2009 annual report - NANA Development Corporation

Transcription

NANA
REGIONAL CORPORATION, INC.
making a
WORLD
OF DIFFERENCE
2009 ANNUAL REPORT
2009 AT A GLANCE
REVENUE
EMPLOYMENT
SHAREHOLDER DEVELOPMENT
• $1.26 billion
• NANA employs more than 9,000 people
worldwide.
• In 2009, more than 3,000 Alaskans earned
a NANA paycheck.
• 1,067 NANA shareholders were employed by our
companies in 2009, earning $44 million in wages.
• Red Dog Mine employs more than 250 NANA
shareholders, making up approximately 56
percent of the mine’s workforce.
• The Shareholder Development Department
created Modern Day Hunters, a social network
for NANA shareholder college students
and shareholders interested in pursuing
postsecondary education and training.
http://moderndayhunters.ning.com
AQQALUK TRUST
The Aqqaluk Trust is a non-profit organization
established by NANA to encourage educational
advancement and cultural preservation.
• NANA contributed more than $3.7 million
to the Trust in 2009; $845,000 of which was
designated for scholarships and education
administration. The Trust provided scholarships
to 290 shareholders so they could pursue higher
learning and vocational training.
DIVIDENDS
• NANA declared $17.2 million in dividends to
more than 12,000 shareholders for 2009.
• In November 2009, the Board approved a
distribution to the NANA Elders’ Settlement Trust
of $1,500 per Elder plus $500 per Elder to cover
taxes associated with the dividend for a total of
$2,000 per Elder, plus administrative expenses.
LANDS
• $38.8 million in royalties (net proceeds)
were paid to NANA from the Red Dog Mine.
• NANA restructured the Lands & Natural
Resources Department and completed the
conveyances project by the end of 2009.
BUSINESS
• NANA businesses continued to grow,
generating $59.2 million in operating income
for the corporation.
• NANA acquired 100 percent ownership of Akima
Management Services and Ki, LLC with the purchase
of the ownership interests of the Aleut Corporation.
• NANA opened a new SpringHill Suites hotel in
Anchorage close to the Alaska Native Medical
Center, the University of Alaska, Alaska Pacific
University, and Providence Hospital.
TABLE OF CONTENTS
2009 at a Glance
Letter to our Shareholders
Five–Year Financial Highlights
Making a World of DifferENce
In Memoriam
Tributes
2009 Financial REPORT
Guide to Financial terms
MANAGEMENT DISCUSSION & ANALYSIS
Financial statements
Board of Directors
00
02
04
05
16
17
20
21
22
30
57
A few of NANA’s 2009 summer
interns pose outside of NANA’s
corporate offices in Anchorage,
Alaska. (left-to-right) Mike Johnson,
Marissa Atoruk, Janelle Sharp (front),
Sara Schaeffer, Tracy Porter,
Tirrell Thomas, Marian Henry,
Brittney McConnell, and
Berenda Newlin.
WHO WE ARE
OUR MISSION
OUR CORE PRINCIPLES
NANA Regional Corporation manages
the surface and subsurface rights and
development of more than 38,000 acres
of land in northwest Alaska for the
economic, social, and cultural benefit
of our shareholders. We created NANA
Development Corporation to oversee our
business activities, to create shareholder
job opportunities and to generate the
income needed to fulfill NANA’s vision,
mission, and core principles.
We improve the quality of life for our
people by maximizing economic growth,
protecting and enhancing our lands, and
promoting healthy communities with
decisions, actions, and behaviors inspired
by our Iñupiat Ixitqusiat values, and
consistent with our Core Principles.
• Honesty and integrity will
govern our activities.
• Commitments made will
be fulfilled.
• Everyone will be treated with
dignity and respect.
01
NANA – Making a Difference
Dear NANA Shareholder,
When you think of NANA, you may think of our office in Kotzebue, our
shareholder relations staff and resource technicians, or our NANA region.
But NANA is more than that.
Today, NANA is our companies in all 50 states and all over the world. NANA
is military role players in California helping to prepare America’s service
members for war. It is chefs and cooks in Hawaii serving Marines at the best
mess hall in the military. NANA is information technology professionals
creating computer programs and using the latest technology to protect
the homeland. It is NANA engineers and designers building an elementary
school for the children of the Acoma tribe in New Mexico, and the miners of
zinc right here in Alaska. NANA is all these things and more.
For more than three decades, our corporation has grown from a small Alaska
company into a worldwide Hunter. In that time, our family has grown – not
just with new shareholders, but also to include the more than 9,000 skilled
employees working for our NANA companies across the globe. Together, all
of us work for a common purpose – the future of our people.
As we look back at 2009, we want to take this opportunity to share with you
the stories and successes of the people who make up our NANA family of
companies. As a NANA shareholder, you can be proud that our companies
and our culture touch the lives of hundreds of thousands of people every
day. We have much to share with the world, and we are passing on the gifts
of our people through our businesses.
You may recognize many faces in the following pages. Some faces will be
new – but all belong to NANA – and all are working together to move our
company forward into a successful future.
Taikuu!
02
President Marie N. Greene
Chairman Donald G. Sheldon
Truestone is a NANA-owned company that designs, installs, maintains, and protects
computer systems for the federal government. Here Truestone developers Richard
Merve and Kim-Kia Pierce point to vessels indicated on WebCOP, a visual tool
developed by Truestone. WebCOP is used by Coast Guard personnel to maintain
a comprehensive picture of the ports and waterways they are
tasked to protect, monitoring the locations of
commercial and private vessels.
DOWL HKM designed the Glenn/Bragraw Street
Interchange to reduce congestion, improve traffic
flow and enhance safety to and from Anchorage
on the Glenn Highway.
Allison Conwell, from Kotzebue, is a heavy
equipment operator for Teck. NANA’s
agreement with Teck ensured that the mine
would provide jobs and other benefits to the
NANA region, and the training to prepare NANA
shareholders to succeed in these jobs.
03
Five Year FinanciaL Highlights
NANA Regional Corporation, Inc. and Subsidiaries
As of and for the five years ended September 30, 2009, 2008, 2007, 2006 and September 25, 2005.
2009
Revenues
$ 1,257,804,000
Net Income 17,107,000
Assets 756,754,000
Line of Credit and
Long-term Debt 165,680,000
Shareholders’ Equity 243,491,000
Shares Outstanding
1,435,400
Earnings Per Share
11.92
Dividends Declared Per Share
12.00
2008
2007
2006
2005
$ 1,175,496,000
29,281,000
739,018,000
$ 975,472,000
37,393,000
645,185,000
$ 821,934,000
16,042,000
456,439,000
$ 532,415,000
10,845,000
381,802,000
54,285,000
247,845,000
1,405,500
20.83
24.75
101,291,000
292,163,000
1,367,000
27.35
15.00
101,819,000
155,454,000
1,336,600
12.00
7.00
107,365,000
124,819,000
1,311,600
8.27
3.81
(Dividends historically have been paid in November or December following the end of the fiscal year.
In fiscal year 2008 dividends also were paid in April.)
REVENUE BY YEAR
(IN MILLIONS)
TOTAL ASSETS &
SHAREHOLDERS’ EQUITY
(IN MILLIONS)
$800.0
$1,400. 0
1,200.0
700.0
1,257.8
1,175.5
975.5
800.0
532.4
400.0
200.0
100.0
0.0
0.0
2008
2007
2006
2005
29.3
25.0
456.4
381.8
243.5
247.8
15.0
292.2
15.00
17.1
16.0
10.0
155.5
124.8
10.00
10.8
5.0
2008
Total Assets
2007
2006
Shareholders’ Equity
2005
15.00
12.00
7.00
5.00
3.81
0.0
2009
24.75
20.00
20.0
300.0
200.0
25.00
30.0
400.0
600.0
2009
645.2
500.0
821.9
821
37.4
35.0
739.0
DIVIDENDS DECLARED
PER SHARE
(IN DOLLARS)
$30.00
$40.0
756.8
754.7
600.0
1,000.0
04
NET INCOME BY YEAR
(IN MILLIONS)
0.00
2009
2008
2007
2006
2005
2009
2008
2007
2006
2005
Lindell Ruiz of Akima Facilities Management, LLC,
maintains equipment and buildings at the Kauai
Test Facility in Hawaii. Akima’s work at this site
supports the defense of United States airspace.
making a
WORLD
OF DIFFERENCE
NANA’s service to the oil and gas industry
in Alaska has been a cornerstone of our
businesses for more than 35 years.
05
Seining on the Wulik River
06
KiŊuniq /
KIÑUNIQ – HOME
(coastal)
(upper kobuk)
Our alaska story
Alaska is our home. NANA has grown to become the third largest private
employer in the state, employing more than 3,000 Alaskans. From the
North Slope to Anchorage – from Kotzebue to Juneau, NANA companies
provide jobs and support Alaska communities. Our companies are
leaders in resource development, facilities management and logistics,
engineering and construction, and information technology.
NANA companies deliver needed services to Alaska every day. NANA
Oilfield Services, Inc. (NOSI) delivers Chevron lubricant products to
North Slope producers to keep their equipment in good running
order. DOWL HKM’s engineers analyze traffic patterns to create better
roadways so Alaska families arrive home safely. Our hotels, like the
new SpringHill Suites Anchorage University Lake by Marriott, serve the
Native community from around the state by providing guests with a
comfortable place to stay while visiting the Alaska Native Medical Center
and surrounding medical facilities, and WHPacific engineers design
alternative energies that are lowering our in-region energy costs.
NANA Construction is creating a new operations center for NANA Oilfield
Service, Inc., near the Deadhorse Airport on the North Slope. NANA companies
put Alaskans to work and help fuel the Alaska economy.
NANA employees are trained and qualified professionals who make a difference in
people’s lives. Purcell Security Officer Jared Peace (left) saved a 45-year-old man’s
life this year on the North Slope. He was named a Real Hero by the American Red
Cross of Alaska. (left-to-right) Jared Peace, Mary Davenport of American Red Cross,
and Skye Ahrens.
Our companies also create income that is used for the good of our
people and help provide training, educational, and employment
opportunities that are important to us. In 2009, 1,067 NANA shareholders
earned a paycheck working directly for NANA or one of our affiliates.
