By: Margie Brown, CIRI president and CEO
CIRI had a good year in 2011. The Company earned net income of $29.6 million, up from $16.5 million in 2010. CIRI’s total assets increased to $760 million in 2011 from $735 million in 2010. And total shareholders’ equity at the close of 2011 was $634.5 million, up from $627.4 million in 2010. In addition to strong financial performance, the Company also made significant strides in achieving its goal of finding additional business investments and acquiring companies that will improve our near- and mid-term cash flow while providing additional diversification of business lines.
Before describing those achievements, it is appropriate to take a moment to remember that the Alaska Native Claims Settlement Act was signed into law on Dec. 18, 1971. It mandated the establishment of Alaska Native regional and village corporations, and CIRI was formed less than six months later on June 8, 1972. This means CIRI celebrates its 40-year anniversary in 2012. I cannot help but take great pride in all of the amazing feats our Company has accomplished in its first 40 years.
CIRI paid its first dividend to shareholders in 1980 and has paid dividends every year since then. It created and initially funded a family of independent nonprofits that provide needed education, health care, social and cultural services to CIRI shareholders, descendants and others. It invested in a diversified portfolio of assets that have grown in value and enabled our Company to weather economic downturns. And today, the CIRI Board and executives continue to evolve the Company to expand its investment focus to include more development projects and business operations that promise to generate sustainable, stable growth and revenue to benefit generations of shareholders.
We are pursuing two related goals. First, CIRI is investing in long-term development projects that provide opportunities to transform the Company and position it for future success. Such projects, including our underground coal gasification and other energy projects, will have a scope and scale that offer significant growth potential but require longer lead times to produce revenue. Second, and equally important, we recognized the need for investments that promise stable and predictable cash flows and net income in the near- and mid-term. During the past several years, and continuing into 2012, we have focused on purchasing operating businesses that are positioned to grow over time while also producing stable and sustainable revenue streams.
CIRI purchased North Wind Inc. in late 2009, and 2011 was the second full year that business has been in CIRI’s portfolio of companies. North Wind’s performance has contributed to CIRI’s bottom line, and it successfully provides a variety of environmental remediation, project management and construction services across the country.
The Company also teamed with Dean Weidner and Weidner Apartment Homes to invest in multifamily properties in the Tucson and Phoenix markets. While in the early years these properties produce depreciation that serves to depress net income, they are expected to produce immediate cash flow and positive net income in the near-distant future.
More recently, CIRI invested in the Cook Inlet Natural Gas Storage Alaska project to meet Southcentral Alaska’s natural gas storage needs. It partnered with leading financial services provider TIAA-CREF and Edison Mission Energy to invest in utility-scale wind farms in Wyoming, Texas and other states. It acquired a majority equity stake in Cruz Energy Services LLC to provide heavy construction and other oilfield services in North Dakota’s rapidly expanding oil patch and other Lower 48 markets. It acquired a similar interest in Cruz Marine LLC to provide tug and barge services for resource development projects, including the Fire Island Wind project, in and outside of Alaska. And CIRI acquired a majority interest in Weldin Construction LLC, a full-service engineering, construction and project management company based in Palmer, Alaska, which provides a variety of construction services, especially for federal agencies and contractors.
As this message is written, wind turbine components for the Fire Island Wind project are arriving in Anchorage for the start of construction on the island this spring. The Fire Island Wind project will produce near-term cash flow under its 25-year power purchase agreement with Chugach Electric as well as providing CIRI with significant depreciation to legitimately lower our tax burden. Equally exciting is the progress being made to develop a significant commercial natural gas discovery that was made on CIRI lands last year. Our Company is supporting the lessee’s efforts to secure permits it needs to build infrastructure and start producing and selling natural gas from CIRI’s subsurface estate.
These investments and others are transforming our Company and promise to provide near-term cash flow and net income and support long-term growth and sustainable revenues. These are the kinds of investments that provide solid footing as CIRI looks ahead to its next 40 years.
It has been my honor and privilege to work with many bright and dedicated people at CIRI for most of CIRI’s first 40 years, and I have enjoyed contributing my efforts to help CIRI grow into a well-diversified, financially stable company that will continue to evolve and thrive for generations to come.
