Newsletter - March 1999

I am happy to report to you, as the article on the cover of this newsletter announces, that CIRI's net income for 1998 was $50.2 million, a 12 percent increase over 1997 net income of $44.9 million.

This is the 7th consecutive year of increasing net income, and represents the highest net income year in the company's history.

You need to know, however, that every year, even a strong year like 1998, has a number of results in individual businesses that make it up, some better than we expected and some not as good as we had hoped.

For example, in 1998 we again saw the strong positive results of our investment in LIN Television Corporation, the last of which was sold in 1998. This completes our exit from television on a favorable basis.

On the other hand, 1998 performance of CMI, our heavy equipment distribution business, was disappointing, due to disruptions caused by expansion, higher inventories than planned, sales disruptions caused by over-supply of "gray goods," and other factors; these resulted in CMI losing money in 1998, a situation we are working hard to improve.

Performance in the real estate segment was up in 1998, and we plan to

capitalize on some gains in this sector in 1999. On the other hand, low

oil prices will likely have a negative effect on construction services businesses in 1999, while 1998 was a good year for these businesses.

I believe a look behind the year-end profit number shows the benefits of CIRI's diversification. By investing in several different lines of business, in Alaska and in the Lower-48 states, we can better weather the ups and downs of a particular industry or location, and have a sustainable,

positive economic position to build on for the future.

As you know, I have made non-profit service delivery a high priority since I began serving as your company's president, and 1998 performance of our family of non-profit entities was also very strong. In your annual report, you will receive a detailed profile of the many services offered in Alaska by Cook Inlet Tribal Council, Southcentral Foundation, Cook Inlet Housing Authority, and Alaska's People; the educational support available to shareholders and their descendants throughout the country through The CIRI Foundation; and the important community and cultural work of the Alaska Native Heritage Center and Koahnic Broadcast Corporation.

Again, thank you for the privilege of serving the corporation during another year of good overall results.

In conclusion, I would like to say that one of the most important parts of my job is to keep shareholders fully informed about their company. As our income statement demonstrates, we've had a lot of business activity and plenty of news to report. Unfortunately, we've not done a good job of letting you know what's been happening because we've failed to publish a newsletter for the past two months. There is no excuse for this error and you have my guarantee that we will not repeat this omission again. In the future I promise that you will receive a timely and informative newsletter each and every month.

More than a Change of Seasons for Stan Stephens Cruises

1999 means a new name, new identity, and new summer itineraries for CIRI-owned Stan Stephens Cruises. While Stan Stephens continues to oversee the Valdez-based operations, the company's name has been changed officially to Prince William Sound Cruises & Tours, Operated by Stan Stephens.

"The name change was designed to provide a stronger product identity for this Prince William Sound tour operation," said Dennis Brandon, CIRI vice president of tourism. "This is an ideal tie-in with the new day trips being introduced out of Whittier this summer."

Since 1961, Prince William Sound Cruises & Tours has specialized in sharing the unique beauty of Prince William Sound with passengers aboard its vessels. The company operates daily round-trip cruises from Valdez and from Valdez to Whittier, which are also packaged with coach, rail and air transportation, overnight accommodations, and a variety of other activities. And beginning May 15, new round-trip cruises from Whittier will be available, making one-day tours of Prince William Sound possible from Anchorage through September 15.

"We are very excited about the new direction of the company. This expanded service will allow us to better serve our customers seeking a one-day activity from Anchorage," said Stan Stephens, president of Prince William Sound Cruises & Tours.

The company's tours are operated on five vessels ranging in size from 75 to 105 feet. A variety of tours, up to nine hours in length, out of Valdez visit Columbia Glacier, Southcentral Alaska's largest tidewater glacier. The tour operation also includes lunches at Growler Island and - for the adventuresome - overnight accommodations at Growler Island Wilderness Camp, with spectacular views of Columbia Glacier and plenty of soft adventure activities such as hiking and kayaking.

Prince William Sound Cruises & Tours, along with Kenai Fjords Tours, the new Talkeetna Lodge and the Anchorage RV Park, is operated under Alaska Heritage Tours, Inc., a tourism subsidiary of CIRI.

We Want to Hear From You

The Shareholder Update prints questions and answers pertaining to CIRI, its non-profits and subsidiaries. If you would like a response to your questions or comments, please send them along with your name, address and telephone number to CIRI Shareholder Relations. Responses will be provided in a timely manner.

Question: Do the CIRI dividends I received in 1998 affect my ability to qualify for the earned income credit on my 1998 tax return?

Answer: Tax laws do not permit anyone who received more than $2,300 in interest, dividends, and certain other investment income to get the earned income credit. CIRI makes two kinds of distributions to shareholders: the dividend, which is based on the profits of the corporation and is paid on a per-share basis on all outstanding shares and a 7(j) distribution (or resource revenue payment).

The resource revenue payment is not a dividend. Instead, it is a sharing of resource revenues among the 12 regional corporations as required by ANCSA, which stipulates that resource revenues received by a regional corporation be paid in accordance with Section 7(j) of the Act. At-large shareholders receive their resource revenue payment directly from their regional corporation; resource revenue payments for village shareholders are paid to their village corporation.

In 1998, CIRI paid a total of $21.24 per share ($2,124 per 100 shares) in dividends. These dividends should be reported as ordinary dividends on Schedule B of IRS Form 1040. In addition to dividends, at-large shareholders received $2.3884 per share ($238.84 per 100 shares) in 7(j) resource revenue payments. The 7(j) payments should be reported as "Other income not subject to self-employment tax" on the same line where the Alaska Permanent Fund Corporation dividend is reported.

Although the 7(j) payment was included on your 1099-DIV, it is not a dividend and is not investment income. If you own 100 shares, the CIRI dividends alone would not cause your investment income amount to be more than $2,300. When using a tax preparer, share with them this form. For more information or help in determining your dividend/7(j) amounts, contact the CIRI Shareholder Relations Department at 1-800-764-2474 outside Alaska and at 274-8638 in Anchorage.