Alaska is our home and NANA is committed to creating a bright future
for our people – in our region, in Alaska, and around the world.
07
INILLAIÑAIJIQ – Develop
OUR MINING STORY
Every day, zinc from Red Dog Mine is used around the world. Whether it is
taken as a vitamin to boost the immune system, used to create cleaner sources
of energy like zinc fuel-cell batteries, or utilized to galvanize steel – the zinc
produced at Red Dog makes a difference in the lives of people around the globe.
The Red Dog Mine also continues to be a great benefit to our people and our
region. Red Dog provides our people with good jobs and training opportunities,
and contributes to the Northwest Arctic Borough – all of these things help us
build up our regional economy and strengthen our villages.
Mining is a way of life for many families in our region. For two weeks every
month, Red Dog is home to more than 250 shareholders. Working at the mine
allows many of our shareholders to have good jobs and live a subsistence
lifestyle. Whether they work for Teck or for one of our NANA companies that
provide essential services, Red Dog employees are part of the Red Dog family.
This year, NANA received $38.8 million in proceeds from the mine. But the mine
benefits all of Alaska. Royalties from the mine are also shared with other Alaska
Native Corporations (ANCs) as part of the 7(i) provision of the Alaska Native
Claims Settlement Act (ANCSA). In December 2008, NANA paid $121.7 million
in 7(i) royalties to the other corporations. This money helps other ANCs reach
their goals, uplifting all Alaska Native people.
Developing the Aqqaluk Deposit, located adjacent to the main pit, will keep the
benefits of Red Dog going for another 20 years. That means 20 more years of
well-paying jobs for our people, fees paid to the Northwest Arctic Borough, and
a reliable American source of zinc to fuel the new economy and help build new
forms of clean energy.
08
Left: Jimmy Mills, an environmental intern
from Noatak, reseeds part of the 27 acres that
have been replanted at Red Dog. Land no
longer needed for active mining is returned
to a natural state through the planting of
native grasses.
Right (from top to bottom): Roughly 56
percent of Red Dog employees, like Amelia
Clark from Selawik, work for Teck or for a
NANA company that works at the mine. The
paychecks from these jobs help families and
they also boost local village economies when
Red Dog employees come home.
Red Dog Mine provides more than jobs
to our region. Teck is the Northwest Arctic
Borough’s only private financial contributor,
infusing approximately $8 million annually into
the Borough. This money helps build schools
and provides needed services to our villages.
NANA lands are rich with resources. The future
holds even more opportunities like developing
Bornite in the Kobuk region, on-shore oil and
gas and alternative energies like wind, solar,
biomass, and geothermal to help reduce
in-region energy costs and create jobs.
09
SIMMIQ – Trade
Our Business Story
NANA is a worldwide trader. Today, our
corporation has more than 40 companies
working in a wide variety of service lines in
all 50 states and in eight countries – with
operations extending from Alaska to
Antarctica. NANA’s team of more than 9,000
hard-working and dedicated employees
provide needed services to the engineering
and construction, resource development,
IT and telecommunications, facilities
management and logistics, and real estate
and hotel development sectors. Our services
may vary, but all operate with NANA values.
Our employees at Purcell Security protect
oil production on Alaska’s North Slope and
the corporate assets of Procter & Gamble
at 15 locations in the Lower 48. Kisaq’s team
is trusted with providing contamination
clean-up services and environmental studies
to ensure the health and safety of working
environments for their clients; and Ikun
Energy sells natural gas and manages energy
data software for clients like Safeway to help
them monitor and reduce energy costs.
It takes hard work to live in the area of
Alaska that we call home. The decisions we
make can often be the difference between
life and death in our harsh northern
environment. We know that proper training,
cooperation, and a clear vision of where
to go and how to get there increase our
chances for success. These are the principles
we bring to our businesses.
Center: Our engineering companies, like WHPacific in Albuquerque,
New Mexico, help other Native peoples build facilities. Throughout the
designing process, NANA companies listen to tribal needs and wants and
incorporate them into the building. WHPacific used tribal symbols and
images as part of the artistic design of the San Felipe Pueblo Day School for
10
the Acoma tribe of New Mexico.
Bottom right: NANA
companies are award winners.
NANA Services’ Anderson Mess Hall staff at
Kaneohe Bay Marine Corps Base, Oahu, Hawaii, is a three-time
Hill Award Winner. The W.P.T. Hill awards were established in 1985 to
improve food service operations and encourage excellence in food service
Top right: The steam generation plant at Walter Reed Army
programs for the Marine Corps and Navy personnel. NDC Board Member
Medical Center is a centralized facility which provides
and Chairman of the NANA Services Board, Dood Lincoln, pictured here
heat and hot water throughout the medical center. Akima
with Anderson Mess Hall project manager Ricky Liu, NANA Services
Construction replaced original, 100-year-old steam pipes as
president Dan Javes, and Akmaaq president Jonathan Widdis, traveled to
one part of a major renovation to the center.
Hawaii to thank the staff for their service to NANA and to their country.
11
itqanAiyaQ – To Make Ready
Our STORY OF SERVICE TO AMERICA
When there is a need, we step up. We have always
been a patriotic people, and we will continue to be
there when our country needs our services. Over the
past decade, NANA has built a line of business that
serves the federal government in numerous ways.
Through these business opportunities, we have
strengthened our business base, developed a broad
range of capabilities, and we have brought income
back to our shareholders and to Alaska.
The work we do is important. Our companies, like
Five Rivers Services, LLC, provide visual information
support services to the United States Army Armor
Center and the United States Army Recruiting
Command at Fort Knox, Kentucky. Ki, LLC, engineers
and technicians provide support for the Navy’s Space
and Naval Warfare Systems Command that helps
deliver real-time information to sailors; and Truestone,
LLC, mans and maintains the First Army Operations
Center providing experienced senior analysts that help
maintain constant situational awareness for soldiers.
At NANA, we look for ways to continue our tradition
of service, seeking ways to take our business to more
places, finding employment for our shareholders
within our operations, working to build on our
excellent reputation every day. To quote Ricky Liu,
who runs the NANA Services operation that received
the prestigious Hill award for the third time, “We don’t
do this to win awards. We are grateful and appreciate
being acknowledged. But, we do this because we
genuinely care about our Marines. They are out there
for America. The least we can do is to give them the
opportunity to relax and enjoy their meals. It’s our
way of saying thank you.”
USCGC Bear (WMEC-901) is a United States Coast Guard
medium endurance cutter. It conducts a wide spectrum
of missions including search and rescue, fisheries
enforcement, and counter-drug patrols. Twenty-four hours
a day Coast Guard personnel, using the Nationwide Control
Station (NCS) system, monitor and control up to 200
remote broadcast sites located throughout the continental
U.S., Alaska, Hawaii, and Puerto Rico. Truestone provides
software and database development, maintenance and
system administration services for the NCS system to
support the expansion of the GPS service.
12
Elizabeth Moore, a NANA
shareholder, worked in
Washington D.C. this year
to help NANA maintain its
ability to do business with
the federal government.
NANA companies provide
important services to the
federal government that help
keep American servicemen
and women safe. Ki, LLC, in
Colorado Springs, Colorado,
refurbishes old or damaged
equipment to be sent back
out into the battlefield.
13
AutaaĠusiusiaq – Share
14
Right: Selawik seiners, Jessica Sheldon, Diana Ramoth,
and Tracy Sampson cut and hang white fish to dry.
Far Right: From spring to late fall, people in the NANA
region rely on boats for hunting, fishing and traveling
between their camp sites and the villages.
The Story of Our Future
Aarigaa. It is good. It is good to share. It is part of our values and our cultural
tradition. In our villages, we share the best with one another. We share our best
food, we share our knowledge, and we share our resources.
When we do business at NANA, we are also sharing. We are sharing the minerals
found beneath our lands, the skill of our employees, and we are sharing our
values and culture.
Every day, everything we do at NANA, is in the hope that we are creating the
means for our people to thrive. We work to make sure future generations
continue to speak Iñupiaq and continue to know how to live in the Arctic.
We are investing not only in companies, in employees, and in resources – we are
investing in the future of our villages. We are building a corporation not just for
this generation of NANA shareholders, but for countless generations to come.
We move forward knowing that with each business transaction, each project
completed, and each successful partnership – we are sharing the gift of
tomorrow with our people.
Left: In Kivalina families work together to seine for salmon.
From left to right are Gary Swan, Terry Baldwin, Lazarus Adams,
Rojo Adams, and Joe Swan.
15
IN MEMORIAM
Gary Lee Anderson
Ruth Carter
Hailey Greist
Mamie Mouse
Pearl Arey
Lizzie Cleveland
Patrick Griffis
Chloe G. Myers
Ruth Ashby
RegINALD Cleveland
Rachel Hutchinson
Malania M. Nash
Alan Atoruk
Truman Cleveland, Sr.
Daniel Iyatunguk
Helen O’Connor
Mary T. Atoruk
Edwin Cobbin
Alta Jack
Alice Reuben
Harry Ballot
Lilly Curtis
Klarissa Jackson
Paul Richards, Jr.
Delores Lillian Barr
Lydia Curtis
Robert L. Jackson
Frederica Schaeffer
Evelyn Barr
Stanley Custer, Sr.
Art Jessup, Sr.
Sol Scott, Jr.
Lilly Beckett
Perry Dimmick
Flora Mae Johnson
Collins Sheldon
Nicholas Bell
Terry ANN Douglas
Margaret Amarok Kane
Annie Pearl Sours
Michael Bingham
Martha Downey
Roderick Kenworthy
Lorena Stiles
Amelia Black
Colleen Engle
Laura Kiana
Ben Swan
Samuel Black
Irene Farquhar
Johnny Kingeak, Sr.
Travis Thomas
Warren Booth
Quana Fayer
Theodore Kingeak, Jr.
Homer Thompson
Brenton L. Buckmaster
Anthony Feist, Jr.
Nimrod Koenig
Robert Bobby Tikik
Ronald L. Bush
Ray Ferguson
Bessie Lee
Carrie K. Uhl
Joseph Ferreira
Judy Lee
Daisy Walton
Clement Frankson, Sr.
