effect                                               245         ---        ---                  Extraordinary item                                              ---         ---       (180)                                                                             ---------- ----------- ----------                                                                               (5,683)     (4,123)      (753)                  Stockholders' equity, for stock option compensation                    expense for tax purposes in excess of amounts                    recognized for financial reporting purposes                  (211)       (157)       (65)                                                                             ---------- ----------- ----------                                                                            $  (5,894)     (4,280)      (818)                                                                             ========== =========== ==========        Income tax benefit consists of the following (amounts in thousands):                                                                                  Years ended December 31,                                                                                1999        1998       1997                                                                             ---------- ----------- ----------                                                                                                                                Current tax benefit:                    Federal taxes                                           $     ---      (2,858)    (4,333)                    State taxes                                                   ---        (521)      (830)                                                                             ---------- ----------- ----------                                                                                  ---      (3,379)    (5,163)                                                                             ---------- ----------- ----------                  Deferred tax benefit:                    Federal taxes                                              (4,808)       (629)     3,800                    State taxes                                                  (876)       (115)       610                                                                             ---------- ----------- ----------                                                                               (5,683)       (744)     4,410                                                                             ---------- ----------- ----------                                                                            $  (5,683)     (4,123)      (753)                                                                             ========== =========== ==========        Total income tax benefit differed from the "expected" income tax benefit        determined by applying the statutory federal income tax rate of 34% as        follows (amounts in thousands):                                                                                  Years ended December 31,                                                                                1999        1998        1997                                                                             ---------- ----------- ----------                                                                                                                                  "Expected" statutory tax benefit                          $  (6,496)     (3,713)      (997)                  State income taxes, net of federal benefit                     (649)       (594)      (181)                  Income tax effect of goodwill amortization,                    nondeductible expenditures and other items, net               469         441        107                  Other                                                           993        (257)       318                                                                             ---------- ----------- ----------                                                                            $  (5,683)     (4,123)      (753)                                                                             ========== =========== ==========                                       85                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        The tax effects of temporary differences that give rise to significant        portions of the deferred tax assets and deferred tax liabilities at        December 31, 1999 and 1998 are presented below (amounts in thousands):                                                                                          December 31,                                                                                       1999          1998                                                                                  -------------- -------------                                                                                                                             Net current deferred tax assets:                     Accounts receivable, principally due to allowance for                       doubtful accounts                                         $       715           354                     Compensated absences, accrued for financial reporting                       purposes                                                        1,154           804                     Workers compensation and self insurance health reserves,                       principally due to accrual for financial reporting                       purposes                                                          327           244                     Other                                                               776           545                                                                                  -------------- -------------                       Total current deferred tax assets                         $     2,972         1,947                                                                                  ============== =============                  Net long-term deferred tax assets:                    Net operating loss carryforwards                             $    35,486        20,871                    Alternative minimum tax credits                                    2,502         2,081                    Deferred compensation expense for financial reporting                       purposes in excess of amounts recognized for tax                       purposes                                                          973         1,027                    Employee stock option compensation expense for financial                       reporting purposes in excess of amounts recognized for                       tax purposes                                                       47           327                    Sweepstakes award in excess of amounts recognized for tax                       purposes                                                          197           201                    Other                                                                555            99                                                                                  -------------- -------------                       Total long-term deferred tax assets                            39,760        24,606                                                                                  -------------- -------------                  Net long-term deferred tax liabilities:                    Plant and equipment, principally due to differences in                       depreciation                                                   62,007        56,244                    Amortizable assets                                                 6,889         4,784                    Costs recognized for tax purposes in excess of amounts                       recognized for book purposes                                    1,319         1,319                    Other                                                                406           534                                                                                  -------------- -------------                       Total gross long-term deferred tax liabilities                 70,621        62,881                                                                                  -------------- -------------                       Net combined long-term deferred tax liabilities           $    30,861        38,275                                                                                  ============== =============        In conjunction with the 1996 Cable Companies acquisition, the Company        incurred a net deferred income tax liability of $24.4 million and        acquired net operating losses totaling $57.6 million. The Company        determined that approximately $20 million of the acquired net operating        losses would not be utilized for income tax purposes, and elected with        its December 31, 1996 income tax returns to forego utilization of such        acquired losses under Internal Revenue Code section 1.1502-32(b)(4).        Deferred tax assets were not recorded associated with the foregone        losses and, accordingly, no valuation allowance was provided. At        December 31, 1999, the Company has (1) tax net operating loss        carryforwards of approximately $88.0 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. The Company's utilization of        remaining acquired net operating loss carryforwards is subject to annual        limitations pursuant to Internal Revenue Code section 382 which could        reduce or defer the utilization of these losses.                                       86                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        Tax benefits associated with recorded deferred tax assets are considered        to be more likely than not realizable through taxable income earned in        carryback years, 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.(7)     Redeemable Preferred Stock        The Company issued 20,000 shares of convertible redeemable accreting        preferred stock ("Preferred Stock") on April 30, 1999. Proceeds totaling        $20 million (before payment of expenses of $88,000) were used for        general corporate purposes, to repay outstanding indebtedness, and to        provide additional liquidity. The Company's amended Senior Holdings Loan        facilities limit use of such proceeds (see note 5(b)). The Preferred        Stock contains a $1,000 per share liquidation preference, plus accrued        but unpaid dividends and fees. Prior to the four-year anniversary        following closing, dividends are payable semi-annually at the rate of        8.5%, plus accrued but unpaid dividends, at the Company's option, in        cash or in additional fully-paid shares of Preferred Stock. Dividends        earned after the four-year anniversary of closing are payable        semi-annually at the rate of 17%, plus accrued but unpaid dividends, in        cash only. Dividends totaling $1,158,000, or $57.90 per share, were        accrued for the year ended December 31, 1999. Mandatory redemption is        required 12 years from the date of closing.        The Company may redeem the Preferred Stock after the four-year        anniversary of its issuance, and must redeem the Preferred Stock upon        the occurrence of a triggering event (as defined). The holders may        convert the Preferred Stock into Class A common stock of the Company at        any time at a price of $5.55 per share. At any time subsequent to the        third anniversary following closing, and assuming the stock is trading        at no less than two times the conversion price, the Company may require        immediate conversion. The Preferred Stock, subject to lender approval,        is exchangeable in whole or in part, at the Company's option, into        subordinated debt with terms and conditions comparable to those        governing the Preferred Stock. The Preferred Stock is senior to all        other classes of the Company's equity securities, and has voting rights        equal to that number of shares of common stock into which it can be        converted.        Holders of the Preferred Stock shares will have the right to vote on all        matters presented for vote to the holders of common stock on an        as-converted basis. Additionally, as long as the Preferred Stock shares        remain outstanding and unconverted, the Preferred Stock holders will        have the right to vote, as a class, and the Company must obtain the        written consent of holders of a majority (or higher as required by        Alaska law) of that stock to take certain actions, some of which require        shareholder approval necessitating amendment of the Company's Articles        of Incorporation.        Following issuance of the Preferred Stock shares, the Company's Board of        Directors ("Board") expanded its size from nine to ten seats. The new        Board member was elected at the June 24, 1999 Board meeting. The        agreement also provides that the rights of the holders of Preferred        Stock shares relating to the Board seat or observer (as defined in the        Preferred Stock agreement) are to remain effective so long as any of the        Preferred Stock shares remain outstanding.(8)     Stockholders' Equity        Common Stock        GCI's Class A common stock and Class B common stock are identical in all        respects, except that each share of Class A common stock has one vote        per share and each share of Class B common stock has ten votes per        share. In addition, each share of Class B common stock outstanding is        convertible, at the option of the holder, into one share of Class A        common stock.        MCI WorldCom owns a total of 8,251,509 shares of GCI's Class A and        1,275,791 shares of GCI's Class B common stock that represent        approximately 18 and 32 percent of the issued and outstanding shares of        the respective class at December 31, 1999 and 1998, respectively.                                       87                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        After the transaction described in note 2, the owners of the cable        television properties acquired in 1996 owned a total of 14,723,077        shares of GCI's Class A common stock representing approximately 40        percent of the issued and outstanding Class A common shares at December        31, 1996. The holders of the GCI subordinated notes exercised a        conversion option in January 1997. As a result the noteholders received        1,538,457 shares of GCI's Class A common stock, some of which were sold        to others in 1999.        GCI issued 7,000,000 shares of its Class A common stock on August 1,        1997 for $7.25 per share, before deducting underwriting discounts and        commissions. Net proceeds to GCI totaled $47,959,000. Other costs        associated with the stock issuance totaled $1,233,000.        Stock Option Plan        In December 1986, GCI adopted a Stock Option Plan (the "Option Plan") in        order to provide a special incentive to the Company's officers,        non-employee directors, and employees by offering them an opportunity to        acquire an equity interest in GCI. The Option Plan, as amended in 1999,        provides for the grant of options for a maximum of 7,200,000 shares of        GCI Class A common stock, subject to adjustment upon the occurrence of        stock dividends, stock splits, mergers, consolidations or certain other        changes in corporate structure or capitalization. If an option expires        or terminates, the shares subject to the option will be available for        further grants of options under the Option Plan. The Option Committee of        GCI's Board of Directors administers the Option Plan.        The Option Plan provides that all options granted under the Option Plan        must expire not later than ten years after the date of grant. If at the        time an option is granted the exercise price is less than the market        value of the underlying common stock, the "in the money" amount at the        time of grant is expensed ratably over the vesting period of the option.        Options granted pursuant to the Option Plan are only exercisable if at        the time of exercise the option holder is an employee or non-employee        director of GCI.        Information for the years 1997, 1998 and 1999 with respect to the Option        Plan follows:                                                                                        Weighted                                                                                        Average             Range of                                                                       Shares         Exercise Price      Exercise Prices                                                                  -------------     ---------------    ------------------                                                                                                                                   Outstanding at December 31, 1996                   2,453,217            $3.54            $0.75-$6.50                Granted                                              1,047,000            $6.36            $0.01-$7.63               Exercised                                              (57,285)           $3.37            $0.75-$4.00               Forfeited                                              (72,032)           $4.82            $0.75-$6.50                                                                  -------------                 Outstanding at December 31, 1997                   3,370,900            $4.39            $0.01-$7.63               Granted                                              1,145,034            $6.40            $3.25-$7.25               Exercised                                             (264,600)           $2.98            $1.00-$4.00               Forfeited                                             (181,000)           $6.49            $4.00-$7.00                                                                  -------------                 Outstanding at December 31, 1998                   4,070,334            $4.95            $0.01-$7.63               Granted                                                865,796            $4.57            $3.25-$6.00               Exercised                                             (416,365)           $3.83            $0.01-$6.00               Forfeited                                             (165,050)           $6.03            $0.01-$7.63                                                                  -------------                 Outstanding at December 31, 1999                   4,354,715            $4.94            $0.01-$7.63                                                                  =============                 Available for grant at December 31, 1999           1,462,496                                                                  =============                                       88                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        Stock Options Not Pursuant to a Plan        In June 1989, an officer was granted options to acquire 100,000 Class A        common shares at $.75 per share. The options vested in equal annual        increments over a five-year period, expiring in February 1999. Options        to acquire 50,000 shares were exercised during 1998, and options to        acquire the remaining 50,000 shares were exercised in 1999 prior to        their expiration.        The Company entered into an incentive agreement in June 1989 with an        officer providing for the acquisition of 85,190 remaining shares of        Class A common stock of the Company for $.001 per share exercisable        through June 1997. The shares under the incentive agreement vested in        equal annual increments over a three-year period and were exercised in        June 1997.        Stock Warrants Not Pursuant to a Plan        The Company entered into a warrant agreement in December 1998 with Prime        II Management, L.P. ("PMLP"). In lieu of cash payments for services        under the amended Management Agreement, PMLP agreed to accept a stock        warrant which provides for the purchase of 425,000 shares of GCI class A        common stock, with immediate vesting at the option date and an exercise        price of $3.25 per share. The warrant expires December 2003.        The Company entered into a warrant agreement in exchange for services in        December 1998 with certain of its legal counsel which provides for the        purchase of 16,667 shares of GCI class A common stock, vesting in        December 1999, with an exercise price of $3.00 per share, and expiring        December 2003.        The Company entered into a warrant agreement in exchange for services in        June 1999 with certain of its legal counsel which provides for the        purchase of 25,000 shares of GCI class A common stock, vesting over        three years ending December 2001, with an exercise price of $3.00 per        share, and expiring December 2003.        SFAS 123 Disclosures        The Company's stock options and warrants expire at various dates through        October 2009. At December 31, 1999, 1998 and 1997, the weighted-average        remaining contractual lives of options outstanding were 6.14, 6.54 and        6.65 years, respectively.        At December 31, 1999, 1998 and 1997, the number of exercisable shares        under option was 2,509,756, 2,252,130, and 1,759,015, respectively, and        the weighted-average exercise price of those options was $3.91, $3.45        and $3.01, respectively.        The per share weighted-average fair value of stock options granted        during 1999 was $4.14 per share for compensatory and $2.85 for        non-compensatory options; for 1998 was $4.08 per share for compensatory        and non-compensatory options; and for 1997, $6.71 per share for        compensatory options and $6.50 per share for non-compensatory options.        The amounts were determined as of the options' grant dates using a        qualified Black-Scholes option-pricing model with the following        weighted-average assumptions: 1999 - risk-free interest rate of 6.66%,        volatility of 0.6455 and an expected life of 5.7 years; 1998 - risk-free        interest rate of 4.75%, volatility of 0.6951 and an expected life of 5.7        years; and 1997 - risk-free interest rate of 5.46%, volatility of 1.8558        and an expected life of 5.5 years.                                       89                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        Summary information about the Company's stock options and warrants        outstanding at December 31, 1999:                            Options and Warrants Outstanding                          Options and Warrants Exercisable          -----------------------------------------------------------------------  --------------------------------------                                                  Weighted                                                   Average                                    Number        Remaining         Weighted            Number           Range of Exercise    outstanding as   Contractual        Average         Exercisable as    Weighted Average                 Prices           of 12/31/99       Life         Exercise Price      of 12/31/99       Exercise Price          -----------------------------------------------------------------------  --------------------------------------                                                                                                                                   $0.01 - $1.75          335,860          3.46            $1.31               293,335           $1.49             $3.00 - $3.00          803,667          2.56            $3.00               787,000           $3.00             $3.25 - $3.25          696,505          6.13            $3.25               467,805           $3.25             $3.75 - $3.75            4,000          6.09            $3.75                 4,000           $3.75             $4.00 - $4.00          527,100          4.96            $4.00               321,100           $4.00             $4.50 - $5.00          364,950          9.11            $4.97                22,000           $4.55             $6.00 - $6.00          592,500          8.15            $6.00               177,000           $6.00             $6.50 - $6.94          470,800          7.77            $6.57               135,150           $6.54             $7.00 - $7.00          646,000          7.26            $7.00               220,366           $7.00             $7.25 - $7.63          380,000          7.77            $7.39                82,000           $7.53                                -------------------------------------------------  --------------------------------------             $0.01 - $7.63        4,821,382          6.14            $4.78             2,509,756           $3.91                                =================================================  ======================================        Had compensation cost for the Company's 1997, 1998 and 1999 grants for        stock-based compensation plans been determined consistent with SFAS 123,        the Company's net income (loss) and net income (loss) per common share        would approximate the pro forma amounts below (in thousands except per        share data):                                                                    As Reported       Pro Forma                                                                 ----------------- -----------------                                                                                                       1997:          Net loss                                                    $(2,183)          (3,387)          Basic net earnings per common share                         $ (0.05)           (0.08)          Diluted net earnings per common share                       $ (0.05)           (0.08)          1998:          Net loss                                                    $(6,797)          (8,697)          Basic net loss per common share                             $ (0.14)           (0.18)          Diluted net loss per common share                           $ (0.14)           (0.18)          1999:          Net loss                                                    $(9,527)         (11,714)          Basic net loss per common share                             $ (0.21)           (0.26)          Diluted net loss per common share                           $ (0.21)           (0.26)        Pro forma net income (loss) reflects options granted in 1999, 1998 and        1997. Therefore, the full impact of calculating compensation cost for        stock options under SFAS 123 is not reflected in the pro forma net        income amounts presented above since compensation cost is reflected over        the options' vesting period of generally 5 years and compensation cost        for options granted prior to January 1, 1995 is not considered.        Class A Common Shares Held in Treasury        The Company acquired 105,000 shares of its Class A common stock in 1989        for approximately $328,000 to fund a deferred bonus agreement with an        officer of the Company. The agreement provides that the balance is        payable after the later of termination of employment or six months after                                       90                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        the effective date of the agreement. In 1995, 1996 and 1997, the Company        acquired a total of 98,000 additional shares of Class A common stock for        approximately $711,000 to fund additional deferred compensation        agreements for two of its officers. In 1998 the Company acquired a total        of 145,000 additional shares of Class A common stock for approximately        $568,000 to fund additional deferred compensation agreements for three        of its officers.        Employee Stock Purchase Plan        In December 1986, the Company adopted an Employee Stock Purchase Plan        (the "Plan") qualified under Section 401 of the Internal Revenue Code of        1986 (the "Code"). The Plan provides for acquisition of GCI's Class A        and Class B common stock at market value. The Plan permits each employee        of the Company who has completed one year of service to elect to        participate in the Plan. Eligible employees may elect to reduce their        compensation in any even dollar amount up to 10 percent of such        compensation up to a maximum of $10,000 in 1999; they may contribute up        to 10 percent of their compensation with after-tax dollars, or they may        elect a combination of salary reductions and after-tax contributions.        The Company may match employee salary reductions and after tax        contributions in any amount, elected by GCI's Board each year, but not        more than 10 percent of any one employee's compensation will be matched        in any year. The combination of salary reductions, after tax        contributions and matching contributions cannot exceed 25 percent of any        employee's compensation (determined after salary reduction) for any        year. Matching contributions vest over six years. Employee contributions        may be invested in GCI common stock, MCI WorldCom common stock, AT&T        common stock, TCI Satellite Entertainment, Inc. common stock or various        mutual funds. Tele-Communications, Inc. ("TCI") common stock was        previously offered to employees as an investment choice but TCI's merger        with AT&T in March 1999 resulted in the conversion of TCI shares of        common stock into AT&T shares of common stock. TCI Satellite        Entertainment, Inc. was not included in the TCI and AT&T merger,        therefore its stock was not converted. Alternative investment choices        may be offered by the Plan commencing as early as the third quarter of        2000.       Employee contributions invested in GCI common stock receive up to 100%       matching, as determined by GCI's Board each year, in GCI common stock.       Employee contributions invested in other than GCI common stock receive up       to 50% matching, as determined by the GCI's Board each year, in GCI       common stock. The Company's matching contributions allocated to       participant accounts totaled approximately $2,448,000, $2,278,000 and       $1,800,000 for the years ended December 31, 1999, 1998, and 1997,       respectively. The Plan may, at its discretion, purchase shares of GCI       common stock from GCI at market value or may purchase GCI's common stock       on the open market. In 1998 and 1999 the Company funded employer-matching       contributions through the issuance of new shares of GCI common stock       rather than market purchases and expects to continue to do so in 2000.(9)    Fiber Optic Cable System       In early February 1999 the Company completed construction of its fiber       optic cable system with commercial services commencing at that time. The       cities of Anchorage, Juneau and Seattle are connected via a subsea route.       Subsea and terrestrial connections extended the fiber optic cable to       Fairbanks via Whittier and Valdez. The total system cost was       approximately $125 million, portions of which were allocated to Cost of       Sales and to Other Assets in 1999 (see note 13) in connection with the       sale of fiber capacity.(10)   Industry Segments Data       The Company has adopted SFAS No. 131, "Disclosures About Segments of an       Enterprise and Related Information."       The Company's 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.                                       91                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements       The Company has four reportable segments as follows:         Long-distance services. A full range of common-carrier long-distance         services is offered to commercial, government, other telecommunications         companies and residential customers, through its networks of fiber         optic cables, digital microwave, and fixed and transportable satellite         earth stations.         Cable services. The Company provides cable television services to         residential, commercial and government users in the State of Alaska.         The Company's 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 the Company         to offer digital cable television services in Anchorage and retail         cable modem service (through its Internet services segment) in         Anchorage, Fairbanks and Juneau, complementing its existing service         offerings. The Company plans to expand its product offerings as plant         upgrades are completed in other communities in Alaska.         Local access services. The Company introduced facilities based         competitive local exchange services in Anchorage in 1997. The Company         plans to provide similar competitive local exchange services in         Alaska's other major population centers.         Internet services. The Company began offering wholesale and retail         Internet services in 1998. Deployment of the new undersea fiber optic         cable (see note 9) allowed the Company to offer enhanced services with         high-bandwidth requirements.     Services provided by the Company that are included in the "Other" segment     in the tables that follow are managed services, product sales, cellular     telephone services, and the results of insignificant business units     described above which do not meet the quantitative thresholds for     determining reportable segments. None of these business units have ever met     the quantitative thresholds for determining reportable segments. Also     included in the Other segment is a $19.5 million sale of undersea fiber     optic cable system capacity in 1999, and corporate related expenses     including marketing, customer service, management information systems,     accounting, legal and regulatory, human resources and other general and     administrative expenses.     The Company evaluates performance and allocates 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     note 1. Intersegment sales are recorded at cost plus an agreed upon     intercompany profit.     All revenues are earned through sales of services and products within the     United States of America ("USA"). All of the Company's long-lived assets     are located within the USA.     Summarized financial information concerning the Company's reportable     segments follows (amounts in thousands):                                                      Long-                     Local                                                    Distance       Cable        Access     Internet                                                    Services      Services     Services    Services     Other       Total                                                 --------------------------------------------------------------------------                                                                                                                                                       1999                          ----         Revenues:           Intersegment                             $  8,518        1,942        3,937         207         ---      14,604           External                                  159,722       61,146       15,543       9,120      33,648     279,179                                                 --------------------------------------------------------------------------              Total revenues                         168,240       63,088       19,480       9,327      33,648     293,783                                                 --------------------------------------------------------------------------         Cost of sales and services:           Intersegment                                3,430          ---        1,255       9,369         ---      14,054           External                                   80,970       15,478        7,892       3,151      14,976     122,467                                                 --------------------------------------------------------------------------              Total cost of sales and services        84,400       15,478        9,147      12,520      14,976     136,521                                                 --------------------------------------------------------------------------                                       92                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements                                                      Long-                     Local                                                    Distance       Cable        Access     Internet                                                    Services      Services     Services    Services     Other       Total                                                 --------------------------------------------------------------------------                                                                                                                                      Contribution:           Intersegment                                5,088        1,942        2,682      (9,162)       ---          550           External                                   78,752       45,668        7,651       5,969      18,672     156,712                                                 --------------------------------------------------------------------------              Total contribution                      83,840       47,610       10,333      (3,193)     18,672     157,262         Selling, general and administrative           expenses                                   22,789       15,092        9,269       4,531      46,601      98,282                                                 --------------------------------------------------------------------------         Earnings (loss) from operations before            depreciation, amortization, net           interest expense, income taxes and            cumulative effect of a change in           accounting principle                       61,051       32,518        1,064      (7,724)    (27,929)     58,980         Depreciation and amortization                16,270       17,626        3,281       1,128       4,375      42,680                                                 --------------------------------------------------------------------------         Operating income (loss)                    $ 44,781       14,892       (2,217)     (8,852)    (32,304)     16,300                                                 ==========================================================================         Total assets                               $219,806      310,421       28,364      20,311      64,249     643,151                                                 ==========================================================================         Capital expenditures                       $ 17,626        7,186        3,207       5,991       2,563      36,573                                                 ==========================================================================                          1998                          ----         Revenues:           Intersegment                             $  2,716        1,330        1,284         ---         ---       5,330           External                                  157,350       57,640        9,908       6,082      15,815     246,795                                                 --------------------------------------------------------------------------              Total revenues                         160,066       58,970       11,192       6,082      15,815     252,125                                                 --------------------------------------------------------------------------         Cost of sales and services:           Intersegment                                1,284          ---        1,254       2,727         ---       5,265           External                                   79,323       13,407        6,113       3,402      13,828     116,073                                                 --------------------------------------------------------------------------              Total cost of sales and services        80,607       13,407        7,367       6,129      13,828     121,338                                                 --------------------------------------------------------------------------         Contribution:           Intersegment                                1,432        1,330           30      (2,727)        ---          65           External                                   78,027       44,233        3,795       2,680       1,987     130,722                                                 --------------------------------------------------------------------------              Total contribution                      79,459       45,563        3,825         (47)      1,987     130,787         Selling, general and administrative           expenses                                   21,019       15,630        8,477         782      43,925      89,833                                                 --------------------------------------------------------------------------         Earnings (loss) from operations before           depreciation, amortization, net           interest expense and income taxes          58,440       29,933       (4,652)       (829)    (41,938)     40,954         Depreciation and amortization                 6,976       17,281        2,597         501       4,690      32,045                                                 --------------------------------------------------------------------------         Operating income (loss)                    $ 51,464       12,652       (7,249)     (1,330)    (46,628)      8,909                                                 ==========================================================================         Total assets                               $231,727      320,305       31,062      16,535      49,816     649,445                                                 ==========================================================================         Capital expenditures                       $110,177       20,727        8,104       3,836       6,129     148,973                                                 ==========================================================================                                       93                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements                                                      Long-                     Local                                                    Distance       Cable        Access     Internet                                                    Services      Services     Services    Services     Other       Total                                                 --------------------------------------------------------------------------                                                                                                                                                       1997                          ----         Revenues:           Intersegment                             $    ---          516          ---         ---         172         688           External                                  154,681       55,165          610         182      13,171     223,809                                                 --------------------------------------------------------------------------              Total revenues                         154,681       55,681          610         182      13,343     224,497                                                 --------------------------------------------------------------------------         Cost of sales and services:           Intersegment                                  ---          ---          472         ---         ---         472           External                                   86,346       12,610          739         241      11,141     111,077                                                 --------------------------------------------------------------------------              Total cost of sales and services        86,346       12,610        1,211         241      11,141     111,549                                                 --------------------------------------------------------------------------         Contribution:           Intersegment                                  ---          516         (472)        ---         172         216           External                                   68,335       42,555         (129)        (59)      2,030     112,732                                                 --------------------------------------------------------------------------              Total contribution                      68,335       43,071         (601)        (59)      2,202     112,948         Selling, general and administrative           expenses                                   18,724       18,812        2,802          26      33,219      73,583                                                 --------------------------------------------------------------------------         Earnings (loss) from operations before           depreciation, amortization, net           interest expense, income taxes and           extraordinary item                         49,611       24,259       (3,403)        (85)    (31,017)     39,365         Depreciation and amortization                 6,676       13,320          525           3       3,243      23,767                                                 --------------------------------------------------------------------------         Operating income (loss)                    $ 42,935       10,939       (3,928)        (88)    (34,260)     15,598                                                 ==========================================================================         Total assets                               $161,968      311,643       20,357       8,510      42,824     545,302                                                 ==========================================================================         Capital expenditures                       $ 23,107       18,199        9,379       7,496       6,463      64,644                                                 ==========================================================================         ---------------         Long-distance services, local access service and Internet services are         billed utilizing a unified accounts receivable system and are not         reported separately by business segment. All such accounts receivable         are included above in the long-distance services segment for all         periods presented.         