In the January issue of the Shareholder Update, CIRI shareholders were notified of the CIRI Board of Directors' interest in establishing two settlement trusts - a shareholder distribution trust and an elders' trust - as a way to balance taxation challenges while also reinvesting for growth.

Settlement trusts have two important tax advantages (at least through 2010 under existing federal law): 1) the income of a settlement trust is taxed at a lower rate than corporate income; and 2) distributions of earnings from a settlement trust are tax-free to the person who receives them. This means that for shareholders, settlement trusts may be a more tax-efficient way to deliver payments than paying corporate dividends.

In May 2002, CIRI filed a formal application for a private letter ruling from the Internal Revenue Service confirming the tax treatment to be afforded the proposed settlement trusts.

"We anticipate receiving a ruling from the IRS sometime before the end of the year. Once we receive this, we'll be in a position to move forward with a vote of the shareholders sometime in 2003," said CIRI President and Chief Executive Officer Carl Marrs.

Settlement trusts are a form of trust provided for Native corporations under the Alaska Native Claims Settlement Act, and can be established only upon the approval of the majority of CIRI's voting shares.

By law, the trusts would operate as separate entities from the corporation and are legal arrangements in which a group of trustees, in this case appointed by the CIRI Board of Directors, hold and manage money or property for the beneficiaries. Changes to the law in 2001 made settlement trusts more advantageous from a tax standpoint than they had in the past.

Shareholders will receive formal informational materials about the trust, the voting process, and other issues prior to a shareholder vote.

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