Laura Leslie
Dora Watson
Roy C. Green
Ernest Pedro Mendenhall
Kellie R. Williams
Loren Milligrock
Bernice Wilson
Arlene Moo
Dora Wilson
16
2009
TRIBUTES
17
Pauline Asik Harvey
Shareholder of the Year
Originally from Noorvik, Asik is a graduate of Noorvik High School. She received her undergraduate
degree from Seattle Pacific University and a Master’s Degree from the University of Alaska, Fairbanks.
Asik is a teacher both in and out of the classroom; she is a role model for us all. She has taught in Noorvik,
Kotzebue, Eagle River, and Anchorage. For a year and a half, she served as vice principal in Noorvik. She
then served as the principal of McQueen School in Kivalina for two years. She is currently the Interim
Director of the UAF Chukchi Campus in Kotzebue. We are grateful for her leadership, dedication, hard
work, and smiles that keep our culture alive in our schools.
Congratulations to Asik, the 2009 NANA Shareholder of the Year.
May Kunuk Douglas
Elder of the Year
This year’s Elder of the Year is a lifelong resident of the NANA region. She has
raised seven children and has 19 grandchildren. Soon, she will become an
amau (great-grandmother).
Kunuk has taught at Nikaitchuat IIisagviat in Kotzebue for many years and has
been a leader and teacher of the Northern Lights Dancers, an Eskimo dance
group based in Kotzebue. She is an excellent role model for us all and is very
deserving of this year’s Elder of the Year Award.
On behalf of the Regional Elders’ Council and the NANA Board of Directors, we
congratulate May Kunuk Douglas.
18
Dave Zimmerman
Richard A. Baenen Award
Dave and his wife, Vivian, have raised four boys. He has lived at camp outside of
Noorvik since 1970 along with his wife and family. He has lived an Iñupiat lifestyle,
hunting and fishing, and living everyday life as our ancestors did.
He is very deserving of this award for his willingness to help people, especially
during search and rescue efforts. He constantly checks on people and is always
concerned about their well-being. Dave deserves this award for all his hard work
and his untiring commitment to our people.
The NANA Board of Directors thanks Dave Zimmerman and congratulates him as
our 2009 Richard A. Baenen Award recipient.
Bo Ticket
Youth of the Year
Bo is a great role model to all of us and is a young leader in his village and in the region.
A recent graduate of Nunachiam Sissauni, the K-12 school located in Buckland, Bo is
responsible, dependable, and takes time to encourage youth to focus on education and
participate in our Iñupiat IỊitqusiat. During high school, he participated in the Future
Teachers of Alaska Program and was very active in the school.
Bo is the son of Herman and Eva Ticket of Buckland.
Congratulations to Bo Ticket, 2009 NANA Youth of the Year.
19
2009
FINANCIAL
Report
20
Guide to financial terms
• 8(a): Section 8(a) of the US Small Business Act gives special consideration to
small businesses when they bid on Federal contracts. There are time and size
limits for companies to participate in the program. When companies get big
enough or have spent enough time in the program, they lose the special status
and compete on an equal footing with other non-8(a) companies. As a Native
Corporation, NANA is allowed to form 8(a) companies.
• Asset: Something of value that you own, such as a truck or a house. For the
Corporation, this can include big things, like a building. NANA’s assets include
its stock portfolio.
• Consolidated Balance Sheets: This statement shows what the Corporation
and its subsidiary companies own (assets), and owe (liabilities), and NANA’s
net worth (equity) at the end of the fiscal year.
•
Consolidated Statements of Cash Flows: These statements indicate all the
different sources of cash and also explain how the cash was used.
• Consolidated Statements of Income: These statements show the combined
income, expenses, and profit (or loss) of the Corporation, and its subsidiary
and affiliated companies, during a fiscal year.
• Earnings: If you earn a paycheck and use it to pay your taxes and bills, the
money you have left over is called your earnings. In accounting, this term
means what is left of the revenues after expenses and taxes are paid. These
are also called income or profits.
• EBIT: Earnings before interest and taxes.
• Equity: This is the value of property, less the amount that is owed on it. For
example, if you have a truck that is worth $12,000, but you still owe $5,000 in
payments, your equity is $7,000.
•
Expenses: Most people think of expenses as part of the cost of living, like the
monthly mortgage payment on a home or a telephone bill. For the Corporation,
expenses are costs required to generate revenue. For example, if NANA buys
paper so that it can bill customers, the cost of the paper is an expense.
• Fiscal Year: Also called a financial year, a fiscal year (FY) is usually one year
long, but doesn’t necessarily start on January 1. NANA changed its fiscal year
end in 2006 from the last Sunday in September to September 30. NANA’s fiscal year is
from October 1 through September 30.
• Investment:
An investment is money
spent on an asset that is expected to
increase in value or generate income sometime in
the future. For example, if you buy a house, you are making an
investment, hoping that when you sell the house (the asset), you’ll get
more than you paid for it.
• LLC: A Limited Liability Company (LLC) is a business organization that
combines elements of both partnerships and corporations that limits the
financial risk for its owners.
• Liability: If you owe money, it is called a liability. For NANA, a liability can be
a debt, or other obligation, put in terms of money.
• Liquidity: This describes the Corporation’s ability to convert assets into cash
without losing value. The conversion to cash allows NANA to pay debts as they
become due and take advantage of investment opportunities as they arise.
• Marketable Securities: This is a general term for stocks, bonds, or other
investments that can be sold on the open market.
• Minority Interest: Less than 50% equity interest in a company is called
a Minority Interest.
• Net Income (Loss): This is the formal accounting term for total revenues
minus total expenses. If there is a loss, the number will appear in parentheses.
• Revenue: This is the total amount of money the Corporation took in, including
income from all activities and investments. When we sell our services, we
generate revenues. After deducting the cost of those services, what is left is
our income.
• Shareholders’ Equity: This figure includes all of NANA’s assets, minus what
the Corporation owes.
• Subsidiary: This is a corporation that is owned by another corporation.
For example, NANA Development Corporation is owned by NANA Regional
Corporation, Inc., so, NANA Development Corporation is a subsidiary of NANA
Regional Corporation, Inc.
21
Management Discussion & Analysis (MD&A)
Corporate Overview
Financial Overview
NANA Regional Corporation, Inc., (NANA or the Company) was formed in 1972
as one of the 13 Regional Native Corporations created as a result of the Alaska
Native Claims Settlement Act (ANCSA). NANA’s portion of the ANCSA settlement
included two million acres of land and approximately $44 million. NANA is now
owned by more than 12,000 Iñupiat shareholders, descended from families living
in northwest Alaska.
During fiscal year 2009 (FY09), NANA’s consolidated total assets grew by 2.4%
to $756.8 million from $739.0 million at the end of fiscal year 2008 (FY08).
NANA Development Corporation (NDC), a wholly owned subsidiary of NANA, is
responsible for overseeing the business interests of the Company. NDC operates
as a managed holding company with operating subsidiaries throughout the
United States. These subsidiaries operate in the following business segments:
•
Contracted services
•
Hospitality and tourism
•
Professional and management services
•
Oilfield and mining support
In addition, NANA generates passive income from the following sources:
•
Investment income from marketable securities
•
Natural resource royalty income net of sharing with other regional
corporations
•
Natural resource 7(i) income received from other regional corporations
22
Total Assets (in millions)
$800
756.8
739.0
645.2
600
400
448.7
464.8
381.3
200
0
FY09
FY08
Current Assets
FY07
Total Assets
Shareholders’ Equity
Liquidity & Capital Resources
Shareholders’ equity represents all of NANA’s recorded assets, minus the amounts
the Company owes others. Shareholders’ equity was $243.5 million at the end of
FY09, down 1.7% from $247.8 million at the end of FY08. Shareholders’ equity was
$292.2 million at the end of FY07. Shareholders’ equity decreases in value when
we declare dividends to be paid to our shareholders. In FY09, NANA recorded
earnings of $17.1 million and declared $17.2 million in dividends. The decrease in
FY09 is also due to the small decrease in Fair Market Value of Marketable Securities.
A significant portion of the FY08 decrease ($44.4 million) is due to the declaration
of dividends to NANA shareholders totaling $34.6 million and commitments
to the Elders’ Settlement Trust totaling $33.4 million. In FY08, the decrease in
shareholders’ equity was also affected by a decrease in the Fair Market Value of
Marketable Securities. In 2009 and 2008, the Company achieved continued income
growth in its operating businesses.
In order to continue growing at the current pace, NANA needs additional working
capital to invest in our businesses. That capital can come from only two sources;
internally through income earned but not paid out as dividends or externally
from additional borrowings from lending institutions, or capital, debt, and equity
markets. NANA’s lending institutions will generally continue to increase our credit
facilities as long as NANA has a strong asset base and has profitable operations.
However, to meet our growth objectives, it is prudent that NANA retain a significant
portion of earned income. In addition, NANA is developing strategies and building
relationships that will enable the Company to access public and private capital
markets. NANA’s management believes the Company is capable of funding future
cash requirements with the cash generated from business operations and with
careful use of established lines of credit.
Total Shareholders’ Equity (in millions)
$300
292.2
280
260
240
243.5
247.8
220
200
FY09
FY08
FY07
NANA’s current assets, including its investment portfolio, comprise 59.3% of NANA’s
total assets. Current assets are defined as cash and property of the Company
that is expected to be converted to cash within one year. Consolidated accounts
receivable increased 2.4% in FY09, from $284.3 million at the end of FY08 to $291.0
million at the end of FY09. Total current assets decreased 3.5% from $464.8 million
in FY08 to $448.7 million by the end of FY09. This was in line with the change in
current liabilities and lines of credit, which decreased 3.1% from $419.1 million in
FY08 to $406.2 million in FY09.
At September 30, 2009 and 2008, NANA had lines of credit with a limit of $175
million and $150 million, respectively. In December of 2009, NANA’s lines of credit
limit increased by $35 million to $210 million. During FY09, the outstanding
balance on lines of credit increased by 525.0% from $20.0 million in FY08 to $125.0
million in FY09 due to decreased royalties from Red Dog Mine, resource revenue
payable to other regions distributed in December 2008, and dividends that were
paid during FY09.