A reconciliation of total segment revenues to consolidated revenues         follows:         Years ended December 31,                                                1999             1998           1997                                                                            --------------- --------------- --------------                                                                                                                                 Total segment revenues                                            $    293,783          252,125        224,497                 Less intersegment revenues eliminated in consolidation                 (14,604)          (5,330)          (688)                                                                            --------------- --------------- --------------              Consolidated revenues                                        $    279,179          246,795        223,809                                                                                =============== =============== ==============         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:                                       94                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements         Years ended December 31,                                                1999             1998           1997                                                                            -------------- ---------------- --------------                                                                                                                                  Total segment earnings from operations before depreciation,           amortization, net interest expense, income taxes,            extraordinary item and cumulative effect of a change in           accounting principle                                            $     58,980           40,954         39,365              Less intersegment contribution eliminated in consolidation                (550)             (65)          (216)                                                                            -------------- ---------------- --------------              Consolidated earnings from operations before depreciation,                amortization, net interest expense, income taxes,                 extraordinary item and cumulative effect of a change in                 accounting principle                                             58,430           40,889         39,149         Depreciation and amortization                                           42,680           32,045         23,767                                                                            -------------- ---------------- --------------              Consolidated operating income                                      15,750            8,844         15,382         Interest expense, net                                                  (30,616)         (19,764)       (17,617)                                                                            -------------- ---------------- --------------              Consolidated net loss before income taxes, extraordinary                item and cumulative effect of a change in accounting                principle                                                  $    (14,866)         (10,920)        (2,235)                                                                                 ============== ================ ==============       A reconciliation of total segment operating income to consolidated net       loss before income taxes and extraordinary item follows:         Years ended December 31,                                                1999             1998           1997                                                                            --------------- --------------- --------------                                                                                                                                 Total segment operating income                                    $     16,300            8,909         15,598                  Less intersegment contribution eliminated in consolidation                (550)             (65)          (216)                                                                            --------------- --------------- --------------              Consolidated operating income                                      15,750            8,844         15,382         Interest expense, net                                                  (30,616)         (19,764)       (17,617)                                                                            --------------- --------------- --------------              Consolidated net loss before income taxes, extraordinary                item and cumulative effect of a change in accounting                principle                                                  $    (14,866)         (10,920)        (2,235)                                                                            =============== =============== ==============        The Company provides message telephone service to MCI WorldCom (see note        12) and Sprint, major customers. The Company earned revenues, net of        discounts, included in the long-distance segment, pursuant to a contract        with Sprint totaling approximately $19,770,000, $25,244,000 and        $22,956,000 for the years ended December 31, 1999, 1998 and 1997        respectively. As a percentage of total revenues, Sprint revenues totaled        7.1%, 10.2% and 10.3% for the years ended December 31, 1999, 1998 and        1997 respectively.(11)   Fair Value of Financial Instruments       The following table presents the carrying amounts and estimated fair       values of the Company's financial instruments at December 31, 1999 and       1998. The fair value of a financial instrument is the amount at which the       instrument could be exchanged in a current transaction between willing       parties.                                       95                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements            (Amounts in thousands)                   1999                      1998                                           ------------------------- -------------------------                                             Carrying      Fair        Carrying      Fair                                              Amount       Value        Amount       Value                                           ------------------------- -------------------------                                                                                                        Short-term assets                   $ 68,864       68,864       56,367        56,367         Notes receivable                    $  2,067        2,067        1,432         1,432         Short-term liabilities              $ 35,194       35,194       40,190        40,190         Long-term debt and capital lease            obligations                      $340,500      356,214      351,533       380,153       The following methods and assumptions were used to estimate fair values:           Short-term assets: The fair values of cash and cash equivalents, net           receivables, notes receivable and refundable deposit approximate           their carrying values due to the short-term nature of these financial           instruments.           Notes receivable: The carrying value of notes receivable is estimated           to approximate fair values. Although there are no quoted market           prices available for these instruments, the fair value estimates were           based on the change in interest rates and risk related interest rate           spreads since the notes origination dates.           Short-term liabilities: The fair values of current maturities of           long-term debt and capital lease obligations, accounts payable,           accrued interest, and subscriber deposits approximate their carrying           value due to the short-term nature of these financial instruments.           Long-term debt and capital lease obligations: The fair value of           long-term debt is based primarily on discounting the future cash           flows of each instrument at rates currently offered to the Company           for similar debt instruments of comparable maturities by the           Company's bankers. (12)   Related Party Transactions        Pursuant to the terms of a contract with MCI WorldCom, a major        shareholder of GCI (see note 8), the Company earned revenues, net of        discounts, of approximately $40,450,000, $35,991,000 and $33,962,000 for        the years ended December 31, 1999, 1998 and 1997, respectively. As a        percentage of total revenues, MCI WorldCom revenues totaled 14.5%, 14.6%        and 15.2% for the years ended December 31, 1999, 1998 and 1997        respectively. Amounts receivable, net of accounts payable, from MCI        WorldCom totaled $9,111,000 and $4,836,000 at December 31, 1999 and        1998, respectively. The Company paid MCI WorldCom for distribution of        its traffic in the lower 49 states amounts totaling approximately        $10,623,000, $12,639,000 and $14,319,000 for the years ended December        31, 1999, 1998 and 1997, respectively.        The Company entered into a long-term capital lease agreement in 1991        with the wife of the Company's president for property occupied by the        Company. The Company guarantees the lease. The lease term is 15 years        with monthly payments increasing in $800 increments at each two-year        anniversary of the lease. Monthly lease costs will increase to $18,400        effective October 2001. If the owner sells the premises prior to the end        of the tenth year of the lease, the owner will rebate to the Company        one-half of the net sales price received in excess of $900,000. If the        property is not sold prior to the tenth year of the lease, the owner        will pay the Company the greater of one-half of the appreciated value of        the property over $900,000, or $500,000. The leased asset was        capitalized in 1991 at the owner's cost of $900,000 and the related        obligation was recorded in the accompanying financial statements.                                       96                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        GCI Cable, Inc. ("GCI Cable") is a party to a Management Agreement with        PMLP. Certain of the Prime sellers are affiliated with PMLP. The        Management Agreement began on November 1, 1996 and expires on October        31, 2005, however, it can be terminated earlier upon loss of a license        to operate the systems, sale of the systems, breach of contract, or upon        exercise of an option to terminate the Management Agreement by PMLP or        GCI Cable any time after October 31, 2000. The agreement was amended        December 15, 1998.        Under the terms of the amended Management Agreement, PMLP performs        certain services for GCI Cable and will be compensated as follows:             November 01, 1996 through October 31, 1997      $1,000,000             November 01, 1997 through December 31, 1997     $  125,000             January 01, 1998 through January 31, 1999       Warrant to purchase                                                              425,000 shares of                                                               GCI stock             February 01, 1999 through October 31, 1999      $  200,000             November 01, 1999 through October 31, 2000      $  400,000             (plus reimbursement for certain expenses)        In connection with the agreement, GCI Cable received services valued at        approximately $334,000, $752,000 and $1,040,000 including reimbursable        expenses for the periods ended December 31, 1999, 1998 and 1997,        respectively. (13)   Commitments and Contingencies        Leases        The Company as Lessee. The Company leases business offices, has entered        into site lease agreements and uses certain equipment and satellite        transponder capacity pursuant to operating lease arrangements. Rental        costs under such arrangements amounted to approximately $13,678,000,        $11,609,000 and $11,574,000 for the years ended December 31, 1999, 1998        and 1997, respectively.        A summary of future minimum lease payments for all leases as of December        31, 1999 follows:           Year ending December 31:                                             Operating      Capital                                                                              ------------- -------------                                                                                 (Amounts in thousands)                                                                                                                      2000                                                            $       7,498           732             2001                                                                    4,051           114             2002                                                                    2,608           478             2003                                                                    2,454           373             2004                                                                    1,277           230             2005 and thereafter                                                     6,607           413                                                                              ------------- -------------              Total minimum lease payments                                   $      24,495         2,340                                                                              =============              Less amount representing interest                                                     (666)              Less current maturities of obligations under capital leases                           (574)                                                                                            -------------              Subtotal - long-term obligations under capital leases                                1,100              Less long-term obligations under capital leases due to                 related party, excluding current maturities                                        (353)                                                                                            -------------              Long-term obligations under capital leases, excluding                 related party,  excluding current maturities                              $         747                                                                                            =============        The leases generally provide that the Company pay the taxes, insurance        and maintenance expenses related to the leased assets. It is expected        that in the normal course of business, except for satellite transponder        capacity, leases that expire will be renewed or replaced by leases on        other properties.                                       97                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        The Company as Lessor. In 1999 the Company signed agreements with a        large commercial customer for the lease of three DS3 circuits on Alaska        United facilities within Alaska, and between Alaska and the lower 48        states. The lease agreements are for three years with renewal options. A        summary of minimum future operating lease rentals follows:           Year ending December 31,             2000                                       $  4,733             2001                                          4,733             2002                                            919                                                         --------              Total minimum lease rentals               $ 10,385                                                         ========        Future Fiber Capacity Sale         An agreement was executed effective July 1999 for a second $19.5 million        sale of fiber capacity to Alaska Communications Systems. The agreement        requires Alaska Communications Systems to acquire $19.5 million of        additional 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 Other Assets in the accompanying consolidated        financial statements at December 31, 1999.        Deferred Compensation Plan        During 1995, the Company adopted a non-qualified, unfunded deferred        compensation plan to provide a means by which certain employees may        elect to defer receipt of designated percentages or amounts of their        compensation and to provide a means for certain other deferrals of        compensation. The Company may, at its discretion, contribute matching        deferrals equal to the rate of matching selected by the Company.        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 general creditors of the Company        with respect to deferred compensation plan benefits. Compensation        deferred pursuant to the plan totaled approximately $60,000, $117,000        and $58,000 for the years ended December 31, 1999, 1998 and 1997,        respectively.        Satellite Transponders        The Company entered into a purchase and lease-purchase option agreement        in August 1995 for the acquisition of satellite transponders to meet its        long-term satellite capacity requirements. The satellite was        successfully launched in January 2000 and delivered to the Company on        March 5, 2000. The Company intends to finance the satellite transponders        pursuant to a long-term capital lease agreement with a leasing company.        The Company will continue to lease transponder capacity on the PanAmSat        Galaxy IX satellite until its communications traffic is successfully        transitioned to the new satellite transponders.                                       98                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        Self-Insurance        The Company is 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 $600,000 and $545,000 was        recorded at December 31, 1999 and 1998, 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        The Company is 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 the Company's        financial position, results of operations or its 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 December 31, 1999, 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 8.0% of the Company's total basic service        subscribers at December 31, 1999.) Juneau's current rates have been        approved by the RCA and there are no other pending filings with the RCA,        therefore, there is no refund liability for basic service at this time.        Year 2000        The Company initiated a company-wide program in 1998 to ensure that our        date-sensitive information, telephony, cable, Internet and business        systems, and certain other equipment would properly recognize the Year        2000 as a result of the century change on January 1, 2000. The program        focused on the hardware, software, embedded chips, third-party vendors        and suppliers as well as third-party networks that were associated with        the identified systems. The Company substantially completed the program        during third quarter 1999 and its systems did not experience any        significant disruptions as a result of the century change.                                       99                           GENERAL COMMUNICATION, INC.                   Notes to Consolidated Financial Statements        Costs related to the Year 2000 issue have been expensed as incurred and        are funded through the Company's operating cash flows. In total, the        Company has expensed incremental remediation costs totaling $2.3 million        through December 31, 1999, with remaining incremental remediation costs        in 2000 estimated at approximately $400,000.        The Company did not defer any critical information technology projects        because of its Year 2000 program efforts, which were addressed primarily        through a dedicated team within the Company's information technology        group.        Universal Service Fund Appeal        During the year ended December 31, 1999 the Company recorded revenues        and accounts receivable totaling approximately $1 million from the        Universal Service Fund ("USF") for Internet services provided to certain        rural public school districts in Alaska. The USF refused payment of the        submitted billings, and the Company has appealed that decision.        Management believes the Company's position is sustainable, however no        assurance can be given with respect to the ultimate outcome of such        appeal. If the appeal results in disallowance of the disputed billings,        such loss could have an impact on the Company's financial position,        results of operations and cash flows in the year the decision is        rendered.(14)    Supplementary Financial Data        The following is a summary of unaudited quarterly results of operations        for the years ended December 31, 1999 and 1998 (amounts in thousands,        except per share amounts):                                                           First       Second        Third      Fourth       Total                                                           Quarter     Quarter      Quarter     Quarter      Year                                                           -------     -------      -------     -------      -----                                                                                                                            1999       ----       Total revenues                                 $    61,338      83,659       67,340      66,842      279,179       Net earnings (loss)                            $    (4,865)      2,491       (3,537)     (3,616)      (9,527)       Basic earnings (loss) per common share:         Net earnings (loss) before cumulative           effect of a change in accounting           principle (1)                              $     (0.09)       0.04        (0.08)      (0.08)       (0.20)         Cumulative effect of a change in           accounting principle                       $     (0.01)        ---          ---         ---        (0.01)                                                       ------------ ----------- ------------ ----------- ------------         Net earnings (loss) (1)                      $     (0.10)       0.04        (0.08)      (0.08)       (0.21)                                                       ============ =========== ============ =========== ============       Diluted earnings (loss) per common share:         Net earnings (loss) before cumulative           effect of a change in accounting           principle (1)                              $     (0.09)       0.04        (0.08)      (0.08)       (0.20)         Cumulative effect of a change in           accounting principle                       $     (0.01)        ---          ---         ---        (0.01)                                                       ------------ ----------- ------------ ----------- ------------         Net earnings (loss) (1)                      $     (0.10)       0.04        (0.08)      (0.08)       (0.21)                                                       ============ =========== ============ =========== ============       1998       ----       Total revenues                                 $    58,152      62,941       62,766      62,936      246,795       Net loss                                       $    (1,616)     (2,066)      (2,076)     (1,039)      (6,797)       Basic net loss per common share (1)            $     (0.03)      (0.04)       (0.04)      (0.02)       (0.14)       Diluted net loss per common share (1)          $     (0.03)      (0.04)       (0.04)      (0.02)       (0.14)       ------------       1  Due to rounding, the sum of quarterly loss per common share amounts           may not agree to year-to-date loss per common share amounts.                                       100                                     PART IVItem 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND REPORTS ONFORM 8-K                                                                                                            Page No.                                                                                                            --------                                                                                                                 (a)(l) Consolidated Financial Statements                                                                              Included in Part II of this Report:                  Independent Auditor's Report..............................................................69                  Consolidated Balance Sheets, December 31, 1999 and 1998...................................70 -- 71                  Consolidated Statements of Operations,                     Years ended December 31, 1999, 1998 and 1997...........................................72                  Consolidated Statements of Stockholders' Equity,                     Years ended December 31, 1999, 1998 and 1997...........................................73                  Consolidated Statements of Cash Flows,                     Years ended December 31, 1999, 1998 and 1997...........................................74                  Notes to Consolidated Financial Statements................................................75 -- 100(a)(2) Consolidated Financial Statement Schedules           Included in Part IV of this Report:                  Independent Auditors' Report..............................................................107                  Schedule VIII - Valuation and Qualifying Accounts,                     Years ended December 31, 1999, 1998 and 1997...........................................108Other schedules are omitted, as they are not required or are not applicable, orthe required information is shown in the applicable financial statements ornotes thereto.                                       101(b)     Exhibits        Listed below are the exhibits that are filed as a part of this Report        (according to the number assigned to them in Item 601 of Regulation        S-K):        Exhibit No.                                            Description      ----------------------------------------------------------------------------------------------------------------                                         3.1            Restated Articles of Incorporation of The Company dated August 16, 1993. (23)          3.2            Amended and Restated Bylaws of The Company dated January 28, 2000 *          4.1            1997 Amendment No. 1 to Voting Agreement dated October 31, 1996, among Prime II Management                            L.P., as agent for the Voting Prime Sellers, MCI Telecommunications Corporation, Ronald                            A. Duncan, Robert M. Walp and TCI GCI, Inc. (23)          10.1           Employee stock option agreements issued to individuals Spradling, Strid, Behnke, and                            Lewkowski (3)          10.3           Westin Building Lease (5)          10.4           Duncan and Hughes Deferred Bonus Agreements (6)          10.5           Compensation Agreement between General Communication, Inc. and William C. Behnke dated                            January 1, 1997 (19)          10.6           Order approving Application for a Certificate of Public Convenience and Necessity to                            operate as a Telecommunications (Intrastate Interexchange Carrier) Public Utility                            within Alaska (3)          10.7           1986 Stock Option Plan, as amended (21)          10.8           Loan agreement between National Bank of Alaska and GCI Leasing Co., Inc. dated December                            31, 1992 (4)          10.13          MCI Carrier Agreement between MCI Telecommunications Corporation and General                            Communication, Inc. dated January 1, 1993 (8)          10.14          Contract for Alaska Access Services Agreement between MCI Telecommunications Corporation                            and General Communication, Inc. dated January 1, 1993 (8)          10.15          Promissory Note Agreement between General Communication, Inc. and Ronald A. Duncan, dated                            August 13, 1993 (9)          10.16          Deferred Compensation Agreement between General Communication, Inc. and Ronald A. Duncan,                            dated August 13, 1993 (9)          10.17          Pledge Agreement between General Communication, Inc. and Ronald A. Duncan, dated August                            13, 1993 (9)          10.19          Summary Plan Description pertaining to the Revised Qualified Employee Stock Purchase Plan                            of General Communication, Inc. (10)          10.20          The GCI Special Non-Qualified Deferred Compensation Plan (11)          10.21          Transponder Purchase Agreement for Galaxy X between Hughes Communications Galaxy, Inc. and                            GCI Communication Corp. (11)          10.23          Management Agreement, between Prime II Management, L.P., and GCI Cable, Inc., dated                            October 31, 1996 (12)          10.25          Licenses: (5)          10.25.1           214 Authorization          10.25.2           International Resale Authorization          10.25.3           Digital Electronic Message Service Authorization          10.25.4           Fairbanks Earth Station License          10.25.5           Fairbanks (Esro) Construction Permit for P-T-P Microwave Service          10.25.6           Fairbanks (Polaris) Construction Permit for P-T-P Microwave Service          10.25.7           Anchorage Earth Station Construction Permit          10.25.8           License for Eagle River P-T-P Microwave Service          10.25.9           License for Juneau Earth Station          10.25.10          Issaquah Earth Station Construction Permit          10.26          ATU Interconnection Agreement between GCI Communication Corp. and Municipality of                            Anchorage, executed January 15, 1997 (18)          10.29          Asset Purchase Agreement, dated April 15, 1996, among General Communication, Inc., ACNFI,                            ACNJI and ACNKSI (12)                                       102        Exhibit No.                                            Description      ----------------------------------------------------------------------------------------------------------------                                         10.30          Asset Purchase Agreement, dated May 10, 1996, among General Communication, Inc., and                            Alaska Cablevision, Inc. (12)          10.31          Asset Purchase Agreement, dated May 10, 1996, among General Communication, Inc., and                            McCaw/Rock Homer Cable System, J.V. (12)          10.32          Asset Purchase Agreement, dated May 10, 1996, between General Communication, Inc., and                            McCaw/Rock Seward Cable System, J.V. (12)          10.33          Amendment No. 1 to Securities Purchase and Sale Agreement, dated October 31, 1996, among                            General Communication, Inc., and the Prime Sellers Agent (13)          10.34          First Amendment to Asset Purchase Agreement, dated October 30, 1996, among General                            Communication, Inc., ACNFI, ACNJI and ACNKSI (13)          10.36          Order Approving Arbitrated Interconnection Agreement as Resolved and Modified by Order                            U-96-89(8) dated January 14, 1997 (18)          10.37          Amendment to the MCI Carrier Agreement executed April 20, 1994 (18)          10.38          Amendment No. 1 to MCI Carrier Agreement executed July 26, 1994 (16)          10.39          MCI Carrier Addendum--MCI 800 DAL Service effective February 1, 1994 (16)          10.40          Third Amendment to MCI Carrier Agreement dated as of October 1, 1994 (16)          10.41          Fourth Amendment to MCI Carrier Agreement dated as of September 25, 1995 (16)          10.42          Fifth Amendment to the MCI Carrier Agreement executed April 19, 1996 (18)          10.43          Sixth Amendment to MCI Carrier Agreement dated as of March 1, 1996 (16)          10.44          Seventh Amendment to MCI Carrier Agreement dated November 27, 1996 (20)          10.45          First Amendment to Contract for Alaska Access Services between General Communication, Inc.                            and MCI Telecommunications Corporation dated April 1, 1996 (20)          10.46          Service Mark License Agreement between MCI Communications Corporation and General                            Communication, Inc. dated April 13, 1994 (19)          10.47          Radio Station Authorization (Personal Communications Service License), Issue Date June                            23, 1995 (19)          10.48          Framework Agreement between National Bank of Alaska (NBA) and General Communication,                            Inc. dated October 31, 1995 (17)          10.49          1997 Call-Off Contract between National Bank of Alaska (NBA) and General Communication,                            Inc. (GCI) dated November 1, 1996 (20)          10.50          Contract No. 92MR067A Telecommunications Services between BP Exploration (Alaska), Inc.                            and GCI Network Systems dated April 1, 1992 (20)          10.51          Amendment No. 03 to BP Exploration (Alaska) Inc. Contract No. 92MRO67A effective August                            1, 1996 (20)          10.52          Lease Agreement dated September 30, 1991 between RDB Company and General Communication,                            Inc. (3)          10.53          Certificate of Public Convenience and Necessity No. 436 for Telecommunications Service                            (Relay Services) (19)          10.54          Order Approving Transfer Upon Closing, Subject to Conditions, and Requiring Filings                            dated September 23, 1996 (19)          10.55          Order Granting Extension of Time and Clarifying Order dated October 21, 1996 (19)          10.56          Contract for Alaska Access Services among General Communication, Inc. and GCI                            Communication Corp., and Sprint Communications Company L.P. dated June 1, 1993 (20)          10.57          First Amendment to Contract for Alaska Access Services between General Communication,                            Inc. and Sprint Communications Company L.P. dated as of August 7, 1996 (20)          10.58          Employment and Deferred Compensation Agreement between General Communication, Inc. and                            John M. Lowber dated July 1992 (19)          10.59          Deferred Compensation Agreement between GCI Communication Corp. and Dana L. Tindall                            dated August 15, 1994 (19)          10.60          Transponder Lease Agreement between General Communication Incorporated and Hughes                            Communications Satellite Services, Inc., executed August 8, 1989 (9)          10.61          Addendum to Galaxy X Transponder Purchase Agreement between GCI Communi-                                      103        Exhibit No.                                            Description      ----------------------------------------------------------------------------------------------------------------                                                           cation Corp. and Hughes Communications Galaxy, Inc.                            dated August 24, 1995 (19)          10.62          Order Approving Application, Subject to Conditions; Requiring Filing; and Approving                            Proposed Tariff on an Inception Basis, dated February 4, 1997 (19)          10.63          Resale Solutions Switched Services Agreement between Sprint Communications Company L.P.                            and GCI Communications, Inc. dated May 31, 1996 (20)          10.64          Commitment Letter from Credit Lyonnais New York Branch, NationsBank of Texas, N.A. and                            TD Securities (USA) Inc. for Fiber Facility dated as of July 3, 1997 (19)          10.65          Commitment Letter from NationsBank for Credit Facility dated July 2, 1997 (19)          10.66          Supply Contract Between Submarine Systems International Ltd. And GCI Communication Corp.                            dated as of July 11, 1997. (23)          10.67          Supply Contract Between Tyco Submarine Systems Ltd. And Alaska United Fiber System                            Partnership Contract Variation No. 1 dated as of December 1, 1997. (23)          10.68          $200,000,000 Amended and Restated Credit Agreement between GCI Holdings, Inc. and                            NationsBank of Texas, N.A., as administrative agent, Credit Lyonnais New York Branch,                            as documentation agent, and TD Securities (USA), Inc. as syndication agent, dated as                            of November 14, 1997. (23)          10.69          $50,000,000 Amended and Restated Credit Agreement between GCI Holdings, Inc. and                            NationsBank of Texas, N.A., as administrative agent, Credit Lyonnais New York Branch,                            as documentation agent, and TD Securities (USA), Inc. as syndication agent, dated as                            of November 14, 1997. (23)          10.70          Credit and Security Agreement Dated as of January 27, 1998 among Alaska United Fiber                            System Partnership as Borrower and The Lenders Referred to Herein and Credit Lyonnais                            New York Branch as Administrative Agent and NationsBank of Texas, N.A. as Syndication                            Agent and TD Securities (USA), Inc. as Documentation Agent. (24)          10.71          Third Amendment to Contract for Alaska Access Services between General Communication,                            Inc. and MCI Telecommunications Corporation dated February 27, 1998 (25)          10.72          Consent and First Amendment to Credit Agreements dated November 14, 1997 (26)          10.73          Second Amendment to $200,000,000 Amended and Restated Credit Agreement (26)          10.74          Second Amendment to $50,000,000 Amended and Restated Credit Agreement (26)          10.75          Third Amendment to $200,000,000 Amended and Restated Credit Agreement (26)          10.76          Third Amendment to $50,000,000 Amended and Restated Credit Agreement (26)          10.77          General Communication, Inc. Preferred Stock Purchase Agreement (26)          10.78          Qualified Employee Stock Purchase Plan of General Communication, Inc., as amended and restated                             January 01, 2000 *          10.79          Statement of Stock Designation (Series B) (26)          10.80          Fourth Amendment to Contract for Alaska Access Services between General Communication,                            Inc. and its wholly owned subsidiary GCI Communication Corp., and MCI WorldCom. (27)          10.81          Fifth Amendment to Contract for Alaska Access Services between General Communication,                            Inc. and its wholly owned subsidiary GCI Communication Corp., and Sprint                            Communications Company L.P. (27)          21.1           Subsidiaries of the Registrant (23)          23.1           Consent of KPMG LLP (Accountant for Company) *          27.1           Financial Data Schedule *          99             Additional Exhibits:          99.1              The Articles of Incorporation of GCI Communication Corp. (2)          99.2              The Bylaws of GCI Communication Corp. (2)          99.3              The Articles of Incorporation of GCI Communication Services, Inc. (4)          99.4              The Bylaws of GCI Communication Services, Inc. (4)          99.5              The Articles of Incorporation of GCI Leasing Co., Inc. (4)                                      104        Exhibit No.                                            Description      ----------------------------------------------------------------------------------------------------------------                                         99.6              The Bylaws of GCI Leasing Co., Inc. (4)          99.7              The Bylaws of GCI Cable, Inc. (14)          99.8              The Articles of Incorporation of GCI Cable, Inc. (14)          99.9              The Bylaws of GCI Cable / Fairbanks, Inc. (14)          99.10             The Articles of Incorporation of GCI Cable / Fairbanks, Inc. (14)          99.11             The Bylaws of GCI Cable / Juneau, Inc. (14)          99.12             The Articles of Incorporation of GCI Cable / Juneau, Inc. (14)          99.13             The Bylaws of GCI Cable Holdings, Inc. (14)          99.14             The Articles of Incorporation of GCI Cable Holdings, Inc. (14)          99.15             The Bylaws of GCI Holdings, Inc.  (19)          99.16             The Articles of Incorporation of GCI Holdings, Inc.  (19)          99.17             The Articles of Incorporation of GCI, Inc.  (18)          99.18             The Bylaws of GCI, Inc.  (18)          99.19             The Bylaws of GCI Transport, Inc. (23)          99.20             The Articles of Incorporation of GCI Transport, Inc. (23)          99.21             The Bylaws of Fiber Hold Co., Inc. (23)          99.22             The Articles of Incorporation of Fiber Hold Co., Inc. (23)          99.23             The Bylaws of GCI Fiber Co., Inc. (23)          99.24             The Articles of Incorporation of GCI Fiber Co., Inc. (23)          99.25             The Bylaws of GCI Satellite Co., Inc. (23)          99.26             The Articles of Incorporation of GCI Satellite Co., Inc. (23)          99.27             The Partnership Agreement of Alaska United Fiber System (23)          -------------------------            *            Filed herewith.            2            Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended                            December 31, 1990            3            Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended                            December 31, 1991            4            Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended                            December 31, 1992            5            Incorporated by reference to The Company's Registration Statement on Form 10  (File No.                            0-15279), mailed to the Securities and Exchange Commission on December 30, 1986            6            Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended                            December 31, 1989.            8            Incorporated by reference to The Company's Current Report on Form 8-K dated June 4, 1993.            9            Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended                            December 31, 1993.            10           Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended                            December 31, 1994.            11           Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended                            December 31, 1995.            12           Incorporated by reference to The Company's Form S-4 Registration Statement dated October                            4, 1996.            13           Incorporated by reference to The Company's Current Report on Form 8-K dated November 13,                            1996.            14           Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended                            December 31, 1996.                                      105            16           Incorporated by reference to The Company's Current Report on Form 8-K dated March 14,                            1996, filed March 28, 1996.            17           Incorporated by reference to The Company's Amendment to Annual Report dated December 31,                            1995 on Form 10-K/A as amended on August 6, 1996.            18           Incorporated by reference to The Company's Form S-3 Registration Statement (File No.                            333-28001) dated May 29, 1997.            19           Incorporated by reference to The Company's Amendment No. 1 to Form S-3/A Registration                            Statement (File No. 333-28001) dated July 8, 1997.            20           Incorporated by reference to The Company's Amendment No. 2 to Form S-3/A Registration                            Statement (File No. 333-28001) dated July 21, 1997.            21           Incorporated by reference to The Company's Amendment No. 3 to Form S-3/A Registration                            Statement (File No. 333-28001) dated July 22, 1997.            23           Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended                            December 31, 1997.            24           Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period                            ended June 30, 1998.            25           Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended                            December 31, 1998.            26           Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period                            ended March 31, 1999.            27           Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period                            ended June 30, 1999.(c)     Reports on Form 8-K        None.                                      106                          INDEPENDENT AUDITORS' REPORTThe Board of Directors and StockholdersGeneral Communication, Inc.:Under date of March 10, 2000, we reported on the consolidated balance sheets ofGeneral Communication, Inc. and Subsidiaries ("Company") as of December 31, 1999and 1998 and the related consolidated statements of operations, stockholders'equity and cash flows for each of the years in the three-year period endedDecember 31, 1999, which are included in the Company's 1999 Annual Report onForm 10-K. In connection with our audits of the aforementioned consolidatedfinancial statements, we also audited the related consolidated financialstatement schedule in the consolidated financial statements, which is listed inthe index in Item 14(a)(2) of the Company's 1999 Annual Report on Form 10-K.This consolidated financial statement schedule is the responsibility of theCompany's management. Our responsibility is to express an opinion on thisconsolidated financial statement schedule based on our audits.In our opinion this consolidated financial statement schedule, when consideredin relation to the basic consolidated financial statements taken as a whole,presents fairly, in all material respects the information set forth therein.                                                     /s/                                                     KPMG LLPAnchorage, AlaskaMarch 10, 2000                                      107                                                        Schedule VIII                                        GENERAL COMMUNICATION, INC. AND SUBSIDIARIES                                              Valuation and Qualifying Accounts                                        Years ended December 31, 1999, 1998 and 1997                                                                          Additions                 Deductions                                                                          ---------                 ----------                                                     Balance at    Charged to                Write-offs                                                    beginning of   profit and                  net of      Balance at                   Description                          year          loss        Other      recoveries    end of year -----------------------------------------------    -------------- ------------ ----------- -------------- ------------                                                                          (Amounts in thousands)                                                                                                                          Allowance for doubtful receivables, year ended:     December 31, 1999:                            $       887          4,224        ---          2,278         2,833                                                    ============== ============ =========== ============== ============     December 31, 1998:                            $     1,070          2,795        ---          2,978           887                                                    ============== ============ =========== ============== ============     December 31, 1997:                            $       597          3,025        ---          2,552         1,070                                                    ============== ============ =========== ============== ============                                      108SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned thereunto duly authorized.                                                 GENERAL COMMUNICATION, INC.                                                 By: /s/ Ronald A. Duncan                                                     Ronald A. Duncan, President                                                     (Chief Executive Officer)Date:  March 24, 2000Pursuant to the requirements of the Securities Exchange Act of 1934, this reporthas been signed below by the following persons on behalf of the registrant andin the capacities and on the date indicated.              