CIRI exists in the corporate world. In the corporate world this is the time of year that we look backward and forward at the same time. We look back to the past year and report the company’s performance to you. We look forward to the current year and beyond to chart the future direction of the company.

Looking back to 2004, CIRI’s net income was $12.5 million on a pre-tax basis, $8.4 million on an after tax basis. While this is higher than the budget approved at the outset of the year, it is down substantially from prior years.

There are reasons for CIRI’s 2004 net income being what it is. The investment climate was difficult, making sound investment opportunities scarce. Moreover, interest rates were near historic lows, which depressed earnings on CIRI’s financial resources held in low-risk, short-term instruments. In spite of these reasons and other valid reasons that might exist, we should not be satisfied with this level of income. We need to take appropriate steps to build back our annual profitability. I believe that build-back of our net income will likely take more than one year to achieve.

The good news is that CIRI is in strong financial shape to achieve growth through prudent investment. Looking forward to the remainder of 2005 and beyond gives us an opportunity to answer three key questions: What is CIRI’s business? What should it be? What should it not be?

CIRI has 33 years of experience as a company. In these years we have had many successes and some failures. We have a sense of what has worked well for us and what has not been so successful. As we chart our future and answer the questions of what CIRI’s business should and should not be, we should let experience be our guide. Looking at CIRI’s history we know that:

• CIRI has done well when we relied on expert partners to guide us. When we found good partners we used those relationships to forge even more new business.
  
• CIRI has done well when we took advantage of a special niche or preference that our status as an Alaska Native corporation gives us. When those preferences did not exist, we worked to put those preferences in place.
  
• CIRI has done well when we looked to do business that we understand and when we adhered to good business principles, such as diversification of risk.
  
• CIRI has done well when the Board and staff have striven for excellence in our thinking and in our work.

Our strategic plan for 2005 and beyond embraces these principles. For example, in early 2005, CIRI with its expert partner, T-Mobile USA, was high bidder on 36 new PCS wireless licenses. Through this transaction CIRI is putting our preferences to work, using a good business relationship with expert partners to do further deals, and we are in a business with which we are familiar. In another arena, we are currently investigating entering into the government contracting business, something that would put our preferences to work and would require working with expert partners. While we all want to improve CIRI’s bottom line as quickly as possible, it is not wise to rush into ill-advised investments just to get CIRI’s capital re-deployed. CIRI’s capital provides us with an excellent foundation to act on new investments, particularly as the investment climate continues to improve over the next few years. I believe with hard work (and a little patience) our net income again can rise to more acceptable levels.