The Company maintains a central treasury with its primary lender. The central
treasury consolidates existing idle cash to pay down the balance on the lines of credit.
Operating cash flows were negative during FY09 at ($41.9 million) compared with
positive cash flows of $208.3 million and $47.7 in FY08 and FY07, respectively. The
decline in FY09 was primarily the result of 7(i) royalty obligations paid to other regions.
23
Mergers, Acquisitions, Consolidations & Divestitures
In order to maximize efficiency and shareholder return, NANA continues to
explore mergers, acquisitions, consolidations, and divestitures that complement
our strategic vision.
On May 31, 2009, NANA acquired the remaining 25% ownership interest of Ki, LLC.
Prior to the acquisition, Ki, LLC was owned 75% by Ki Professional Services Group, LLC
(KPSG), which is a wholly owned subsidiary of NANA Development Corporation
(NDC), and 25% by The Aleut Corporation (TAC), an unrelated Regional Alaska
Native Corporation. When NDC purchased the remaining 25% ownership interest
in Ki, LLC from TAC and contributed its ownership to KPSG; Ki, LLC became a wholly
owned subsidiary of KPSG. Effective October 1, 2009, KPSG and its subsidiary
companies were merged into Akima Management Services, Inc. (AMS).
Also during FY09, NANA acquired the remaining 20% of Akima Management
Services (AMS). Prior to the acquisition, AMS was owned 80% by NDC and 20% by
TAC. As a result of the acquisition, AMS became a wholly owned subsidiary of NDC.
Results of Operations
Contracted Services
In FY09, NANA owned a controlling interest in four management companies whose
subsidiaries are primarily government service providers: Akima Management Services,
Inc. (AMS) located in Anchorage, Alaska and Charlotte, North Carolina; Qivliq, LLC
located in Anchorage, Alaska with significant operations in Herndon, Virginia; Ki
Professional Services Group, LLC located in Colorado Springs, Colorado; and Akmaaq,
LLC located in Anchorage, Alaska. Earnings before interest and taxes (EBIT) from this
segment increased between FY07 and FY08 and between FY08 and FY09.
This segment reported EBIT of $42.8 million in FY09, a 50.7% increase from EBIT of
$28.4 million in FY08. FY08 EBIT of $28.4 million was 34.0% higher than the $21.2
million in FY07.
While general economic conditions have deteriorated throughout FY09, our
contracted government services companies have seen an increase in activity as the
government has increased spending in an attempt to stimulate the economy. We
anticipate continued growth in this segment throughout 2010, but at a slower pace
than in FY09.
Contracted Government Services EBIT (in millions)
$50
45
40
42.8
35
30
28.4
25
20
21.2
15
10
5
0
FY09
24
FY08
FY07
Hospitality & Tourism
Professional & Management Services
This segment consists of six hotels located in the state of Alaska. In Anchorage,
NANA owns a 60% interest in the Courtyard Anchorage Airport, the SpringHill
Suites Anchorage Midtown, the Residence Inn Anchorage Midtown, and 100% of
the SpringHill Suites Anchorage University Lake. In addition, NANA owns a minority
interest in the SpringHill Suites Fairbanks. NANA also owns 100% of the Nullagvik
Hotel located in Kotzebue, Alaska. All of NANA’s hotels are managed by NANA
Management Services, LLC, a 51%-owned NANA company.
This business segment includes NANA Management Services, LLC (NMS);
NANA WorleyParsons, LLC; DOWL HKM, LLC; WHPacific, Inc and WorkSafe, Inc.
During the past three years the number of available rooms in the Anchorage
market has increased significantly due to construction of new hotels. This has put
downward pressure on room rates and occupancy. In addition, the weakening
economy has started to affect Alaska. Our hotels experienced a decrease in EBIT
during FY09 of 13.3% to $3.9 million from $4.5 million in FY08. FY08 EBIT of
$4.5 million was 9.8% higher than FY07 EBIT of $4.1 million.
We expect further downward pressure on this business segment throughout FY10.
Weakening conditions, combined with the first year of operations at the SpringHill
Suites Anchorage University Lake, are anticipated to result in a further reduction
in EBIT in FY10.
Hospitality & Tourism EBIT (in millions)
$5
4.5
4
4.1
3.9
The Professional and Management Services segment is well diversified. The
Company increased its government and commercial engineering business through
acquisition in FY08, which helped to offset losses incurred from services to the
declining housing industry in the Lower 48 States. However, further weakening
in the economy during FY09 has had a negative impact on the Alaska oil and gas
industry, which has had a significant and negative impact on our Professional &
Management companies that serve that industry.
In total, this business segment’s EBIT decreased 53.4% during FY09, from $16.3
million in FY08 to $7.6 in FY09. EBIT remained constant between FY07 and FY08 at
$16.3 million.
Both the residential real estate downturn, as well as the drop in oil prices, have
materially affected the Professional & Management Services segment. Cost cutting
in the oil and gas industry is being pushed down to service providers in the form
of lower margins. We anticipate some recovery in this business sector during FY10;
however, we remain cautious about the uncertainty in both the housing and oil
and gas industries that are large customers to our companies that provide services
in this business segment.
Professional & Management Services EBIT* (in millions)
$20
3
15
16.3
16.3
2
10
1
7.6
0
FY09
FY08
FY07
5
* Includes earnings from
both consolidated and
unconsolidated entities
0
FY09
FY08
FY07
25
Oilfield and Mining Support
NANA’s primary active consolidated subsidiary in the oilfield and mining support
business segment is NANA Oilfield Services, Inc. (NOSI), located in Deadhorse,
Alaska. NOSI is a provider of petroleum products and related services to oilfield
service companies and mining companies in Alaska.
NANA has an ownership interest in several other entities providing contract
support to the oilfield and mining industries including: NANA Lynden Logistics,
LLC, which provides trucking and other transportation services; NANA Major
Drilling, LLC, which has contracts for exploratory drilling for mining operations
in Alaska; Paa River Construction, LLC, which provides construction services; and,
Arctic Caribou Inn, Ltd., which provides oilfield camp support.
As a result of smaller margins and increased competition in sales of petroleum
products, NANA’s share of EBIT from these business interests decreased 20.8% in
FY09 to $5.7 million from $7.2 million in FY08, which was a 2.7% decrease from
EBIT of $7.4 million in FY07.
Mining activity in early FY09 continued to be weak across the state of Alaska due
to significantly lower market prices for both precious and base metals. During
the 4th quarter, market prices increased significantly. Prices have remained in a
stable range in the first few months of FY10, and as a result, management expects
less volatility in this market segment during FY10. In FY10, we anticipate that this
business segment will have similar performance to FY09.
Oilfield and Mining Support EBIT* (in millions)
$8
7.2
$10
8
8.1
6
4
2.3
1.2
0
FY09
5.7
4
3
2
* Includes earnings from
both consolidated and
unconsolidated entities
1
26
Marketable Securities Portfolio Earnings (in millions)
7.4
6
0
Marketable Securities Portfolio Management
NANA’s investment income is realized from dividends, interest, and the gains or
losses that occur when the Company sells securities at a price higher or lower than
their original purchase price. The timing of sales cannot be predicted and the profit
NANA records is determined by market conditions at the time of the transactions.
For the year ended September 30, 2009, NANA had realized investment earnings of
$2.3 million. This was a 91.7% increase over earnings of $1.2 million in FY08, which
in turn was a 85.2% decrease over earnings of $8.1 million in FY07. Management
expects FY10 to be another volatile year for marketable securities; we have
positioned our portfolios conservatively and are forecasting income from this
source in FY10 to be consistent with FY09. Subsequent to FY09, NANA took action
to protect the portfolio from downward risk in a significant portion of the equities
by purchasing inverse exchange-traded funds. An inverse exchange-traded fund is
designed to move in the opposite direction of the underlying index or benchmark.
2
7
5
Investment Portfolio Management
FY09
FY08
FY07
FY08
FY07
Natural Resource Management
Natural Resources
NANA’s natural resource income comes from four sources: Red Dog Mine
royalties, 7(i) revenues from other Regional Alaska Native Corporations, gravel
sales, and land leases. EBIT for this segment was $24.7 million in FY09, down
55.2% from EBIT of $55.1 million in FY08, which was a 2.8% decrease from EBIT
of $56.7 million in FY07. Zinc market prices ranged between $1.30 and $1.70 per
pound in 2007, between $0.75 and $1.30 per pound in 2008, and between $0.50
and $0.85 in 2009. In the coming year, management expects market prices of
zinc to fluctuate as the world economy adjusts to reduced demand. Subsequent
to year end, zinc prices have risen above $1.00 per pound.
to other RANCs totaling $121.7 million, $33.6 million, and $18.2 million in
2009, 2008, and 2007, respectively. In return, NANA receives a share of natural
resource revenues earned by other RANCs. These revenues have proven to be
unpredictable in the past since they are dependent on both business decisions
made by other RANCs and on the market prices of the related natural resources.
NANA recognized resource revenues from other RANCs totaling $8.0 million,
$6.8 million, and $5.6 million in FY09, FY08, and FY07, respectively.
Natural Resource EBIT (in millions)
$60
55.1
50
The operating agreement for Red Dog Mine required Teck Cominco (Teck)
to pay advance net smelter royalties to NANA until Teck recovered its capital
investment plus interest and advance royalties. At the end of fiscal year 2007,
Teck had recovered all of its capital investment plus interest and recovered all
advance royalties paid. In fiscal year 2009, NANA received a percentage of the
net proceeds from the mine instead of net smelter royalties. The amount of net
proceeds that the mine generates is dependent on a number of factors including,
but not limited to: market prices of zinc, lead, and silver; operating costs at the
mine site; negotiated terms with refiners; and, a number of other factors. While
management believes that net proceeds payments over time will be significantly
higher than advance net smelter royalties paid in the past, the nature of many of
the factors mentioned is extremely volatile and accordingly, management cannot
provide reliable estimates for future net natural resources revenues.
Section 7(i) of the Alaska Native Claims Settlement Act requires that a portion
of NANA’s natural resource revenues must be shared with other Regional Alaska
Native Corporations (RANCs). NANA distributed resource revenues
56.7
40
30
20
24.7
10
0
FY09
FY08
FY07
Social & Cultural Programs
The Company’s earnings are used, in part, for social and cultural programs of
importance to shareholders. Expenditures are made at the direction of the board,
and reflect the guidance of board committees focusing on education and cultural
programs. Expenditures are also made to support other organizations involved in
Alaska Native issues of concern to NANA shareholders and the NANA Region.