Signature                                        Title                                 Date--------------------------------------      ------------------------------------------       -------------------                                                                                                   /s/ Carter F. Page                          Chairman of Board and Director                   March 24, 2000--------------------------------------                                                       -------------------Carter F. Page/s/ Robert M. Walp                          Vice Chairman of Board and Director              March 24, 2000--------------------------------------                                                       -------------------Robert M. Walp/s/ Ronald A. Duncan                        President and Director                           March 24, 2000--------------------------------------      (Principal Executive Officer)                    -------------------Ronald A. Duncan                            /s/ Ronald R. Beaumont                      Director                                         March 24, 2000--------------------------------------                                                       -------------------Ronald R. Beaumont/s/ Donne F. Fisher                         Director                                         March 24, 2000--------------------------------------                                                       -------------------Donne F. Fisher                                            Director--------------------------------------                                                       -------------------William P. Glasgow/s/ Stephen R. Mooney                       Director                                         March 24, 2000--------------------------------------                                                       -------------------Stephen R. Mooney                                            Director--------------------------------------                                                       -------------------Larry E. Romrell                                            Director--------------------------------------                                                       -------------------James M. Schneider/s/ Christopher J. Shipman                  Director                                         March 24, 2000--------------------------------------                                                       -------------------Christopher J. Shipman/s/ John M. Lowber                          Senior Vice President, Chief Financial           March 24, 2000--------------------------------------      Officer, Secretary and Treasurer                 -------------------John M. Lowber                              (Principal Financial Officer)/s/ Alfred J. Walker                        Vice President, Chief Accounting                 March 24, 2000--------------------------------------      Officer                                          -------------------Alfred J. Walker                            (Principal Accounting Officer)                                      109                                    BYLAWS OF                          GENERAL COMMUNICATION, INC.(1)                                    ARTICLE I                                     OFFICES         The Corporation shall maintain a principal office of the Corporation inthe State of Alaska as required by law. The Corporation may also have offices insuch other places, either within or without the State of Alaska, as the Board ofDirectors of the Corporation ("Board") may from time to time designate or as thebusiness of the Corporation may require.______________1  As last amended and restated on January 28, 2000                                           Bylaws of General Communication, Inc.                                                                         Page 1                                   ARTICLE II                                      SEAL         The seal of the Corporation shall be in such form as may be required bylaw and as shall be approved by the Board.  Until changed by the Board, the sealof the  Corporation  shall be in the form impressed  immediately  following thisArticle II. The seal may be used by causing it, or a  facsimile  thereof,  to beimpressed or affixed or reproduced or otherwise.                                                                     [ S E A L ]                                           Bylaws of General Communication, Inc.                                                                         Page 2                                   ARTICLE III                              STOCKHOLDER MEETINGS         Section 1.  Place of  Meetings.  Meetings  of the  stockholders  of theCorporation  ("Stockholders")  shall  be held at such  place  either  within  orwithout the State of Alaska as may from time to time be  designated by the Boardand stated in the notice of the meeting.         Section 2. Annual  Meeting of  Stockholders.  (a) The annual meeting ofthe Stockholders  ("Annual Meeting") shall be held on the first Thursday of Juneof each year at a time to be  designated  by the Board or at such other time anddate as shall be  designated  by the Board and stated in the notice of  meeting.The  purpose  of the  meeting  shall  be  the  election  of  directors  and  thetransaction  of such  other  business  as  properly  may be  brought  before themeeting.         (b)  If  the  election  of  directors  shall  not be  held  on the  daydesignated  in  (a)  of  this  Section  2 for  any  Annual  Meeting,  or at  anyadjournment  of such  meeting,  the Board  shall  call a special  meeting of theStockholders as soon as conveniently  possible thereafter.  At such meeting, theelection of directors shall take place, and such election and any other businesstransacted  thereat shall have the same force and effect as at an Annual Meetingduly called and held.         Section 3.  Special  Stockholders'  Meetings.  Special  meetings of theStockholders  may be called at any time by the  President,  the  Chairman of theBoard of  Directors,  the Board of  Directors,  or the  holders of not less thanone-tenth of all the shares entitled to vote at such meeting. Such request shallstate the purpose of the proposed meeting.  For such meetings,  notices shall begiven in the same manner as notices of the Annual Meeting,  except they shall besigned by the persons  calling the meeting.  No special  Stockholders'  meetingsshall consider any business  except that which is designated in general terms inthe notice of the meeting.         Section 4. Notices of Meetings.  Written or printed  notice stating theplace,  day and hour of the meeting and, in the case of a special  meeting,  thepurpose  or  purposes  for which  the  meeting  is  called,  will be signed  anddelivered not less than 20 nor more than 60 days before the date of the meeting,either  personally  or by mail,  by or at the  direction of the  President,  theSecretary or the officer or persons calling the meeting,  to each Stockholder ofrecord  entitled to vote at such  meeting.  Only  Stockholders  of record on therecord date established by the Board of Directors  pursuant to Section 6 of thisArticle III will be entitled to notice of such meeting.  If mailed,  such noticewill be deemed to be delivered when deposited with postage prepaid in the UnitedStates mail addressed to the Stockholder at the address of the                                           Bylaws of General Communication, Inc.                                                                         Page 3Stockholder as appears on the stock transfer  books of the  Corporation,  or, ifthe  Stockholder  has filed with the Secretary a written request that the noticebe mailed to a different  address,  the Corporation will mail the notice to thatother address.  Except where otherwise  required by law or these Bylaws,  noticeneed not be given of any adjourned meeting of the Stockholders.         Section 5.  Quorum.  The holders of a majority of the stock  issued andoutstanding  and entitled to vote,  present in person or  represented  by proxy,will constitute a quorum at all meetings of the Stockholders for the transactionof business except as otherwise provided by applicable law or by the Articles ofIncorporation;  provided  that in no event  may a quorum  consist  of less  thanone-third  of the  shares  entitled  to vote at the  meeting.  The  Stockholderspresent  in person  or  represented  by proxy at a duly  organized  meeting  maycontinue to transact business until adjournment,  notwithstanding the withdrawalof enough  Stockholders  to leave less than a quorum,  if any action taken otherthan  adjournment  is  approved  by at least a majority  of shares  required  toconstitute  a quorum.  If,  however,  such  quorum  initially  is not present orrepresented at any meeting of the Stockholders,  those  Stockholders  present inperson or  represented  by proxy and entitled to vote will have power to adjournthe meeting from time to time,  without  notice other than  announcement  at themeeting, until a quorum is present or represented. At such reconvened meeting atwhich a quorum is present or represented,  any business may be transacted  whichmight have been transacted at the original meeting.         Section  6.  Voting.  (a) At each  meeting of the  Stockholders,  everyStockholder having the right to vote shall be entitled to vote, either in personor by proxy,  the number of votes as provided for in or pursuant to the Articlesof Incorporation for each share of voting stock registered in that Stockholder'sname on the books of the  Corporation  on the date of the  closing  of the booksagainst  transfers  of stock,  the record  date fixed for the  determination  ofStockholders entitled to vote at such meeting, or if the books are not so closedor no such date is fixed, the date of such meeting.         (b) When a quorum is present at any meeting,  the affirmative vote of amajority of the votes represented by the issued and outstanding  shares entitledto vote,  present in person or  represented  by proxy,  shall  decide any matterbrought before such meeting,  unless the question is one upon which,  by expressprovision   of  the  laws  of  the  State  of  Alaska  or  of  the  Articles  ofIncorporation,  a  different  vote is  required,  in  which  case  such  expressprovision shall govern and control the decision of such question.         (c)  Except  as may be  determined  by the  Board of  Directors  of theCorporation  with  respect  to the  Preferred  Stock  and  except  as  otherwiseexpressly  required  by the  laws of the  State of  Alaska  or the  Articles  ofIncorporation, as then in effect, the holders of the Class A Common Stock of theCorporation and the holders of the Class B Common Stock of the Corporation shallvote  with  the  holders  of  voting  shares  of  the                                             Bylaws of General Communication, Inc.                                                                         Page 4Preferred  Stock of the  Corporation,  if any, as one class for the  election ofdirectors and for all other purposes.         Section 7. Record Date.  In order to determine the holders of record ofthe  Corporation's  stock who are entitled to notice of  meetings,  to vote at ameeting or adjournment  thereof,  and to receive payment of any dividend,  or tomake a determination of the  Stockholders of record for any proper purpose,  theBoard (i) may  prescribe  a record  date  which in no event will be more than 70days nor less than 20 days,  prior to the date of the action which requires suchdetermination  during which no transfer of stock on the books of the Corporationmay be made or (ii) may,  in lieu of  closing  the stock  transfer  books of theCorporation,  fix a record  date which in no event will be more than 60 days norless  than  20  days  prior  to the  date  of the  action  which  requires  suchdetermination as the record date for such determination of Stockholders.         Section 8. Presiding Officer; Order of Business; Conduct of Meeting.         (a) Meetings of the Stockholders shall be presided over by the Chairmanof the Board,  or if the Chairman is not present,  by the  President,  or if thePresident is not present, by a Vice President. The Secretary of the Corporation,or, in the Secretary's absence, an Assistant  Secretary,  shall act as secretaryof every meeting.  In the absence of the Secretary or Assistant  Secretary,  thechairman of the meeting may choose any person present to act as secretary of themeeting.         (b)  Subject  to  the   provisions  of  this  Section  8,  meetings  ofStockholders  shall generally follow accepted rules of parliamentary  procedure,including but not limited to the following:              (1) Except when  overruled by a majority of the votes  represented              by the votes held by  Stockholders  present,  the  chairman of the              meeting  shall have absolute  authority  over matters of procedure              and  authority  to state the rules under which the voting shall be              conducted.              (2) If disorder  shall arise which  prevents  continuation  of the              legitimate  business of the  meeting,  the  chairman  may quit the              chair and announce the adjournment of the meeting; and upon taking              such action, the meeting shall be automatically adjourned.              (3) The  chairman  may ask or require  that anyone not a bona fide              Stockholder or proxy leave the meeting.              (4) Subject to the provisions of Section 14 of this Article III, a              resolution or motion may be considered for a vote if proposed by a              Stockholder  or  duly  authorized   proxy,   and  seconded  by  an              individual, who                                           Bylaws of General Communication, Inc.                                                                         Page 5              is a  Stockholder  or a duly  authorized  proxy,  other  than  the              individual who proposed the resolution or motion.         (c) The  following  order of  business  shall be observed at all AnnualMeetings insofar as is practicable:              (1) Call to order;              (2) Present proof of notice of meeting or waiver of it;              (3) Appoint inspector of election, if necessary;              (4) Determine whether a quorum is present;              (5) Make reports;              (6) Read,  correct  and  approve  minutes of a  previous  meeting,              unless the reading is waived;              (7) Elect directors;              (8) Address special business stated in the notice of meeting;              (9) Address other business;              (10) Adjourn.         (d) At any special  meeting of  Stockholders,  the business  transactedshall be  confined  to the  purpose  described  in the notice of the meeting andsubject to the provisions of Section 14 of this Article III.         Section 9. Proxies.  A Stockholder  may vote the  Stockholder's  sharesthrough a proxy or attorney-in-fact  appointed by a written instrument signed bythe Stockholder and delivered to the secretary of the meeting. No proxy shall bevalid after six months from the date of its execution, unless a longer period isexpressly  provided  in the  proxy,  but in no case may the proxy be valid for aperiod  in excess of 11 months  from the date of  execution.  No proxy  shall bevalid and voted on after the meeting of the Stockholders,  or any adjournment ofsuch  meeting,  to which it  applies.  Every  proxy  shall be  revocable  at thepleasure  of the  Stockholders  executing  it,  except in those  cases  where anirrevocable proxy is duly executed and permitted by law.         Section 10.  Voting  List.  (a) At least 20 days before each meeting ofStockholders,  a  complete  list of the  Stockholders  entitled  to vote at thatmeeting,  arranged in  alphabetical  order and showing the address of and numberand class of                                            Bylaws of General Communication, Inc.                                                                         Page 6shares  entitled to vote at such  meeting  owned by each  Stockholder,  shall beprepared by the Secretary or an officer of the transfer agent, transfer clerk orregistrar of the  Corporation  having charge of the stock  transfer books and atthe direction of the Secretary.  That list of Stockholders will, for a period of30 days prior to such meeting,  be kept on file at the registered  office of theCorporation  and will be subject to  inspection by any  Stockholder  at any timeduring normal business  hours.  Such list will also be produced and kept open atthe time and place of the meeting and will be subject to the  inspection  of anyStockholder during the entire time of the meeting.         (b) The original  stock transfer books shall be prima facie evidence asto who are the Stockholders  entitled to examine such list or transfer books, orto vote at any meeting of the Stockholders.         (c) Failure to comply with the  requirements  of this  Section 10 shallnot affect the validity of any action taken at such meeting of the Stockholders.         Section 11. Action Without a Meeting.  Any action,  except the electionof  directors,  which may be taken by the vote of  Stockholders  at a meeting ofStockholders  may be taken  without  a  meeting  if  authorized  by the  writtenconsents  of  Stockholders,  identical  in content  setting out the action to betaken,  signed by the holders of all outstanding  shares entitled to vote on theaction.         Section  12.  Non-Cumulative  Voting.  In the  election  of  directors,Stockholders will not cumulate their votes but must vote shares held by them foras many persons as there are directors to be elected.         Section 13. Voting of Shares by Certain Stockholders. (a) Shares of theCorporation  standing  in the name of another  corporation  may be voted by suchofficer,  agent or proxy as the bylaws of that  corporation may prescribe or, inthe absence of such provision, as the board of directors of that corporation maydetermine.         (b)  Shares  or the  Corporation  held by an  administrator,  executor,guardian  or  conservator  may be voted by that  person,  either in person or byproxy,  without a  transfer  of such  shares  into that  person's  name.  Sharesstanding in the name of a trustee may be voted by that person,  either in personor by proxy,  but no trustee will be entitled to vote shares held by that personwithout a transfer of such shares into that person's name.         (c) Shares of the  Corporation  standing  in the name of a receiver  orbankruptcy  trustee may be voted by that person, and shares held by or under thecontrol of a receiver or bankruptcy  trustee may be voted by that person withoutthe transfer  thereof into that person's name if authority to do so is containedin an  appropriate  order of the court by which  that  person was  appointed  orotherwise provided or permitted under applicable federal bankruptcy law.                                           Bylaws of General Communication, Inc.                                                                         Page 7         (d) A  Stockholder  whose  shares are pledged  will be entitled to votesuch shares until the shares have been transferred into the name of the pledgee,and thereafter the pledgee will be entitled to vote the shares so transferred.         (e)  Shares of its own stock  held by the  Corporation  in a  fiduciarycapacity,  will not be voted at any meeting or counted in determining  the totalnumber of outstanding shares at any given time.         Section 14. Advance Notice of Nominations and Stockholder Proposals.         (a) All  nominations  of  individuals  for  election  to the Board at ameeting of the  Stockholders  and  proposals of business to be  considered  at ameeting of the Stockholders shall be made as set forth in this Section 14.         (b) The procedures to be followed for an annual meeting of Stockholdersare as follows:              (1)  Nomination  of  individuals  for  election  to the  Board and              proposal of business to be considered by the  Stockholders  may be              made at an annual meeting of Stockholders,                   (A) pursuant to the Corporation's notice of meeting;                   (B) by or at the direction of the Board; or                   (C) by a Stockholder,                       (i) who was a  Stockholder  of record both at the time of                       giving of notice  provided  for in (b) of this Section 14                       and at the  time  of the  meeting  and,  in the  case  of                       proposals,  who had continuously  held at least $2,000 in                       market value or at least 1% of the  Company's  securities                       entitled  to be voted on the matter at the meeting for at                       least one year by the date of  submission of the proposal                       to  the  Company  for  inclusion  on  the  agenda  of the                       meeting;                       (ii) who is entitled to vote at the meeting; and                       (iii) who complied with the notice and other requirements                       set forth in this Section 14.              (2) For  nominations  or other  business  to be  brought  properly              before an annual meeting by a Stockholder  under (b)(1)(C) of this              Section 14, the                                            Bylaws of General Communication, Inc.                                                                         Page 8              Stockholder  must have given timely notice of it in writing to the              Secretary  as  provided  in this  Section 14 and, in the case of a              proposal of business,  that business must be a proper  subject for              action by the Stockholder.              (3) As  used in  (b)(2)  of  this  Section  14,  to be  timely,  a              Stockholder's  notice must be  delivered  to the  Secretary at the              principal  executive  offices of the  Corporation and received not              less  than  120 days nor  more  than 150 days  prior to the  first              anniversary of the release of the Corporation's proxy statement to              Stockholders for the preceding year's annual meeting.  However, in              the event that the date of the annual  meeting is advanced by more              than 30 days or delayed by more than 60 days from such anniversary              date,  notice  by  the  Stockholder,  to  be  timely,  must  be so              delivered  and  received  not earlier  than the 150th day prior to              that  annual  meeting  and not later than the close of business on              the later of the 120th day  prior to that  annual  meeting  or the              10th day  following  the day on which public  announcement  of the              date of that meeting is first made.              (4) The Stockholder's notice shall set forth the following:                   (A) as to  each  person  whom  the  Stockholder  proposes  to                   nominate for election or reelection as a director,                       (i) the name, age,  business and  residential  addresses,                       and  principal  occupation or employment of each proposed                       nominee;                       (ii) the class and number of shares of  capital  stock of                       the  Corporation  which  are  beneficially  owned by that                       nominee on the date of that notice;                       (iii) a description of all arrangements or understandings                       between the  Stockholder and each nominee and the name of                       any  other  person  or  persons  pursuant  to  which  the                       nomination  or   nominations   are  to  be  made  by  the                       Stockholder;                       (iv) all other information  relating to that nominee that                       is required to be  disclosed in  solicitation  of proxies                       for election of directors,  or is otherwise required,  in                       each case pursuant to Regulation 14A adopted  pursuant to                       the  Securities  Exchange  Act of 1934  or any  successor                       provision; and                                           Bylaws of General Communication, Inc.                                                                         Page 9                       (v) the written consent of each proposed nominee to being                       named as a nominee in the proxy statement and to serve as                       a director of the Corporation if so elected;                   (B) as to any other business that the Stockholder proposes to                   bring before the meeting, a brief description of the business                   desired to be brought  before the  meeting,  the  reasons for                   conducting  that  business at the  meeting  and any  material                   interest  in  that  business  of the  Stockholder  and of the                   beneficial  owner,  if any, on whose  behalf the  proposal is                   made; and                   (C)  as  to  the  Stockholder   giving  the  notice  and  the                   beneficial  owner,  if any, on whose behalf the nomination or                   proposal is made,                       (i) the name and  address  of that  Stockholder,  as they                       appear on the Corporation's books, and of that beneficial                       owner, if any;                       (ii) the  class  and  number  of  shares  of stock of the                       Corporation which are owned beneficially and of record by                       the Stockholder and that beneficial owner, if any; and                       (iii) a  representation  that the Stockholder  intends to                       appear in person or by proxy at the  meeting to  nominate                       the  person  or  persons  specified  in the  notice or to                       propose such other business.                   (5) The  Corporation  may  require  any  proposed  nominee to                   furnish  any  information,  in  addition  to  that  furnished                   pursuant  to   (b)(4)(A)   of  this   Section  14,  that  the                   Corporation   may   reasonably   require  to  determine   the                   eligibility of the proposed nominee to serve as a director of                   the Corporation.                   (6)  Notwithstanding the provisions of (b)(3) of this Section                   14 to the contrary, in the event that the number of directors                   to be  elected  to the  Board is  increased  and  there is no                   public  announcement  naming all of the nominees for director                   or  specifying  the size of the  increased  Board made by the                   Corporation at least 130 days prior to the first  anniversary                   of the  preceding  year's  annual  meeting,  a  Stockholder's                   notice  required  by (b) of this  Section  14  shall  also be                   considered  timely, but only with respect to nominees for any                   new positions  created by that increase,  if the notice shall                   be  delivered  to  and  received  by  the  Secretary  at  the                   principal executive offices of the Corporation not later than                   the close of  business                                            Bylaws of General Communication, Inc.                                                                         Page 10                   on the  10th  day  following  the day on  which  that  public                   announcement is first made by the Corporation.         (c) The procedures to be followed for a special meeting of Stockholdersare as follows:              (1) Only such business  shall be conducted and only such proposals              shall be acted upon at a special  meeting of Stockholders as shall              have  been   brought   before   that   meeting   pursuant  to  the              Corporation's notice of meeting.              (2)  Nominations  of persons for election to the Board may be made              at a special  meeting of Stockholders at which directors are to be              elected,                   (A) by or at the direction of the Board; or                   (B) provided  that the notice of the special  meeting  states                   that the purpose, or one of the purposes,  of that meeting is                   to elect directors at the meeting,  by any Stockholder who is                   a stockholder  of record both at the time of giving of notice                   provided  for in  this  Section  14 and  at the  time  of the                   meeting,  who is  entitled  to  vote at the  meeting  and who                   complied with the notice and other  requirements set forth in                   this Section 14.              (3) In the  event  the  Corporation  calls a  special  meeting  of              Stockholders  for the purpose of electing one or more directors to              the Board,  any such Stockholder may nominate a person or persons,              as the case may be, for election to that  position as specified in              the Corporation's  notice of meeting, if the notice containing the              same  information  as would be required  under  (b)(2)-(6) of this              Section 14 for an annual  meeting is  delivered to and received by              the   Secretary  at  the  principal   executive   offices  of  the              Corporation  not earlier  than the 150th day prior to that special              meeting  and not later than the close of  business on the later of              the  120th  day  prior  to that  special  meeting  or the 10th day              following  the day on which public  announcement  is first made of              the date of the special meeting or of the nominees proposed by the              Board to be elected at that meeting.              (4) Proposals of business other than the nomination of persons for              election  to the Board  may be  considered  at a  special  meeting              requested by  Stockholders  in  accordance  with Section 3 of this              Article III only if the Stockholders  give a notice containing the              same information as would be                                           Bylaws of General Communication, Inc.                                                                         Page 11              required under (b)(2)-(6) of this Section 14 for an annual meeting              at the time those Stockholders requested the meeting.         (d) The following provisions apply to Stockholder meetings generally:              (1)  Only  persons  who  are  nominated  in  accordance  with  the              procedure  set forth in this Section 14 shall be eligible to serve              as  directors,  and only such  business  shall be  conducted  at a              meeting  of  Stockholders  as shall have been  brought  before the              meeting  in  accordance  with  the  procedures  set  forth in this              Section 14.              (2) The Board may reject any  nomination or  Stockholder  proposal              submitted for  consideration at any meeting of Stockholders  which              is not made in accordance  with the  provisions of this Section 14              or  which  is not a  proper  subject  for  Stockholder  action  in              accordance with provisions of applicable law.              (3) Should the Board fail to consider the validity of a nomination              or  Stockholder  proposal,  the  presiding  officer of the meeting              shall have the power and duty,                   (A)  to  determine  whether  a  nomination  or  any  business                   proposed to brought before the meeting was made in accordance                   with  the  provisions  of  this  Section  14 and is a  proper                   subject for Stockholder  action in accordance with provisions                   of applicable law; and                   (B)  if  any  proposed  nomination  or  business  is  not  in                   compliance  with this  Section 14 or is not a proper  subject                   for  Stockholder   action,  to  declare  that  the  defective                   nomination or proposal is disregarded.              (4) The provisions of (d) of this Section 14 shall not prevent the              consideration  and  approval  or  disapproval  at the  meeting  of              reports  of  officers,  directors  and  committees  of the  Board.              However, in connection with such reports, no new business shall be              acted upon at the meeting unless stated, submitted and received in              accordance with the provisions of this Section 14.              (5) For purposes of this Section 14,                   (A) "public announcement" means disclosure in a press release                   reported  by the Dow Jones News  Service,  Associated  Press,                                                              Bylaws of General Communication, Inc.                                                                         Page 12                   Reuters or comparable news service or in a document  publicly                   filed by the  Corporation  with the  Securities  and Exchange                   Commission  pursuant  to  Section  13,14,  or  15(d)  of  the                   Securities  Exchange Act of 1934 or any successor  provision;                   and                   (B)  in  no  event  shall  the  public   announcement   of  a                   postponement or adjournment of a meeting  commence a new time                   period for giving of a Stockholder's  notice pursuant to this                   Section 14.              (6) A  Stockholder  may  submit no more than one  proposal  to the              Corporation  for  a  particular   meeting  of  Stockholders.   The              proposal, including any accompanying supporting statement, may not              exceed 500 words.              (7) The Corporation may exclude a Stockholder  proposal for any of              the following substantive reasons:                   (A) would be improper under state law;                   (B) would be a violation of law;                   (C) would be a violation of proxy rules;                   (D) is a personal grievance or special interest;                   (E) is not relevant;                   (F) Corporation lacks power or authority to implement;                   (G) relates to management functions;                   (H) relates to election;                   (I) conflicts with the Corporation's proposal;                   (J) was substantially implemented;                   (K) substantially duplicates another proposal to be addressed                   at the meeting;                   (L) is a resubmission of another proposal; or                   (M) relates to a specific amount of dividend.                                           Bylaws of General Communication, Inc.                                                                         Page 13              (8)  Notwithstanding  the other  provisions  of this Section 14, a              Stockholder shall also comply with all applicable  requirements of              state law and the  Securities  Exchange  Act of 1934 and the rules              and regulations adopted under that act with respect to the matters              set forth in this Section 14.  Nothing in this Section 14 shall be              deemed to affect any rights of Stockholders  to request  inclusion              of  proposals  in, or the  Corporation's  right to omit  proposals              from, the  Corporation's  proxy  statement  pursuant to Rule 14a-8              under that act or any successor provision.                                           Bylaws of General Communication, Inc.                                                                         Page 14                                   ARTICLE IV                               BOARD OF DIRECTORS         Section 1. General Authority. The property, business and affairs of theCorporation shall be managed and controlled by its Board, which may exercise allsuch powers of the Corporation and do all such lawful acts and things as are notby applicable law or the Articles of  Incorporation  or these Bylaws directed orrequired to be exercised or done by the Stockholders.         Section 2. Number and Term of Office.  (a) The  governing  body of thisCorporation shall be the Board.  Directors on the Board need not be Stockholdersand need not be residents of the State of Alaska.  The number of directors shallbe not less than three nor more than twelve.  Each director  shall be of a legalage. The number of members of the Board shall be fixed by the Board from time totime by a vote of at least a simple  majority of the whole Board at a regular orspecial  meeting called by written  notice,  which notice includes notice of theproposal  to change the number of  directors;  provided  that no decrease in thenumber  of  directors  shall  have  the  effect  of  shortening  the term of anyincumbent  director.  Until changed as provided in this Section 2, the number ofdirectors on the Board shall be five.         (b) Upon the establishment of the Board as having three or more members("Class Date"), the Board will be divided into three classes:  Class I, Class IIand Class III. Each such class will consist, as nearly as possible, of one-thirdof the whole number of the Board.  Directors in office on the Class Date will bedivided among such classes and in such manner, consistent with the provisions ofthis Article IV, as the Board may determine by  resolution.  The initial Class Idirectors so determined shall serve until the next Annual Meeting following suchdate. The initial Class II directors so determined  shall serve until the secondAnnual  Meeting  following  such  date.  The  initial  Class  III  directors  sodetermined  shall serve until the third Annual  Meeting  following such date. Inthe case of each such  class,  such  directors  shall  serve,  subject  to theirearlier  death,  resignation  or  removal in  accordance  with the  Articles  ofIncorporation,  these  Bylaws and the laws of the State of Alaska,  until  theirrespective successors shall be elected and shall qualify. At each Annual Meetingafter the date of such filing, the directors chosen to succeed those whose termsshall have  expired  shall be elected to hold office for a term to expire at thethird  succeeding  Annual  Meeting after their  election  and,  subject to theirearlier  death,  resignation  or  removal in  accordance  with the  Articles  ofIncorporation,  these  Bylaws and the laws of the State of Alaska,  until  theirrespective  successors  shall be  elected  and shall  qualify.  If the number ofdirectors is changed,  any increase or decrease shall be apportioned  among suchclasses so as to maintain  all classes as equal in number as  possible,  and any                                           Bylaws of General Communication, Inc.                                                                         Page 15additional  director  elected to any class  shall  hold  office for a term whichshall coincide with the terms of the other directors in such class.         (c) As used in these Bylaws,  the terms "whole Board" or "entire Board"shall mean the number of directors the Corporation would have under these Bylawsat the time of determination if there were no vacancies.         Section 3.  Elections.  (a) Other than as provided in Section 2 of thisArticle  IV, the  directors  of the  Corporation  shall be elected at the AnnualMeeting or at a special meeting of Stockholders  called for that purpose,  by atleast a simple majority of the quorum for that meeting.         (b) Any vacancy  occurring  in the Board  cased by death,  resignation,removal and any newly  created  directorship  resulting  from an increase in thenumber of directors on the Board, may be filled by the directors then in office,although  such  directors  are less  than a  quorum,  or by the  sole  remainingdirector. Each director chosen to fill a vacancy or a newly created directorshipshall hold office until the next  election of the Class for which such  directorshall  have been  chosen  or, if no class is  established,  then  until the nextelection of directors and, subject to that director's earlier death, resignationor removal in accordance  with the Articles of  Incorporation,  these Bylaws andthe laws of the State of Alaska,  until that director's  successor shall be dulyelected and shall qualify.         (c) Any director may resign at any time by giving written notice to theBoard of Directors,  the President,  Chairman of the Board,  or the Secretary ofthe  Corporation.  Any such  resignation  will take effect upon  receipt of suchnotice or at any later time specified in the notice.  Unless otherwise specifiedin the notice,  the acceptance of such resignation will not be necessary to makeany postdated resignation by notice in writing to the resigning director. In theevent the resignation of a director is tendered to take effect at a future time,a  successor  may be  elected  to  take  office  when  the  resignation  becomeseffective.         (d) The  Stockholders  may elect a  director  to fill any  vacancy  notfilled by the Board.         (e)  The  term  of  a  director   terminates   upon  the  election  andqualification of a successor.         Section 4. Removal of Directors. (a) The entire Board or any individualdirector may be removed from office,  at an Annual Meeting or a special  meetingof  Stockholders  called for that  purpose,  by at least,  a majority  vote of aquorum of Stockholders for that meeting.                                           Bylaws of General Communication, Inc.                                                                         Page 16         (b) If, after the filling of a vacancy by the Board,  the directors whohave been  elected by the  Stockholders  constitute  less than a majority of thedirectors,  a holder or  holders  of an  aggregate  of 10 percent or more of theshares  outstanding at the time may call a special  meeting of  Stockholders  toelect the entire Board.         (c) The Board may declare  vacant the office of a director who has beendeclared of unsound mind by a court order.         (d) The superior court may, at the suit of the Board or of Stockholdersholding at least 10 percent  of the number of  outstanding  shares of any class,remove from office a director for fraudulent or dishonest acts, gross neglect ofduty,  or  gross  abuse  of  authority  or  discretion  with  reference  to  theCorporation and may bar from reelection a director  removed in that manner for aperiod prescribed by the court. In this instance, the Corporation will be made aparty to the suit.         (e) Except as set forth in (a)-(d)  of this  Section 4, a director  maynot be removed from office  before the  expiration of the term of office of thatdirector.         Section 5. Executive Committee. (a) By the affirmative vote of at least75 percent of the directors, the Board may designate an Executive Committee, allof whose members  shall be  directors,  to manage and operate the affairs of theCorporation or particular  properties or enterprises of the Corporation,  exceptto the extent  Stockholder  authorization  is required by law,  the  Articles ofIncorporation or these Bylaws.  The Executive  Committee will have the power, asset forth by resolution of the Board or these Bylaws to perform or authorize anyact  that  could  be done or  accomplished  by the  majority  action  of all thedirectors of the  Corporation,  except as provided in (b) of this Section 5. TheExecutive  Committee  shall keep minutes of its meetings and report to the Boardnot less often than  quarterly on its activities and shall be responsible to theBoard for the conduct of the enterprises and affairs entrusted to it.         (b) The following areas of responsibility are expressly reserved to theBoard and will not be delegated to any committees of the Board:              (1) Declaring dividends or distributions;              (2) Approving or recommending to Stockholders actions or proposals              required  by  the  Alaska  Corporations  Code  to be  approved  by              Stockholders;              (3)  Designating  candidates  for  the  office  of  director,  for              purposes of proxy solicitation or otherwise,  or fill vacancies on              the board or any committee of the board;                                           Bylaws of General Communication, Inc.                                                                         Page 17              (4) Amending the Bylaws;              (5) Approving a plan or merger not requiring Stockholder approval;              (6) Capitalizing retained earnings;              (7)  Authorizing  or approve the  reacquisition  of shares  unless              under a general formula or method specified by the board;              (8)  Authorizing or approve the issuance or sale of, or a contract              to issue or sell,  shares or designate  the terms of a series of a              class of shares,  unless the Board, having acted regarding general              authorization  for the  issuance or sale of shares,  a contract to              issue  or sell,  or the  designation  of a  series,  authorizes  a              committee,  under a general  formula  or method  specified  by the              Board by  resolution  or by  adoption  of a stock  option or other              plan,  to fix the terms of a  contract  for the sale of the shares              and to fix the terms  upon which the shares may be issued or sold,              including,  without  limitation,  the price,  the  dividend  rate,              provisions for  redemption,  sinking fund,  conversion,  voting or              preferential  rights, and provisions for other features of a class              of shares,  or a series of a class of  shares,  with full power in              the  committee  to adopt a final  resolution  setting  out all the              terms  of a  series  for  filing  with  the  commissioner  of  the              Department  of  Commerce & Economic  Development  under the Alaska              Corporations Code; or              (9)  Authorizing,  approving,  or  ratifying  contracts  or  other              transactions  between  the  Corporation  and  one or  more  of its              directors, or between the Corporation and a corporation,  firm, or              association  in which one or more of its  directors has a material              financial  interest as defined  under AS  10.06.478  of the Alaska              Corporations Code.         (c) The designation of a committee,  the delegation to the committee ofauthority,  or action  by the  committee  under  that  authority  does not aloneconstitute  compliance  by a  member  of the  Board or that  committee  with theresponsibility to act in good faith, in a manner the member reasonably  believesto be in the best  interests of the  Corporation,  and with the care,  includingreasonable inquiry, as an ordinarily prudent person in a like position would useunder similar circumstances.         Section 6. Other  Committees.  The Board may, by resolution,  establishcommittees   other  than  an  Executive   Committee   and  shall   specify  withparticularity the powers and duties of any such committee. All committees of theBoard  including  the  Executive  Committee  shall serve at the  pleasure of theBoard,  keep  minutes  of their                                             Bylaws of General Communication, Inc.                                                                         Page 18meetings;  have such names as the Board,  by resolution,  may determine;  and beresponsible  to the  Board  for  the  conduct  of the  enterprises  and  affairsentrusted  to them.  All such  committees  will  each  have at least two or moremembers, all of whom will serve at the pleasure of the Board.         Section 7. Place of Meetings.  The directors may hold their meetings insuch place or places as the Board may from time to time by resolution determine.         Section 8. Meetings.  Regular or special  meetings of the Board or of acommittee of the Board will be held at such place as may be designated from timeto time by the Board or any other person calling the meeting,  and such meetingsmay be called by the Chairman of the Board, the President, a Vice President, theSecretary, or a director.         Section 9.  Quorums.  (a) The  presence  of a majority of the number ofdirectors fixed by the Articles of  Incorporation at a meeting of the Board dulyassembled will constitute a quorum for the transaction of business,  and the actof a  majority  of the  directors  present  at any  meeting at which a quorum ispresent will be the act of the Board,  except as may be  otherwise  specificallyprovided  by the  Articles  of  Incorporation  or by these  Bylaws.  If a quoruminitially is not present at any meeting of directors,  the directors  present atthat  meeting may adjourn the meeting  from time to time,  without  notice otherthan announcement at the meeting, until a quorum is present.         (b) The  presence of a majority of the number of directors at a meetingof a committee  of the Board duly  assembled  will  constitute  a quorum for thetransaction of business, and the act of majority of the directors present at anymeeting at which a quorum is present will be the act of that  committee,  exceptas may be otherwise  specifically  provided by the Articles of  Incorporation orthese Bylaws. If a quorum initially is not present at any meeting of a committeeof the Board,  the members  present at that meeting may adjourn the meeting fromtime to time,  without notice other than  announcement  at the meeting,  until aquorum is present.         