| I hope all of you had a wonderful and safe Fourth of July. I had the honor of accompanying Senator Ted Stevens and his wife Catherine to Seldovia, to watch Senator Stevens named as the Old Crab of the Century. He really seemed to enjoy his stay and the honor that was bestowed upon him. The Seldovia Tribe put on a great show with the Alutiiq dancers. It was impressive to see the young people of Seldovia not only learning the traditional Native dances, but also being able to sing the songs in the Native language. I want to thank the Seldovia Tribe for their great hospitality and the young people for such a great performance. Over half the year has passed already and many things have happened during that time. I thought I would try to bring you current on the many events that CIRI has been involved in. VoiceStream recently announced that it will be acquired by international communications giant Deutsche Telekom. There are some serious regulatory obstacles before that transaction can close. If it does, however, CIRI's investments will be very well-positioned, since the transaction puts a high price on VoiceStream. As I have discussed in a previous letter to shareholders, CIRI has the right to acquire VoiceStream stock (or, if the Deutsche Telekom deal closes, Deutsche Telekom stock) in exchange for CIRI's joint venture interests. That right arises in 2002 and 2004 under the current law, but we are working with the government to try to advance those dates. If our efforts to obtain changes in the law are successful, CIRI could realize these investments, and capitalize on the VoiceStream merger, earlier. We need to be very careful in managing these investments, with a goal of maximizing returns to the company and to you, the shareholder. Meanwhile, our interests in tourism, construction services, real estate, and other areas are also progressing well. Our construction services division in Alaska is having a good year, as one would expect with the continued |  | high price of oil. Oil prices have a direct impact on construction services in Alaska and we expect this area to continue to do well as long as oil prices continue to stay high.  The Alaska division of Construction Machinery, Inc. (CMI) is also doing well. I specify the Alaska division, because CMI's operations in the Lower 48 continue to have problems, which in turn continued to take CMI's overall results into the red. In June, however, CMI showed an overall operating profit for the first time in awhile. While one month doesn't make a success, the changes CMI is continuing to make, to try to reduce costs and increase sales and rentals, are starting to show some results. In our tourism division, plans for growth continue to be implemented, and I continue to believe this division will have a positive effect on the future growth of CIRI. We are expanding our relationships with the major tour operators that bring the majority of group tours to Alaska. To meet the demands generated by these tour operators and independent travelers, we are expanding our premiere Talkeetna Alaskan Lodge by adding 150 rooms, bringing us to a total of 254 rooms for the 2001 season. We are also expanding the Windsong Lodge in Seward to accommodate independent travelers and the package offerings of our marine operations. We are working with Chugach Native Corporation on a longer-term arrangement to redesign Growler Island for more comfortable, less rustic accommodations for Prince William Sound Tours customers. We are also working on a potential partnership with Doyon Ltd. to bid on the concession rights at Denali National Park (Mt. McKinley) for 2002, and to evaluate the prospects for a resort lodge near the entrance to Denali Park. Finally we continue to evaluate the feasibility of a marine operation in Kachemak Bay, operating out of Homer, with a goal of offering service in 2001. So, as you can see, we are continuing to invest in this growing area. For many years land, real estate, and resources were the backbone of CIRI. The vast majority of CIRI's income came from the land CIRI acquired under ANCSA and resources derived from that land. Today, very little revenue comes from the land and resources area. However, as exploration continues on our lands, it is possible that resources could again become a good producer. Also, as the population of the Cook Inlet area increases, so does the long-term value of the surface land CIRI holds. Areas in the Mat-Su Valley and Kenai Peninsula, and assets such as Fire Island, will have a lot to offer in the long-term future of CIRI. Continued on page 6 |