27
Social & Cultural Net Expenditures
FY09
FY08
FY07
Revenues:
Social & Cultural Committee
$
— $ 23,311 $ 17,663
Language Commission
—
—
34,939
Regional Elders’ Meetings
—
16,975
65,836
Resource Specialists
110,000
62,500
150,000
110,000
102,786
268,438
Expenses:
In-Region 111,502
332,523
231,823
Donations to Native
Nonprofit Organizations 247,326
315,902
274,693
Regional Elders’ Meetings
32,400
62,269
42,008
Resource Specialists 790,702
757,535
692,840
Aqqaluk Trust Scholarships 450,000
450,000
300,000
Aqqaluk Trust Education
Department Administration 125,004
125,000
100,000
Aqqaluk Trust 7(i)
Scholarship Endowment 269,964
269,964
269,964
Aqqaluk Trust Other
Programs and Administration 300,000
300,000
250,000
191,321
—
Aqqaluk Trust Camp Sivunniibvik 191,316
Aqqaluk Trust Endowment
Use of Proceeds Contribution 2,000,000 5,000,000
—
Medical, Disaster,
and Burial Assistance
82,510
142,606
181,761
Village Economic Development 207,336
7,954
—
Social and Cultural Committee 395,268
301,513
211,910
Rosetta Stone
Language CD Project 300,000
25,195
62,583
Language Commission
40,500
30,669
30,259
5,543,828 8,312,451 2,647,841
Total
$5,433,828 $8,209,665 $2,379,403
28
Special Note Regarding Forward-Looking Statements
The statements contained in this Management Discussion & Analysis of Financial
Condition and Results of Operations that are not purely historical, or that may be
considered an opinion or projection concerning NANA or its business, whether
expressed or implied, are forward-looking statements. These statements may
include statements regarding Management’s expectations, intentions, plans,
or strategies regarding the future. All forward-looking statements included
in this document are based upon information available to NANA on the date
hereof and NANA assumes no obligation to update any such forward-looking
statements. It is important to note that NANA’s actual results could differ
significantly from those described in, or implied from, such forward-looking
statements, because of, among other factors, continued uncertainty in the
global economy, changes in the price of Alaska’s oil, volatility in the worldwide
spot-prices of natural resource commodities, stock market performance, and
the inability to pass inflation-based cost increases through to customers. Future
revenues and earnings are influenced by a number of factors, including those
outlined above, which are inherently difficult to forecast. However, NANA
believes that it has the competitive and financial resources for continued
business success in the markets in which it chooses to operate.
report of Independent auditorS
The Board of Directors and Shareholders
NANA Regional Corporation, Inc.:
We have audited the accompanying consolidated balance sheet of NANA
Regional Corporation, Inc. and subsidiary as of September 30, 2009 and the
related consolidated statements of income, changes in shareholders’ equity,
and cash flows for the year then ended. These consolidated financial statements
are the responsibility of the management of NANA Regional Corporation, Inc.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audit. The financial statements of NANA Regional
Corporation, Inc. and subsidiary for the years ended September 30, 2008 and
2007, were audited by other auditors whose report dated January 23, 2009,
expressed an unqualified opinion.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. We were not engaged
to perform an audit of the Company’s internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express
no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2009 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of NANA Regional
Corporation, Inc. and subsidiary as of September 30, 2009 and the results of
their operations and their cash flows for the year then ended, in conformity
with U.S. generally accepted accounting principles.
Seattle, Washington
January 8, 2010
Audited Consolidated Financial Statements
Consolidated Balance Sheets
30
Consolidated Statements of Income
32
Consolidated Statements of Changes in Shareholders’ Equity
33
Consolidated Statements of Cash Flows
34
Notes to Consolidated Financial Statements
36
29
Consolidated balance sheets
September 30, 2009 and 2008
Assets
2009
2008
Current assets:
Cash and cash equivalents
$ 23,756,340 $ 36,482,144 Marketable securities 103,274,405 110,863,583 Derivative financial instruments
— 7,470,307 Trade accounts receivable, net 290,973,868 284,277,216 Inventories
8,634,845 2,859,466 Taxes receivable
2,990,847 1,718,642
Deferred tax asset 6,653,641 6,399,332 Prepaid expenses and deposits 10,279,962 12,557,456 Other
2,140,349 2,194,739 Total current assets 448,704,257 464,822,885 Net property and equipment 122,434,228 92,761,508 Investments in affiliates 20,377,559 21,445,292 Goodwill 24,975,931 19,260,386 Intangible assets, net 17,981,970 9,372,820 Long-term deferred tax assets 116,886,466 130,349,074 Other long-term assets
5,393,910 1,006,183 Total assets
$ 756,754,321 $ 739,018,148 30
See accompanying notes to consolidated financial statements.
Consolidated balance sheets
Liabilities and shareholders’ equity
2009
2008
Current liabilities:
Accounts payable
$ 66,009,767 $ 118,618,067 Accrued expenses 128,204,669 70,083,596 Dividends payable 17,660,938 22,584,394 Elders’ Settlement Trust payable — 33,379,000 Resource revenues distributable to others 36,460,128 133,390,289 Deferred revenue 19,393,867 15,972,291 Current portion of long-term debt 9,755,727 4,360,487 Current portion of long-term capital leases 750,435 711,498 Other current liabilities
2,914,785 — Total current liabilities 281,150,316 399,099,622 Long-term debt, line of credit 125,000,000 20,000,000 Long-term debt, less current installments 30,923,781 29,924,848 Long-term obligation under capital leases, less current installments
1,255,627 723,983 Elders’ Settlement Trust payable 32,500,000 — Other long-term liabilities 8,210,821 2,541,809 Total liabilities 479,040,545 452,290,262 Minority interest 34,222,550 38,883,357 Commitments and contingencies
Shareholders’ equity:
Common stock 14,354 14,055 Additional paid-in capital 209,624,437 209,624,736 Retained earnings 36,987,053 37,113,250 Accumulated other comprehensive (loss) income (3,134,618) 1,092,488 Total shareholders’ equity 243,491,226 247,844,529 Total liabilities and shareholders’ equity
$ 756,754,321 $ 739,018,148 See accompanying notes to consolidated financial statements.
31
Consolidated statements of income
Year ended September 30, 2009, 2008, and 2007
2009
2008
2007 Revenues:
Contracted services
$ 847,259,950
$ 649,536,685
$ 515,878,412
Professional and management services 292,779,727
301,680,346
257,504,956
39,750,309
42,549,690
35,886,337
19,024,182
19,553,604
18,540,714
Other investments
1,331,492
2,094,523
1,026,510
Investment income 2,289,286
1,158,666
8,089,821
Natural resource 55,368,826
158,922,616
138,544,753
Total revenues 1,257,803,772
1,175,496,130
975,471,503
Expenses:
Contracted services 804,479,116
621,089,435
494,719,961
Professional and management services 285,150,645
285,408,817
241,254,592
34,046,658
35,379,232
28,501,146
15,113,725
15,095,061
14,434,517
Other investments
2,177,984
4,862,006
3,703,337
Natural resource 30,652,792
103,798,252
81,810,320
Corporate general and administrative 34,575,263
32,557,174
20,531,479
Total expenses 1,206,196,183
1,098,189,977
884,955,352
Operating income
51,607,589
77,306,153
90,516,151
Other (income) expenses:
Interest expense
4,968,440
7,518,021
7,432,769
Derivative financial instrument income
(446,481)
(5,461,144)
—
Social and cultural programs
5,433,828
8,209,665
2,379,403
Miscellaneous
1,264,424
4,765,215
(409,524)
Income from continuing operations
before income taxes and minority interest
40,387,378
62,274,396
81,113,503
Income tax expense 12,042,891
19,394,158
30,900,907
Income from continuing operations before minority interest
28,344,487
42,880,238
50,212,596
Minority interest, net of taxes
11,237,120
13,373,628
9,119,938
17,107,367
29,506,610
41,092,658
Loss from discontinued operations, net of taxes —
(225,577)
(3,699,800)
Net income
$
17,107,367
$
29,281,033
$
37,392,858
Basic earnings (loss) per share:
$
11.92
$
20.99
$
30.06
Loss from discontinued operations
— (0.16)
(2.71)
Net income per share
$
11.92
$
20.83
$
27.35
32
Consolidated statements of changes
in shareholders’ equity
Accumulated other
Total Total
Common
Additional
Retained
comprehensive shareholders’
stock
paid-in capital
earnings
income equity
Balance at September 30, 2006
$ 13,366 $ 85,048,787 $ 65,081,780 $ 5,310,307 $ 155,454,240 Comprehensive income, net of tax:
Net income
— — 37,392,858 — 37,392,858 Change in unrealized gain on marketable securities
— — — 1,515,229 1,515,229 Total comprehensive income
— — 37,392,858 1,515,229 38,908,087 Pension liability adjustment
— — — (96,403) (96,403) Issuance of Class D stock
304 (304) — — — Dividends – $15.00 per share
— — (20,504,205) — (20,504,205) Tax benefit from ANCSA — 118,401,000 — — 118,401,000 Reclassification — 6,175,638 (6,175,638) — — Balance at September 30, 2007 13,670 209,625,121 75,794,795 6,729,133 292,162,719 Comprehensive income (loss), net of tax:
Net income
— — 29,281,033 — 29,281,033 Net loss from defined benefit pension plan
— — — (652,566) (652,566) Change in unrealized gain on marketable securities
— — — (4,984,079) (4,984,079) Total comprehensive income (loss)
— — 29,281,033 (5,636,645) 23,644,388 Issuance of Class D stock
— — (34,583,578) — (34,583,578) Elders’ Settlement Trust distribution
— — (33,379,000) — (33,379,000) Balance at September 30, 2008 14,055 209,624,736 37,113,250 1,092,488 247,844,529 Comprehensive income (loss), net of tax:
Net income
— — 17,107,367 — 17,107,367 Net loss from defined benefit pension plan
— — — (2,776,485) (2,776,486) Change in unrealized gain on marketable securities
— — — (1,450,621) (1,450,620) Total comprehensive income (loss)
— — 17,107,367 (4,227,106) 12,880,261 Issuance of Class D stock
— — (17,223,564) — (17,223,564) Elders’ Settlement Trust distribution
— — (10,000) — (10,000) Balance at September 30, 2009
$ 14,354 $ 209,624,437 $ 36,987,053 $ (3,134,618) $ 243,491,226 See accompanying notes to consolidated financial statements.