Section 10. Action Without a Meeting. Any action that may be taken at ameeting of the Board or a committee of the Board may be taken  without a meetingif identical  consents in writing  describing  the action so taken are signed byall of the directors or members of such committee  entitled to vote with respectto the subject matter thereof.  Each such consent in writing shall be filed withthe minutes of the proceedings of the Board.         Section 11. Order of Business. At meetings of the Board, business shallbe  transacted in such order as the Board may by  resolution  determine.  At allmeetings of the Board,  the Chairman of the Board, or in that person's  absence,the  President,  or in                                            Bylaws of General Communication, Inc.                                                                         Page 19that person's absence the director  designated as the chairman of the meeting bythe majority of the directors present, shall preside.         Section 12.  Director's  compensation.  Directors  shall  receive  suchcompensation and reimbursement of any expenses  incidental to the performance oftheir duties as the Board shall determine by resolution.  Such  compensation maybe in addition to any  compensation  received by the members of the Board in anyother capacity.         Section  13.  Minutes.  The Board  shall  keep  written  minutes of itsmeetings.  In the event the Secretary of the  Corporation is not a member of theBoard, the Board shall prescribe by a resolution the officer or other person whoshall be  charged  with the  responsibility  of  keeping  and  maintaining  suchminutes.         Section 14. Notice and Waiver of Notice.  (a) The first meeting of eachnewly  elected Board will be held,  without  notice,  immediately  following theadjournment of the  corresponding  Annual  Meeting,  or as soon thereafter as ispracticable.         (b) Regular  meetings  of the Board or a committee  of the Board may beheld, without notice, at such time and place, as will from time to time be fixedby the Board or these Bylaws.         (c) Special  meetings of the Board or a committee  of the Board will beheld upon either  notice in writing sent 10 days before the meeting or notice byelectronic   means,   personal   messenger,   or   comparable   person-to-personcommunication  given at least 72 hours  before  the  meeting.  The  notice  mustinclude  disclosure  of the  business  to be  transacted  and the purpose of themeeting.         (d)  Whenever  under the  provisions  of  statutes,  of the Articles ofIncorporation,  or of  these  Bylaws,  notice  is  required  to be  given to anydirector  or  Stockholder,  it will be given in  writing,  by mail or  telegram,addressed  to such  director or  Stockholder  at such  address as appears on therecords of the Corporation with postage thereon prepaid, and such notice by mailwill be deemed to be given at the time when deposited in the United States mail.         (e) Attendance of a Stockholder,  either in person or by proxy, or of adirector at a meeting will constitute a waiver or notice of such meeting, exceptwhere  an  appearance  is made  for the  express  purpose  of  objecting  to thetransaction  of any  business  because  the  meeting is not  lawfully  called orconvened.         (f) Whenever any notice is required to be given under the provisions ofstatutes,  the Articles of Incorporation or these Bylaws, a waiver of the noticein writing,  signed by the person  entitled to the notice either before or afterthe time  stated in the notice will be deemed  equivalent  to the giving of thatnotice.                                           Bylaws of General Communication, Inc.                                                                         Page 20         Section 15. Dividends.  Subject always to the provisions of the laws ofthe State of Alaska and the Articles of Incorporation, the Board shall have fullpower to  determine  whether  any,  and if so what  part,  of the funds  legallyavailable  for the payment of dividends  shall be declared in dividends and paidto the Stockholders.  The Board may fix a sum which may be set aside or reservedover and above the paid-in  capital of the Corporation for working capital or asa reserve for any proper purpose,  and from time to time may increase,  diminishand vary such funds in the Board's absolute  judgment and discretion.  Dividendsupon the shares of stock of the  Corporation,  subject  always to the  mentionedprovisions,  may be declared  by the Board at any regular or special  meeting ofthe Board, payable in cash, property or shares of the Corporation's stock.         Section 16. Meetings Held Other Than in Person. Members of the Board orany  committee  thereof  may  participate  in a  meeting  of the  Board  or suchcommittee,  as the case may be, by means of a  conference  telephone  network orsimilar  communications method by which all persons participating in the meetingcan hear each other, and such participation  shall constitute presence in personat the meeting.  Each person  participating in any meeting in which any directorparticipates by such means shall sign the minutes thereof,  and such minutes maybe signed in counterpart.                                           Bylaws of General Communication, Inc.                                                                         Page 21                                    ARTICLE V                                    OFFICERS         Section 1. Number and Tenure.  The Board shall elect from its members aChairman of the Board and a President. The Board shall also elect a Secretary, aTreasurer and a Registered  Agent. The Board may also elect,  from time to time,such Vice  Presidents  and other or  additional  officers  as in its opinion aredesirable or required for the conduct of the business of the Corporation. Any ofthe officers of the  Corporation  may or may not be  directors,  except that theChairman of the Board and the President shall be directors.  The officers of theCorporation shall hold office until the first meeting of the Board following theAnnual Meeting next following their  respective  election and,  subject to theirearlier  death,  resignation  or  removal in  accordance  with the  Articles  ofIncorporation,  these  Bylaws and the laws of the State of Alaska,  until  theirsuccessors are chosen and qualify.         Section 2. Discretion.  In its discretion,  the Board, by the vote of amajority of the whole  Board,  may leave any office,  except that of  President,Treasurer, Secretary or Registered Agent, unfilled for any such period as it mayfix by  resolution.  Subject to the laws of the State of Alaska,  any officer oragent of the corporation  may be removed at any time by the affirmative  vote ofat least 75 percent of the whole Board.         Section 3. Chairman of the Board.  The Chairman of the Board shall be adirector  and, when  present,  shall  preside at all meetings of the Board.  TheChairman of the Board shall be a member of all standing  committees of the Boardand Chairman of the Executive Committee. The Chairman of the Board shall performsuch  other  duties  as may be  prescribed  from time to time by the Board or bythese  Bylaws.  The Chairman of the Board shall have the powers of the Presidentand power to delegate any of the Chairman's  powers, on a temporary or permanentbasis, to the President.         Section  4.  President.  The  President  shall be the  chief  executiveofficer of the  Corporation.  The President shall be a member of the Board.  ThePresident  shall  exercise such duties as  customarily  pertain to the office ofPresident  and shall have  general  and active  supervision  over the  property,business  and  affairs of the  Corporation  and over its several  officers.  ThePresident  may appoint and terminate  the  appointment  or election of officers,agents,  or employees  other than those  appointed or elected by the Board.  ThePresident may sign, execute and deliver, in the name of the Corporation,  powersof attorney,  contracts,  bonds and other obligations  which implement  policiesestablished  by the  Board,  and  shall  perform  such  other  duties  as may beprescribed from time to time by the Board or by these Bylaws.                                           Bylaws of General Communication, Inc.                                                                         Page 22         Section  5.  Vice   Presidents.   Vice   Presidents   shall  have  suchdistinguishing titles, powers and perform such duties as may be assigned to themby the Chairman of the Board,  the  President,  the  Executive  Committee or theBoard.  In the  absence  or  disability  of the  Chairman  of the  Board and thePresident, any Vice President designated by the Board may perform the duties andexercise  the powers of the  President.  A Vice  President  may sign and executecontracts and other  obligations  pertaining to the regular  course of duties ofthat office which implement policies  established by the Board and shall performsuch other duties as may be  prescribed  from time to time by the Board or theseBylaws.         Section  6.  Treasurer.  The  Treasurer  shall be the  chief  financialofficer  and,  unless the Board  otherwise  declares  by  resolution,  the chiefaccounting  officer of the Corporation.  Unless the Board otherwise  declares byresolution,  the  Treasurer  shall  have  general  custody  of all the funds andsecurities of the Corporation and have general supervision of the collection anddisbursement  of funds of the  Corporation.  The  Treasurer  shall  endorse  forcollection on behalf of the Corporation checks, notes and other obligations, andshall deposit the same to the credit of the Corporation in such bank or banks ordepository as the Board may designate. The Treasurer may sign, with the Chairmanof the Board,  President,  or such other person or persons as may be  designatedfor the purpose by the Board,  all bills of exchange or promissory  notes of theCorporation.  The Treasurer shall enter or cause to be entered  regularly in thebooks of the Corporation a full and accurate  account of all moneys received andpaid by the  Treasurer on account of the  Corporation;  shall at all  reasonabletimes  exhibit  books and  accounts  of the  Treasurer  to any  director  of theCorporation  upon  application at the office of the Corporation  during businesshours;  and,  whenever  required by the Board or the  President,  shall render astatement of accounts for the  Corporation.  The  Treasurer  shall  perform suchother  duties  as may be  prescribed  from  time to time by the  Board or by theBylaws. The Treasurer may be required to give bond for the faithful  performanceof duties of that  office in such sum and with such  surety as shall be approvedby the Board.  The Board may authorize one or more  accounting  firms to performany  act or  discharge  any  responsibility  of the  Treasurer.  Any  individualappointed  by  the  Board  as  Assistant  Treasurer  shall,  in the  absence  ordisability of the  Treasurer,  perform the duties and exercise the powers of theTreasurer  and shall perform such other duties and have such other powers as theBoard may from time to time prescribe.         Section 7.  Secretary.  Subject to Section 8 of Article III and Section13 of Article IV of these Bylaws,  the  Secretary  shall keep the minutes of allmeetings of the  Stockholders and of the Board, and to the extent ordered by theBoard,  the  Chairman  of the Board or the  President,  will keep the minutes ofmeetings of all  committees.  The  Secretary  shall cause  notice to be given ofmeetings of  Stockholders,  of the Board and of any  committee  appointed by theBoard.  The Secretary  shall have custody of the corporate  seal and minutes andrecords  relating  to the conduct  and acts of the                                             Bylaws of General Communication, Inc.                                                                         Page 23Stockholders and the Board, which shall, at all reasonable times, be open to theexamination of any director.  The Secretary or any Assistant Secretary appointedby the Board may  certify  the  record of  proceedings  of the  meetings  of theStockholders  or of the Board and of resolutions  adopted at such meetings;  maysign or attest  certificates,  statements  or reports  required to be filed withgovernmental bodies or officials;  may sign acknowledgments of instruments;  maygive  notices of  meetings;  and shall  perform  such other duties and have suchother powers as the Board may from time to time prescribe.         Section 8. Registered  Agent.  The Registered Agent for the Corporationmay be an  individual  or  corporation,  resident  or  located  in  Alaska.  TheRegistered Agent shall have such duties and  responsibilities  as are prescribedby the laws of the State of Alaska.         Section 9. Bank  Accounts.  In addition to such bank accounts as may beauthorized in the usual manner by resolution of the Board,  the Treasurer,  withapproval of the Chairman of the Board or the President, may authorize such banksaccounts to be opened or maintained in the name and on behalf of the Corporationas may be deemed  necessary or appropriate by the Treasurer,  provided  paymentsfrom such bank  accounts  are to be made upon and  according to the check of theCorporation,  which may be signed  jointly  or  singularly  by either  manual orfacsimile  signature or signatures  of such officers or bonded  employees of theCorporation as shall be specified in the written  instructions  of the Treasureror  Assistant  Treasurer  with the  approval of the Chairman of the Board or thePresident.         Section 10.  Vacancies.  In case any office  shall become  vacant,  theBoard  shall  have  power  to fill  such  vacancy.  In case  of the  absence  ordisability  of any officer,  the Board may delegate the powers or duties of suchofficer to another officer in the Corporation, or to a director.         Section  11.  Proxies.  Unless  otherwise  directed  by the Board,  theChairman of the Board or the President,  or the designees of either of these twoofficers  shall have full power and  authority on behalf of the  Corporation  toattend  and  to  vote  upon  all  matters  and  resolutions  at any  meeting  ofStockholders  of any corporation in which this  Corporation may hold stock,  andmay exercise on behalf of this  Corporation any and all of the rights and powersincident to the ownership of such stock at any such meeting,  whether regular orspecial, and at all adjournments  thereof, and shall have power and authority toexecute  and  deliver  proxies and  consents  on behalf of this  Corporation  inconnection  with the  exercise  by this  Corporation  of the  rights  and powersincident to the  ownership  of such stock,  with full power of  substitution  orrevocation.                                           Bylaws of General Communication, Inc.                                                                         Page 24         Section 12. Dual  Offices.  Any person may hold more than one corporateoffice, except that the President shall not hold any other office except that ofChairman of the Board.         Section 13.  Salaries.  The salaries of all  executive  officers of theCorporation  shall be fixed by the Board from time to time.  No officer shall beineligible  to receive  such  salary by reason of the fact that that  officer isalso a director of the Corporation and receiving  compensation  therefor or thatthat officer  devotes less than full time during  normal  business  hours to theperformance of that officer's duties as an officer of the Corporation.                                           Bylaws of General Communication, Inc.                                                                         Page 25                                   ARTICLE VI                                 INDEMNIFICATION         Section 1. Non-Derivative  Actions.  The Corporation will indemnify anyperson  who  was or is a  party  or is  threatened  to be  made a  party  to anythreatened,  pending or completed  action,  suit or  proceeding,  whether civil,criminal,  administrative  or  investigative  (other than an action by or in theright of the Corporation) by reason of or arising from the fact that that personis or was a director,  officer, employee, or agent of the Corporation,  or is orwas serving at the request of the Corporation as a director,  officer,  employeeor agent of another  corporation,  partnership,  joint  venture,  trust or otherenterprise.  Amounts paid in settlement actually and reasonably incurred by thatperson  in  connection  with  such  action,   suit  or  proceeding  may  includereimbursement of expenses,  attorney fees, judgments, fines, and amounts paid insettlement  actually and reasonably  incurred by that person in connection  withthe action or  proceedings  if that  person  acted in good faith and in a mannerthat  that  person  reasonably  believed  to be in or not  opposed  to the  bestinterests  of the  Corporation  and,  with  respect  to any  criminal  action orproceeding,  had no reasonable  cause to believe the conduct was  unlawful.  Thetermination of any action, suit and proceeding by judgment,  order,  settlement,conviction,  or upon a plea of nolo  contendere or its  equivalent,  will not ofitself create a  presumption  that the person did not act in good faith and in amanner which that person reasonably believed to be in or not opposed to the bestinterests  of the  Corporation  and,  with  respect  to any  criminal  action orproceeding,  the person had  reasonable  cause to believe  that the  conduct wasunlawful.         Section 2.  Derivative  Actions.  The  Corporation  will  indemnify anyperson  who  was or is a  party  or is  threatened  to be  made a  party  to anythreatened,  pending  or  completed  action  or suit by or in the  right  of theCorporation  to procure a judgment in its favor by reason for  arising  from thefact  that  he  is or  was  a  director,  officer,  employee  or  agent  of  theCorporation,  or is or was  serving  at the  request  of  the  Corporation  as adirector, officer, employee or agent of another corporation,  partnership, jointventure,   trust  or  other   enterprise.   This   indemnification   will  coverreimbursement  for expenses  (including  attorney  fees) actually and reasonablyincurred by that person in  connection  with the defense or  settlement  of suchaction if that person acted in good faith and in a manner that person reasonablybelieved to be in or not opposed to the best interests of the Corporation.         Section 3. Reimbursement  Conditions.  (a) Indemnification  will not bemade in respect of any claim,  issue,  or matter as to which the person has beenadjudged to be liable for  negligence or misconduct  in the  performance  of theperson's duty to the  Corporation,  except to the extent that the court in whichthe  action  was  brought   determines  upon  application   that,   despite  theadjudication  of liability,  in view of all the                                             Bylaws of General Communication, Inc.                                                                         Page 26circumstances  of the case,  the person is fairly  and  reasonably  entitled  toindemnity for expenses that the court considers proper.         (b) To the extent that a director,  officer,  employee, or agent of theCorporation  has been  successful  on the merits or  otherwise  in defense of anaction or  proceeding  as described in Sections 1 and 2 of this Article VI or indefense of a claim, issue, or matter in the action or proceeding,  the director,officer,  employee,  or agent will be indemnified  against expenses and attorneyfees actually and reasonably incurred in connection with the defense.         (c) Unless otherwise ordered by a court, indemnification under Sections1 or 2 of  this  Article  VI  may  only  be  made  by  the  Corporation  upon  adetermination that indemnification of the director,  officer, employee, or agentis proper in the circumstances because the director, officer, employee, or agenthas met the  applicable  standard  of  conduct  set out in those  sections.  Thedetermination will be made by:              (1) The Board by at least a majority  vote of a quorum  consisting              of directors who were not parties to the action or proceeding; or              (2)  Independent  legal  counsel in a written  opinion if a quorum              under (c)(1) of this Section 3 is                   (A) not obtainable;                   (B) obtainable but a majority of  disinterested  directors so                   directs; or                   (C) Approval of the outstanding shares of the Corporation.         (d)  The  Corporation  may pay or  reimburse  the  reasonable  expensesincurred in defending a civil or criminal action or proceeding in advance of thefinal disposition in the manner provided in (c) of this Section 3 if:              (1) In the case of a director or officer,  the director or officer              furnishes the  Corporation  with a written  affirmation  of a good              faith  belief  that  the  standard  of  conduct  described  in  AS              10.06.450(b) or 10.06.483(e) of the Alaska  Corporations  Code has              been met;              (2) The  director,  officer,  employee,  or  agent  furnishes  the              Corporation  a written  unlimited  general  undertaking,  executed              personally or on behalf of the individual, to repay the advance if              it is ultimately determined that an applicable standard of conduct              was not met; and                                           Bylaws of General Communication, Inc.                                                                         Page 27              (3) A  determination  is made that the facts  then  known to those              making the determination would not preclude  indemnification under              the Alaska Corporations Code.         (e) The indemnification provided under Sections 1 and 2 of this ArticleVI  is  not   exclusive  of  any  other   rights  to  which  a  person   seekingindemnification may be entitled under a bylaw,  agreement,  vote of Stockholdersor  disinterested  directors,  or  otherwise,  both as to action in the officialcapacity of the person and as to action in another  capacity  while  holding theoffice. The right to indemnification  continues as to a person who has ceased tobe a director,  officer,  employee,  or agent,  and inures to the benefit of theheirs, executors, and administrators of the person.         Section 4. Insurance.  At the discretion of the Board,  the Corporationmay  purchase  and  maintain  insurance  on behalf of any person who is or was adirector, officer, employee or agent of the Corporation, or is or was serving atthe  request of the  Corporation  as a director,  officer,  employee or agent ofanother  corporation,  partnership,  joint  venture,  trust or other  enterpriseagainst any liability  asserted  against that person and incurred by that personin any  such  capacity,  or  arising  out of  that  status,  whether  or not theCorporation would have the power to indemnify that person against such liabilityunder the provisions of this Article VI.                                           Bylaws of General Communication, Inc.                                                                         Page 28                                   ARTICLE VII                              CERTIFICATE OF STOCK         Section  1.  Form.  (a) The  interest  of  each  Stockholder  shall  beevidenced by certificates  for shares of stock,  certifying the class and numberof shares  represented  thereby  and in such  form,  not  inconsistent  with theArticles of Incorporation, as the Board may from time to time prescribe.         (b) The  certificates  of stock shall be signed by the  President  or aVice  President and by the  Secretary or an Assistant  Secretary and sealed withthe seal of the Corporation.  Such seal may be a facsimile, engraved or printed.Where any certificate is countersigned or otherwise  authenticated by a transferagent or by a transfer  clerk,  and by a registrar,  the  signatures of any suchofficers upon such  certificate may be facsimile,  engraved or printed.  In caseany  officer,  transfer  agent or  registrar  who has signed or whose  facsimilesignature  has been  placed upon any  certificates  shall have ceased to be suchbefore the certificate is issued,  it may be issued by the Corporation  with thesame effect as if such officer, transfer agent or registrar had not ceased to besuch at the time of its issue.         Section 2.  Transfers.  (a) Transfers of shares of the capital stock ofthe  Corporation  shall  be made  only on the  books of the  Corporation  by theregistered owner thereof,  or by that owner's duly authorized  attorney,  and onsurrender of the certificate or certificates  for such shares properly  endorsedor  accompanied  by proper  evidence of  succession,  assignment or authority totransfer, and with all taxes thereon paid.         (b) The person in whose name  shares of stock stand on the books of theCorporation  shall be deemed by the  Corporation to be the owner thereof for allpurposes,  and the Corporation  shall not be bound to recognize any equitable orother  claim to or  interest  in such  share or  shares on the part of any otherperson, whether or not it shall have express or other notice thereof,  except asotherwise provided by the laws of the State of Alaska.         Section 3. Lost or  Destroyed  Certificates.  The Board  shall have thepower to direct new stock  certificates to be issued to any Stockholder in placeof any certificates  theretofore issued by the Corporation when such Stockholderproves to the  satisfaction  of the Board  that a stock  certificate  is lost ordestroyed, or upon the posting of an indemnity bond by the owner of such lost ordestroyed  certificates,  or that Stockholder's legal  representatives,  in suchamount as the Board shall deem  appropriate,  to hold the  Corporation  harmlessfrom any loss or claim  arising out of or in  connection  with the issuance of aduplicate  certificate,  unless such requirement be dispensed with by the Board,in its discretion, in any instance or instances.                                           Bylaws of General Communication, Inc.                                                                         Page 29         Section 4. Transfer Agent and  Registrar.  The Board may appoint one ormore  transfer  agents or transfer  clerks and one or more  registrars,  and mayrequire all certificates for shares to bear the manual or facsimile signature orsignatures of any of them. The Corporation's transfer agent and registrar may bethe  identical  if  the  person  or  entity  acting  in  such  dual   capacitiescountersigns  certificates for shares required to bear that person's  signaturesin both capacities.         Section 5.  Restrictions on Transfer.  No securities of the Corporationor certificates representing such securities will be transferred in violation ofany law or of any  restriction  on such  transfer  set forth in the  Articles ofIncorporation or amendments to them, these Bylaws or other agreement restrictingsuch transfer which has been filed with the Corporation if reference to any suchrestrictions  is made on the  certificates  representing  such  securities.  TheCorporation  will not be bound by any  restriction  not so filed and noted.  TheCorporation  may rely in good  faith upon the  opinion of its  counsel as to anylegal or contractual  violation with respect to any such restrictions unless theissue has been  finally  determined  by a court of competent  jurisdiction.  TheCorporation  and any  party to such  agreement  will  have  the  right to have arestrictive  legend imprinted upon any certificate  covered by the agreement andany certificates  issued in replacement or exchange  therefor or with respect tosuch certificates.         Section 6. Closing Transfer Books and Filing Record Date. The Board mayprescribe  a period  not  exceeding  70 days nor less than 20 days  prior to therecord date appointed for the payment of dividends to Stockholders  during whichno transfer of stock may be made on the books of the  Corporation,  or the Boardmay fix a date not more than 60 days nor less than 20 days prior to the date forthe payment of any such  dividends  as the record date as of which  Stockholdersentitled  to  receive  payment  of  such  dividends  will  be  determined.  OnlyStockholders  of record on that record date will be entitled to receive  paymentof such dividends.                                           Bylaws of General Communication, Inc.                                                                         Page 30                                  ARTICLE VIII                             REPORTS TO SHAREHOLDERS         Section 1. Annual Report.  (a) The Board will authorize the preparationof and arrangement  for the  distribution of an annual report to Stockholders ofthe Corporation as required by as 10.06.433(a) Alaska Corporations Code.         (b) The annual  report to  Stockholders  will  contain,  at minimum,  abalance  sheet as of the end of the  fiscal  year and an  income  statement  andstatement of changes in financial  position for the fiscal year  accompanied  by(1) a report on the fiscal year by independent accountants or (2) if there is nosuch report from  accountants,  a certificate  of an  authorized  officer of theCorporation  that the financial  statements were prepared without audit from thebooks  and  records  of  the   Corporation;   provided  that,  so  long  as  theCorporation's  stock is registered  pursuant to the federal Securities  ExchangeAct of 1934, the Annual Report to  Stockholders  required under that act will beprovided to all Stockholders.         Section 2. Other Reports.  A Stockholder  holding at least five percentof the  outstanding  shares  of a class of the  Corporation  may make a  writtenrequest to the  Corporation  in accordance  with AS  10.06.433(c)  of the AlaskaCorporations  Code, for a quarterly  income  statement of the  Corporation and abalance sheet of the Corporation  and, in addition,  if an annual report for thelast fiscal year has not been sent to Stockholders,  the statements  required by(a) of Section 1 of Article VIII of these Bylaws for the last fiscal year. Thesestatements  will be delivered or mailed by the  Corporation to the person makingthe request within 30 days of the request.  A copy of these  statements  will bekept on file in the principal office of the Corporation for 12 months,  and theywill  be  exhibited  at all  reasonable  times  to a  Stockholder  demanding  anexamination of the  statements,  or a copy of the  statements  will be mailed tothat Stockholder.         Section 3. Delivery.  (a) The  Corporation  will, in accordance with AS10.06.433(d)  of the Alaska  Corporations  Code,  upon the written  request of aStockholder,  mail to the  Stockholder  a copy of the reports  described in thisArticle VIII.         (b) The  income  statements  and  balance  sheets  referred  to in thisArticle VIII must be accompanied by any report on those  statements  prepared byindependent  accountants  engaged by the  Corporation  or the  certificate of anauthorized  officer  of the  Corporation  that  the  financial  statements  wereprepared without audit from the books and records of the Corporation.                                           Bylaws of General Communication, Inc.                                                                         Page 31                                   ARTICLE IX                           TRANSACTIONS WITH OFFICERS,                           DIRECTORS AND SHAREHOLDERS         Section 1. Director Material Interest.  A contract or other transactionbetween the Corporation and one or more of the directors of the Corporation,  orbetween the Corporation and a corporation,  firm, or association in which one ormore of the directors of the Corporation has a material financial  interest,  isneither  void  nor   voidable   because  the  director  or  directors  or  othercorporation,  firm,  or  association  is a party  or  because  the  director  ordirectors is present at the meeting of the Board that authorizes,  approves,  orratifies  the  contract  or  transaction,  if  the  material  facts  as  to  thetransaction  and as to the director's  interest are fully  disclosed or known tothe              (1)  Stockholders  and the contract or  transaction is approved by              the  Stockholders  in good  faith,  with the  shares  owned by the              interested director or directors not being entitled to vote; or              (2) Board,  and the Board  authorizes,  approves,  or ratifies the              contract or transaction in good faith by a sufficient vote without              counting the vote of the interested director or directors, and the              person  asserting  the  validity of the  contract  or  transaction              sustains the burden of proving  that the  contract or  transaction              was just and  reasonable as to the  Corporation at the time it was              authorized, approved, or ratified.         Section 2. Common  Directorships,  Votes on Compensation.  (a) A commondirectorship does not alone constitute a material  financial interest within themeaning of this Article IX. A director is not interested,  within the meaning ofthis Article IX, in a resolution  fixing the compensation of another director asa director,  officer,  or employee of the Corporation,  notwithstanding the factthat the first director is also receiving compensation from the Corporation.         (b) Interested or common  directors may be counted in  determining  thepresence  of a quorum at a meeting of the Board that  authorizes,  approves,  orratifies a contract or transaction under this Article IX.         Section 3. Transactions  Involving Cross  Directorships.  A contract orother  transaction  between the  Corporation and a corporation or association ofwhich one or more directors of the Corporation are directors is neither void norvoidable  because the  director or  directors  are present at the meeting of theBoard that authorizes, approves, or ratifies the contract or transaction, if thematerial facts of the  transaction  and the director's  other  directorship  arefully  disclosed or known to the Board and the Board  authorizes,  approves,  orratifies the contract or transaction in good faith by a sufficient                                             Bylaws of General Communication, Inc.                                                                         Page 32vote  without  counting  the vote of the common  director  or  directors  or thecontract or  transaction  is approved by the  Stockholders  in good faith.  ThisSection 3 does not apply to  contracts or  transactions  covered by Section 1 ofthis Article IX.                                           Bylaws of General Communication, Inc.                                                                         Page 33                                    ARTICLE X                               GENERAL PROVISIONS         Section 1.  Fiscal  Year.  The  fiscal  year of the  Corporation  shallconvene on the first day of January of each year, unless otherwise determined bythe Board.         Section 2. Books and  Records.  A  certified  copy of the  Articles  ofIncorporation  and the Bylaws shall be deposited in the name of the  Corporationin such bank or banks, trust company or trust companies or other institutions asthe Board shall  designate by resolution.  All checks or demands for the paymentof money and all notes and other  instruments  of a  negotiable  nature shall besigned by the person designated by appropriate  resolution of the Board or theseBylaws.         Section 3.  Contracts.  The Board may authorize any officer or officersor agent or agents  to enter  into any  contract  or  execute  and  deliver  anyinstrument in the name and on behalf of the Corporation,  and such authority maybe general or confined to specific instances.         Section  4.  Loans.  No loans  shall be  contracted  on  behalf  of theCorporation and no evidence of  indebtedness  shall be issued in its name unlessauthorized by a resolution of the Board, and such  authorization  may be generalor confined to specific instances.         Section 5. Saving Clause. In the event any provision of these Bylaws isinconsistent  with the Articles of  Incorporation  or the corporate  laws of theState of Alaska, such provision shall be invalid to the extent of such conflict;and such conflict shall not affect the validity of all other provisions of theseBylaws.                                           Bylaws of General Communication, Inc.                                                                         Page 34                                   ARTICLE XI                                   AMENDMENTS         Section 1. Amendment and Repeal.  Except as otherwise  provided by law,the power to alter,  amend or repeal  these  Bylaws and adopt new Bylaws will bevested  exclusively  in the Board,  provided that such action must be taken by avote of at least a simple majority of the whole Board.         Section 2.  Recordation.  Whenever an amendment or new bylaw is adoptedand thereby made a part of the Bylaws,  a copy of that bylaw will be kept in theminute book with these  Bylaws.  If any position of the Bylaws is repealed,  thefact of such  repeal and the date on which it  occurred  will be recorded in theminute  book,  and a copy of it will be  placed  next to and  include  in  theseBylaws.         I, the undersigned being the Secretary of GENERAL COMMUNICATION,  INC.,hereby  certify  the  foregoing  to be the  amended  and  revised  Bylaws of theCorporation, as adopted by the Board, on the 28th day of January, 2000.                                                          /S/                                                     John M. Lowber, Secretary                                           Bylaws of General Communication, Inc.                                                                         Page 35                    QUALIFIED EMPLOYEE STOCK PURCHASE PLAN                                       OF                           GENERAL COMMUNICATION, INC.   (Amended and restated in compliance with SBJPA '96 and TRA '97 and USERRA)                                TABLE OF CONTENTS                                -----------------                                                                           PAGE                                                                           ----ARTICLE I                  NAME AND PURPOSE OF PLAN AND TRUST               3ARTICLE II                 DEFINITIONS                                      4ARTICLE III                PARTICIPATION                                    11ARTICLE IV                 CONTRIBUTIONS                                    13ARTICLE V                  DETERMINATION AND VESTING OF                           PARTICIPANT ACCOUNTS                             26ARTICLE VI                 RETIREMENT DATE--DESIGNATION                           OF BENEFICIARY                                   30ARTICLE VII                DISTRIBUTION FROM TRUST FUND                     31ARTICLE VIII               FIDUCIARY OBLIGATIONS                            43ARTICLE IX                 PLAN ADMINISTRATOR AND                           PLAN COMMITTEE                                   46ARTICLE X                  POWERS AND DUTIES OF THE TRUSTEE                 51ARTICLE XI                 CONTINUANCE, TERMINATION, AND                           AMENDMENT OF PLAN AND TRUST                      56ARTICLE XII                MISCELLANEOUS                                    58RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 2January 01, 2000                                    ARTICLE I                       NAME AND PURPOSE OF PLAN AND TRUST         Section  1.1  Name and  Purpose.  The  Company,  by  execution  of thisagreement, amends and restates its qualified stock purchase plan, to be known asthe General  Communication,  Inc.  Qualified  Employee  Stock  Purchase Plan, toafford its employees a convenient means for regular and systematic  purchases ofcommon  stock of the  Company  and to  instill  a  proprietary  interest  in theCompany.  The Plan and Trust  Fund are  created  for the  exclusive  benefit  ofEmployee-Participants  and their beneficiaries.  The Plan is intended to qualifyunder  Sections  401(a) and 401(k) of the Code,  and the trust created under thePlan is intended to be exempt under Section 501(a) of the Code.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 3January 01, 2000                                   ARTICLE II                                   DEFINITIONS         Section 2.1  Definitions.  When used in this  agreement,  the followingwords shall have the following  meanings,  unless the context clearly  indicatesotherwise:  (i)       "Account",  unless otherwise indicated, means a Participant's entire            interest  in  Company  stock and any other  assets in the Trust Fund            created by his Employer's  contributions and his own  contributions,            and the income,  expenses,  gains,  and losses  attributable to such            stock and assets.  (ii)      "Anniversary Date" means the first day of each Plan Year.  (iii)     "Associated  Company" means any corporation  which is deemed to be a            member of the group of  corporations  under  common  control  of the            Company and which adopts this Plan and Trust with the consent of the            Company.  Any such Company which  subsequently is no longer a member            of the controlled group shall be deemed to have terminated this Plan            and  Trust  immediately  upon  such  failure  to be a member  of the            controlled group.  (iv)      "Beneficiary"  means  the  person  who,  under  this  Plan,  becomes            entitled to receive a Participant's Account upon his death.  (v)       "Board of Directors" means the board of directors of the Company.  (vi)      "Break in Service" for purposes of eligibility to participate  means            any 12-month  period,  measured  from the  Employee's  employment or            Reemployment  Commencement  Date in which the Employee has completed            no more than 500 hours of service.  "One-Year  Break in Service" for            vesting  and all  other  purposes  means  any Plan Year in which the            Employee  has  completed  no more  than 500  hours of  service.  For            purposes of this definition,  hours of service shall include service            as  an  Employee  in  any  capacity  including  Union  Employee  and            commissioned salesman.  (vii)     "Code" means the Internal  Revenue Code of 1986,  as it presently is            constituted,  as it may be  amended,  or any  successor  statute  of            similar purposes.  (viii)    "Company" means General Communication,  Inc., a corporation with its            principal place of business at Anchorage,  Alaska,  or any successor            in interest to it resulting from merger, consolidation,  or transfer            of  substantially  all of its assets,  which  expressly may agree in            writing to continue this Plan.  (ix)      "Compensation"  means the total  amount  actually or  constructively            paid by an Employer to a  Participant  for services  rendered to the            Employer during the Plan Year including  overtime pay,  commissions,            and bonuses,  but excluding  relinquished  vacation pay, unused sick            pay, insurance  premiums,  pension and retirement  benefits,  living            expenses, other allowances, and all contributions by the Employer to            this Plan, to any other tax qualified Plan or to any health accident            or welfare fund or Plan. Compensation shall be calculated to include            amounts  that  are  not  currently  paid  to a  Participant  and not            includible  in  a  Participant's  gross  income  by  reason  of  the            application of Code Section 125 and 402(g).RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 4January 01, 2000            Pursuant to Code Section 401(a)(17), Compensation taken into account            for all  purposes  under  this Plan shall not  exceed  $150,000,  as            adjusted  by the  Secretary  of the  Treasury  for  cost  of  living            increases each year, for any Plan Year.  (x)       "Determination  Date" means, with respect to any Plan Year, the last            day of the  preceding  Plan Year (or in the case of the  first  Plan            Year, the last day of such Plan Year).  This Section 2.1(x) shall be            interpreted to conform with Code Section 416.  (xi)      "Effective Date" of this restated Plan means January 1, 1997, unless            otherwise provided in this Plan. For any Associated Company which is            not  participating  in this  Plan on the  restated  effective  date,            effective date means that date designated by the Associated Company.  (xii)     "Employee"  means  any  person,  whether  male  or  female,  now  or            hereafter  in the employ of an Employer,  including  officers of the            Employer,  but  excluding  directors  who are not in the  Employer's            employ in any other capacity, excluding independent contractors, and            excluding Union Employees. Employee shall not include any individual            who is treated as an  independent  contractor  by the  Employer,  as            reflected  in the records of the  Company,  even if such  individual            becomes  classified  as a common-law  employee of the Company by any            administrative agency or court of competent jurisdiction,  or by the            IRS, or pursuant to an agreement between the Company and the IRS.  (xiii)    "Employer"  means the Company and any  Associated  Company which has            adopted the Plan and Trust.  (xiv)     "Employment  Commencement  Date" means the date on which an Employee            first performs an Hour of Service for the Employer.  (xv)      "Fiduciary"  means a  person  who (A)  exercises  any  discretionary            authority or discretionary control respecting management of the Plan            or exercises  any  authority  or control  respecting  management  or            disposition of its assets;  (B) renders  investment advice for a fee            or other  Compensation,  direct or  indirect,  with  respect  to any            moneys  or other  property  of the  Plan,  or has any  authority  or            responsibility to do so; or (C) has any  discretionary  authority or            discretionary  responsibility in the  administration of the Plan. If            any money or other  property of the Plan is  invested in  securities            issued by an  investment  company  registered  under the  Investment            Company Act of 1940,  such investment by itself shall not cause such            investment company or such investment  company's  investment adviser            or principal  underwriter  to be deemed to be a fiduciary or a party            in interest.  (xvi)     "Highly Compensated  Employee" means, for the Plan Year beginning in            1997, and subsequent Plan Years, any Employee who:            (A) was a five  percent  owner at any time during the  Determination            Year or the Look-Back Year; or            (B) for the Look-Back  Year, had  Compensation  in excess of $80,000            (as  adjusted by the  Secretary  of the  Treasury for cost of living            increases), andRESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 5January 01, 2000            (C) was in the top-paid  group of Employees for the Look-Back  Year.            An Employee is in the top-paid  group of Employees for any Plan Year            if such  Employee  is in the  group  consisting  of the  top  twenty            percent  (20%)  of  the  Employees  when  ranked  on  the  basis  of            Compensation paid during the Plan Year.            For purposes of this definition, the Determination Year shall be the            Plan  Year.  The  Look-Back  Year shall be the  twelve-month  period            immediately preceding the Determination Year.            In  determining  an  individual's  Compensation  under this section,            Compensation  from each Company required to be aggregated under Code            Sections 414(b),  (c), (m), and (o) will be taken into account.  