It is unfortunate that shareholders have to go through such a horrendous dissident fight, especially on the heels of the past five years of tremendous success and dividend distributions your corporation has been able to provide. We’re no strangers to dissident actions, but this particular dissident action by the “Alliance” appears to have become vicious and personal, and, in my view, is very damaging to your corporation.

However, I have set my course on “the high road.” Some time ago, I made a conscious decision that this was the route I would stay on no matter what. As most of you well know, this particular route is not exactly an overcrowded superhighway. But it’s the path I will continue to follow.

My job is to run your company as best I can for the good of the shareholders. However, I serve at the discretion of the board, and it’s important that I try not to enmesh myself in board politics. I don’t want to get drawn into personal attacks, because personal attacks are bad for the company.
Recent publications by the “Alliance” force me to test my resolve in this regard. But on reflection, when I step back, what I can say to you is this: Enough is enough. You as shareholders are the only ones who can stop groups like the “Alliance” from making negative, and in some cases misleading, statements. I believe that if the kinds of attacks we have seen in recent months continue, this corporation will quickly lose the prominence it now holds in Alaska and the country.

When you get to the core of what they are saying, it seems to me that they are obsessed with trying to dig up some past wrong to accuse someone of. Despite their efforts, they haven’t found any wrongdoing. And, from what I’ve seen, they haven’t spent a minute of their time in trying to build your company. They are destructive in my judgment, and I don’t believe they are doing anything that would make you proud of CIRI. At some point, people who use these kinds of tactics can succeed. If they attack the board and management long enough and shareholders let them, they will find a way to make CIRI into a corporation so torn from within that it can’t operate. They ought to know that attacks on the board and me personally or professionally can be seen by others as attacks on our reputation, and on the reputation of the management team that works for me, and on CIRI itself.

What has CIRI done most recently, guided by CIRI’s board? Our record shines clearly on the front page of this newsletter. Our GAAP pre-tax operating income was more than $41 million (a figure which does not include an additional $15 million recovery on last year’s estimated loss from the disposition of our heavy equipment subsidiary.) After tax our GAAP net income was $36.6 million in 2002, a year that was incredibly challenging for companies all across the nation, many of which went bankrupt. And our book shareholder equity stands steady at nearly $660.6 million, even after all the dividends we have paid, about the same as year-end 2001.

Let me go back for a moment to our net income. I need to stress that this figure is what our income is after we have paid corporate income taxes. As we have been noting for some time, CIRI is now a company that is required to pay taxes. In the past, we have relied on our unique tax situation as an Alaska Native corporation, but the tax benefits that we were able to utilize (such as our net operating losses) were all used up on income generated in prior years and are no longer available to us. In 2002, our tax cost came to nearly $20 million. Put in perspective that is equal to about a full year’s worth of typical regular dividends to you.

As has been reported to you in the past, your board has been working on what the most appropriate basis is for determining the payment of regular dividends. As we head into the future, our plans will need to take into account taxation of CIRI’s income, taxation of dividends, and fluctuations in income resulting from investment timing, performance, and strategy.

These changes in CIRI’s financial situation come at a historic moment in the life of the company. They come at a time when we have proven ourselves to be a strong and successful company. They come at a time when our company has matured.
I believe in my heart that the majority of CIRI’s shareholders do not want the company to be destroyed or liquidated. We do not want CIRI’s reputation dragged through the mud. There are many of us who believe in operating ethically, who believe in honor, and who believe in building. We are being called to action at this moment in time. We must stand up to these attacks. And we must stand united and move forward to build CIRI. I urge you to convey your feelings on these issues to members of the “Alliance.” I look forward to working together, as we build CIRI for the future.
Most of all, I look forward to meeting you on the less well traveled path, the high road.




Our troops - our friends, our relatives, our loved ones

The next few days and weeks will be critical for our nation as we go to war with Iraq. This is a time for all of us to pause and remember in our prayers the men and women who have been sent overseas and who are in harm’s way. All of us are connected to our troops in one way or another. They are mothers, fathers, daughters, sons and friends with loved ones scattered throughout the United States. They did not choose this war, but they did sign up to serve, and they deserve our support. They are putting their lives on the line for all of us.