33
Consolidated statements of Cash flows
34
2009
2008
Operating activities:
Net income
$ 17,107,367
$ 29,281,033
$
Loss from discontinued operations
—
225,577
Income from continuing operations 17,107,367 29,506,610
Adjustments to reconcile income from continuing operations to net cash (used in) provided by operating activities:
Depreciation and amortization 14,482,657 13,433,848
Deferred taxes 12,010,054 18,515,397
Bad debt expense (recovery) (1,829,810) 1,552,635
Impairment of goodwill and other assets
972,592 1,873,549
Unrealized gain on derivative financial instruments
— (4,184,094)
Realized gain on sale of derivative financial instruments (446,481) (1,277,050)
Loss on disposition of assets
98,469
60,324
Net loss (gain) on sale of marketable securities
70,204
72,132
Other-than-temporary impairment on marketable securities
— 3,687,295
Undistributed loss (earnings) of unconsolidated affiliates 1,067,733 (6,066,432)
Minority interest 11,237,120 13,373,628
Changes in operating assets and liabilities that provided or used cash:
Trade and other receivables, net (3,898,420) 33,968,319
Inventories (5,563,541)
(101,540)
Other current assets (3,525,315)
(770,380)
Prepaid expenses and deposits 2,382,117 1,703,261
Accounts payable, accrued expenses, and
resource revenues distributable to others (86,085,665) 102,921,384
Net cash (used in) provided by operating activities (41,920,919) 208,268,886
Investing activities:
Purchases of marketable securities (46,500,597)(137,614,863)
Purchase of derivative financial instruments
— (3,917,625)
Proceeds from sales of marketable securities 51,554,609 94,056,789
Proceeds from sale of derivatives financial instruments 7,916,788 1,908,463
Increase in intangibles
—
(411,487)
Decrease (increase) in other assets
—
385,071
Capital contributions to unconsolidated financial affiliates
—
(550,000)
2007
37,392,858
3,699,800 41,092,658
11,534,294
28,149,481
2,087,602
1,023,000
—
—
49,797
(4,787,885)
—
(6,615,795)
9,119,938
(72,954,639)
(56,474)
1,079,515
(1,136,391)
39,075,007
47,660,108
(70,449,656)
—
67,133,449
—
—
(402,265)
(5,000)
Consolidated statements of Cash flows
2009
2008
2007
Proceeds from the sale of assets
$
454,961
$
247,071
$
435,148
Purchases of property and equipment (41,477,525) (27,289,166) (16,086,010)
Purchase of businesses, net of cash acquired (21,024,780) (5,903,182) (4,196,119)
Net cash used in investing activities (49,076,544) (79,088,929) (23,570,453)
Financing activities:
Proceeds from issuance of long-term debt 9,096,034
450,000 1,315,966
Principal payments on long-term debt (4,445,460) (2,618,243) (2,427,378)
Principal payments under capital lease obligations (1,101,852)
(453,978)
(351,172)
Net borrowings (repayments) under line of credit105,000,000 (55,000,000)
583,760
Capital contributions from minority investors
—
— 1,225,000
Distributions to minority investors (8,451,043) (7,548,135) (6,949,741)
Contributions to minority investors 1,200,000 2,666,727
Dividends paid (23,026,020) (32,911,483) (8,947,735)
Net cash provided by (used in) financing activities 78,271,659 (95,415,112) (15,551,300)
Net cash used by discontinued operations
—
(225,577) (6,186,957)
Net (decrease) increase in cash (12,725,804) 33,539,268 2,351,398
Cash and cash equivalents at beginning of year 36,482,144 2,942,876
591,478
Cash and cash equivalents at end of year
$ 23,756,340
$ 36,482,144
$ 2,942,876
Supplemental disclosures of cash flow information:
Interest paid
$ 4,968,440
$ 7,503,995
$ 7,432,769
Income taxes paid 1,232,783 4,181,969 1,208,325
Supplemental schedule of noncash investing and financing activities:
Equipment purchases financed by capital leases and notes payable
908,963 1,339,249 1,189,220
Dividends declared and not paid 17,223,564 22,584,394 20,912,299
Issuance of Class D stock
299
385
304
35
Notes to consolidated FINANCIAL statements September 30, 2009, 2008 and 2007
1.
Organization
on the original parental enrollment in the NANA region. Class D shares
carry certain restrictions.
NANA Regional Corporation, Inc. (Company or NANA) was formed as a
for-profit corporation under Alaska state law and under the Alaska Native
Claims Settlement Act (ANCSA or Act) of 1971. Under the terms of ANCSA,
the Company received cash and land, including the surface and subsurface
estate of 2,256,074 acres and title to subsurface estate rights only on
161,260 acres. At September 30, 2009, the Company has received interim
conveyance or patent to 3,019,600 acres of surface estate and 3,186,486 acres
of subsurface estate. No value has been ascribed in the consolidated financial
statements to any land received under the Act.
Class A, B, and C stock passes to the heirs of a shareholder upon that
shareholder’s death. Class D stock is deemed cancelled upon the death of
the shareholder to whom it was issued. The Company’s stock cannot be sold
unless a majority of the outstanding shares is voted to authorize such a sale.
Sections 7(i) and 7(j) of the Act require the Company to make the following
mandatory distributions:
• 70% of all net revenues received by the Company for subsurface and
timber resources transferred under the Act to the Company must be
distributed to all regional corporations, including itself (the funds are
allocated based on the shareholder eligibility information compiled by
the U.S. Department of Interior in 1981); and similarly, the Company
receives its pro rata share of 70% of resource revenues received by the
other 11 Native regional corporations which are recorded as revenues
when the amount thereof is determined.
The Company maintains an investment portfolio and negotiates resource
contracts for minerals extracted from its land. In addition, the Company
operates in various business segments through its wholly owned subsidiary,
NANA Development Corporation (NDC). Its contracted services segment
operates around the world. Its hospitality and tourism, professional and
management services, and oilfield and mining support segments operate
primarily within the state of Alaska. Changes in Alaska’s economy, particularly
the oil and gas industry and tourism, the spending by the U.S. Government,
specifically, the U.S. Department of Defense, and the price of zinc and lead
could have a significant effect on the Company.
Pursuant to section 7(i), net resource revenues distributed to other
regional corporations are $121,703,483, $33,616,007, and $18,213,174
for the years ended September 30, 2009, 2008, and 2007, respectively.
• Of the 70% of the resource revenues of the Native regional corporations
to which NANA is entitled, 50% of a portion of such revenues, which
portion is based on the ratio of the non-village shareholders and enrolled
village shareholders to total NANA shareholders, must be distributed to
NANA’s enrolled non-village shareholders and the Kikiktagruk Iñupiat
Corporation. NANA retains the shares of such revenues that the merged
villages would have been entitled to receive.
The Act required the Company to issue 100 shares of its stock to each Native
enrolled in the northwest region of Alaska. NANA currently has the following
classes of common stock outstanding:
• Class A common stock to those Natives who enrolled in the NANA region
as residents of one of its villages (when the village corporations merged,
Class A shareholders turned in their 100 shares of village corporation
stock and received another 100 shares of NANA stock);
Pursuant to section 7(j), net resource revenues distributed to non-village
shareholders and the Kikiktagruk Iñupiat Corporation are $4,543,587,
$2,702,338, and $2,083,406 for the years ended September 30, 2009, 2008,
and 2007, respectively.
• Class B common stock to those Natives who enrolled in the NANA region,
but elected not to be registered as residents of any of its villages;
• Class C common stock to those Natives who were eligible to but did not
enroll under ANCSA;
• Class D common stock to Natives born after 1971 who meet certain
eligibility requirements. Recipients receive either 50 or 100 shares based
36
2.
Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements have been prepared
on the accrual basis in accordance with U.S. generally accepted accounting
Notes to consolidated FINANCIAL statements
principles and include the accounts of the Company and its wholly owned
subsidiary, NDC. The Company’s consolidation policy requires the
consolidation of entities where a controlling financial interest is obtained
as well as consolidation of variable interest entities in which the Company
is determined to be the primary beneficiary. Equity investments in which
the Company exercises significant influence, but does not control and is
not the primary beneficiary, are accounted for using the equity method of
accounting. Under the equity method, the Company’s share of the earnings
or losses of each investment is included in the consolidated statements of
income, and the undistributed earnings or losses are reported as an increase
or decrease to investments in affiliates. Investments in which the Company
does not exercise significant influence over the investee are accounted
for using the cost method of accounting. All significant intercompany
transactions have been eliminated in consolidation.
Cash Equivalents
For purposes of the consolidated statements of cash flows, highly liquid
short-term investments with maturities of less than 90 days at the date of
purchase and demand bank deposits are considered to be cash equivalents.
Certain money market funds are included in marketable securities as it is the
intent of the Company to hold these securities in their investment portfolio.
Inventories
Inventories, consisting primarily of fuel and food products, are stated at
the lower of cost or market. Cost is determined using the first in, first out
method (FIFO).
of accumulated other comprehensive income. Realized gains and losses on
sales of securities are computed using the specific-identification method
of determining the cost of securities sold. Cost is determined using the first
in, first out method (FIFO).
A decline in the fair value of any available-for-sale securities below cost that
are deemed to be other than temporary results in a reduction in carrying
amount to fair value. The impairment is charged to earnings and a new cost
basis for the security is established. To determine whether an impairment is
other than temporary, the Company considers whether it has the ability and
intent to hold the investment until a market price recovery and considers
whether evidence indicating the cost of the investment is recoverable
outweighs evidence to the contrary.