For            purposes of this section,  the  determination  of Compensation  will            include  deferrals  made pursuant to Code  Sections 125,  402(e)(3),            402(h)(1)(B) and, in the case of Company contributions made pursuant            to a elective  deferral  agreement,  deferrals made pursuant to Code            Section 403(b).            A former Employee will be treated as a Highly  Compensated  Employee            if such  Employee  separated  from  service  (or was  deemed to have            separated)  prior to the Plan  Year,  performs  no  service  for the            Company during the Plan Year, and was a Highly Compensated  Employee            for either the  separation  year or any Plan Year ending on or after            the Employee's 55th birthday.            The determination of who is a Highly Compensated Employee, including            the  determinations  of the number and  identity of Employees in the            top-paid group and the Compensation that is considered, will be made            in accordance with Code Section 414(q).  (xvii)    (A) "Hour of  Service"  means (1) each hour for which an Employee is            paid or is entitled to payment,  for the  performance  of duties for            his Employer during the applicable computation period; (2) each hour            for which an  Employee  is paid or is  entitled  to  payment  by his            Employer on account of a period of time  during  which no duties are            performed  (irrespective  of whether the employment  relationship is            terminated) due to vacation, holiday, illness, incapacity (including            disability),  layoff, jury duty, military duty, or leave of absence;            and (3) each hour for which back pay,  irrespective of mitigation of            damages, either was awarded or agreed to by the Employer.            (B) For  purposes of Section  2.1(xvii)(A)(2)  the  following  rules            shall  apply:  (1) no more than 501 hours  will be  credited  to any            Employee on account of a single  continuous  period during which the            Employee  performs  no duties;  (2) an hour shall not be credited on            account  of a period  during  which no duties are  performed  if the            payment for such hour is made or due under a Plan maintained  solely            for the purpose of complying with applicable workmen's Compensation,            or unemployment Compensation or disability insurance laws; (3) hours            shall not be  credited  for  payments  which  reimburse  an Employee            solely for medical or  medically  related  expenses  incurred by the            Employee;  and (4) a  payment  shall be  deemed to be made by or due            from the Employer  regardless  of whether such payment is made by or            due from the Employer directly, or indirectly through, among others,            a Trust Fund, or insurer, to which the Employer  contributes or pays            premiums. These rules alsoRESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 6January 01, 2000            shall  apply to the extent that any back pay is agreed to or awarded            for a period of time during  which an Employee  did not or would not            have performed duties.            (C) For  purposes  of this  Section  2.1(xvii),  the  same  hours of            service shall not be credited under both Sections 2.1(xvii)(A)(1) or            (2) of this  Plan and also  under  Section  2.1(xvii)(A)(3)  of this            Plan.  Each Hour of Service  shall be  credited  under this  Section            2.1(xvii) in accordance with 29 C.F.R.  Section  2530.200b-2(b)  and            (c).  Employment  with  any  affiliated  companies  (whether  or not            incorporated)  that are members of a controlled  group as defined in            Code Section  414(b),  that are under  common  control as defined in            Code Section  414(c),  or that are members of an affiliated  service            group within the meaning of Code Section  414(m) or any other entity            required to be aggregated with the Company  pursuant to Code Section            414(o)  and the final  regulations  thereunder,  will be  treated as            employment  with the  Company  for  purposes  of  participation  and            vesting under this Plan; provided, however, that an employee must be            employed by the Employer to  participate  in this Plan. In addition,            for all purposes of the Plan,  Hours of Service will be credited for            any  individual  considered  a Leased  Employee  under Code  Section            414(n) and for any  individual  considered  an  Employee  under Code            Section 414(o) and the final regulations thereunder.            (D) For purposes of determining  whether an Employee has experienced            a Break in Service,  hours of service  shall  include  each hour for            which an  Employee  is absent from work for any period (1) by reason            of the  pregnancy of the  Employee;  (2) by reason of the birth of a            child of the  Employee;  (3) by reason of the  placement  of a child            with the Employee in  connection  with the adoption of such child by            such  Employee;  or (4) for  purposes of caring for such child for a            period beginning immediately following such birth or placement.            (E) The hours  described in the preceding  sentence shall be treated            as hours of  service  in the year in which  the  absence  from  work            begins  if the  Participant  would be  prevented  from  incurring  a            one-year  Break in Service as a result of such  treatment or, in any            other  case,  the hours  shall be treated as hours of service in the            immediately following year. The hours described in the two preceding            sentences  shall  be the  hours of  service  which  otherwise  would            normally  have  been  credited  to such  Participant  but  for  such            absence,  or in any case in which the Plan is  unable  to  determine            such hours, eight hours of service per work day of such absence.  No            credit  will  be  given  pursuant  to  this  paragraph   unless  the            Participant  furnishes to the Plan Committee such timely information            as the Plan may require to  establish  that the absence from work is            for reasons  described above and to establish the number of days for            which there was such an absence.            (F) An Employee will be credited with service for  participation and            vesting  purposes for leaves of absence  qualifying under the Family            and Medical  Leave Act of 1993,  but only to the extent  required by            the Family and Medical Leave Act and the regulations thereunder.  (xviii)   (A) "Key  Employee"  means any  Employee of an Employer  who, at any            time during the Plan Year or any of the four  preceding  Plan Years,            is (1) an officer of an Employer having annual Compensation  greater            than  50  percent  of  the  dollar  limitation  under  Code  Section            415(b)(1)(A),  as adjusted  for  increases in the cost of living for            any  Plan  Year;  (2)  one  of  the  ten  Employees   having  annual            Compensation from an Employer of more than the $30,000RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 7January 01, 2000            annual addition  limitation as adjusted for increases in the cost of            living and owning (or  considered to own under Code Section 318) the            largest  interests of the Employer;  (3) a five percent owner of the            Employer;  or (4) a one percent owner of the Employer  having annual            Compensation from the Employer of more than $150,000.            (B) For purposes of Section  2.1(xviii)(A)(1)  of this Plan, no more            than 50 Employees  (or, if lesser,  the greater of 3 Employees or 10            percent of the Employees) shall be treated as officers. For purposes            of Section  2.1(xviii)(A)(2) of this Plan, if two Employees have the            same interest in an Employer,  the Employee  having  greater  annual            Compensation  from the Employer  shall be treated as having a larger            interest. This Section 2.1(xviii)(B) shall be interpreted to conform            with Code Section 416. For purposes of this  definition,  "Employee"            shall have the same meaning as it does under Code Section 416(i)(1).            Any  Beneficiary  of a  Key  Employee  shall  be  treated  as a  Key            Employee.  (xix)     "Named  Fiduciary" means any Fiduciary who is named in this Plan, or            who, pursuant to a procedure specified in the Plan, is identified as            a  Fiduciary  to the Plan by the  Company.  Such  Named  Fiduciaries            include,  but are not limited to, the Trustee,  the Plan  Committee,            and the Plan Administrator.  (xx)      "Normal Retirement Age" means the date a Participant attains age 65.  (xxi)     "Participant"  means any Employee who has become a Participant under            Article III of this Plan.  Participation  shall cease upon the later            of (A)  distribution  of a  Participant's  entire vested Account and            forfeiture  of a  Participant's  entire  nonvested  Account  or  (B)            Termination of Employment.  (xxii)    "Plan"  and "Plan and  Trust"  means the  Qualified  Employee  Stock            Purchase  Plan of  General  Communication,  Inc.,  and the Trust set            forth in and by this Agreement and all subsequent amendments to it.  (xxiii)   "Plan  Administrator"  means the  person  appointed  by the Board of            Directors whose duties are provided in this Plan and Trust.  (xxiv)    "Plan  Committee"  means  the  committee  appointed  by the Board of            Directors whose duties are provided in this Plan and Trust.  (xxv)     "Plan Year" means the Company's  fiscal (taxable) year, as presently            established,  which ends on December 31 of each year, and this shall            be the fiscal  (taxable) year of the Trust.  If there is a change in            the Company's fiscal year, then "Plan Year" shall mean the Company's            new fiscal  year,  and any short  fiscal  year  resulting  from such            change  shall be  considered  a full year for all  purposes  of this            Plan.  The "Plan  Year"  shall not change  without  approval  of the            Internal Revenue Service.  (xxvi)    "Qualifying  Employer Security" means the Class A and Class B common            stock of the Company.  (xxvii)   "Quarterly  Anniversary  Date" means  January 1, April 1, July 1, or            October 1 of each Plan Year.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 8January 01, 2000  (xxviii)  "Reemployment  Commencement Date" means the first date after a Break            in Service on which an Employee  performs an Hour of Service for the            Employer.  (xxix)    "Super Top Heavy  Plan" means a plan in which the  aggregate  of the            Accounts  of Key  Employees  under the plan as of the  Determination            Date   exceeds  90%  of  the   aggregate  of  the  Accounts  of  all            Participants  under the plan (as of the  Determination  Date for the            Plan Year), excluding former Key Employees.  (xxx)     "Termination  of  Employment"  means the  termination  of a person's            status as an  Employee  as defined in Section  2.1(xii),  as a Union            Employee  as  defined in Section  2.1(xxxvi),  or as a  commissioned            salesman.  (xxxi)    "Top Heavy Plan" means a plan in which the aggregate of the Accounts            of Key Employees  under the plan as of the Valuation Date exceeds 60            percent of the aggregate of the Accounts of all  Participants  under            the Plan (as of the Determination Date for the Plan Year), excluding            former  Key  Employees.   The  Accounts  of  Participants  shall  be            increased by the aggregate  distributions  made with respect to such            Participants during the five-year period ending on the Determination            Date.  Section  2.1(xxxi)  shall be interpreted to conform with Code            Section  416.  For  purposes  of  determining  whether  this and any            aggregated  plans  are top  heavy or super top  heavy,  all  defined            benefit and defined  contribution  plans  (including  any simplified            Employee pension plan) maintained or ever maintained by the Employer            in which a Key Employee participates or on which any plan in which a            Key  Employee  participates  depends  for  qualification  under Code            Sections 401(a)(4) or 410 must be aggregated. Other plans maintained            or ever  maintained  by the  Employer  may be  aggregated  if,  when            considered as a group with the plans that must be  aggregated,  they            would  continue  to  satisfy  the   requirements  of  Code  Sections            401(a)(4) and 410.  (xxxii)   "Total  Disability"  means a disability that  permanently  renders a            Participant unable to perform satisfactorily the usual duties of his            employment with his Employer,  as determined by a physician selected            by the Plan  Committee,  and which  results  in his  Termination  of            Employment with the Employer.  (xxxiii)  "Trust Fund" means the assets of the trust  established by this Plan            and Trust from which the benefits  under this Plan shall be paid and            shall  include  all income of any nature  earned by the fund and all            changes in fair market value.  (xxxiv)   "Trustee"  means the person or persons  appointed  as trustee of the            Trust Fund and any duly appointed and qualified successor trustee.  (xxxv)    "Trustee  Responsibility"  means any responsibility  provided in the            Plan to manage or control the assets of this Plan.  (xxxvi)   "Union  Employee"  means any  Employee  who is included in a unit of            Employees  covered  by a  collective  bargaining  agreement  between            Employee  representatives and the Company or any Associated Company,            if  retirement  benefits  were the subject of good faith  bargaining            between such Employee  representatives and the Company or Associated            Company.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 9January 01, 2000  (xxxvii)  "Valuation Date" means the last day of each Plan Year.  (xxxvii)  "Year of Service" for purposes of eligibility  to participate  means            any  12-month  period,   measured  from  the  Employee's  Employment            Commencement  Date or Reemployment  Commencement  Date, in which the            Employee  completes 1,000 or more Hours of Service.  For purposes of            this  definition,  Hours of  Service  shall  include  service  as an            Employee in any capacity  including Union Employee and  commissioned            salesman  and shall  include  service as an  Employee of an Employer            under common  control  with the Company as defined in Code  Sections            414(b), (c), (m), and (o) and the final regulations  thereunder,  or            any other  Company  designated  by the Plan  Committee  from time to            time.  Year of Service also shall  include  service with any company            that  is  acquired   directly   or   indirectly   by  any   Employer            participating in this Plan whether by acquisition of stock or assets            if such company becomes part of the controlled group of corporations            as defined in Code  Section  414(b) or (c) of which the Company is a            part.  "Year of Service" for purposes of vesting means any Plan Year            in which the Participant completes 1,000 or more Hours of Service.            Effective  for  acquisitions  occurring on or after January 1, 1996,            Year of Service also shall include Years of Service with any company            that  is  acquired   directly   or   indirectly   by  any   Employer            participating in this Plan whether by acquisition of stock or assets            if such company becomes part of the controlled group of corporations            as defined in Code  Section  1563(a) of which the  Company is a part            and provided that such  individual for whom such service is credited            becomes an  Employee of General  Communication,  Inc. as a result of            the  acquisition.  Effective  for  Employees  first  employed by the            Company on or after  January 1, 1996,  an Employee  will be credited            with Years of Service  under this Plan for Years of Service with any            company which has received  services provided by the Company under a            management or outsourcing  contract between such company and General            Communication,  Inc. as a service  provider  (as  determined  by the            Company)  provided that such  individual for whom such service is to            be credited  becomes an Employee  of the Company  directly  from the            company  for  which  the  Company  serves as  service  provider  (as            determined by the Company).    Section 2.2 Gender.  The  masculine  gender  shall  include the feminine andneuter, and the singular shall include the plural.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 10January 01, 2000                                   ARTICLE III                                  PARTICIPATION    Section 3.1 Who May Become a Participant. Any Employee of an Employer on theEffective Date who has completed one Year of Service may become a Participant onthe  Effective  Date of the Plan.  Any other or new  Employee of an Employer maybecome a Participant on any Quarterly Anniversary Date of the Plan following hishaving completed one Year of Service, provided such Employee must be an Employeeof the Employer when he becomes a Participant.    Section 3.2 Participation Form. (a) Completion Requested.  The participationform shall be available  from the Plan  Administrator.  To become a Participant,each  Employee must  complete and return the form to the Plan  Administrator  onwhich he shall evidence the following:  (i) his acceptance of  participation  inthe Plan;  and (ii) his consent to be bound by the terms and  conditions  of thePlan and all its amendments.            (b) Failure To  Complete,  Revocation.  The failure to complete  andreturn the form will be deemed to be an election not to become a Participant. AnEmployee  may revoke  this  election  and become a  Participant  by  requesting,completing,  and  returning an  application  form before a subsequent  QuarterlyAnniversary Date of the Plan, if he otherwise is eligible.    Section 3.3 Effect of Break in Service on Becoming a  Participant.  (a) Yearin Which the  Employee  Completes  More Than 500 but Fewer Than  1,000  Hours ofService.  An Employee who completes  more than 500 but fewer than 1,000 hours ofservice during any 12-month period,  measured from the Employee's  employment orReemployment  Commencement Date, shall not be deemed to have completed a Year ofService  nor to have  suffered a Break in Service.  For the  purposes of Section3.3(c) of this Plan,  any breaks in service which are  interrupted  by a year inwhich the Employee has more than 500 but fewer than 1,000 hours of service shallbe treated as inconsecutive breaks in service.            (b) Inclusion of Pre-Break Years of Service in General. All years ofservice  prior  to any  period  of up to five  consecutive  one year  breaks  inservice, not excluded by reason of this section, shall be counted in determiningwho may become a Participant.            (c)  Exclusion  of Years of Service  for  Employees  Without  VestedRights.  Years of service completed prior to any Break in Service by an Employeewho has no vested  interest  in any  Employer  contributions  at the time of hisreemployment shall not be counted in determining whether the Employee may becomea Participant if the number of consecutive  one-year breaks in service equals orexceeds  the greater of five years or the  aggregate  number of years of servicebefore such break.  The aggregate  number of years of service  before such breakshall not include any years of service  which have been  excluded by reason of aprior application of this Section 3.3(c).    Section 3.4 Participation Upon  Reemployment.  An Employee who has satisfiedthe  service  requirement  under  Section 3.1 of this Plan by reason of years ofservice prior to a Break in Service of one year or longer (which service has notbeen  excluded  under  Section  3.3 of  this  Plan)  may  become  a  Participantimmediately  upon  his  reemployment.   However,   an  Employee  who  becomes  aParticipant  under this section may not commence  contributions  until the firstQuarterly  Anniversary Date occurring after reemployment pursuant to Section 4.1of this Plan.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 11January 01, 2000    Section 3.5 Military Service.  Notwithstanding any provision of this Plan tothe  contrary,  contributions,  benefits  and  service  credit  with  respect toqualified  military  service  will be provided in  accordance  with Code Section414(u).RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 12January 01, 2000                                   ARTICLE IV                                  CONTRIBUTIONS    Section 4.1 Contributions and Salary Reductions by Participants. (a) GeneralRules. Each Participant shall make contributions to the Trust Fund only by meansof regular payroll deductions, by elective deferrals, or in such other manner asthe Plan Committee shall  determine,  which  contributions  shall be paid to theTrustee  at least  quarterly.  Participant  after-tax  contributions  by payrolldeduction or by any other manner as the Plan Committee  shall determine shall bereferred to as voluntary  contributions,  and Participant pre-tax  contributionsshall be known as elective deferrals. Each Participant shall designate up to 10%of his Compensation in each payroll period, until changed by the Participant, asa elective deferral, plus any contributions under Section 4.1(c) of this Plan. AParticipant  may  change his  designation  prospectively  but not  retroactivelyeffective  for any  payroll  period  by  filing  a new  election  with  the PlanAdministrator  prior to the last two weeks of the calendar  quarter  immediatelypreceding the quarter for which it is to be effective. A Participant may suspendhis  contributions  to the Plan for any  quarter  by filing a written  notice ofsuspension with the Plan  Administrator  at any time prior to the last two weeksof the calendar quarter  immediately  preceding the calendar quarter in which itis to be effective.  Such notice shall remain  effective  until the  Participantelects to make further Participant contributions,  and no Employer contributionsshall be made on behalf of the  Participant  during such  suspension  period.  AParticipant may authorize  resumption of Participant  contributions  by filing anew contribution  designation  with the Plan  Administrator at any time prior tothe last two weeks of the calendar  quarter  immediately  preceding the calendarquarter in which it is to be effective.            (b) Salary  Reductions.  To become or remain a  Participant  in thisPlan, an eligible  Employee must elect to reduce his Compensation in such manneras the Plan Committee shall determine not to exceed 10% of his  Compensation perpayroll  period.  Such election  shall be made and may be changed at any time inaccordance  with Section 4.1(a) of this Plan.  Contributions  under this sectionshall be made in accordance  with an agreement  with the Company under which theParticipant  elects to reduce his  Compensation by the amount  determined at hisdiscretion,  and for  purposes  of Code  Section  401(k)  shall be  deemed to beCompany  contributions.  Agreements to reduce  Compensation  shall be subject toSections 4.11 and 4.12 of this Plan.            (c) Nonqualified Voluntary Contributions.  Each Plan Participant maycontribute to the Plan for each Plan Year during which he is a Participant  suchamount of  nonqualified  voluntary  contributions  as he shall elect in his solediscretion,  provided that such amount shall not exceed 10% of his  Compensationfor  each  payroll  period.  Nonqualified  voluntary  contributions  shall be sodesignated  in  writing  when made or when the  Participant  agrees  to  payrolldeductions. All non-qualified voluntary contributions for the Plan Year shall bemade during the Plan Year or within 30 days after the end of the Plan Year.    Section  4.2  Determination  of  Contribution  by  the  Employer.  The  PlanCommittee  on behalf  of each  Employer  shall pay into the Trust  Fund at leastannually  an  amount  up to 100% of each  Participant's  elective  deferral  andvoluntary  contributions  to the Plan which are invested in Qualifying  EmployerSecurities  pursuant  to  Section  10.1(d),  as the  Board  of  Directors  shalldetermine by resolution;  provided,  however,  that the Employer contribution onbehalf of Participants  who have elected to direct the investment of any portionof their elective  deferrals and voluntary  contributions into investments otherthan Qualifying Employer Securities will receive an Employer matchingRESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 13January 01, 2000contribution of up to 50% of the  Participant's  elective deferral and voluntarycontributions  to  the  Plan.  The  Employer's  contribution  on  behalf  of anyParticipant  who elects to direct the  investment of any portion of his electivedeferrals and voluntary  contributions  into  investments  other than QualifyingEmployer  Securities under Section 10.1(d) shall be equal to a stated percentageof each such  Participant's  contributions  (both  voluntary  contributions  andelective  deferrals)  under Section 4.1 of this Plan during any payroll  period,and the  Employer's  contribution  on behalf of any  Participant  who  elects todirect  the   investment  of  all  of  his  elective   deferrals  and  voluntarycontributions into Qualifying Employer Securities under Section 10.1(d) shall beequal to a stated  percentage  of each such  Participant's  contributions  (bothvoluntary  contributions and elective  deferrals) under Section 4.1 of this Planduring any payroll  period.  No  Participant's  elective  deferral or  voluntarycontributions  shall be matched in an amount exceeding 10% of such Participant'sCompensation during any payroll period the Participant participates in the Plan.Except as  provided in Section  7.3 of this Plan,  the amount of the  Employer'scontribution  shall not exceed either 10% of the aggregate  Compensation  of allParticipants  under  this Plan in the year for which the  contribution  is beingdetermined  or the  annual  addition  limitations  of the  Code as  provided  inSections 4.8 or 4.9 of this Plan.    Section 4.3 Time and Method of Payment of Contribution by the Employer.  ThePlan  Committee on behalf of the  Employer may make payment of its  contributionfor any Plan Year in installments on any date or dates it elects,  provided thatthe amount of its  contribution  for any year  shall be paid in full  within thetime  prescribed in order to qualify such payment as an income tax deduction forsuch year under the Code or any other  provisions  of law and  provided  furtherthat the final allocation of such Employer  contribution shall not be made to anAccount until the last day of the Plan Year.  Such  contribution  may be made incash, in Qualifying  Employer  Securities (as determined by the Company),  or inproperty of the character in which the Trustee is authorized to invest the TrustFund.   Contributions  of  property  other  than  cash  or  Qualifying  EmployerSecurities  shall  be  subject  to the  approval  of the  Trustee  and the  PlanCommittee.    Section  4.4  To  Whom   Contributions   Are  To  Be  Paid.  The  Employer'scontributions  for any Plan Year shall be paid to the Trustee and shall become apart of the Trust Fund.    Section 4.5 Return of Employer Contributions.  (a) Circumstances Under WhichReturn  Will Be Made.  A  contribution  by the  Employer  to the  Plan  shall bereturned  to  the  Company,  at  the  Employer's  discretion,  under  any of thefollowing  circumstances:  (i) if a  contribution  is made by the  Employer by amistake of fact,  including a mistaken excess  contribution,  within one year ofits payment to the Plan;  (ii) if initial  qualification  of the Plan is denied,within one year after the date of denial of initial  qualification  of the Plan;or (iii) if all or any part of the deduction of the  contribution is disallowed,to the extent of the disallowance, within one year after the disallowance of thededuction.            (b) Amount of Return. The Employer shall state by written request tothe Trustee  the amount of the  contribution  to be returned  and the reason forsuch  return.  Such amount shall not include any  earnings  attributable  to thecontribution   and  shall  be  reduced  by  any  losses   attributable   to  thecontribution.   Upon  sending   such  request  to  the  Trustee,   the  Employersimultaneously  shall  send to the Plan  Committee  a copy of the  request.  TheTrustee shall return such contributions to the Employer immediately upon receiptof the written request by the Employer. All contributions by the Employer to thePlan are  declared to be  conditioned  upon both the  qualification  of the Planunder Section 401 of the Code and the deductibility of such contributions  UnderSection 404 of the Code.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 14January 01, 2000    Section 4.6 Employer's Obligations. The adoption and continuance of the Planshall not be deemed to  constitute  a  contract  between  the  Employer  and anyEmployee or  Participant,  nor to be a  consideration  for, or an  inducement orcondition of, the employment of any person. Nothing in this Plan shall be deemedto give any  Employee or  Participant  the right to be retained in the employ ofthe  Employer,  or to interfere  with the right of the Employer to discharge anyEmployee or Participant at any time, nor shall it be deemed to give the Employerthe right to require the Employee or  Participant  to remain in its employ,  norshall it interfere  with the right of any Employee or  Participant  to terminatehis employment at any time.    Section 4.7 Rollover Contributions and Transfers. Notwithstanding the limitsimposed upon Participant contributions,  a Participant may contribute any amountof funds or property to the Plan in any year if such contribution  satisfies therequirements  under law for  rollover  contributions  and if the Plan  Committeeagrees in  writing  to accept  such  contribution  on behalf of the Plan and theEmployer.  Subject  to the  direction  of the Plan  Committee,  the  Trustee  isauthorized  to receive and add to the Trust Fund those  assets  attributable  toemployees  who  were  participants  in  the  Western  Tele-Communications,  Inc.Employee Stock Purchase Plan. A direct transfer from a qualified Plan subject toCode  Section 417 shall not be  permitted.  The  Employer  shall not be requiredunder  Section  4.2 of this  Plan to make any  matching  contributions  for suchrollover contributions or transfers.  Rollover contributions and transfers shallbe added to a separate Account for such  Participant,  shall be  nonforfeitable,and shall be  distributable  under Article VII of this Plan.  Transfers from theWestern Tele-Communications,  Inc. Employee Stock Purchase Plan shall be subjectto Section 10.1(d) of this Plan.    Section  4.8  Annual  Addition.  (a)  Limitations.  For the  purpose of thisSection 4.8, the term "Annual  Addition"  includes  Employer  contributions  andforfeitures and any Participant's voluntary contributions. Annual Addition shallnot include any direct transfer or any contribution  made by a Participant whichqualified under law as a rollover contribution. The annual limitation year shallbe the Plan Year.  If the Annual  Addition  to the  Account of any  Participant,attributable to all defined contribution plans (including money purchase pensionplans or profit-sharing  plans of the Employer),  would exceed either $30,000 or25% of such Participant's  Compensation,  the excess amount shall be disposed ofas follows:      (i)   any Participant  contributions,  to the extent that the return would            reduce the excess amount, shall be returned to the Participant;     (ii)   The amount of such excess attributable to Employer contributions and            any  forfeitures   shall  be  allocated  and  reallocated  to  other            Participants'  Accounts in accordance with Article V of this Plan to            the extent that such  allocations  do not cause the additions to any            such  Participant's  Account  to exceed  the  lesser of the  maximum            permissible amount or any other limitation provided in the Plan;    (iii)   To  the  extent  that  the  excess  amounts   described  in  Section            4.8(a)(ii)  of this Plan cannot be  allocated  to other  Participant            Accounts,  such excess  amounts  shall be  allocated to the suspense            Account in  accordance  with Article V of this Plan and allocated to            Participants under the provisions of that article.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 15January 01, 2000            (b) Compensation  Defined. For purposes of limiting Annual Additionsunder this section and combined benefits and contributions  under Section 4.9 ofthis  Plan,  compensation  means  a  Participant's  wages,  salaries,  fees  forprofessional services, and other amounts received for personal services actuallyrendered  for the  Employer  (including  but not  limited to,  commissions  paidsalesmen,  compensations  for services on the basis of a percentage  of profits,commissions on insurance premiums, tips, and bonuses).                  (i)      For Plan Years  beginning prior to December 31, 1997,                           compensation for Annual Additions  purposes shall not                           include the following:  (A) Employer contributions to                           a deferred  compensation plan that are not includable                           in the Employee's  gross income for the year in which                           contributed,  Employer  contributions to a simplified                           Employee  pension plan  described  under Code Section                           408(k)  to  the   extent   such   contributions   are                           deductible by the Employee, or any distributions from                           a  deferred  compensation  plan  other  than  amounts                           received  from an  unfunded  nonqualified  plan;  (B)                           amounts  realized from the exercise of a nonqualified                           stock option or when  restricted  stock (or property)                           held   by  the   Employee   either   becomes   freely                           transferable  or is no longer  subject to substantial                           risk of  forfeiture;  (C) amounts  realized  from the                           sale,   exchange,   or  other  disposition  of  stock                           acquired under a qualified stock option; or (D) other                           amounts  which  received  special  tax  benefits,  or                           Employer   contributions   to   purchase  an  annuity                           contract described in Code Section 403(b), whether or                           not under a elective deferral agreement or whether or                           not the  amounts  actually  are  excludable  from the                           gross income of the Employee.                  (ii)     For Plan Years  beginning  after  December  31, 1997,                           "Compensation"  shall include elective  deferrals (as                           defined in Code Section 402(g)) and any amounts which                           are not included in the Participant's gross income by                           reason of Code Sections 125 (cafeteria plans) and 457                           (deferrals to governmental plans). All determinations                           of Compensation  will be made in accordance with Code                           Section 415(c)(3),  as it may be amended from time to                           time.    Section 4.9 Limitation on Combined Benefits and Contributions of All DefinedBenefit  and  Defined   Contribution   Plans  of  the  Employer.   (a)  EmployerContributions.  In any year if the  Employer  makes  contributions  to a definedbenefit  plan on behalf of an Employee who also is a  Participant  in this Plan,then the sum of the defined  benefit plan fraction and the defined  contributionplan fraction (both as prescribed by law and as defined below) for such Employeefor such  year  shall  not  exceed  1.0.  In any year if the sum of the  definedbenefit plan fraction and the defined contribution plan fraction on behalf of anEmployee does exceed 1.0,  then the  Employer's  contribution  on behalf of suchParticipant to this defined  contribution  plan of the Employer shall be reducedto the extent  necessary  to prevent  the sum of the defined  contribution  planfraction  and  the  defined  benefit  plan  fraction  from  exceeding  1.0.  TheEmployer's  contribution  on  behalf  of such  Participant  to this  Plan may bereallocated  to other  Participants  under  Article V of this Plan to the extentnecessary to prevent the sum of the defined  contribution  plan fraction and thedefined  benefit  Plan  fraction  from  exceeding  1.0. If any amount  cannot beallocated or reallocated  without exceeding the limits provided in this Article,such amount may be allocated to the suspense Account established under Article Vof this Plan and allocated to the Participants in accordance with the provisionsof Article V of this Plan.  For  purposes of this  section the  limitation  yearshall be the Plan Year.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 16January 01, 2000            (b) Defined Benefit Plan Fraction. The defined benefit plan fractionis a fraction the  numerator  of which is the  projected  annual  benefit of theParticipant  under  the Plan  (determined  as of the  close of the year) and thedenominator of which is the lesser of the following amounts  determined for suchyear and for each prior Year of Service  with the  Employer:  (i) the product of1.25 times the maximum  benefit  dollar  limitation in effect for the limitationyear;  or (ii)  the  product  of 1.4  times  100% of the  Participant's  averageCompensation for his high three consecutive calendar years.            (c) Defined  Contribution  Plan Fraction.  The defined  contributionplan  fraction  is a fraction  the  numerator  of which is the sum of the annualadditions to the Participant's  Account under all defined  contribution Plans ofthe Employer as of the close of the limitation year and the denominator of whichis the sum of the lesser of the following  amounts  determined for such year andfor each prior Year of Service with the Employer:  (i) the product is 1.25 timesthe  dollar  limitations  in effect  under  Code  Section  415(c)(1)(A)  for thelimitation year (without regard to Code Section 415(c)(6));  or (ii) the productof 1.4 times an amount equal to 25% of the  Participant's  Compensation  for thelimitation year.            (d) Transition  Rules.  The Plan Committee,  in its discretion,  mayelect to use the transition rules for calculating the defined  contribution planfraction as provided in Code Sections 415(e)(4) and 415(e)(6).            (e) Limitation Years Beginning After December 31, 1999. This Section4.9 shall not apply to any limitation year beginning after December 31, 1999.    Section 4.10 Top Heavy Plan  Provisions.  (a) Plan Years after  December 31,1983.  The  provisions  of this  section  shall  have  effect for any Plan Yearsbeginning after December 31, 1983 in which the Plan is top heavy.            (b) Minimum  Contribution.  If no other qualified plan maintained bythe Employer  provides the minimum benefit or contribution  for  Participants asrequired under Code Section  416(c) for a year that the plan is top heavy,  thisPlan shall provide a minimum allocation (which may include forfeitures otherwiseallocable) for such Plan Year for each  Participant who is a non-Key Employee inan amount equal to at least three percent of such Participant's Compensation forsuch Plan Year.  Notwithstanding the preceding sentence,  the minimum allocationrequired  under this  Section 4.10 shall in no event  exceed the  percentage  ofcontributions  made under the Plan for such year for the Key  Employee  for whomsuch percentage is the highest for such year. If Employees who are  Participantsin this Plan  also  participate  in a defined  benefit  plan  maintained  by theEmployer  and both plans are top heavy in any year,  the  Employer  may elect tosatisfy the minimum  contribution  requirements  of Code Section  416(c) and theregulations  thereunder  by  providing a minimum  allocation  (which may includeforfeitures  otherwise  allocable) for such Plan Year for each  Participant (forpurposes of Code Section 416(c) and the regulations thereunder) who is a non-KeyEmployee in an amount  equal to at least 5% of such  Participant's  Compensationfor such Plan Year. For purposes of this Section 4.10,  Participants who must beconsidered  Participants  to satisfy the coverage  requirements  of Code Section410(b) in accordance with Code Section 401(a)(5) and who have not separated fromservice at the end of the Plan Year  shall be  eligible  to share  this  minimumcontribution  including  Participants  who have failed to complete 1,000 or morehours of service, who have declined to make mandatory  contributions to the Planor who have been excluded because such RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 17January 01, 2000Participant's  Compensation  is less  than a  stated  amount.  Compensation  forpurposes of this Section 4.10 shall mean  Compensation as defined in Section 4.8of this Plan.  Elective  deferral  contributions  may not be used to satisfy theminimum  contribution  required  under this section  4.10.  If, in any top-heavyyear, the highest percentage of Employer contributions and forfeitures allocatedto any Key Employee is less than three percent, amounts allocated as a result ofany Key  Employee's  elective  deferrals  must be  included in  determining  theEmployer contribution made on behalf of such Key Employees.            (c)  Modification of Plan Fractions.  The 1.25 factor in the definedbenefit plan fraction and defined  contribution Plan fraction (as such fractionsare defined in the preceding  section) shall be reduced to 1.0 for any year thatthe Plan is top heavy.  If the Plan is super top  heavy,  the 1.25  factor  alsoshall be reduced to 1.0 for the Plan Year.            (d)  Maximum  Compensation   Limitation.   The  annual  Compensationconsidered for each  Participant  for purposes of the Plan for any year that thePlan is top heavy shall not exceed such  Participant's  Compensation (as limitedby Code Section 401(a)(17)).    Section 4.11 Salary  Reduction  Rules.  (a) Election to Reduce Salary.  As acondition of  participation,  an Employee  eligible to  participate in this Planmust elect to reduce his or her  Compensation by an amount  determined at his orher discretion  (annually not to exceed the lesser of the amount specified for agiven calendar year by the Internal Revenue Service or 10% of  Compensation).  AParticipant must make this election according to the procedure prescribed by andon the form provided by the Plan Committee.            (b)  Nondiscriminatory  Benefits.  All  Participants are eligible todefer identical  percentages of their Compensation,  regardless of the amount ofsuch  Compensation;  provided such  percentage  does not result in a deferral ofmore than the limitation imposed under Code Section 402(g) in any calendar year.A Participant may assign to this Plan any excess elective  deferrals made duringa taxable year of the  Participant  by notifying  the Plan  Administrator  on orbefore the following March 15 of the amount of the excess elective  deferrals tobe assigned  to the Plan.  A  Participant  is deemed to have  notified  the PlanAdministrator  of any excess  elective  deferrals that arise taking into accountonly  those  elective  deferrals  made to this Plan and any  other  plans of theEmployer. An excess elective deferral is any elective deferral during a calendaryear in excess of the dollar  limitation in effect under Code Section 402(g) forsuch year. On or before the April 15th  following the end of each calendar year,the Company will distribute excess elective deferrals (plus any allocable incomeand  minus  any  allocable  loss) to any  Participant  to whose  Account  excesselective  deferrals  were made or assigned for the preceding year and who claimsexcess  elective  deferrals  for  such  taxable  year or who is  deemed  to havenotified the Plan  Administrator of such excess. The income or loss attributableto excess elective deferrals is the income or loss for the year allocable to theParticipant's  elective  deferrals  multiplied  by a fraction,  the numerator ofwhich is the  Participant's  excess  elective  deferrals  for such  year and thedenominator  of  which  is  the  total  Account   balance  of  the   Participantattributable  to  elective  deferrals,  without  regard to any  income or lossesallocable to such elective  deferrals for the calendar year.  Alternatively,  inthe discretion of the Committee,  income allocable to the  Participant's  excesselective  deferrals may be determined  under any  reasonable  method used by thePlan for allocating income on Plan assets.            (c)  Limit  on  Actual  Deferral  Percentage.  The  Actual  DeferralPercentage for Participants who are Highly  Compensated  Employees for each PlanYear and the Actual  Deferral  Percentage forRESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 18January 01, 2000Participants  who are  Non-Highly  Compensated  Employees for the same Plan Yearmust satisfy one of the following tests:                  (i)    The Actual  Deferral  Percentage  for the Plan Year for                         Participants who are Highly  Compensated  Employees may                         not  exceed  the  Actual  Deferral  Percentage  for the                         preceding Plan Year for Participants who are Non-Highly                         Compensated Employees multiplied by 1.25 times; or                  (ii)   The Actual  Deferral  Percentage  for the Plan Year for                         Participants who are Highly  Compensated  Employees may                         not  exceed  the  Actual  Deferral  Percentage  for the                         preceding Plan Year for Participants who are Non-Highly                         Compensated  Employees multiplied by 2.0, provided that                         the Actual  Deferral  Percentage  for the Plan Year for                         Participants who are Highly Compensated  Employees does                         not  exceed  the  Actual  Deferral  Percentage  for the                         preceding Plan Year for Participants who are Non-Highly                         Compensated  Employees  by  more  than  two  percentage                         points.                         The  following  rules  regarding  the  Actual  Deferral                         Percentage will apply:                  (i)    The Actual  Deferral  Percentage  for the Plan Year for                         any Highly Compensated Employee who is eligible to have                         elective   deferrals   (and   qualified    non-elective                         contributions or qualified matching  contributions,  or                         both,  if such  contributions  are  treated as elective                         deferrals   for   purposes   of  the  Actual   Deferral                         Percentage  test) allocated to his or her Account under                         two or more  arrangements  described  in  Code  Section                         401(k)  that  are  maintained  by the  Company  will be                         determined  as if  such  elective  deferrals  (and,  if                         applicable,  such qualified non-elective  contributions                         or qualified matching contributions, or both) were made                         under a single  arrangement.  If a  Highly  Compensated                         Employee  participates  in two or more cash or deferred                         arrangements  that have different Plan Years,  all cash                         or deferred arrangements ending with or within the same                         calendar year will be treated as a single arrangement;                  (ii)   In the event that this Plan satisfies the  requirements                         of Code Sections 401(k),  401(a)(4),  or 410(b) only if                         aggregated  with one or more other plans,  or if one or                         more other plans satisfy the  requirements of such Code                         Sections only if aggregated  with this Plan,  then this                         section  will be  applied  by  determining  the  Actual                         Deferral  Percentage  of  Participants  as if all  such                         plans were a single plan.  Plans may be  aggregated  in                         order to satisfy Code Section  401(k) only if they have                         the same Plan Year;                  (iii)  For  purposes  of  determining   the  Actual   Deferral                         Percentage,  elective deferrals, qualified non-elective                         contributions,  and  qualified  matching  contributions                         must be made  before  the last day of the  twelve-month                         period  immediately  following  the Plan  Year to which                         such contributions relate; and                  (iv)   The  Company  will  maintain   records   sufficient  to                         demonstrate   satisfaction   of  the  Actual   Deferral                         Percentage   test   and   the   amount   of   qualified                         non-elective   contributions   or  qualified   matching                         contributions, or both, used in such test.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 19January 01, 2000            (d)  Nonforfeitability  of  Elective  Contributions.   All  electivedeferral  contributions  made on behalf of  Participants to this Plan are vestedimmediately. Such elective deferrals are nonforfeitable at all times.            (e) Distributions  Restriction.  Elective deferrals shall be subjectto the restrictions on withdrawals under Section 7.6 of this Plan.            (f)   Definitions.                  (i)    The "Actual Deferral  Percentage" for a specified group                         of  Participants  for a Plan Year is the average of the                         ratios  (calculated  separately for each Participant in                         such group) of the amount of  deferrals  made under the                         Plan on behalf of each  such  Participant  for the Plan                         Year to the  Participant's  Compensation for the entire                         Plan  Year  (whether  or  not  the  Participant  was  a                         Participant  for  the  entire  Plan  Year)  or for  the                         portion of such Plan Year during which the Employee was                         a  Participant,  as  determined by the Company for such                         Plan  Year so long as  such  determination  is  applied                         uniformly to Participants  under the Plan for such Plan                         Year.  Deferrals on behalf of any  Participant  include                         [A]  any  elective   deferrals  made  pursuant  to  the                         Participant's   deferral  election,   including  excess                         elective  deferrals,  but excluding  elective deferrals                         that are taken into account in the Average Contribution                         Percentage   test   (provided   the   Actual   Deferral                         Percentage  test is  satisfied  both  with and  without                         exclusion of these elective deferrals);  and [B] in the                         discretion of the Company,  all qualified  non-elective                         contributions    or   such    qualified    non-elective                         contributions  as are  necessary  to  meet  the  Actual                         Deferral  Percentage  test and all  qualified  matching                         contributions or such qualified matching  contributions                         as are necessary to meet the Actual Deferral Percentage                         test.  For  purposes  of  computing   Actual   Deferral                         Percentages, an Employee who would be a Participant but                         for the  failure  to make  elective  deferrals  will be                         treated as a  Participant  on whose  behalf no elective                         deferrals are made.                  (ii)   "Elective  Deferrals"  means any Company  contributions                         made to the Plan at the election of the  Participant in                         lieu of cash compensation, including contributions made                         pursuant  to a  elective  deferral  agreement  or other                         deferral   arrangement.    A   Participant's   elective                         deferrals  in any  calendar  year  are  the  sum of all                         Company   contributions   made   on   behalf   of  such                         Participant  pursuant to an election to defer under any                         arrangement  described  in  Code  Section  401(k),  any                         simplified    employee   pension   cash   or   deferred                         arrangement described in Code Section 402(h)(1)(B), any                         eligible deferred  compensation plan under Code Section                         457, any plan as described in Code Section  501(c)(18),                         and  any  Company  contributions  made on  behalf  of a                         Participant  pursuant to a elective deferral  agreement                         for the  purchase  of an  annuity  contract  under Code                         Section 403(b).                  (iii)  "Participant"  for  purposes of this  Section 4.11 only                         includes all Employees  eligible to participate in this                         Plan even if not electing to do so.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 20January 01, 2000                  (iv)   "Compensation"  for purposes of this Section 4.11 means                         only Compensation as defined in Section 2.1(ix) of this                         Plan prior to any elective  deferrals under Section 4.1                         of this Plan.            (g) Distribution of Excess Contributions.  An excess contribution isthe excess, in any Plan Year, of the aggregate amount of contributions  actuallytaken into account in  determining  the Actual  Deferral  Percentage  for HighlyCompensated Employees over the maximum amount of such contributions permitted bythe Actual Deferral Percentage test,  determined by reducing  contributions madeon behalf of Highly Compensated  Employees beginning with the Highly CompensatedEmployee  with the highest  amount of elective  deferrals for such Plan Year. Inthe event that excess  contributions  are made for any Plan Year,  the Committeewill distribute the excess  contributions in accordance with this paragraph.  Onor before the 15th day of the third month  following  the end of each Plan Year,but in no event  later than the close of the  following  Plan Year,  each HighlyCompensated  Employee  will have his or her portion of the excess  contribution,adjusted for any income or loss  allocable to such portion,  distributed to him.The income or loss  attributable to excess  contributions  is the income or lossfor the Plan Year allocable to the Participant's elective deferral Account (and,if applicable,  the qualified non-elective contribution Account or the qualifiedmatching contribution Account, or both) multiplied by a fraction,  the numeratorof which is the  Participant's  excess  contributions  for the Plan Year and thedenominator  of which  is the  Participant's  Account  balance  attributable  toelective  deferrals  (and  qualified  non-elective  contributions  or  qualifiedmatching  contributions,  or both,  if any such  contributions  are  taken  intoaccount in determining  the actual deferral  percentage),  without regard to anyincome  or  losses   allocable  to  such   contributions   for  the  Plan  Year.Alternatively,  in the  discretion  of the  Committee,  income  allocable to theParticipant's excess contributions may be determined under any reasonable methodused by the Plan for allocating income on Plan assets. Excess contributions willbe distributed from the  Participant's  elective  deferral Account and qualifiedmatching   contributions   Account,   if   applicable,   in  proportion  to  theParticipant's  elective deferrals and qualified  matching  contributions (to theextent used in the actual deferral  percentage  test) for the Plan Year.  Excesscontributions will be distributed from the Participant's  qualified non-electivecontribution  Account only to the extent that such excess  contributions  exceedthe  balance  in the  Participant's  elective  deferral  Account  and  qualifiedmatching  contributions  account. If excess contributions are not distributed bythe 15th day of the third month following the end of the Plan Year in which suchexcess  contributions  arose,  a ten  percent  excise tax will be imposed on theCompany  with  respect  to such  excess  contributions.  Matching  contributionsattributable to excess contributions that are distributed to a Participant shallbe forfeited as of the distribution date of the excess contribution.    Section  4.12  Nondiscrimination   Rules  for  Voluntary  Contributions  andEmployer  Contributions.  (a)  Limit on  Average  Contribution  Percentage.  TheAverage  Contribution  Percentage for  Participants  who are Highly  CompensatedEmployees  for  each  Plan  Year and the  Average  Contribution  Percentage  forParticipants  who are  Non-Highly  Compensated  Employees for the same Plan Yearmust satisfy one of the following tests:                  (i)    The Average  Contribution  Percentage for the Plan Year                         for Participants who are Highly  Compensated  Employees                         may not exceed the Average Contribution  Percentage for                         the  preceding  Plan  Year  [need   confirmation]   for                         Participants who are Non-Highly  Compensated  Employees                         multiplied by 1.25 times; orRESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 21January 01, 2000                  (ii)   The Average  Contribution  Percentage for the Plan Year                         for Participants who are Highly  Compensated  Employees                         may not exceed the Average Contribution  Percentage for                         the  preceding  Plan  Year  for  Participants  who  are                         Non-Highly  Compensated  Employees  multiplied  by 2.0,                         provided that the Average  Contribution  Percentage for                         the  Plan  Year  for   Participants   who  are   Highly                         Compensated  Employees  does  not  exceed  the  Average                         Contribution Percentage for the preceding Plan Year for                         Participants who are Non-Highly  Compensated  Employees                         by more than two percentage points.                  (i)    Multiple  Use:  If  one  or  more  Highly   Compensated                         Employees  participate  in  both  a  cash  or  deferred                         arrangement   and  a  plan   subject  to  the   Average                         Contribution  Percentage test maintained by the Company                         and  the  sum of the  Actual  Deferral  Percentage  and                         Average   Contribution   Percentage   of  those  Highly                         Compensated  Employees  subject to either or both tests                         exceeds   the   Aggregate   Limit,   then  the  Average                         Contribution  Percentage  of those  Highly  Compensated                         Employees  who also  participate  in a cash or deferred                         arrangement will be reduced (beginning with such Highly                         Compensated  Employee  with the highest  amount of such                         contributions   for  such  Plan   Years)  so  that  the                         Aggregate  Limit is not  exceeded.  The amount by which                         each Highly Compensated Employee's  contribution amount                         is  reduced  will be  treated  as an  excess  aggregate                         contribution.   The  Actual  Deferral   Percentage  and                         Average   Contribution   Percentage   of   the   Highly                         Compensated   Employees   are   determined   after  any                         corrections   required  to  meet  the  Actual  Deferral                         Percentage and Average  Contribution  Percentage tests.                         Multiple use does not occur if both the Actual Deferral                         Percentage and the Average  Contribution  Percentage of                         the Highly  Compensated  Employees  do not exceed  1.25                         times  the  Actual  Deferral   Percentage  and  Average                         Contribution  Percentage of the Non-Highly  Compensated                         Employees;                  (ii)   The Average  Contribution  Percentage for the Plan Year                         for any Highly Compensated  Employee who is eligible to                         have contribution  percentage  amounts allocated to his                         or her Account under two or more arrangements described                         in Code  Section  401(k)  that  are  maintained  by the                         Company  will be  determined  as if  such  contribution                         percentage   amounts   were   made   under   a   single                         arrangement.   If   a   Highly   Compensated   Employee                         participates   in  two  or  more   cash   or   deferred                         arrangements  that have different Plan Years,  all cash                         or deferred arrangements ending with or within the same                         calendar year will be treated as a single arrangement;                  (iii)  In the event that this Plan satisfies the  requirements                         of Code Sections 401(m),  401(a)(4),  or 410(b) only if                         aggregated  with one or more other plans,  or if one or                         more other plans satisfy the  requirements of such Code                         Sections only if aggregated  with this Plan,  then this                         section will be applied by determining the contribution                         percentage of  Participants as if all such plans were a                         single  plan.  Plans  may be  aggregated  in  order  to                         satisfy Code Section  401(m) only if they have the same                         Plan Year;RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 22January 01, 2000                  (iv)   For purposes of  determining  the Average  Contribution                         Percentage   test,   Participant    contributions   are                         considered  to have been made in the Plan Year in which                         contributed to the Trust.  Matching  contributions  and                         qualified non-elective contributions will be considered                         made for a Plan  Year if made no later  than the end of                         the twelve-month  period beginning on the day after the                         close  of  the  Plan  Year.  A  matching   contribution                         (including a qualified  matching  contribution) that is                         forfeited to correct excess  contributions,  or because                         it is attributable to an excess  contribution or excess                         deferral will not be taken into account for purposes of                         determining the contribution percentage test; and                  (v)    The  Company  will  maintain   records   sufficient  to                         demonstrate  satisfaction  of the Average  Contribution                         Percentage   test   and   the   amount   of   qualified                         non-elective   contributions   or  qualified   matching                         contributions, or both, used in such test.                  (vi)   An excess aggregate  contribution is the excess, in any                         Plan Year,  of the  aggregate  contribution  percentage                         amounts taken into account in determining the numerator                         of the average contribution percentage actually made on                         behalf of Highly Compensated Employees over the maximum                         contribution   percentage   amounts  permitted  by  the                         average  contribution  percentage  test,  determined by                         reducing   contributions   made  on  behalf  of  Highly                         Compensated   Employees   beginning   with  the  Highly                         Compensated  Employee  with  the  highest  contribution                         percentage.   In  the  event  that   excess   aggregate                         contributions are made for any Plan Year, the Committee                         will distribute the excess  aggregate  contributions in                         the   same   manner   as   excess   contributions   are                         distributed,  as  provided  above.  Income  and  losses                         attributable to excess aggregate  contributions will be                         determined  and  distributed   along  with  the  excess                         aggregate contributions in the manner provided above.                  (vii)  In  lieu  of  distributing   excess   contributions  as                         provided  above or excess  aggregate  contributions  as                         provided above,  the Company,  in its  discretion,  may                         make qualified non-elective  contributions on behalf of                         all Participants or all Participants who are non-Highly                         Compensated  Employees,  in the  Company's  discretion,                         that  are  sufficient  to  satisfy  either  the  actual                         deferral  percentage  test or the average  contribution                         percentage test, or both, pursuant to regulations under                         the Code. "Qualified non-elective  contributions" means                         contributions  (other than  matching  contributions  or                         qualified matching  contributions)  made by the Company                         and  allocated  to  Participants'   Accounts  that  the                         Participants  may not elect to  receive  in cash  until                         distributed from the Plan, that are nonforfeitable when                         made,  and that are  distributable  only in  accordance                         with the distribution provisions that are applicable to                         elective     deferrals    and    qualified     matching                         contributions.            (b)   Definitions.                   (i)    The "Average  Contribution  Percentage" for a specified                         group of Participants for a Plan Year is the average of                         the ratios (calculated  separately for each Participant                         in  such   group)   of  the  sum  of  the   Participant                         contributions,  matching  contributions,  and qualified                         matching    contributions    (to   the   extent    RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 23January 01, 2000                         such  contributions  are not  taken  into  account  for                         purposes of the actual deferral  percentage  test) made                         on behalf of the  Participant  for the Plan Year to the                         Participant's  Compensation  for the  entire  Plan Year                         (whether or not the  Participant  was a Participant for                         the entire  Plan  Year) or for the  portion of the Plan                         Year during which the Employee was a Participant in the                         Plan,  as  determined by the Company for such Plan Year                         so long as such  determination is applied  uniformly to                         all  Participants  under the Plan for such  Plan  Year.                         Matching and qualified matching contributions on behalf                         of any  Participant in any Plan Year include [A] in the                         discretion of the Company,  all qualified  non-elective                         contributions    or   such    qualified    non-elective                         contributions,  as are  necessary  to meet the  average                         contribution percentage test; and [B] in the discretion                         of the Company, all elective deferrals made pursuant to                         the  Participant's  deferral  election or such elective                         deferrals   as  are   necessary  to  meet  the  average                         contribution  percentage test (provided that the actual                         deferral  percentage  test is  satisfied  both with and                         without the  exclusion  of these  elective  deferrals).                         Such contribution  percentage amounts shall not include                         matching  contributions  that are  forfeited  either to                         correct excess  aggregate  contributions or because the                         contributions   to  which   they   relate   are  excess                         deferrals,  excess  contributions  or excess  aggregate                         contributions.                  (ii)   "Aggregate Limit" means the greater of:                         (A)   the sum of [i]  1.25  times  the  greater  of the                               Actual   Deferral    Percentage   of   Non-Highly                               Compensated  Employees  for the Plan  Year or the                               Average  Contribution  Percentage  of  Non-Highly                               Compensated Employees for the Plan Year beginning                               with or  within  the  Plan  Year  of the  cash or                               deferred arrangement;  and [ii] the lesser of two                               times  or two  plus  the  lesser  of such  Actual                               Deferral   Percentage  or  Average   Contribution                               Percentage; or                         (B)   the  sum of [i]  1.25  times  the  lesser  of the                               Actual   Deferral    Percentage   of   Non-Highly                               Compensated  Employees  for the Plan  Year or the                               Average  Contribution  Percentage  of  Non-Highly                               Compensated Employees for the Plan Year beginning                               with or  within  the  Plan  Year  of the  cash or                               deferred arrangement;  and [ii] the lesser of two                               times  or two  plus the  greater  of such  Actual                               Deferral   Percentage  or  Average   Contribution                               Percentage.                  (iii)  "Compensation"  for purposes of this Section 4.12 only,                         will  mean  compensation  as  defined  in Code  Section                         2.1(ix)  of this Plan prior to any  elective  deferrals                         under Section 4.1 of this Plan.                  (iv)   "Participant  Contribution" means any contribution made                         to the Plan by or on  behalf of a  Participant  that is                         included in the Participant's  gross income in the year                         in which made and that is  maintained  under a separate                         Account to which earnings and losses are allocated.                  (v)    "Matching  Contribution"  means a Company  contribution                         made to this or any other defined  contribution plan on                         behalf of a  Participant  on account  of a  RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 24January 01, 2000                         Participant  contribution made by such Participant,  or                         on account of a Participant's elective deferral,  under                         a Plan maintained by the Company.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 25January 01, 2000                                    ARTICLE V                DETERMINATION AND VESTING OF PARTICIPANT ACCOUNTS    Section 5.1  Determination  of  Participants'  Accounts.  (a)  Allocation ofContributions.  As of the last day of each calendar  quarter the Plan  Committeeshall allocate to the Account of each  Participant  (including a Participant whoterminates  employment  during  the  quarter)  any  amounts  contributed  by theEmployer to the Trust on behalf of such  Participant  under  Section 4.2 of thisPlan for the calendar quarter then ended.  Forfeitures under Section 7.3 of thisPlan shall be  allocated  along  with  Employer  contributions  during the firstcalendar  quarter after the end of the year in which the forfeitures  occur. Themaximum  allocation  under this Section 5.1(a) to any  Participant  for any PlanYear  shall  not  exceed  10%  of  such  Participant's  Compensation.  Voluntarycontributions  and elective  deferrals  under  Section 4.1 of this Plan shall beallocated to the Account of the Participant making such contribution.            (b) Allocation of Earnings,  Losses and Changes in Fair Market Valueof  the  Net  Assets  of the  Trust  Fund;  Allocation  of  Qualifying  EmployerSecurities.  Each  class  (whether  Class A or Class B) of  Qualifying  EmployerSecurities  shall be allocated to the Accounts of  Participants as of the end ofeach biweekly  payroll  period or as of the end of each  calendar  quarter afteracquired by the Trust Fund in the ratio that contributions  under Section 4.1 ofthis  Plan  made to each  Account  in the  calendar  quarter  bear to the  totalcontributions  under that  Section  4.1 made to all  Accounts  for the  calendarquarter.  Any dividends,  cash or stock, paid on Qualifying  Employer Securitiesshall be allocated along with the Qualifying  Employer  Securities on which theyare paid. Once Qualifying  Employer  Securities are allocated to a Participant'sAccounts, any dividends,  cash or stock, paid on such allocated securities shallbe allocated  directly to such  Accounts.  Earnings and losses of the Trust Fund(other than on Qualifying  Employer  Securities) shall be computed and allocatedto the  Participants  in the ratio which the total  dollar  value of the Account(whether or not vested and excluding  Qualifying  Employer  Securities)  of eachParticipant  in the  Trust  Fund  bears  to the  aggregate  dollar  value of theAccounts (excluding  Qualifying  Employer  Securities) of all Participants as ofthe annual  computation  date. Only  Participants in the Plan on the last day ofthe Plan Year shall share in the  allocation of earnings,  losses and changes infair market  value of the net assets of the Trust Fund  (other  than  QualifyingEmployer   Securities)   for  that  year.   Losses  and  declines  in  value  ofParticipants' Accounts will not be considered to be a forfeiture.            (c)  Participant  Accounts.  The Plan  Committee  shall  maintain anAccount  for each  Participant  showing  the number of shares  allocated  to hisAccount  in the  Trust  Fund as of the last  previous  annual  computation  dateattributable to any contributions  made by the Employer,  including any Employercontributions  for the year ending on such date.  This Account shall be known asthe  Employer  contributions  Account.  Separate  Accounts  also  shall be kept,showing the voluntary and elective  deferral  contributions of each Participant,shares  allocated,  and the  earnings,  losses and changes in fair market  valuethereof.  The Plan Committee shall  distribute,  or cause to be distributed,  toeach Participant at least annually a written  statement  setting forth the valueof such  Participant's  Accounts  as of the last day of the Plan Year,  and suchother  information as the Plan Committee shall  determine.  Qualifying  EmployerSecurities  shall be valued at the mean between  dealer "bid" and "ask"  closingprices of the stock in the  over-the-counter  market as reported by the NationalAssociation of Securities  Dealers,  Inc., or in the "pink sheets"  published bythe National Quotation Bureau, Inc. Valuations of Qualifying Employer Securitiesthat are not readily tradable on an established  securities market shall be madeby an independent appraiser.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 26January 01, 2000            (d) Valuation  Dates.  The Valuation Date of the Trust Fund shall bethe last day of each  Plan  Year,  and such  other  dates as  determined  by theCommittee, at which time the Plan Committee shall determine the value of the netassets of the Trust Fund (i.e., the value of all the assets of the Trust Fund attheir then current fair market  value,  less all  liabilities)  and the value ofcontributions by each Employer and all Participants for such year.            (e) Computation Dates. The Plan Committee shall compute the value ofeach Participant's  Account annually on the last day of each Plan Year and shallbase such  computations  on the valuation of the assets in the Trust Fund on theValuation Date coincident with such date. Upon direct distribution under Section7.2(a) of this Plan,  the Plan  Committee  shall make a special  computation  bywhich it shall  adjust the value of such  Participant's  Account to reflect  thevalues determined as of the most recent Quarterly  Anniversary Date prior to theoccurrence of such direct distribution.  The value of his Account as so adjustedshall be the amount which the Plan Committee shall use in determining the amountwhich shall be distributable to such  Participants.  The Plan Committee shall beunder no obligation to compute the value of any Participant's  Account more thanonce annually,  unless an event occurs which requires the direct distribution ofany part of a  Participant's  Account,  in which case the Plan  Committee  shallcompute  the  Account  of  such  Participant  as  provided  above  and,  in  itsdiscretion,  may  compute  the  Account  of  each  Participant.  To  the  extentQualifying  Employer  Securities  have  been  allocated  to the  Account  of anyParticipant,   the  Plan  Committee  may  distribute  such  Qualifying  EmployerSecurities in kind without a special computation of value.            (f) Suspense  Account for Unallocated  Amounts.  If the amount to beallocated to any Participant's Account would exceed the contribution limitationsof  Sections  4.8 or 4.9 of this Plan,  a  separate  suspense  Account  shall beestablished  to hold such  unallocated  amounts  for any year or years  providedthat:  (i)  no  Employer  contributions  may be  made  at any  time  when  theirallocations would be precluded by Section 415 of the Code; (ii) investment gainsand losses and other income are not allocated to the suspense Account; and (iii)the amounts in the suspense  Account are allocated  under Section 5.1(a) of thisPlan as of each allocation date on which such amounts may be allocated until thesuspense Account is exhausted. In the event of Plan termination,  the balance ofsuch  suspense  Account  may  revert  to the  Company,  subject  to  regulationsgoverning such reversion.    Section 5.2 Vesting of  Participants'  Accounts.  (a) General Rules.  If anyParticipant reaches his Normal Retirement Age, dies, or suffers Total Disabilitywhile a Participant, his entire Account shall become fully vested without regardto the number of years of service such  Participant  has had with the  Employer.Any Account whether vested or forfeitable  shall become payable to a Participantor his beneficiaries  only to the extent provided in this Plan. A Participant orformer  Participant who has designated a Beneficiary and who dies shall cease tohave any  interest in this Plan or in his  Account,  and his  Beneficiary  shallbecome entitled to distribution of the Participant's Account under this Plan andnot as a result of any  transfer of the  interest or  Account.  A  Participant'sAccount  attributable  to his own  contributions  or  attributable to a rollovercontribution shall be fully vested at all times.            (b) Vesting Schedule.  A Participant shall have a vested interest inthe portion of his Account attributable to Employer contributions, in accordancewith the following schedule:RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 27January 01, 2000                                                     Percentage of Account             Years of Service                           Which is Vested        ----------------------------                -----------------------                Fewer than 1                                     0         1 or more but fewer than 2                             20         2 or more but fewer than 3                             30         3 or more but fewer than 4                             45         4 or more but fewer than 5                             60         5 or more but fewer than 6                             80                  6 or more                                    100    Section 5.3 Full Vesting Upon Termination or Partial  Termination of Plan orUpon Complete Discontinuance of Employer Contributions.  Upon the termination orpartial  termination  of this Plan or upon complete  discontinuance  of Employercontributions,  the Accounts of all Participants  affected,  as of the date suchtermination,   partial  termination,  or  complete  discontinuance  of  Employercontributions occurred, shall be fully vested.    Section 5.4 Service Included in Determination of Vested Accounts.  All yearsof service with the Company and any Associated Company shall be included for thepurpose of determining a Participant's  vested Account under Section 5.2 of thisPlan,  except  years of service  excluded by reason of a Break in Service  underSection 5.5 of this Plan.    Section  5.5  Effect of Break in  Service  on  Vesting.  With  respect  to aParticipant who has five or more consecutive  one-year breaks in service,  yearsof  service  after such Break in  Service  shall not be taken into  account  forpurposes of computing the Participant's  vested Account balance  attributable toEmployer contributions made before such five or more year period.    Section 5.6 Effect of Certain Distributions.  (a) Participant Contributions.The  provisions  of  this  Section  5.6  shall  not  apply  to  any  Participantcontributions (including elective deferrals) or rollover contributions.            (b)  Repayment  of   Distribution.   A  Participant  who  terminatesparticipation for any reason other than retirement,  disability,  or death whileany portion of his Account in the Trust Fund is  forfeitable  and who receives adistribution of his vested Account attributable to Employer  contributions shallhave the right to pay back such  distribution to the Plan. Such repayment may bemade (i) only if the  Participant  has  returned to the employ of the Company orany  Associated  Company,  and (ii) before the earlier of the date which is fiveyears after the date the Participant is re-employed by the Employer, or the dateon which the  Participant  experiences any five  consecutive  one-year breaks inservice commencing after the distribution.  Repayment of a Participant's Accountattributable  to his  elective  deferral  contributions,  if any,  shall  not bepermitted under this Section 5.6. A Participant who desires to make repayment ofa distribution  under this Section  5.6(b) shall make repayment  directly to thePlan Committee.  If a Participant repays a distribution under this section,  thevalue of his Account shall be the amount of his Account  prior to  distribution,unadjusted for any subsequent gains or losses.  The amount of the  Participant'sAccount that was forfeited  previously shall be restored from one or more of thefollowing  sources,  at the discretion of the Plan Committee:  income or gain tothe Plan, forfeitures or Employer contributions.            (c)  Forfeiture  of Account When  Repayment of  Distribution  Is NotMade.  If  distribution  is made to a  Participant  and he does not  repay  suchdistribution  under the terms of Section 5.6(b) of this Plan when the time limitfor repayment  expires under Section 5.6(b) above, the Participant shall RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 28January 01, 2000forfeit the entire  portion of his nonvested  Account (as adjusted for gains andlosses) which was not  distributed  to him. The Account shall be unadjusted  forany increase in vesting for service completed during the repayment period.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 29January 01, 2000                                   ARTICLE VI                   RETIREMENT DATE, DESIGNATION OF BENEFICIARY    Section 6.1 Normal Retirement Date. On the last date of the quarter in whicha Participant  attains his Normal  Retirement  Age, for purposes of this Plan heshall be entitled to retire  voluntarily.  The Employer may continue to employ aParticipant  after he has attained his Normal Retirement Age with the consent ofsuch  Participant.  At any time  thereafter such  Participant may retire.  Untilretirement,  a Participant  shall  continue to participate in the Plan unless heelects  otherwise.  A Participant who has completed 10 years of service with anyEmployer or  combination  of Employers  may elect to retire for purposes of thisPlan on the last day of any  quarter  during the 5-1/2 years prior to his NormalRetirement  Age upon  application to and approval by the Plan  Committee.  In noevent  may  a  Participant  receive  a  distribution  attributable  to  Employercontributions  prior to termination of the Participant's  employment except uponretirement for purposes of this Plan.    Section 6.2 Designation of Beneficiary.  A Participant's full vested Accountbalance shall be payable upon the death of the Participant, to the Participant'ssurviving  spouse  or to his  designated  Beneficiary  if there is no  survivingspouse or if the spouse  consents to such  Beneficiary  designation  in writing.This spousal  consent shall  acknowledge the effect of such consent and shall bewitnessed  by a Plan  Committee  member  or a  notary  public.  If  there  is nosurviving  spouse  or in the  case of a  spousal  election  not to  receive  theAccount,  a Participant  shall designate a Beneficiary to receive his Account inthe Trust Fund upon his death on the form  prescribed  by and  delivered  to thePlan  Committee.  The  Participant  shall  have the  right to change or revoke adesignation at any time by filing a new designation or notice of revocation withthe Plan  Administrator.  No notice to any Beneficiary other than the spouse norconsent by any Beneficiary other than the spouse shall be required to effect anychange of  designation  or  revocation.  If a  Participant  fails to designate aBeneficiary  before his death,  or if no  designated  Beneficiary  survives  theParticipant,  the Plan Committee  shall direct the Trustee to pay his Account inthe  Trust  Fund  to  his  surviving   spouse,  or  if  none,  to  his  personalrepresentative.  If no personal  representative has been appointed actual noticeof such is given to the Plan  Committee  within 60 days after the  Participant'sdeath, and if his Account does not exceed $5,000,  the Plan Committee may directthe Trustee to pay his Account to such person as may be entitled to it under thelaws of the state where such  Participant  resided at the date of his death.  Insuch case,  the Plan  Committee may require such proof of right or identity fromsuch person as the Plan Committee may deem necessary.    Section 6.3 Participant or Beneficiary Whose Whereabouts Are Unknown. In thecase of any Participant or Beneficiary whose  whereabouts are unknown,  the PlanCommittee shall notify such Participant or Beneficiary at his last known addressby certified mail with return receipt  requested  advising him of his right to apending  distribution.  If the  Participant or Beneficiary  cannot be located inthis  manner,  the Plan  Committee  shall  direct  the  Trustee to  establish  acustodial Account for such Participant or Beneficiary for the purpose of holdingthe Participant's  Account until it is claimed by the Participant or Beneficiaryor until proof of death  satisfactory  to the Plan  Committee is received by thePlan  Committee.  If such proof of death is received,  the Plan Committee  shalldirect the Trustee to distribute the  Participant's  Account in accordance  withthe  provisions  of  Section  6.2 of  this  Plan.  Any  Trustee  fees  or  otheradministrative  expenses  attributable  to a custodial  Account  established andmaintained under this section shall be charged against such Account.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 30January 01, 2000                                   ARTICLE VII                          DISTRIBUTION FROM TRUST FUND    Section 7.1 When Accounts Become  Distributable  and Effect of Distribution.If a Participant  dies,  suffers Total  Disability,  retires,  or terminates hisemployment for any other reason, the portion of this vested Account attributableto Employer  contributions,  to Participant  contributions,  and to any rollovercontributions  shall be  distributable  under Section 7.2 of this Plan. When theParticipant's  Account becomes  distributable,  such Participant  shall cease tohave any further  interest or  participation in the Trust Fund or any subsequentaccruals or  contributions  to the Trust Fund except as  provided  below:  (i) aParticipant  shall  retain the right to receive  distribution  of his Account asdetermined at the last prior regular computation or upon the special computationas  determined  under  Section 5.1 of this Plan;  and (ii) except as provided inSection  5.1 of this Plan,  a  Participant  who makes  contributions  during anyquarter  shall  retain  the  right  to  receive  his  share  in  the  Employer'scontribution allocated to his Account for such quarter.    Section 7.2 Distribution of Account.  (a) Notification of Trustee and Natureof  Distribution.  As soon as  administratively  feasible after a  Participant'svested Account is distributable,  the Plan Committee shall notify the Trustee inwriting of the Participant's name and address,  the amount of his vested Accountwhich  is  distributable,  the  reason  for  its  being  distributable  and  thepermissible manner of distribution. A Participant's Account shall be distributedin cash or Qualifying  Employer  Securities at the election of the  Participant,provided  that  Qualifying   Employer  Securities  shall  be  distributed  to  aParticipant  who makes a written  demand  for such to the Plan  Committee.  Cashalways may be distributed in lieu of fractional shares.            (b) Distribution Upon Retirement and Upon Total  Disability.  Exceptas provided in Section 7.5, if a  Participant's  Account  becomes  distributableupon his  Termination of Employment with the Employer  because such  Participanthas  attained  retirement  age or because of his Total  Disability,  the Trusteeshall  pay  such  Participant's  Account  as soon as  administratively  feasiblefollowing  the  Participant's  Termination  of  Employment  in (i) one  lump sumdistribution,  or (ii) substantially equal annual installments over a period notto exceed five years. If he dies before receiving all of his vested Account, theremaining  installments shall be paid to his Beneficiary under this Section 7.2.Any payments  received as  disability  benefits  under this Plan are intended toqualify as  distribution  from an accident  and health Plan as  described in theCode.            (c) Distribution Upon Death. Except as provided in Section 7.5, if aParticipant's   Account  becomes   distributable   because  of  his  death,  hisBeneficiary may elect to receive such Participant's Account,  commencing as soonas  administratively  feasible following the Participant's death in (i) one lumpsum distribution,  or (ii) substantially equal annual installments over a periodnot to exceed five years.  If the Beneficiary  dies before  receiving all of theParticipant's  vested  Account,  the  remaining  payments  shall  be made to thecontingent  Beneficiary,  if  any.  If the  Participant  has  not  designated  aBeneficiary,  or if he has designated a Beneficiary who dies and the Participanthas not designated a contingent  Beneficiary,  the Participant's vested Account,or the  undistributed  portion of it, shall be paid in a lump sum under  Section6.2 of this Plan.            (d)  Distribution  Upon Other  Termination of Employment.  Except asprovided in Section 7.5, if a Participant's  Account becomes  distributable uponhis Termination of Employment for any reason other than attainment of retirementage, disability,  or death, the Trustee shall pay RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 31January 01, 2000such Participant's  Account to the Participant,  in one lump sum distribution assoon  as  administratively   feasible  following  Participant's  Termination  ofEmployment  and election to receive a  distribution  in accordance  with Section7.2(f).  The vested  Account of a  Participant  who has  satisfied  the years ofservice requirement for early retirement under Section 6.1 of this Plan, but whoterminates  employment prior to the early retirement age may be distributed,  atthe option of the Participant,  as soon as  administratively  feasible followingthe date on which the Participant  attains early retirement age, if such date isearlier than the date on which this Account otherwise would be distributable. Ifthe Participant dies prior to receiving all of his vested Account, the remaindershall be distributed to his Beneficiary under this Section 7.2.            (e)   Distribution for Rollover  Transactions and Eligible  Rollover                  Distributions.                  (i)    Notwithstanding  any other  provision  of this  Section                         7.2, a Participant whose Account becomes  distributable                         may request that the Plan Committee  direct the Trustee                         to distribute the entirety of the Participant's  vested                         Account in a single payment to the  Participant for the                         purpose of transferring  such Account upon  Termination                         of   Employment   to   another   plan  in  a   rollover                         transaction. A Participant may not rollover the portion                         of   his   Account   considered   contributed   by  the                         Participant,    which    includes    all    Participant                         contributions other than elective deferrals. A rollover                         contribution  may  include  all or any  portion  of any                         prior rollover contributions, any earnings, losses, and                         changes in the fair  market  value of the  portion of a                         Participant's   Account   attributable   to   his   own                         contributions and the portion of a Participant's vested                         Account attributable to elective deferrals and Employer                         contributions. The Participant shall make such rollover                         request in writing and shall  provide such  information                         to the Plan Committee as the Plan  Committee  requests,                         including the name of the plan to which his interest is                         to be  transferred  and the  name  and  address  of the                         sponsor  and  the   Trustee  of  the  new  plan,   when                         applicable.                  (ii)   Notwithstanding  any  provision  of  the  Plan  to  the                         contrary  that  otherwise  would limit a  Participant's                         distribution election under this Article, a Participant                         may elect, at the time and in the manner  prescribed by                         the Plan Committee,  to have any portion of an eligible                         rollover  distribution  paid  directly  to an  eligible                         retirement  plan  specified  by  the  Participant  in a                         direct rollover.  