Derivative Financial Instruments
The Company recognizes all derivatives as either assets or liabilities on the
balance sheet and measures those instruments at fair value. The accounting
for changes in fair value of a derivative depends on the intended use of the
derivative and its designation as a hedge. Derivatives that are not hedges are
adjusted to fair value through earnings. If a derivative is a hedge, depending
on the nature of the hedge, changes in fair value either offset the change in fair
value of the hedged assets, liabilities or firm commitments through earnings,
or are recognized in other comprehensive income until the hedged transaction
is recognized in earnings. The change in a derivative’s fair value related to the
ineffective portion of a hedge, if any, is immediately recognized in earnings.
The Company has classified all of its marketable securities as securities
available-for-sale. Securities are classified as available-for-sale when
management intends to hold the securities for an indefinite period of
time for appreciation and income or when the securities may be utilized
for tactical asset/liability purposes and may be sold from time to time to
effectively manage interest rate exposure and liquidity needs.
The Company does not enter into any derivative contracts for speculative
purposes; however, the Company may take advantage of temporary
market movements. The Company may use derivative financial instruments
to manage the risk of decreases in cash flows due to changes in market
price of zinc and lead. To the extent that derivative financial instruments
are outstanding as of a period-end, the fair value of those instruments,
represented by the estimated amount the Company would receive or pay to
terminate the agreements, is reported on the balance sheet as a component
of other assets or liabilities.
Securities available–for–sale are stated at fair value with unrealized holding
gains and losses excluded from earnings and reported as a separate component
On March 3, 2008, the Company entered into put options for standard lead
and special high grade zinc with stated total notional quantities of 20,400
Marketable Securities
37
metric tons paying a time premium of $3,917,625. Each option contract had
a one-month exercise period; contracts expired August 29, 2008 through
September 30, 2010. Due to the nature of the hedged risk, the options
purchased did not qualify for hedge accounting treatment. During the year
ended September 30, 2008, the Company recognized, through earnings,
gains from the sale of derivatives and changes in market value of $1,277,050
and $4,184,094, respectively. On October 7, 2008, the Company liquidated its
derivative portfolio recognizing additional income of $466,482.
On September 23, 2003, the Company entered into an interest rate swap
agreement, effective October 1, 2003 to change $10,000,000 of its variable
interest rate line of credit to an effective fixed interest rate of 3.75%. The swap
terms are similar to the debt and the swap agreement expired on October 1,
2008. The fair value of the swap at September 30, 2008, was nominal.
Accounts Receivable
Billed accounts receivable are recorded at the invoiced amount and do not
bear interest. Unbilled accounts receivable arise when revenues have not
yet been billed and include amounts to be billed in subsequent periods,
retentions, unapproved change orders, and claims. The allowance for
doubtful accounts is the Company’s best estimate of the amount of probable
credit losses in the Company’s existing accounts receivable. Account balances
are charged off against the allowance after all means of collection have been
exhausted and the potential for recovery is considered remote. The Company
does not have any off-balance-sheet credit exposure related to its customers.
Property and Equipment, Intangible Assets, Depreciation,
and Amortization
Property and equipment are stated at cost. Equipment under capital leases is
capitalized at the present value of minimum lease payments at the inception
of the lease.
Depreciation, which includes depreciation on assets purchased under capital
leases, is calculated using the straight-line method over the estimated useful
lives of the assets, which range from 3 to 40 years. Equipment held under
capital leases and leasehold improvements is amortized straight-line over
the shorter of the lease term or estimated useful life of the asset. Depletion
38
of investments in oil and gas producing and other mineral properties is
calculated using the units of revenue method.
Long lived assets are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to estimated undiscounted
future cash flows expected to be generated by the asset. If the carrying amount
of an asset exceeds its estimated future cash flow, an impairment charge is
recognized by the amount the carrying amount of the asset exceeds the fair
value of the asset. Assets to be disposed of would be separately presented
in the balance sheet and reported at the lower of the carrying amount or fair
value less costs to sell, and are no longer depreciated. The assets and liabilities
of a disposal group classified as held for sale would be presented separately in
the appropriate asset and liability sections of the balance sheet.
Revenue Recognition
Revenue is derived from service contracts, construction and productiontype contracts, and sales of goods and services based on the terms of the
underlying agreement and in accordance with the following policy. Revenue
is recognized and earned when all the following criteria are satisfied with
regard to a specific transaction: persuasive evidence of a sales arrangement
exists; the price is fixed or determinable; cash collection is reasonably assured;
and delivery has occurred or services have been rendered.
The Company generates its contractual revenue from three different types of
contractual arrangements: cost-plus contracts; time-and-materials contracts;
and fixed-price contracts.
Revenues on cost-type contracts are recorded as contract allowable costs
are incurred and fees earned. The Company does not recognize award fee
income until the fees are fixed and determinable, generally upon contract
notification confirming the award fee. Due to such timing, and to fluctuations
in the level of revenue, profit as a percentage of revenue on award fee
contracts will fluctuate period to period.
Revenues for time and materials contracts are recorded on the basis of
contract allowable labor hours worked multiplied by the contract defined
billing rates, plus the direct costs and indirect cost burdens associated with
materials and subcontract work used in performance on the contract. Profits
on time and material contracts result from the difference between the cost of
services performed and the contract defined billing rates for these services.
Revenue recognition methods on fixed-price contracts vary depending
on the nature of the work and the contract terms. On certain fixed-price
contracts, revenues are recorded as costs are incurred using the percentageof-completion, cost-to-cost input method of accounting, since these
contracts require design, engineering, and development performed to the
customer’s specifications. Profits on fixed-price contracts result from the
difference between the incurred costs and the revenue earned. Revenues
on fixed-price service contracts are either recognized as work is performed
or ratably over the service period, as appropriate. Profits related to service
contracts may fluctuate from period to period, particularly in the early
phases of the contract.
Contract accounting requires significant judgment relative to assessing risks,
estimating contract revenue and costs, and making assumptions for schedule
and technical issues. Due to the size and nature of many of the Company’s
contracts, the determination of total revenue and cost at completion
requires the use of estimates. Contract costs include material, labor and
subcontracting costs, as well as an allocation of allowable indirect costs,
including general and administrative costs. Assumptions have to be made
regarding the length of time to complete the contract because costs also
include expected increases in wages and prices for materials. For contract
change orders, claims or similar items, the Company applies judgment in
estimating the amounts and assessing the potential for realization. These
amounts are only included in contract value when they can be reliably
estimated and realization is considered probable. Estimates of total contract
revenue and costs are continuously monitored during the term of the
contract and are subject to revision as the contract progresses. Anticipated
losses on construction and production-type contracts are recognized in the
period they are deemed probable and can be reasonably estimated. Losses
on service-type contracts are recognized as incurred.
Contracts may include the delivery of a combination of one or more of the
Company’s service offerings. In these situations, the Company applies the
separation criteria based on the appropriate accounting literature in order to
determine whether arrangements with multiple elements should be treated
as separate units of accounting, with revenue allocated to each element of
the arrangement based on the relative fair value of each element.
Revenue from sales where the Company has, by agreement, transferred all
significant risk to manufacturers or others are recorded net of costs.
Revenue related to work performed on contracts at risk, which is work
performed at the customer’s request prior to the government formalizing
funding, is not recognized as income until it can be reliably estimated and its
realization is probable.
Income Taxes
The Company and its subsidiaries file consolidated federal income tax
returns. Certain state tax returns are also filed on a consolidated basis
depending on the individual state filing requirements. The Company
accounts for income taxes using the asset and liability method under
which deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets are reduced by a valuation allowance when it
is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment. The
Company’s surface and subsurface estate received in accordance with
ANCSA have not been recognized in the accompanying financial statements
because the fair value was not determinable within reasonable limits at
the time of conveyance. In addition, the tax basis of the Company’s surface
and subsurface estate also has not been determined, except for certain
subsurface estate for mining activities.
Due to the unique tax attributes of ANCSA corporations’ natural resources
and the revenue-sharing requirements of Section 7(i), the tax basis of such
resources most likely would be significantly in excess of their book basis. The
Company does not reflect a deferred tax asset for surface or subsurface estate
until a reasonable basis has been determined and such amounts are recorded
to paid-in capital. The net deferred tax benefit or expense associated with
ANCSA subsurface estate is also recorded as additional paid-in capital.
39
Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income or loss, net unrealized
gains and losses on marketable securities, and net minimum pension gains or
losses and is presented in the consolidated statements of shareholders’ equity.
Common Stock
Common stock is comprised of:
2009
2008
Class A common stock of $0.01 par value.
Authorized 2,000,000 shares; issued and
outstanding 704,700 shares
$ 7,047
Class B common stock of $0.01 par value.
Authorized 500,000 shares; issued and
294
294
Class C common stock of $0.01 par value.
Authorized 50,000 shares; issued and
14
14
Class D common stock of $0.01 par value.
Authorized 5,000,000 shares; issued and
outstanding 699,900 shares and 670,000
shares at September 30, 2009 and 2008,
respectively
6,999
6,700
$ 14,354 $ 14,055
$
7,047
Earnings per share are computed using the weighted average number
of shares of Class A, B, C, and D common stock outstanding of 1,435,400,
1,405,500, and 1,367,000 in 2009, 2008, and 2007, respectively. On March 19,
2008, the Board of Directors approved a dividend of $9.00 per share with a
record date of March 17, 2008. On September 25, 2008, the Board of Directors
approved a dividend of $15.75 per share with a record date of October 13,
2008. On September 24, 2009, the Board of Directors approved a dividend of
$12.00 per share with a record date of October 16, 2009.
Acquisitions
40
For acquisitions completed on or before September 30, 2009, the Company
accounts for acquisitions using the purchase method. The acquiring
company allocates the purchase price to the assets acquired and liabilities
assumed based on their estimated fair values at the date of acquisition,
including intangible assets that can be identified and named. The purchase
price in excess of the fair value of the net assets and liabilities is recorded
as goodwill. Among other sources of relevant information, the Company
uses independent appraisals and actuarial or other valuations to assist in
determining the estimated fair values of the assets and liabilities.
Goodwill
Goodwill represents the excess of the aggregate purchase price over the
fair value of the net assets acquired in a purchase business combination.