An eligible rollover  distribution is                         any  distribution  of all or any portion of the balance                         to  the  credit  of the  Participant,  except  that  an                         eligible rollover distribution does not include (A) any                         distribution  that is one of a series of  substantially                         equal  periodic  payments  (not  less  frequently  than                         annually) made for the life (or life expectancy) of the                         distributee   or  the  joint   lives  (or  joint   life                         expectancies) of the distributee and the  distributee's                         designated  beneficiary,  or for a specified  period of                         ten years or more; (B) any  distribution  to the extent                         such   distribution  is  required  under  Code  Section                         401(a)(9); and (C) the portion of any distribution that                         is not includible in gross income  (determined  without                         regard to the exclusion for net unrealized appreciation                         with  respect  to  employer  securities).  An  eligible                         retirement  plan is an  individual  retirement  account                         described  in  Code  Section   408(a),   an  individual                         retirement annuity described in Code Section 408(b), an                         annuity plan  described in Code  Section  403(a),  or a                         qualified trust described in Code Section 401(a),  that                         accepts    the    distributee's    RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 32January 01, 2000                         eligible rollover distribution. However, in the case of                         an  eligible  rollover   distribution  to  a  surviving                         spouse,  an eligible  retirement  plan is an individual                         retirement account or individual  retirement annuity. A                         distributee includes an Employee or former Employee. In                         addition, the Employee's or former Employee's surviving                         spouse and the Employee's or former  Employee's  spouse                         or former  spouse who is the  alternate  payee  under a                         qualified  domestic relations order, as defined in Code                         Section  414(p),  are  distributees  with regard to the                         interest  of the  spouse  or  former  spouse.  A direct                         rollover  is a  payment  by the  Plan  to the  eligible                         retirement  plan  specified  by  the  distributee.  The                         Committee may establish procedures for the distribution                         of  eligible  rollover  distributions,   including  any                         limitations  on  the  amount  eligible  for a  rollover                         distribution, to the extent permitted by law.            (f) Distribution of a Participant's  Contributions.  Notwithstandingany other  provision  of Section  7.2 of this Plan,  but subject to the rules ofSection 7.5 of this Plan; if a Participant terminates employment for any reason,he shall receive  distribution  in one lump sum of his Account in the Trust Fundattributable to Participant contributions and the earnings,  losses, and changesin fair market value of such  contributions  if he makes written demand for themupon the Plan  Committee.  If a  Participant  so requests,  distribution  of hisAccount  attributable  to  Participant  contributions  shall  be made as soon asadministratively  feasible  following his election.  Any amount  attributable toParticipant  contributions  not  distributed  under this Section 7.2(f) shall bedistributed along with Employer contributions.            (g)   Optional   Forms   of   Benefits   for   Transferred   Assets.Notwithstanding  any provision of this Plan to the contrary,  to the extent thatany optional form of benefit under this Plan permits a distribution prior to theemployee's  retirement,  death,  disability,  or severance from employment,  andprior to Plan  termination,  the optional form of benefit is not available  withrespect to benefits attributable to assets (including the post-transfer earningsthereon) and  liabilities  that are  transferred,  within the meaning of section414(1) of the Internal  Revenue Code, to this Plan from a money purchase pensionplan qualified under section 401(a) of the Internal Revenue Code (other than anyportion of those  assets and  liabilities  attributable  to  voluntary  employeecontributions).    Section 7.3 Disposition of Forfeitable Account on Termination of Employment.If  a  Participant's   employment  is  terminated  for  any  reason  other  thanretirement,  death,  or Total  Disability,  while any part of his Account in theTrust Fund is forfeitable, then that portion of his Account which is forfeitableshall be  forfeited by him on the earlier of the date the  Participant  receivesdistribution or the date which he experiences five  consecutive  one-year breaksin service. If the value of a Participant's  vested Account balance is zero uponthe Participant's  termination of employment,  the Participant will be deemed tohave received a distribution of the vested Account balance immediately upon suchtermination of employment.  If a Participant  who has received a distribution ofless than his or her entire Account upon termination of employment is reemployedprior to five consecutive one-year breaks in service, the forfeited Account willbe  restored  from  income  or  gains  to  the  Plan,  forfeitures,  or  Companycontributions,  at the  discretion  of the Plan  Committee,  if the  Participantrepays the distributed amount to the Plan pursuant to section 5.6(b). Any amountforfeited  will  remain in the Trust Fund and will be  allocated  as provided inSection 5.1 of this Plan.    Section 7.4 Assignment of Benefits. (a) General Rules. Except as provided inthis Section 7.4, all amounts  payable by the Trustee  shall be paid only to theperson  entitled to them,  and all such RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 33January 01, 2000payments  shall be paid  directly to such person and not to any other  person orcorporation.  Such payments shall not be subject to the claim of any creditor ofa  Participant,  nor shall such  payments be taken in execution by attachment orgarnishment or by any other legal or equitable proceedings. No person shall haveany right to alienate,  anticipate,  commute,  pledge,  encumber,  or assign anypayments or benefits which he may expect to receive  contingently  or otherwise,under this Plan,  except the right to designate a Beneficiary or  beneficiaries;provided, that this Section 7.4 shall not affect, restrict, or abridge any rightof setoff or lien which the Trust may have by law.            (b)   Qualified Domestic Relations Orders.                  (i)    Section  7.4(a)  of this  Plan  shall  not  apply  with                         respect to payments in accordance with the requirements                         of a qualified  domestic  relations  order. A qualified                         domestic  relations  order  creates or  recognizes  the                         existence of an alternate  payee's right to, or assigns                         to an  alternate  payee the right to,  receive all or a                         portion  of  the  benefits   otherwise   payable  to  a                         Participant under the Plan. A domestic  relations order                         means  any  judgment,   decree,   or  order  (including                         approval  of  a  property  settlement  agreement)  that                         relates  to the  provision  of child  support,  alimony                         payments,  or  marital  property  rights  to a  spouse,                         former  spouse,   child,   or  other   dependent  of  a                         Participant,  and is made pursuant to a state  domestic                         relations law (including a community  property law). To                         qualify, the domestic relations order must:                         (A)   Clearly  state  the name and last  known  mailing                               address  of the  Participant  and  the  name  and                               mailing  address of each alternate  payee covered                               by the order;                         (B)   Clearly  state the  amount or  percentage  of the                               Participant's  benefits to be paid by the Plan to                               each alternate  payee, or the manner in which the                               amount or percentage is to be determined;                         (C)   Clearly state the number of payments or period to                               which the order applies;                         (D)   Identify each Plan to which the order applies;                         (E)   Not  require the Plan to provide any type or form                               of  benefits,   or  any  option,   not  otherwise                               provided under the Plan;                         (F)   Not  require   the  Plan  to  provide   increased                               benefits  (determined  on the basis of  actuarial                               value); and                         (G)   Not   require  the  payment  of  benefits  to  an                               alternate  payee that are  required to be paid to                               another   alternate  payee  under  another  order                               previously  determined to be a qualified domestic                               relations order.                  (ii)   In the case of any  distribution  before a  Participant                         has  separated  from  service,   a  qualified  domestic                         relations order shall not fail to meet the requirements                         of Section  7.4(b)(i)(E)  of this Plan  solely  because                         such order requires that RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 34January 01, 2000                         payment of benefits be made to an  alternate  payee (A)                         on or  after  the  date  the  Participant  attains  the                         earliest  retirement age, (B) as if the Participant had                         retired on the date on which  such  payment is to begin                         under such order, and (C) in any form in which benefits                         may be paid  under the Plan to the  Participant  (other                         than in the  form of a  qualified  joint  and  survivor                         annuity  with  respect to the  alternate  payee and his                         subsequent   spouse).   Payment  of   benefits   before                         Termination of Employment  solely by reason of payments                         to  an  alternate  payee  under  a  qualified  domestic                         relations  order  shall not be deemed to be a violation                         of Code Section 401(a) or (k).            (c)   Definitions.                  (i)    "Alternate  payee"  means any  spouse,  former  spouse,                         child,  or  other  dependent  of a  Participant  who is                         recognized by a qualified  domestic  relations order as                         having a right to  receive  all,  or a portion  of, the                         benefits  payable  under a Plan  with  respect  to such                         Participant.                  (ii)   "Earliest retirement age" means the earlier of:                         (A)   The date on which the  Participant is entitled to                               a distribution under the Plan; or                         (B)   The later of the date the Participant attains age                               50, or the earliest date on which the Participant                               could begin receiving  benefits under the Plan if                               the Participant had separated from service.    Section 7.5 Other Rules for  Distribution  of Fund. (a) Vested  Accounts andConsent to Distribution.  No life annuity may be purchased or distributed  underthis Plan and no amount  (taking into  consideration  both Employer and Employeecontributions)  may be distributed  to a Participant  prior to age 65 unless theamount  is  distributed  in a lump  sum of  $5,000  or less  or the  Participantconsents  in  writing  to  the  distribution.   Unless  the  Participant  electsotherwise,  distribution  must  commence not later than 60 days after the end ofthe Plan Year in which a Participant  attains Normal  Retirement Age or actuallyretires,  whichever  is later.  Unless  otherwise  elected  by the  Participant,distributions  must  commence no later than one year after the close of the PlanYear in which occurs the later of the  Participant's  Termination  of Employmentbecause of death,  disability or Normal  Retirement  Age, or the fifth Plan Yearfollowing the Participants' separation from service; provided,  however, that ifsecurities held in a Participant's Account were purchased with the proceeds of aloan that has not been repaid in full,  distributions  may be delayed  until theend of the Plan Year during which the loan is repaid in full. The  Participant'sAccount  must be  distributed  over a period not longer than five years or, fiveyears plus one  additional  year (but not more than five  additional  years) foreach $100,000 of Account balance in excess of $500,000.            (b) Distribution Rules. Notwithstanding any other provisions of thissection, the following distribution rules shall apply (unless a different methodof  distribution  applies  under  Section  242(b) of the Tax  Equity  and FiscalResponsibility Act of 1982):                  (i)    Before Death.  The entire  Account of each  Participant                         (A)  will be  distributed  to him not  later  than  the                         required  beginning  date; or (B) shall be  distributedRESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 35January 01, 2000                         commencing  not later than the required  beginning date                         over (1) the life of the  Participant  (or the lives of                         the Participant and his designated Beneficiary), or (2)                         a period not  extending  beyond the life  expectancy of                         the   Participant   (or  the  life  expectancy  of  the                         Participant and his designated Beneficiary).                  (ii)   After Death. If a Participant  dies and distribution of                         his  Account  has  begun  in  accordance  with  Section                         7.5(i)(B) of this Plan,  the  remaining  portion of his                         Account  will be  distributed  at least as  rapidly  as                         under the method of distribution  being used under that                         Section  7.5(i)(B) as of the date of the  Participant's                         death. If a Participant dies before distribution of the                         Participant's   Account  has   commenced,   the  entire                         interest of the Participant will be distributed  within                         five  years  after  the death of the  Participant.  The                         preceding  sentence  shall not apply if any  portion of                         the  Participant's  Account  is  payable  to or for the                         benefit of a  designated  Beneficiary,  if such portion                         will be  distributed  over the  life of the  designated                         Beneficiary,  and if such  distributions will begin not                         later than one year after the date of the Participant's                         death  or  such  later  date  as the  Secretary  of the                         Treasury   may   prescribe  by   regulations.   If  the                         designated  Beneficiary is the surviving  spouse of the                         Participant,  the date on which the  distributions  are                         required to begin shall not be earlier than the date on                         which the  Participant  would have attained age 70-1/2,                         and  if  the   surviving   spouse   dies   before   the                         distribution to such spouse begins, distributions shall                         be  made  as  if  the   surviving   spouse   were   the                         Participant.                  (iii)  Life Expectancy.  For purposes of this Section 7.5, the                         life  expectancy  of an  Employee  and  the  Employee's                         spouse  (other than in the case of a life  annuity) may                         be  redetermined  but not more frequently than annually                         as determined by the Plan Committee.                  (iv)   Required Beginning Date.  Required Beginning Date means                         April 1 of the  calendar  year  following  the calendar                         year in  which  occurs  the  later  of [1] the date the                         Participant  attains  age 70 1/2,  or [2] the  date the                         Participant  retires from  employment with the Company.                         Notwithstanding the above, in the case of a 5% owner of                         the Company,  Required  Beginning Date means April 1 of                         the calendar year  following the calendar year in which                         the Participant attains age 70 1/2.                         Any Participant  (who is not a 5% owner of the Company)                         attaining  age 70 1/2 in years  after 1995 may elect by                         April 1 of the  calendar  year  following  the  year in                         which  the  Participant  attained  age 70  1/2,  (or by                         December  31,  1997  in  the  case  of  a   Participant                         attaining  age 70 1/2 in 1996)  to defer  distributions                         until the calendar year  following the calendar year in                         which the Participant  retires.  If no such election is                         made the Participant will begin receiving distributions                         by the April 1 of the calendar year  following the year                         in which  the  Participant  attained  age 70 1/2 (or by                         December  31,  1997  in  the  case  of  a   Participant                         attaining age 70 1/2 in 1996).RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 36January 01, 2000                         Any Participant  attaining age 70 1/2 in years prior to                         1997 may elect to stop  distributions and recommence by                         the April 1 of the calendar year  following the year in                         which the Participant retires.                  (v)    Designated  Beneficiary.  Designated  Beneficiary means                         any  individual  designated  as a  Beneficiary  by  the                         Participant.                  (vi)   Treatment  of Payments to Children.  Under  regulations                         prescribed by the Secretary of the Treasury, any amount                         paid to a child shall be treated as if it had been paid                         to the  surviving  spouse if such  amount  will  become                         payable  to  the  surviving   spouse  upon  such  child                         reaching  majority  (or  such  other  designated  event                         permitted under regulations).                  (vii)  Spouse,  Trust  for  Benefit  of  Spouse,  or Estate As                         Beneficiary.  If distribution  prior to a Participant's                         death has not commenced or has commenced as installment                         payments  from the  Trust  Fund and if the  Participant                         designates  his spouse,  a trust for the benefit of his                         spouse,   or  his  estate  as  his   Beneficiary,   the                         provisions of this subsection  shall apply,  subject to                         the limitations in this Section 7.5:                         (A)   Spouse   As   Beneficiary.   If   a   Participant                               designates  his spouse as his  Beneficiary,  upon                               the death of the  Participant  the  spouse  shall                               elect (1) to receive  the  entire  Account of the                               Participant in a lump sum distribution, or (2) to                               receive payment of the Account in installments as                               provided in Section  7.5(vii)(E) of this Plan. In                               the absence of an  election  by the  spouse,  the                               Participant's Account shall be distributed to the                               spouse in a lump sum within a period of time that                               satisfies  the   requirements  of  this  section.                               Notwithstanding  any  other  provisions  of  this                               Plan,  the  spouse  at any  time may  direct  the                               Trustee  to  distribute  all or any  part  of the                               Account to the spouse,  or may  request  that the                               Trustee  segregate the Account from the remainder                               of the Trust  Fund and  invest  it in the  manner                               that the spouse  specifies.  The Trustee,  in its                               sole    discretion,    shall   determine   on   a                               nondiscriminatory  basis  whether to permit  such                               segregation.                         (B)   QTIP  Trust  As  Beneficiary.  If  a  Participant                               designates   as  his   Beneficiary   a  qualified                               terminable interest property "QTIP" trust for the                               benefit  of his  spouse,  upon  the  death of the                               Participant  the  Trustee of the QTIP trust shall                               elect  for the  QTIP  trust  (1) to  receive  the                               entire  Account of the  Participant in a lump sum                               distribution,  or (2) to  receive  payment of the                               Account in  installments  as  provided in Section                               7.5(vii)(E)  of this Plan.  In the  absence of an                               election by the QTIP Trustee,  the  Participant's                               Account shall be distributed to the QTIP trust in                               a lump sum within a period of time that satisfies                               the    requirements    of   this   Section   7.5.                               Notwithstanding  any  other  provisions  of  this                               Plan,  the  spouse  at any  time may  direct  the                               Trustee  to  distribute  all or any  part  of the                               Account to the QTIP trust,  or may  request  that                               the  Trustee   segregate  the  Account  from  the                               remainder  of the Trust Fund and invest it in the                               manner  that  the  QTIP  Trustee  RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 37January 01, 2000                               specifies.  The Trustee,  in its sole discretion,                               shall  determine  on  a  nondiscriminatory  basis                               whether to permit such segregation.                         (C)   General   Power   of    Appointment    Trust   As                               Beneficiary. If the Participant designates as his                               Beneficiary  a trust  over which his spouse has a                               general power of  appointment,  upon the death of                               the  Participant  the spouse  shall elect (1) for                               such trust to receive  the entire  Account of the                               Participant  in a lump sum  distribution,  or (2)                               for such trust to receive  payment of the Account                               in    installments   as   provided   in   Section                               7.5(vii)(E)  of this Plan.  In the  absence of an                               election by the spouse, the Participant's Account                               shall be  distributed to such trust in a lump sum                               within  a  period  of  time  that  satisfies  the                               requirements of this section. Notwithstanding any                               other  provisions of this Plan, the spouse at any                               time may direct the Trustee to distribute  all or                               any part of the Account to the  general  power of                               appointment   trust,  or  may  request  that  the                               Trustee  segregate the Account from the remainder                               of the Trust  Fund and  invest  it in the  manner                               that the spouse  specifies.  The Trustee,  in its                               sole    discretion,    shall   determine   on   a                               nondiscriminatory  basis  whether to permit  such                               segregation.                         (D)   Estate  As   Beneficiary.   If  the   Participant                               designates his estate as his  Beneficiary  with a                               specific  bequest  of his  income in  respect  of                               decedent  to his  spouse,  upon the  death of the                               Participant  the personal  representative  of the                               Participant  (or the  successor  of the  personal                               representative)  shall  elect (1) to receive  the                               entire  Account of the  Participant in a lump sum                               distribution,  or (2) for the  spouse to  receive                               payment  of  the  Account  in   installments   as                               provided in Section  7.5(vii)(E) of this Plan. In                               the  absence  of  an  election  by  the  personal                               representative    (or   his    successor),    the                               Participant's Account shall be distributed to the                               personal  representative  (or his successor) in a                               lump sum within a time period that  satisfies the                               requirements of this section. Notwithstanding any                               other  provisions  of  this  Plan,  the  personal                               representative (or his successor) at any time may                               direct the Trustee to distribute  all or any part                               of the  Account,  or may request that the Trustee                               segregate  the Account from the  remainder of the                               Trust Fund and  invest it in the manner  that the                               personal   representative   (or  his   successor)                               specifies.  The Trustee,  in its sole discretion,                               shall  determine  on  a  nondiscriminatory  basis                               whether to permit such segregation.                         (E)   Installment    Distributions.    If   installment                               payments of the Participant's Account are elected                               under  this   section,   the  person  making  the                               election shall specify the amount of the payments                               and  when  they  shall  be  made,  provided  that                               payment  must be made  no  less  frequently  than                               annually.  The total  installment  payments  each                               year  shall  equal the  greater of (1) all income                               from the Account,  or (2) the minimum permissible                               annual  payment under this Section 7.5, and shall                               be limited as provided  under  Section  7.2(c) of                               this  Plan.  If  a  spouse   elects   installment                               payments,  such spouse shall  determine who shall                               receive the amounts,  if any,  payable under such                               installment election after such spouse's death.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 38January 01, 2000    Section 7.6  Withdrawals.  (a) Employer  Contributions.  Upon completing therequirements  for early  retirement  provided  in Section  6.1 of this  Plan,  aParticipant  may  elect to retire  for  purposes  of this  Plan and may  requestwithdrawal from the Trust Fund of all or any portion of his Account attributableto Employer contributions valued as of the most recent preceding Valuation Date.If a  Participant  does make such a  withdrawal,  he shall  not be  eligible  toparticipate  in the Plan again and he shall  forfeit all income which  otherwisewould have been  credited to his Account on the last day of the year in which hemakes a withdrawal of Employer  contributions.  His Account shall be credited orcharged with any realized or  unrealized  gains or losses on such date as thoughno such withdrawal had occurred.            (b) Voluntary  Contributions.  At any time a Participant may requestwithdrawal  of  all  or  any  part  of his  Account  attributable  to  voluntarycontributions.  A Participant  desiring  such a withdrawal  shall file a writtenrequest  with the Plan  Committee  at least two weeks  before  the date on whichwithdrawal is to be made. The  Participant  shall specify the date of withdrawalin his request  which date shall be the end of a calendar  quarter and that dateshall be the  withdrawal  date for all  purposes of this Plan  whether or not heactually  receives his  distribution on that date. The Plan Committee then shalldirect the Trustee to distribute the amount  requested to the  Participant.  TheTrustee  shall  distribute  the  withdrawn  contributions  as soon as reasonablypossible after the withdrawal  date. A Participant  who makes  withdrawal of anyportion of his Account under this Section 7.6(b) may not contribute to the TrustFund under Section 4.1 of this Plan until the first calendar quarter  commencingsix months after withdrawal is made. Any expenses attributable to any withdrawalunder this  Section  7.6(b)  shall be charged to the Account of the  Participantrequesting the  withdrawal.  Vested benefits under the Plan may not be forfeitedbecause a Participant withdraws his voluntary contributions.            (c) Salary Reductions and Rollover Contributions.  A Participant maywithdraw his elective  deferral  contributions  to this Plan (but  excluding anyearnings,  losses, and changes in fair market value of such contributions in thecase of a hardship  withdrawal),  as  reflected in his Account  attributable  toelective deferrals, upon either completing the requirements for early retirementunder Section 6.1 of this Plan or upon serious  financial  hardship,  as definedbelow. A Participant may withdraw any Rollover  contributions made under Section4.7  (including any earnings,  losses,  and changes in fair market value of suchrollover  contributions)  upon serious financial  hardship,  as defined below. AParticipant  desiring such a withdrawal  shall make his request in such form andmanner as the Plan Committee shall prescribe from time to time. If a Participantmakes a  withdrawal  upon  eligibility  for  early  retirement,  he shall not beeligible to  participate  in the Plan again and shall  forfeit all income  whichotherwise would have been credited to his Account on the last day of the year inwhich he makes  withdrawal.  A hardship  distribution  cannot  exceed the amountrequired to meet the immediate financial need and cannot be reasonably availableto the Participant  from other  resources.  If the Plan Committee  determines inaccordance with a uniform and  nondiscriminatory  policy that serious  financialhardship exists, it may direct the Trustee to distribute the amount requested tothe Participant.  Any expenses  attributable to the hardship withdrawal shall becharged to the Account of the  Participant  requesting the  withdrawal.  For thepurposes  of this  Section,  a  serious  financial  hardship  is  defined  as animmediate and heavy  financial  need of the  Participant  when such  Participantlacks other  available  resources.  The following are the only  financial  needsconsidered immediate and heavy:RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 39January 01, 2000      (i)   Deductible  medical  expenses  (within the  meaning of Code  Section            213(d)) of the Participant,  the Participant's spouse,  children, or            dependents;     (ii)   The purchase  (excluding mortgage payments) of a principal residence            for the Participant;    (iii)   Payment of tuition, and related expenses, for the next twelve months            of post-secondary  education for the Participant,  the Participant's            spouse, children, or dependents;     (iv)   The need to prevent  the  eviction  of the  Participant  from,  or a            foreclosure  on  the  mortgage  of,  the   Participant's   principal            residence;      (v)   Funeral expenses of a family member of the Participant; or     (vi)   Any other reason deemed to be an immediate and heavy  financial need            by the Secretary of Treasury.In the case of hardship withdrawal of elective deferrals, a distribution will beconsidered as necessary to satisfy an immediate and heavy  financial need of theParticipant  only if (A) the Participant has obtained all  distributions,  otherthan hardship distributions,  and all nontaxable loans available under all Plansmaintained  by the Company;  (B) in the case of hardship  withdrawal of electivedeferrals,  all Plans  maintained by the Company provide that the  Participant'selective  deferrals and Participant  contributions  will be suspended for twelvemonths after the receipt of the hardship  distribution;  (C) the distribution isnot in excess  of the  amount  necessary  to  satisfy  the  immediate  and heavyfinancial  need;  and (D) all plans  maintained by the Company  provide that theParticipant may not make elective  deferrals for the Participant's  taxable yearimmediately following the taxable year of the hardship distribution in excess ofthe  applicable  limit under Code Section  402(g) for such taxable year less theamount of such  Participant's  elective  deferrals  for the taxable  year of thehardship distribution.Any hardship withdrawal under this section may be made only in a cash lump sum.    Section 7.7 Put Option. If Qualifying  Employer Securities  distributed,  aspart of the  balance to the  credit of the  Participant  distributed  within onetaxable year, are not readily tradable on an established market, the Participantreceiving  such  Qualifying  Employer  Securities  has a right  to  require  theEmployer to repurchase such Qualifying Employer Securities at fair market value.The put option  period shall  extend for 60 days after the date of  distributionand, if not exercised  during that time period shall extend for an additional 60day  period in the  following  Plan Year (to the  extent  provided  in  Treasuryregulations).  Payments for the Qualifying  Employer  Securities must be made insubstantially  equal period  payments over a period not exceeding five years andmust commence  within 30 days after the exercise of the "put  option".  Adequatesecurity  shall be  provided  and  reasonable  interest  shall be paid on unpaidamounts.  Qualifying  Employer  Securities  shall  be  readily  tradable  on  anestablished  market if they are (i)  listed on a  national  securities  exchangeregistered  under Section 6 of the Securities  Exchange Act of 1934, (ii) quotedon a system  sponsored by a national  securities  association  registered  underSection  15A(b)  of  the  Securities   Exchange  Act,   including  the  NationalAssociation of Securities  Dealers,  Inc. Automated Quotation System ("NASDAQ"),or (iii)  traded on any over the  counter  market by brokers or dealers who makethe market using "pink sheets" published by the National Quotation Bureau, Inc.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 40January 01, 2000    Section 7.8 Loans to Participants.  (a) Uniform  Non-Discriminatory  Policy.The Committee may establish a uniform and  nondiscriminatory  policy under whichit may direct the  Trustee to make a loan to a  Participant  who makes a writtenrequest for such a loan. In no event may all loans from all  qualified  plans ofthe Company to an individual Participant exceed the lesser of (i) the greater of$10,000  or  one-half  the  present  value of the  Participant's  nonforfeitableaccrued  benefit under all such plans; or (ii) $50,000 reduced by the excess (ifany) of the highest  outstanding balance of loans from all such plans during theone year  period  ending on the day  before the date on which such loan was madeover the  outstanding  balance of loans from all such plans on the date on whichsuch loan was made.            (b)  Collateral  Terms.  All loans  shall be secured  adequately  bycollateral which collateral may (in the Plan Committee's  discretion) include upto 50% of the Participant's vested Account,  shall be considered  investments ofthe Plan and Trust, and shall bear a rate of interest  considered  reasonable onthe date on which the loan was made.  Except to the extent it is used to acquireany dwelling unit that within a reasonable time is to be used (determined at thetime the loan is made) as a principal  residence  of the  Participant,  any suchloan shall be repaid  within or upon the earlier of the date  prescribed  by thePlan  Committee,  or five years  after the loan is made.  To the extent that anyloan is used to acquire the principal  residence of the  Participant,  such loanshall  be  repaid  within  a  reasonable  period  of time as  determined  by theCommittee.  Substantially level amortization of the loan (with payments at leastquarterly)  shall be made over the term of the loan. If a  Participant  does notrepay such loan  within  the time  prescribed,  then in  addition  to  enforcingpayment through any legal remedy, the Plan Committee may instruct the Trustee todeduct the total amount of the loan and any unpaid  interest due on it from suchParticipant's Account, but no foreclosure of the Participant's Account may occurprior to the Account being  distributable  under this Article. In its discretionthe Plan  Committee  may  require the  Participant  to repay the loan by payrolldeduction. Loans may not be made to shareholder-Employees or to owner-Employees.For purposes of this requirement,  a  shareholder-Employee  means an Employee orofficer of an electing small business (Subchapter S) corporation who owns (or isconsidered  as owning  within the meaning of Code Section  319(a)(1)) on any dayduring  the  taxable  year of such  corporation,  more than five  percent of theoutstanding stock of the corporation.  An  owner-Employee  means an Employee whoowns the entire interest of an unincorporated  trade or business or is a partnerowning  more  than  10  percent  of the  capital  interest  or  profits  in suchpartnership.    Section  7.9  Other  Restrictions  on  Withdrawals.   Notwithstanding  otherprovisions  of  this  Plan  and in  particular  Article  VII of this  Plan,  thefollowing  will  apply  to  all  transactions   involving   Qualifying  EmployerSecurities or Accounts which are the subject of this Plan:      (i)   Six Month  Limitation on Further  Purchases.  An officer or director            Participant  making a withdrawal  under this Plan must cease further            purchases  of  Qualifying  Employer  Securities  in the Plan for six            months, or the Qualifying Employer Securities so distributed must be            held by that  Participant six months prior to disposition;  provided            that extraordinary  distributions of all of the Qualifying  Employer            Securities  held by the Plan and  distributions  in connection  with            death,  retirement,  disability,  Termination  of  Employment,  or a            qualified domestic relations order as defined by the Code or Title I            of the Employee  Retirement  Income Security Act, or the rules under            those acts, are not subject to this requirement; andRESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 41January 01, 2000     (ii)   Six  Month  Limitation  on  Further  Participation.  An  officer  or            director  Participant who ceases  participation  in the Plan may not            participate in the Plan again for at least six months.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 42January 01, 2000                                  ARTICLE VIII                              FIDUCIARY OBLIGATIONS    Section 8.1 General Fiduciary Duties. A Fiduciary shall discharge his dutiesunder the Plan solely in the interest of the Participants and the  beneficiariesand for the exclusive purpose of providing benefits to Participants and to theirbeneficiaries and defraying  reasonable  expenses of administering the Plan. Allfiduciaries  shall act with the care, skill,  prudence,  and diligence under thecircumstances  then  prevailing that a prudent man acting in a like capacity andfamiliar  with such matters  would use in the conduct of an enterprise of a likecharacter  and with  like  aims.  Except as  authorized  by  regulations  of theSecretary of Labor,  no  Fiduciary  may maintain the indicia of ownership of anyassets of the Plan outside the jurisdiction of the district courts of the UnitedStates.  A Fiduciary  shall act in accordance with the documents and instrumentsgoverning the Plan to the extent such documents and  instruments  are consistentwith the requirements of law.    Section 8.2 Allocation of Fiduciary  Responsibility.  A Named  Fiduciary maydesignate   persons  other  than  named   fiduciaries  to  carry  out  Fiduciaryresponsibilities (other than Trustee responsibilities) under the Plan.    Section 8.3 Liability of Fiduciaries.  (a) Extent of Liability.  A Fiduciarywho breaches any of the  responsibilities,  obligations,  or duties imposed uponhim by this Plan or by the  requirements of law shall be personally  liable only(i) to make  good to the Plan any  losses  resulting  from his  breach,  (ii) torestore to the Plan any profits the  Fiduciary  has made through the use of Planassets for his personal Account,  and (iii) to pay those penalties prescribed bylaw  arising  from his  breach.  A  Fiduciary  shall be  subject  to such  otherequitable or remedial relief as a court of law may deem  appropriate,  includingremoval of the  Fiduciary.  A Fiduciary  also may be removed for a violation  ofSection 8.8 of this Plan  (prohibition  against  certain persons holding certainpositions).  No  Fiduciary  shall be  liable  with  respect  to the  breach of aFiduciary  duty if such breach was  committed  before he became a  Fiduciary  orafter he ceased to be a Fiduciary.            (b) Liability of Fiduciary for Breach by  Co-Fiduciary.  A Fiduciaryshall be liable for a breach of Fiduciary responsibility of another Fiduciary ofthis Plan, only if he (i) participates  knowingly in, or knowingly undertakes toconceal,  an act or  omission  of the other  Fiduciary,  and  knows  such act oromission by the other  Fiduciary  is a breach of the other  Fiduciary's  duties,(ii) enables another Fiduciary to commit a breach, by his failure to comply withSection 8.1 of this Plan in the administration of the specific  responsibilitieswhich give rise to his status as a Fiduciary, or (iii) has knowledge of a breachof  another   Fiduciary  and  does  not  make   reasonable   efforts  under  thecircumstances to remedy the breach.            (c) Liability for Improper Delegation of Fiduciary Responsibility. ANamed  Fiduciary  who allocates  any of his  Fiduciary  responsibilities  to anyperson  or   designates   any   person  to  carry  out  any  of  his   Fiduciaryresponsibilities  shall be  liable  for the act or  omission  of such  person incarrying  out the  responsibility  only to the extent  that the Named  Fiduciaryfails to satisfy his general  Fiduciary  duties of Section 8.1 of this Plan withrespect to the allocation or designation,  with respect to the  establishment orimplementation of the procedure by which he allocates the  responsibilities,  orin continuing  the  allocation or  designation.  Nothing in this Section  8.3(c)shall  prevent a Named  Fiduciary  from being  liable if he  otherwise  would beliable for an act or omission under Section 8.3 of this Plan.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 43January 01, 2000            (d) Fiduciary to whom Responsibilities are Allocated. Any person whohas been designated to carry out Fiduciary responsibilities under Section 8.2 ofthis Plan shall be liable for such  responsibilities  under this  section to thesame extent as any Named Fiduciary.            (e) Liability  Insurance and  Indemnification.  Nothing in this Planshall preclude a Fiduciary from purchasing insurance to cover liability from andfor his own  account.  The Company may  purchase  insurance  to cover  potentialliability of those persons who serve in a Fiduciary  capacity with regard to thePlan or may  indemnify a Fiduciary  against  liability  and expenses  reasonablyincurred by him in  connection  with any action to which such  Fiduciary  may bemade a party by reason of his being or having been a Fiduciary.    Section 8.4 Prohibited  Transactions.  No Fiduciary  shall cause the Plan toengage  in a  transaction  if the  Fiduciary  knows  or  should  know  that  thetransaction  constitutes  a prohibited  transaction  under law. No  disqualifiedperson under law (other than a Fiduciary  acting only as such) shall engage in aprohibited transaction as prescribed by law.    Section 8.5 Receipts of Benefits by Fiduciaries.  Nothing shall prohibit anyFiduciary  from  receiving  any  benefit  to  which  he  may  be  entitled  as aParticipant  or Beneficiary in the Plan, if such benefit is computed and paid ona basis  which is  consistent  with the terms of the Plan  applied  to all otherParticipants and  beneficiaries.  The determination of any matters affecting thepayment of  benefits to any  Fiduciary  other than the Plan  Committee  shall bedetermined by the Plan  Committee.  If the Plan Committee is an individual,  thedetermination  of any  matters  affecting  the  payment of  benefits to the PlanCommittee  shall be made by a temporary Plan Committee who shall be appointed bythe Board of Directors  for such  purpose.  If the Plan  Committee is a group ofindividuals,  the determination of any matters affecting the payment of benefitsto any  individual  Plan  Committee  member shall be made by the remaining  PlanCommittee  members without the vote of such individual Plan Committee member. Ifthe remaining Plan Committee members are unable to agree on any matter affectingthe payment of such benefits,  the Board of Directors  shall appoint a temporaryPlan Committee to decide the matter.    Section 8.6 Compensation  and Expenses of Fiduciaries.  (a) General Rules. AFiduciary shall be entitled to receive any reasonable  Compensation for servicesrendered or for the  reimbursement of expenses properly and actually incurred inthe performance of his duties under the Plan.  However, no Fiduciary who alreadyreceives  full-time  pay from an Employer  shall receive  Compensation  from thePlan, except for reimbursement of expenses properly and actually  incurred.  AllCompensation and expenses shall be paid by the Plan, unless the Company,  in itsdiscretion, elects to pay all or any part of such Compensation and expenses.            (b) Compensation of Plan Committee and Plan  Administration.  A PlanAdministrator  who is not a full-time  Employee of an Employer shall be entitledto such  reasonable  Compensation  as the Plan Committee and Plan  Administratormutually  shall  determine.  A Plan  Committee  member  who  is not a  full-timeEmployee of an Employer shall be entitled to such reasonable Compensation as theCompany and the Plan Committee  mutually shall determine.  Any expenses properlyand actually  incurred by the Plan Committee or the Plan  Administrator due to arequest by a Participant  shall be charged to the Account of the  Participant onwhose behalf such expenses are incurred.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 44January 01, 2000            (c)  Compensation  of  Trustee.  A  Trustee  who is not a  full-timeEmployee of an Employer shall be entitled to such  reasonable  Compensation  forits services as the Plan Committee and the Trustee mutually shall determine.            (d) Compensation of Persons Retained or Employed by Named Fiduciary.The Compensation of all agents,  counsel,  or other persons retained or employedby a Named Fiduciary  shall be determined by the Named Fiduciary  employing suchperson,  with the Plan  Committee's  approval,  provided  that a person who is afull-time Employee of an Employer shall receive no Compensation from the Plan.    Section 8.7 Service by Fiduciaries and Disqualified Persons. Nothing in thisPlan shall  prohibit  anyone from serving as a Fiduciary in addition to being anofficer,  Employee,  agent, or other  representative of a disqualified person asdefined in the Code.    Section 8.8 Prohibition  Against Certain Persons Holding Certain  Positions.No person who has been  convicted  of a felony shall be permitted to serve as anadministrator,  Fiduciary,  officer,  Trustee,  custodian,  counsel,  agent,  orEmployee of this Plan, or as a consultant to this Plan,  unless  permitted underlaw.  The  Plan  Committee  shall  ascertain  to the  extent  practical  that noviolation of this section occurs. In any event, no person knowingly shall permitany other person to serve in any capacity which would violate this section.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 45January 01, 2000                                   ARTICLE IX                      PLAN ADMINISTRATOR AND PLAN COMMITTEE    Section 9.1 Appointment of Plan Administrator and Plan Committee.  The Boardof  Directors  by  resolution  shall  appoint  a  Plan  Administrator  and  PlanCommittee,  both of whom shall hold office until resignation,  death, or removalby the Board of Directors.  If the Board of Directors  fails to appoint the PlanCommittee or Plan  Administrator,  or both, the Board of Directors  shall be thePlan Committee,  the Plan  Administrator,  or both. Any person may serve in morethan one Fiduciary  capacity,  including service as Plan  Administrator and PlanCommittee  member.  Any group of persons appointed by the Board of Directors mayserve in the capacity of Plan Committee, Plan Administrator, or both.    Section 9.2 Organization and Operation of Offices of Plan  Administrator andPlan  Committee.  The Plan  Administrator  and Plan  Committee  may  adopt  suchprocedures as each deems desirable for the conduct of their  respective  affairsand may appoint or employ a secretary or other  agents,  any of whom may be, butneed not be, an officer or Employee of the Company or an Associated Company. Anyagent may be removed at any time by the person appointing or employing him.    Section 9.3  Information  To Be Made  Available to Plan  Committee  and PlanAdministrator.  To  enable  the Plan  Committee  and the Plan  Administrator  toperform all of their  respective  duties  under the Plan,  each  Employer  shallprovide  the  Plan  Committee  and the Plan  Administrator  with  access  to thefollowing  information  for each  Employee:  (i) name and  address;  (ii) socialsecurity number; (iii) birthdate;  (iv) dates of commencement and Termination ofEmployment;  (v) reason for termination of employment;  (vi) hours worked duringeach year; (vii) annual Compensation;  (viii) Employer  contributions;  and (ix)such other  information  as the Plan  Committee  or the Plan  Administrator  mayrequire.  To the extent the  information  is available in Employer  records,  anEmployer shall provide the Plan Committee and Plan  Administrator with access toinformation relating to each Employee's  contributions,  benefits received underthe Plan,  and marital  status.  If such  information  is not available from theEmployer  records,  the Plan Committee  shall obtain such  information  from theParticipants.  The Plan Committee,  the Plan  Administrator and the Employer mayrely on and shall not be liable  because of any  information  which an  Employeeprovides,  either  directly or  indirectly.  As soon as possible  following  anyParticipant's  death,  Total  Disability,  retirement,  or other  Termination ofEmployment, his Employer shall certify in writing to the Plan Committee and PlanAdministrator   such  Participant's  name  and  the  date  and  reason  for  hisTermination of Employment.    Section 9.4 Resignation and Removal of Plan  Administrator or Plan CommitteeMember;  Appointment of  Successors.  Any Plan  Administrator  or Plan Committeemember  may  resign  at any  time by  giving  written  notice  to the  Board  ofDirectors,  effective as stated in such notice,  otherwise  upon receipt of suchnotice.  At any time the Plan  Administrator or any Plan Committee member may beremoved by the Board of Directors without cause. As soon as practical, followingthe death,  resignation,  or removal of any Plan Administrator or Plan Committeemember, the Board of Directors shall appoint a successor by resolution.  Writtennotice of the  appointment of a successor Plan  Administrator  or successor PlanCommittee member shall be given by the Company to the Trustee.  Until receipt bythe  Trustee of such  written  notice,  the  Trustee  shall not be charged  withknowledge or notice of such change.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 46January 01, 2000    Section  9.5  Duties  and  Powers  of  Plan  Administrator,   Reporting  andDisclosure.   (a)  General   Requirements.   The  Plan  Administrator  shall  beresponsible for all applicable reporting and disclosure requirements of law. ThePlan  Administrator  shall  prepare,  file  with the  Secretary  of  Labor,  theSecretary of the Treasury,  or the Pension Benefit  Guaranty  Corporation,  whenapplicable, and furnish to Participants and beneficiaries,  when applicable, thefollowing:  (i) summary plan description;  (ii) description of modifications andchanges;  (iii) annual  report;  (iv) terminal and  supplementary  reports;  (v)registration statement;  and (vi) any other return, report, or document requiredby law.            (b) Statement of Benefits Accrued and Vested. The Plan Administratoris to furnish any Plan Participant or Beneficiary who so requests in writing,  astatement  indicating,  on the basis of the latest  available  information,  thetotal benefits accrued and the vested benefits,  if any, which have accrued,  orthe earliest date on which benefits will become vested.  The Plan  Administratorshall furnish a written  statement to any Participant who terminates  employmentduring the Plan Year and is entitled to a deferred vested benefit under the Planas of the end of the Plan Year,  if no  retirement  benefits have been paid withrespect to such  Participant  during the Plan Year.  The  statement  shall be anindividual  statement and shall contain the  information  required in the annualregistration statement which the Plan Administrator is required to file with theSecretary of the Treasury.  The Plan Administrator  shall furnish the individualstatement to the  Participant  before the expiration of the time  prescribed forfiling the annual registration statement with the Secretary of the Treasury.            (c)  Inspection  of  Documents.  The Plan  Administrator  is to makeavailable for inspection  copies of the Plan  description  and the latest annualreport and the agreements  under which the Plan was  established or is operated.Such  documents  shall  be  available  for  examination  by any  Participant  orBeneficiary in the principal office of the Plan  Administrator and in such otherplaces as may be necessary to make  available all pertinent  information  to allParticipants.  Upon written request by any Participant or Beneficiary,  the PlanAdministrator is to furnish a copy of the last updated summary Plan description,Plan  description,  and the latest annual report,  any terminal report,  and anyagreements  under which the Plan is  established or operated.  In addition,  thePlan  Administrator is to comply with every other requirement  imposed on him bylaw.            (d)    Employment   of   Advisers   and   Persons   To   Carry   OutResponsibilities.  The Plan  Administrator  may appoint  one or more  persons torender advice with regard to any responsibility the Plan Administrator has underthe Plan and may employ one or more persons  (other than a Named  Fiduciary)  tocarry out any of his responsibilities under the Plan.            (e) Notice of Eligibility for Direct Rollover Distribution. The PlanAdministrator  shall  provide  a written  explanation  to the  recipient  of anyeligible  rollover  distribution  that income  taxes will not be withheld on thedistribution  to the extent  such  distribution  is  transferred  in an eligiblerollover distribution to an eligible retirement plan.    Section  9.6 Duties  and Powers of Plan  Committee  - In  General.  The PlanCommittee  shall  decide,  in its sole and absolute  discretion,  all  questionsarising in the administration,  interpretation,  and application of the Plan andTrust,   including  all  questions   relating  to  eligibility,   vesting,   anddistribution,  except as may be  reserved  under this Plan to the  Company,  itsBoard of Directors or any Associated  Company.  The Plan Committee may designateany person  (other than the Plan  Administrator  or Trustee) to carry out any ofthe Plan  Committee's  Fiduciary  responsibilities  under the Plan (other than aTrustee  Responsibility)  and may appoint one or more  persons to render  adviceRESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 47January 01, 2000with regard to any  responsibility  the Plan  Committee has under the Plan.  ThePlan  Committee  from time to time  shall  direct  the  Trustee  concerning  thepayments to be made out of the Trust Fund  pursuant to this Plan.  All  notices,directions,  information, and other communications from the Plan Committee shallbe in writing.    Section 9.7 Duties and Powers of Plan  Committee  - Keeping of Records.  ThePlan Committee shall keep a record of all the Plan  Committee's  proceedings andshall  keep all  such  books  of  Account,  records,  and  other  data as may benecessary or advisable in its judgment for the  administration  of this Plan andTrust,  including  records to reflect the affairs of this Plan, to determine theamount of vested and/or forfeitable interests of the respective  Participants inthe Trust Fund,  and to determine the amount of all benefits  payable under thisPlan. The Plan Committee shall maintain  separate  Accounts for each Participantas provided under Section 5.1 of this Plan.  Subject to the requirements of law,any person  dealing  with the Plan  Committee  may rely on,  and shall  incur noliability in relying on, a certificate  or  memorandum in writing  signed by thePlan Committee as evidence of any action taken or resolution adopted by the PlanCommittee.    Section  9.8 Duties and Powers of Plan  Committee  - Claims  Procedure.  (a)Filing and Initial  Determination of Claim. Any Participant,  Beneficiary or hisduly authorized  representative may file a claim for a Plan benefit to which theclaimant  believes  that he is  entitled.  Such a claim must be in  writing  anddelivered to the Plan Committee in person or by certified mail, postage prepaid.Within 90 days after receipt of such claim, the Plan Committee shall send to theclaimant by certified mail, postage prepaid,  notice of the granting or denying,in whole or in part,  of such  claim  unless  special  circumstances  require anextension of time for processing the claim. In no event may the extension exceed90 days from the end of the initial  period.  If such extension is necessary theclaimant will receive a written notice to this effect prior to the expiration ofthe  initial  90-day  period.  The Plan  Committee  shall  have full  discretionpursuant to the Plan to deny or grant a claim in whole or in part.  If notice ofthe denial of a claim is not furnished in accordance  with this Section  9.8(a),the claim shall be deemed denied and the claimant shall be permitted to exercisehis right of review pursuant to Section 9.8(c) and (d) of this Plan.            (b) Duty of Plan Committee Upon Denial of Claim.  The Plan Committeeshall  provide  to every  claimant  who is denied a claim for  benefits  writtennotice  setting  forth in a manner  calculated to be understood by the claimant:(i) the specific  reason or reasons for the denial;  (ii) specific  reference topertinent Plan  provisions on which the denial is based;  (iii) a description ofany additional material or information necessary for the claimant to perfect theclaim  and an  explanation  of why  such  material  is  necessary;  and  (iv) anexplanation of the Plan's claim review procedure.            (c) Request for Review of Claim Denial. Within 60 days after receiptby the claimant of written notification of the denial in whole or in part of hisclaim,  the  claimant  or  his  duly  authorized  representative,  upon  writtenapplication  to the Plan  Committee  in person  or by  certified  mail,  postageprepaid, may request a review of such denial, may review pertinent documents andmay submit  issues and comments in writing.  Upon its receipt of the request forreview, the Plan Committee shall notify the Board of Directors of the request.            (d) Claims  Reviewer.  Upon its  receipt of notice of a request  forreview,  the  Board  of  Directors  shall  appoint  a person  other  than a PlanCommittee member to be the claims reviewer.  The Plan Committee shall deliver tothe claims  reviewer  all  documents  submitted  by the  claimant  and all otherdocuments  pertinent  to the  review.  The claims  reviewer  shall make a promptdecision RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 48January 01, 2000on the review. The decision on review shall be written in a manner calculated tobe  understood  by the  claimant,  and shall  include  specific  reasons for thedecision and specific  references to the pertinent Plan  provisions on which thedecision is based.  The  decision on review shall be made not later than 60 daysafter the Plan  Committee's  receipt of a request for a review,  unless  specialcircumstances  require  an  extension  of time for  processing,  in which case adecision  shall be rendered  not later than 120 days after  receipt of a requestfor review.  If such  extension is necessary the claimant shall be given writtennotice of the extension prior to the expiration of the initial 60-day period. Ifnotice of the  decision  on  review is not  furnished  in  accordance  with thisSection  9.8(d),  the claim  shall be deemed  denied and the  claimant  shall bepermitted to exercise his right to legal  remedy  pursuant to Section  9.8(e) ofthis Plan.            (e) Legal  Remedy.  After  exhaustion  of the  claims  procedure  asprovided  under this Plan,  nothing  shall  prevent any person from pursuing anyother legal remedy.    Section 9.9 Duties and Powers of Plan Committee - Funding Policy. The policyof each Employer is that this Plan shall be funded with  Employer  contributionsand  Participant  contributions.  The Plan Committee  shall determine the Plan'sshort-run  and  long-run   financial  needs  and  regularly   communicate  theserequirements  to the  appropriate  persons.  The Plan  Committee  will determinewhether the Plan has a short-run need for liquidity,  (e.g., to pay benefits) orwhether the liquidity is a long-run goal and investment growth is a more currentneed. The Plan Committee shall  communicate  such  information to the Trustee sothat investment policy can be coordinated appropriately with Plan needs.    Section  9.10 Duties and Powers of Plan  Committee - Bonding of  Fiduciariesand Plan  Officials.  The Plan Committee shall procure bonds for every Fiduciaryof the Plan and every  Plan  official,  if he handles  funds of the Plan,  in anamount  not less than 10% of the  amount of funds  handled  and in no event lessthan  $1,000,  except the Plan  Committee  shall not be required to procure suchbonds if: (i) the person is  excepted  from the bonding  requirement  by law; or(ii) the Secretary of Labor exempts the Plan from the bonding requirements.  Thebonds shall conform to the requirements of law.    Section  9.11  Duties  and Powers of Plan  Committee  -  Qualified  DomesticRelations Orders. (a) Establish Procedures. Effective as of January 1, 1985, thePlan  Committee  shall  establish  reasonable  procedures  for  determining  thequalification  status of a domestic relations order. Such procedures:  (i) shallbe in  writing;  (ii)  shall  provide  to each  person  specified  in a domesticrelations  order as entitled to payment of Plan  benefits  notification  of suchprocedures  promptly  upon  receipt  by the Plan of the order;  and (iii)  shallpermit an alternate payee to designate a representative for receipt of copies ofnotices that are sent to the alternate payee.            (b)  Determination of Plan Committee.  Within a reasonable period oftime after receipt of such order,  the Plan Committee  shall  determine  whethersuch order is a qualified  domestic  relations  order and notify the Participantand each alternate payee of such  determination.  During any period in which theissue of whether a qualified  domestic  relations order is a qualified  domesticrelations  order is being  determined,  the Plan Committee  shall segregate in aseparate  Account the amounts  which  would have been  payable to the  alternatepayee  during  such  period if the order had been  determined  to be a qualifieddomestic relations order. If, within 18 months the order is determined not to bea qualified  domestic relations order or the issue as to whether such order is aqualified  domestic  relations  order is not resolved,  then the Plan  Committeeshall pay under the terms of the Plan the  segregated  amounts  to the person orpersons who would have been entitled to such amounts RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 49January 01, 2000if there had been no order. If a Fiduciary acts in accordance with the fiduciaryresponsibility   provisions  of  ERISA,   then  the  Plan's  obligation  to  theParticipant  and each  alternate  payee shall be  discharge to the extent of anypayment made.    Section 9.12 Advice to Designated  Fiduciaries.  Any Fiduciary designated bythe Plan  Committee  or Plan  Administrator  may appoint with the consent of thePlan  Committee  or Plan  Administrator,  respectively,  one or more  persons torender advice with regard to any  responsibility  such designated  Fiduciary hasunder the Plan.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 50January 01, 2000                                    ARTICLE X                        POWERS AND DUTIES OF THE TRUSTEE    Section 10.1  Investment of Trust Fund.  (a) Duties of Trustee.  The duty ofthe Trustee is to hold in trust the funds it receives.  Subject to the directionof the  Plan  Committee,  the  Trustee  shall  have  exclusively  authority  anddiscretion  to manage and control the assets of the Plan and to manage,  invest,and reinvest the Trust Fund and the income from it under this  article,  withoutdistinction between principal and income, and shall be responsible only for suchsums that it actually  receives as  Trustee.  The Trustee  shall have no duty tocollect any sums from the Plan Committee.  The Plan Committee will have the dutyto direct the Trustee with respect to the investment of the Trust Fund,  subjectto  the   Participants'   direction  of  investment   under   Section   10.1(d).Notwithstanding  any other  provision  of the Plan,  the  Trustee  shall have noresponsibility  to select the investment  options offered to Participants  underSection  10.1(d) nor shall the Trustee have any  discretion  with respect to theinvestment of Trust Fund assets.            (b) Powers of Trustee. The Trustee shall have the power to apply thefunds it receives to purchase shares of Qualifying Employer Securities,  and theTrustee may invest in Qualifying Employer Securities, up to 100% of the value ofPlan assets,  without regard to the diversification  requirement or the prudencerequirement to the extent it requires diversification. Purchases of stock may bemade by the Trustee in the open market or by private purchase, or, if available,from the  Company,  or as the  Trustee  may  determine  in its sole  discretion,provided only that no private  purchase or purchase from the Company may be madeat a price  greater  than the  current  market  price  for  Qualifying  EmployerSecurities on the day of such purchase. The Trustee also may purchase stock fromParticipants who receive  distributions from this Trust,  provided that all suchpurchases shall be made at the current market price on the day of such purchase.The  Trustee  also shall have the power to invest  and/or  reinvest  any and allmoney or property of any  description at any time held by it and  constituting apart  of  the  Trust  Fund,  without  previous  application  to,  or  subsequentratification  of, any court,  tribunal,  or commission,  or any federal or stategovernmental  agency and may invest in real  property  and all  interest in realproperty, in bonds, notes,  debentures,  mortgages,  commercial paper, preferredstocks, common stocks, or other securities,  rights,  obligations,  or property,real or personal,  including shares or certificates of  participation  issued byregulated investment  companies or regulated investment trusts,  shares or unitsof  participation in qualified common trust funds, in qualified pooled funds, orin pooled  investment funds of an insurance  Company qualified to do business inthe state. If the Trustee is a bank or similar financial institution  supervisedby the United  States or a state,  it may invest Plan assets in its own deposits(savings  Accounts  and  certificates  of  deposit)  if  such  deposits  bear  areasonable rate of interest.            (c) Diversification and Prudence Requirements.  Except to the extentthe Trustee  invests in the Qualifying  Employer  Securities,  the Trustee shalldiversify  the  investments  of the Plan to minimize  the risk of large  losses,unless under the  circumstances  it is clearly prudent not to do so. The Trusteeshall act with the care, skill,  prudence, and diligence under the circumstancesthen  prevailing  that a prudent man acting in a like capacity and familiar withsuch matters would use in the conduct of an  enterprise of a like  character andwith like aims.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 51January 01, 2000            (d)   Participant's Right to Designate Investments.            (i)  General  Rules.  Each  Participant  shall  have  the  right  todesignate  the  investment  of his Account  attributable  to  elective  deferralcontributions, voluntary contributions, and rollover contributions and transfersmade to the Plan, as provided below.            (ii) Investments as of December 31, 1994, to be Invested by Trustee,at the direction of the Plan Committee. All Accounts as of December 31, 1994, orsuch later date as  determined  by the Plan  Committee,  will remain  subject toinvestment  by  the  Trustee  as  directed  by  the  Plan  Committee,  includinginvestment of up to 100% of such Accounts in Qualifying Employer Securities.            (iii)  Procedure  for  Designation.  Any  designation  or changes indesignation  of  the  investment  of a  Participant's  Account  attributable  toelective deferrals or voluntary  contributions shall be made in writing on formsprovided  by the Plan  Committee  and  submitted  to the Plan  Committee  or theTrustee,  as  determined  by the  Plan  Committee,  at such  times  as the  PlanCommittee shall provide.            (iv) Investment  Categories.  The Plan Committee shall offer a broadrange of investment  categories,  as selected by the Plan Committee from time totime,  which  categories  shall  include  fixed income  obligations  of a securenature,  such as savings  accounts,  certificates  of deposit,  and fixed incomegovernment and corporate obligations. The investment categories also may includeQualifying  Employer  Securities,  other common stocks,  real  property,  notes,mortgages,   commercial  paper,   preferred  stocks,   mutual  funds,  or  othersecurities, rights, obligations, or property, real or personal, including sharesor  certificates  of  participation  issued by regulated  investment  trusts andshares or units of  participation  in  qualified  common  Trust  Funds or pooledfunds.            (v) Absence of Investment Designation. In the absence of any writtendesignation of investment for the Participant's  elective deferrals or voluntarycontributions,  the Trustee  shall  invest all funds  received on Account of anyParticipant  in such category or categories as the Plan  Committee may designatefrom time to time.            (vi)  Irrevocability of Investment  Designation.  Once a Participanthas designated the investment of his Account  attributable to elective deferralsor voluntary  contributions into Qualifying Employer  Securities,  such Accountswill  thereafter   remain  invested  in  Qualifying   Employer   Securities.   AParticipant's rollover contributions and transfer contributions,  if any, may beinvested in Qualifying  Employer  Securities and such investments may be changedquarterly  in the same  manner as  investments  other than  Qualifying  EmployerSecurities are changed under the Plan.            (vii)  Sole  and  Exclusive  Power  of  Participants.  The  right todesignate  investment  categories  under this Section 10.1 shall be the sole andexclusive investment power granted to Participants.  Neither the Trustee nor thePlan Committee  shall be liable for any loss which results from the  Participantexercising such control under this Section 10.1.            (viii)  Expenses.  Any  expense  incurred by the Trustee or the PlanCommittee  will be  charged  directly  against  the value of the  Account of theParticipant  on whose behalf such  expense is incurred.  The Trustee or the PlanCommittee may allocate expenses to individual Accounts or commingled Accounts ona nondiscriminatory basis.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 52January 01, 2000            (ix) Special 1997 Participant Election Regarding Qualifying EmployerSecurities:  Effective from January 27, 1997, until August 31, 1997, and only inconnection  with the public  offering of common stock of General  Communication,Inc. that occurs during 1997 (the "1997 Public Offering"), each Participant willbe  permitted  to make a one-time  election to sell up to 50% of the  QualifyingEmployer  Securities  held  in such  Participant's  Account  (including  but notlimited to the Participant's elective deferral account and Company contributionsaccount). The election to sell such Qualifying Employer Securities shall be madepursuant to procedures promulgated by the Committee,  which will be applied in auniform  and  nondiscriminatory  manner.  The sale  price  for  such  QualifyingEmployer  Securities will be that price at which such common stock is offered tothe general public during the 1997 Public  Offering.  The proceeds from the saleof such Qualifying Employer Securities thereafter may be invested as directed bythe  Participant  pursuant to the provisions of this Section 10.1,  disregardingSection 10.1(ii) to the extent applicable to the Participant's  special one-timeelection.   Participant  Accounts  (including  proceeds  from  the  1997  PublicOffering)  invested  in  Qualifying  Employer  Securities  after the 1997 PublicOffering will remain subject to the prohibition  against later sales provided inSection 10.1(vi).    Section  10.2  Administrative   Powers  of  the  Trustee.   Subject  to  therequirements  imposed by law,  the Trustee  shall have all powers  necessary  oradvisable to carry out the  provisions  of this Plan and Trust and all inherent,implied,  and statutory  powers not or subsequently  provided by law,  includingspecifically the power to do any of the following:      (i)   To cause any  securities or other property to be registered and held            in its  name  as  Trustee,  or in the  name  of one or  more  of its            nominees,  without disclosing the Fiduciary capacity, or to keep the            same in unregistered form payable to bearer;     (ii)   To  sell,  grant  options  to  sell,  exchange,   pledge,  encumber,            mortgage, deed in trust, or use any other form of hypothecation,  or            otherwise dispose of the whole or any part of the Trust Fund on such            terms and for such property or cash, in part cash and credit,  as it            may deem best; to retain, hold, maintain, or continue any securities            or investments  which it may hold as part of the Trust Fund for such            length  of time as it may  deem  advisable;  and  generally,  in all            respects, to do all things and exercise each and every right, power,            and privilege in  connection  with and in relation to the Trust Fund            as could be done,  exercised,  or executed by an individual  holding            and owning such property in absolute and unconditional ownership;    (iii)   To abandon,  compromise,  contest, and arbitrate claims and demands;            to  institute,  compromise,  and defend  actions at law (but without            obligation  to do so); in  connection  with such  powers,  to employ            counsel as the Trustee  shall deem  advisable and as approved by the            Plan  Committee;  and to  exercise  such  powers all at the risk and            expense of the Trust Fund;     (iv)   To borrow money for this trust upon such terms and conditions as the            Trustee shall deem advisable, and to secure the repayment of such by            the  mortgage  or pledge of any assets of the Trust  Fund,  provided            that  the  Trustee  may not  borrow  money  to  purchase  Qualifying            Employer Securities;      (v)   To vote in person or by proxy any shares of stock or rights  held in            the Trust Fund as directed by the Plan Committee;  to participate in            and to exchange  securities  or other  RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 53January 01, 2000            property in  reorganization,  liquidation,  or  dissolutions  of any            corporation, the securities of which are held in the Trust Fund; and     (vi)   To any amount due on any loan or advance made to the Trust Fund,  to            charge  against  and pay from the Trust Fund all taxes of any nature            levied,  assessed,  or imposed  upon the Trust Fund,  and to pay all            reasonable  expenses and attorney fees  necessarily  incurred by the            Trustee and  approved by the Plan  Committee  with respect to any of            the foregoing matters.    Section 10.3 Advice of Counsel.  The Trustee may consult with legal counsel,who may be counsel for the Company or any Associated  Company,  or Trustee's owncounsel,  with respect to the meaning or  construction  of the Plan and Trust orTrustee's  obligations  or  duties.  The  Trustee  shall be  protected  from anyresponsibility  with  respect to any action taken or omitted by it in good faithpursuant to the advice of such counsel, to the extent permitted by law.    Section 10.4 Records and Accounts of the Trustee. The Trustee shall keep allsuch records and  Accounts  which may be  necessary  in the  administration  andconduct of this  trust.  The  Trustee's  records and  Accounts  shall be open toinspection by the Company, any Associated Company,  the Plan Committee,  and thePlan  Administrator,  at all reasonable times during business hours. All income,profits,  recoveries,  contributions,  forfeitures,  and  any  and  all  moneys,securities,  and  properties  of any  kind at any time  received  or held by theTrustee  shall be held for  investment  purposes  as a  commingled  Trust  Fund.Separate  Accounts or records may be maintained for  operational  and accountingpurposes,  but no such Account or record shall be considered as segregating  anyfunds or property from any other funds or property  contained in the  commingledfund, except as otherwise  provided.  After the close of each year of the trust,the Trustee  shall  render to the Company and the Plan  Committee a statement ofassets and liabilities of the Trust Fund for such year.    Section 10.5 Appointment, Resignation, Removal, and Substitution of Trustee.The Board of Directors by resolution  shall appoint a Trustee or Trustees,  eachof which  shall  hold  office  until  resignation  or  removal  by the  Board ofDirectors.  The Trustee may resign at any time upon 30 days'  written  notice tothe Company.  The Trustee may be removed at any time by the Company upon writtennotice to the Trustee with or without cause.  Upon resignation or removal of theTrustee,  the  Company,  by action of its Board of  Directors,  shall  appoint asuccessor  Trustee  which shall have the same powers and duties as are conferredupon the Trustee  appointed  under this Plan.  The resigning or removed  Trusteeshall  deliver to its successor  Trustee all property of the Trust Fund,  less areasonable amount necessary to provide for its Compensation,  expenses,  and anytaxes or advances chargeable or payable out of the Trust Fund. If the Trustee isan individual,  death shall be treated as a resignation,  effective immediately.If any corporate Trustee at any time shall be merged,  or consolidated  with, orshall sell or transfer  substantially  all of its assets and business to anothercorporation, whether state or federal, or shall be reorganized or reincorporatedin any manner, then the resulting or acquiring  corporation shall be substitutedfor such corporate  Trustee  without the execution of any instrument and withoutany action upon the part of the Company, any Participant or Beneficiary,  or anyother  person  having or claiming to have an interest in the Trust Fund or underthe Plan.    Section 10.6  Appointment  of Trustee,  Acceptance  in Writing.  The Trusteeshall accept its  appointment  as soon as practical by executing this Plan or bydelivering a signed  document to the  RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 54January 01, 2000Company, a copy of which shall be sent to the Plan Committee by the Trustee. TheBoard of Directors  shall  appoint a new Trustee if the Trustee  fails to acceptits appointment in writing.    Section 10.7 Vote of Qualifying  Employer  Securities  Held in Trust. If theEmployer  securities of the Company are not publicly traded and if more than 10%of the  total  Plan  assets  are  securities  of the  Company,  then for  votingpurposes,  each  Participant  shall  be  credited  with  his  pro  rata  portion(including fractional shares) of the Qualifying Employer Securities allocated tohis Account which are not encumbered. Each Participant shall be entitled to votethe pro rata portion of Qualifying  Employer  Securities  allocable to him underthis Section 10.7.  Unreleased  Qualifying Employer Securities shall be voted bythe  Trustee.  The Plan  Committee  shall  certify to the Employer the number ofshares to be voted by each  Participant if an event occurs which requires a voteof such shares.  To the extent the Participants do not vote Qualifying  EmployerSecurities  under  this  Section  10.7,  the  Plan  Committee  shall  vote  suchQualifying  Employer  Securities.  If the Employer securities of the Company arepublicly  traded or if the Employer  securities  of the Company are not publiclytraded but not more than 10% of the total  Plan  assets  are  securities  of theCompany,  then  the  participants  shall  not be  entitled  to vote the pro rataportion of Qualifying Employer  Securities  allocable to them under this Section10.7 and the Plan Committee shall vote all Qualifying  Employer  Securities heldin the Trust.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 55January 01, 2000                                   ARTICLE XI            CONTINUANCE, TERMINATION, AND AMENDMENT OF PLAN AND TRUST    Section 11.1  Termination  of Plan.  The  expectation of each Employer is tocontinue this Plan indefinitely,  but the continuance of the Plan is not assumedas a  contractual  obligation  by the Employer and the right is reserved to eachEmployer,  by action of its Board of Directors,  to terminate this Plan in wholeor in part at any time.  The  termination of the Plan by an Employer in no eventshall have the effect of revesting  any part of the Trust Fund in the  Employer.The Plan created by execution of this Plan with respect to any Employer shall beterminated  automatically  in the  event of the  dissolution,  consolidation  ormerger of such Employer or the sale by such Employer of substantially all of itsassets, if the resulting successor  corporation or business entity shall fail toadopt  the Plan and  Trust  under  Section  11.3 of this  Plan.  If this Plan isdisqualified,  the Board of  Directors of the Company,  in its  discretion,  mayterminate this Plan.    Section 11.2  Termination  of Trust.  The Trust created by execution of thisPlan shall  continue in full force and effect for such time as may be  necessaryto accomplish the purposes for which it is created, unless sooner terminated anddiscontinued  by the Board of  Directors.  Notice of such  termination  shall begiven to the  Trustee  by the Plan  Committee  in the form of an  instrument  inwriting  executed  by the  Company  pursuant  to the  action  of  its  Board  ofDirectors,  together  with a certified  copy of the  resolution  of the Board ofDirectors to that effect.  In its  discretion  the Plan  Committee may receive afavorable  determination  letter from the Internal  Revenue Service stating thatthe  prior  qualified  status  of  the  Plan  has  not  been  affected  by  suchtermination.  Such termination  shall take effect as of the date of the deliveryof the notice of termination and favorable determination letter, if obtained, tothe Trustee.  The Plan  Administrator  shall file such  terminal  reports as arerequired in Article IX of this Plan.    Section 11.3 Continuance of Plan and Trust by Successor  Business.  With theapproval of the Company,  a successor  business may continue this Plan and Trustby proper action of the proprietor or partners, if not a corporation,  and, if acorporation,  by resolution of its Board of Directors, and by executing a propersupplemental  agreement to this Plan and Trust with the Trustee.  Within 90 daysfrom the Effective Date of such dissolution,  consolidation,  merger, or sale ofassets of an Employer,  if such  successor  business does not adopt and continuethis Plan and Trust,  this Plan shall be terminated  automatically as of the endof such 90-day period.    Section 11.4 Merger, Consolidation,  or Transfer of Assets or Liabilities ofthe Plan.  The Board of Directors  may merge or  consolidate  this Plan with anyother plan or may  transfer the assets or  liabilities  of the Plan to any otherplan if each Participant in the Plan (if the Plan then terminated) would receivea benefit  immediately  after the merger,  consolidation,  or transfer  which isequal to or greater  than the  benefit he would  have been  entitled  to receiveimmediately before the merger, consolidation,  or transfer (if the Plan then hadterminated). If any merger, consolidation,  or transfer of assets or liabilitiesoccurs, the Plan Administrator shall file such reports as required in Article IXof this Plan.    Section 11.5  Distribution  of Trust Fund on  Termination  of Trust.  If thetrust is terminated under this Article XI, the Trustee shall determine the valueof the  Trust  Fund  and of the  respective  interest  of the  Participants  andbeneficiaries under Article V of this Plan as of the business day next followingthe date of such  termination.  The  value  of the  Account  of each  respectiveParticipant  or Beneficiary RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 56January 01, 2000in the  Trust  Fund  shall  be  vested  in its  entirety  as of the  date of thetermination of the Plan. The Trustee then shall transfer to each  Participant orBeneficiary  the net  balance  of the  Participant's  Account  unless  the  PlanCommittee  directs the Trustee to retain the assets and pay them under the termsof this Plan as if no termination had occurred.    Section 11.6 Amendments to Plan and Trust. At any time the Company may amendthis  Plan and  Trust by action  of its  Board of  Directors,  provided  that noamendment  shall cause the Trust Fund to be diverted to purposes  other than forthe exclusive benefit of the Participants and their beneficiaries.  No amendmentshall decrease the vested  interest of any  Participant  nor shall any amendmentincrease the  contribution  of any Employer or  Participant  in the Plan.  If anamended vesting schedule is adopted,  any Participant who has five or more yearsof  service  at the  later of the date  the  amendment  is  adopted  or  becomeseffective and who is disadvantaged  by the amendment,  may elect to remain underthe Plan's prior  vesting  schedule.  Such election must be made within a periodestablished by the Plan Committee,  in accordance  with applicable  regulations,and on a form provided by and delivered to the Plan  Committee.  No amendment tothe Plan  (including a change in the actuarial  basis for  determining  optionalbenefits)  shall be effective to the extent that it has the effect of decreasinga  Participant's  accrued  benefit.  For purposes of this  Section  11.6, a Planamendment that has the effect of (i) eliminating or reducing an early retirementbenefit or a  retirement-type  subsidy,  or (ii) eliminating an optional form ofbenefit,  with respect to benefits attributable to service before the amendment,will be treated as reducing accrued benefits. No amendment shall discriminate infavor  of  Employees  who  are  officer,  shareholders,  or  Highly  CompensatedEmployees.  Notwithstanding anything in this Plan and Trust to the contrary, thePlan and Trust may be  amended  at any time to  conform  to the  provisions  andrequirements  of federal and state law with respect to employees'  trusts or anyamendments to such laws or regulations  or rulings  issued  pursuant to them. Nosuch  amendment  shall  be  considered   prejudicial  to  the  interest  of  anyParticipant or Beneficiary under this Plan.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 57January 01, 2000                                   ARTICLE XII                                  MISCELLANEOUS    Section  12.1  Benefits  To Be  Provided  Solely  from the Trust  Fund.  Allbenefits payable under this Plan shall be paid or provided solely from the TrustFund,  and no  Employer  assumes  liability  or  responsibility  for  payment ofbenefits.    Section  12.2  Notices from  Participants  To Be Filed with Plan  Committee.Whenever  provision  is made in the Plan that a  Participant  may  exercise  anyoption or election or designate any Beneficiary,  the action of each Participantshall be evidenced by a written notice signed by the  Participant  and deliveredto the Plan Committee in person or by certified  mail. If a form is furnished bythe Plan Committee for such purpose,  a Participant shall give written notice ofhis exercise of any option or election or of his  designation of any Beneficiaryon the form  provided for such  purpose.  Written  notice shall not be effectiveuntil received by the Plan Committee.    Section  12.3 Text To Control.  The  headings of articles  and  sections areincluded  solely for  convenience  of  reference.  If any  conflict  between anyheading and the text of this Plan and Trust exists, the text shall control.    Section  12.4  Severability.  If any  provision  of this  Plan and  Trust isillegal or invalid for any  reason,  such  illegality  or  invalidity  shall notaffect the remaining  provisions.  On the contrary,  such  remaining  provisionsshall be  fully  severable,  and this  Plan and  Trust  shall be  construed  andenforced as if such  illegal or invalid  provisions  never had been  inserted inthis Plan.    Section 12.5  Jurisdiction.  This Plan shall be construed  and  administeredunder the laws of the State of Alaska when the laws of that jurisdiction are notin conflict with federal substantive law.    Section  12.6  Plan  for  Exclusive   Benefit  of  Participants;   ReversionProhibited.  This Plan and Trust has been established for the exclusive  benefitof the Participants and their  beneficiaries.  Under no circumstances  shall anyfunds  contributed to or held by the Trustee at any time revert to or be used byor enjoyed by an Employer  except to the extent  permitted by Article IV of thisPlan.    Section 12.7 Transferability Restriction. A derivative security issued underthe Plan,  including but not limited to Class B common stock of the Company,  isnot  transferable by the  Participant  other than by will or the laws of descentand distribution or pursuant to a qualified  domestic relations order as definedby the Code or Title I of the  Employee  Retirement  Income  Security Act or therules  under  those  acts.  The  designation  of a  beneficiary  by an  officer,director,  or other Participant in the Plan does not constitute a transfer underthe Plan.RESTATED QUALIFIED EMPLOYEE STOCK PURCHASEPLAN OF GENERAL COMMUNICATION, INC.                                      PAGE 58January 01, 2000                                                                  EXHIBIT 23.1.1The Board of DirectorsGeneral Communication, Inc.:We consent to incorporation by reference in the registration statements (No.33-60728 and No. 33-60222) on Forms S-8 of General Communication, Inc. of ourreport dated March 10, 2000, relating to the consolidated balance sheets ofGeneral Communication, Inc. and Subsidiaries as of December 31, 1999 and 1998,and the related consolidated statements of operations, stockholders' equity andcash flows for each of the years in the three-year period ended December 31,1999, and the related schedule, which report appears in the December 31, 1999,annual report on Form 10-K of General Communication, Inc.                                                          /s/                                                          KPMG LLPAnchorage, AlaskaMarch 10, 2000          
                     5        THIS SCHEDULE CONTAINS SUMMARY FINANCIAL  INFORMATION EXTRACTED FROM THE        CONSOLIDATED  STATEMENT  OF INCOME FOR THE YEAR ENDED  DECEMBER 31, 1999        AND THE  CONSOLIDATED  BALANCE  SHEET  AS OF  DECEMBER  31,  1999 AND IS        QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.                         0000808461                        GENERAL COMMUNICATION, INC.                                   1,000                                                                                                        12-MOS                              DEC-31-1999                                 JAN-01-1999                                   DEC-31-1999                                         13,734                                   0                                  48,414                                   2,833                                    3,754                               77,814                                         417,488                                 111,828                                 643,151                          55,120                                        340,500                          19,912                                    0                                       182,731                                     9,817                   643,151                                        0                               279,179                                          0                                  122,467                               136,738                               4,224                             31,237                                (14,866)                                   (5,683)                            (9,183)                                 0                                0                                      344                                   (9,527)                                    (0.21)                                  (0.21)