Goodwill is reviewed for impairment at least annually. The goodwill
impairment test is a two step-test. Under the first step, the fair value of the
reporting unit is compared with its carrying value (including goodwill). If the
fair value of the reporting unit is less than its carrying value, an indication
of goodwill impairment exists for the reporting unit and the Company must
perform step two of the impairment test (measurement). Under step two,
an impairment loss is recognized for any excess of the carrying amount of
the reporting unit’s goodwill over the implied fair value of that goodwill. The
implied fair value of goodwill is determined by allocating the fair value of the
reporting unit in a manner similar to a purchase price allocation. The residual
fair value after this allocation is the implied fair value of the reporting unit
goodwill. Fair value of the reporting unit is determined using a discounted
cash flow analysis. If the fair value of the reporting unit exceeds its carrying
value, step two does not need to be performed.
Intangible Assets
Intangible assets are recorded based upon estimated fair values at the dates
of the respective acquisitions and are amortized on a straight-line basis over
their estimated lives. See Note 1 for the Company’s policy with respect to
reviewing long-lived assets for impairment.
Use of Estimates
The Company prepares its consolidated financial statements in conformity
with accounting principles generally accepted in the United States (GAAP).
The preparation of financial statements in conformity with GAAP requires
management of the Company to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements, and the reported amounts of revenues and expenses during the
period. Such estimates and assumptions could change in the future as more
information becomes known, which could impact the amounts reported
and disclosed herein.
Fair Value of Financial Instruments
Fair value of financial instruments, as defined by the Financial Accounting
Standards Board, is estimated by management. The fair value of a financial
instrument is the amount at which the instrument could be exchanged
in a current transaction between willing parties. Fair value estimates are
dependent upon subjective assumptions and involve significant uncertainties
resulting in variability in estimates with changes in assumptions.
Defined Benefit Pension Plan
The Company recognizes the funded status of defined benefit pension and
other postretirement plans as a net asset or liability and recognizes changes
in that funded status in the year in which the changes occur through
accumulated other comprehensive income to the extent those changes are
not included in the net periodic cost.
Reclassifications
Certain reclassifications have been made to the 2007 and 2008 balances to
conform to the 2009 presentation. These reclassifications did not impact net
income or shareholders’ equity as previously reported in the 2007 and 2008
financial statements.
Adoption of Accounting Pronouncements
Accounting Standards Codification – In June 2009, the Financial Accounting
Standards Board (FASB) approved the Accounting Standards Codification
which became the single source of authoritative nongovernment GAAP,
superseding existing FASB, American Institute of Certified Public Accountants,
Emerging Issues Task Force, and related accounting literature. The Accounting
Standards Codification is a major restructuring of accounting and reporting
standards; however, the codification is not intended to change existing
standards. The Accounting Standards Codification is effective for interim
and annual periods ending after September 15, 2009.
Fair Value Measurement – In September 2006, the FASB issued a new
accounting standard on Fair Value Measurements. The new standard defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value
measurements, but does not require any new fair value measurements.
The Fair Value Measurement accounting standard supersedes the definition
of fair value in most existing pronouncements under generally accepted
accounting principles that require or permit the use of fair value, including
(but not limited to) business combinations, impairments and exchanges of
nonmonetary assets. The new standard established a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level I measurements) and the
lowest priority to unobservable inputs (Level III measurements).
The Company adopted the Fair Value Measurement accounting standard
for its non pension financial assets and liabilities as of October 1, 2008. For
pension-related financial assets and liabilities and nonfinancial assets and
liabilities, the standard is effective for the Company on October 1, 2009.
Fair Value Option – In February 2007, the FASB issued a new accounting
standard on the Fair Value Option. The new standard permits entities to
choose to measure at fair value many financial instruments and certain other
assets and liabilities that are not currently required to be measured at fair
value. Unrealized gains and losses on items for which the fair value option
has been elected are reported in earnings. The new standard does not affect
any existing accounting literature that requires certain assets and liabilities
to be carried at fair value. The Company adopted the standard on October 1,
2008, but did not elect to apply the fair value option.
Subsequent Events – In May 2009, the FASB issued a new accounting
standard on Subsequent Events. The new standard establishes principles
and requirements for subsequent events and sets forth the period after
the balance sheet date during which management shall evaluate events
or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity shall
recognize events or transactions occurring after the balance sheet date in its
financial statements, and the disclosures an entity shall make about events
or transactions that occurred after the balance sheet date. The Company
adopted this new standard during 2009; this adoption did not have any
impact on the Company’s financial position, results of operations, and cash
flows. The Company evaluated subsequent events through January 8, 2010,
the date the audit opinion on our financial statements was issued.
41
Recently Issued Accounting Pronouncements (Not Yet Adopted)
benefit from an uncertain tax position is recognized only if it is more likely
than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits. Upon adoption, the Company’s
policy will require the recognition of interest and penalties related to
uncertain tax positions in income tax expense. However, the Company’s
current policy is to recognize tax benefits of uncertain tax positions only
if it is probable that the position will be sustained. The Accounting for
Uncertainty in Income Taxes accounting standard is effective for fiscal
years beginning on or after December 15, 2008. The Company is currently
assessing the impact that the accounting standard may have on its financial
position, results of operations, and cash flows.
Business Combinations – In December 2007, the FASB issued a revised
accounting standard on Business Combinations. In general, the revised
accounting standard expands the definition of a business and transactions
that are accounted for as business combinations. In addition, the revised
accounting standard generally requires all assets and liabilities of acquired
entities to be recorded at fair value, and changes the recognition and
measurement of related aspects of business combinations. The revised
Business Combinations accounting standard is effective for business
combinations with an acquisition date within fiscal years beginning on or
after December 15, 2008. The Company is currently assessing the impact
that the accounting standard may have on its financial position, results of
operations, and cash flows.
Noncontrolling Interests in Consolidated Financial Statements – In December
2007, the FASB issued a revised accounting standard on accounting for
Noncontrolling Interests in Consolidated Financial Statements. The standard
amends the accounting and reporting standards for the noncontrolling
interest in a subsidiary (often referred to as minority interest) and for the
deconsolidation of a subsidiary. Under the standard, the noncontrolling
interest in a subsidiary is reported as equity in the parent company’s
consolidated financial statements. The accounting standard also requires that
the parent company’s consolidated statement of operations include both
the parent and noncontrolling interest share of the subsidiary’s statement
of operations. Formerly, the noncontrolling interest share was shown as a
reduction of income on the parent’s consolidated statement of operations.
The revised Noncontrolling Interests in Consolidated Financial Statements
accounting standard is effective for fiscal years beginning on or after
December 15, 2008. The Company is currently assessing the impact that the
accounting standard may have on its financial position, results of operations,
and cash flows.
Accounting for Uncertainty in Income Taxes – In June 2006 and February
2008, the FASB issued revised accounting standards on Accounting for
Uncertainty in Income Taxes, which addresses the determination of whether
tax benefits claimed or expected to be claimed on a tax return should be
recorded in the financial statements. Under the accounting standard, the tax
42
Consolidation of Variable Interest Entities – In June 2009, the FASB issued
a revised accounting standard regarding the Consolidation of Variable
Interest Entities. Among other things, the revised standard amends certain
guidance for determining whether an entity is a variable interest entity (VIE),
requires a qualitative rather than quantitative analysis to determine the
primary beneficiary of a VIE, requires continuous assessments of whether
an enterprise is the primary beneficiary of a VIE, and requires enhanced
disclosures about an enterprise’s involvement with a VIE. The revised
standard is effective for fiscal years beginning after November 15, 2009, for
interim periods within those fiscal years, and for interim and annual reporting
periods thereafter. The Company is in the process of determining the effect
the adoption of the revised accounting standard will have on the Company’s
financial condition, results of operations, and cash flows.
3.
Trade Accounts Receivable, Net
A summary of trade accounts receivable, net follows:
2009
2008
Billed accounts receivable:
Government
$
Non government
Unbilled accounts receivable
Less allowance for doubtful accounts
Net trade accounts receivable
117,393,288 $
78,169,125 189,108,191 240,178,172 106,672,891 50,736,068 4,807,214 $
162,009,047 71,714,903 290,973,868 6,637,024 $
284,277,216 Notes to consolidated FINANCIAL statements
4.
Property and Equipment
Gross realized gains and losses on sales of marketable securities totaled $390,126
and $460,330, respectively, during the year ended September 30, 2009.
A summary of property and equipment, at cost, follows:
Estimated
useful lives
Land
—
Buildings
2009
$
2008
9,223,181 $
9,234,970 40 years
76,105,440 49,029,744 Leasehold improvements
3 to 40 years
11,778,431 9,820,488 Vehicles and Equipment
3 to 15 years
24,277,339 20,048,240 Computer hardware and
software
3 to 10 years
21,153,384 18,275,103 Fixtures and furnishings
3 to 15 years
24,109,608 19,575,231 Other
3 to 15 years
218,171 218,171 Work-in-progress
— Less accumulated depreciation
Net property and equipment
18,100,889 19,007,702 184,966,443 145,209,649 62,532,215 52,448,141 $ 122,434,228 $
Cost
September 30, 2008:
Cash and cash
equivalents
$
Cost
— — Fair value
$
71,916,683 — (41,276) 2,505,147 5,181,891 (2,056,950) 24,786,471 Mutual funds
11,655,282 $ 107,779,918 — $
5,181,891 $
— 11,655,282 (2,098,226) $ 110,863,583 Gross realized gains and losses on sales of marketable securities totaled $468,357
and $540,489, respectively, during the year ended September 30, 2008.
Gross unrealized losses on investment securities and the fair value of the
related securities, aggregated by investment category and length of time
that the individual securities have been in a continuous unrealized loss
position at September 30, 2009 and 2008, were as follows:
Corporate notes
and bonds
Fair value
$
12 months
or more
Unrealized
losses
Total
Unrealized
losses
Fair value
(29,000) $
17,000 $
(6,838)
$
259,013 (456,731)
2,133,540 (392,097)
(1,195,889)
11,611,765 (280,578)
1,472,576 (679,513)
$ 3,846,909 $ (1,681,620) $ 13,762,305 $
71,353,395 Fair value
$
2,115,320 (35,838) $
276,013 (848,828)
4,248,860 (1,476,467)
13,084,341
$ (2,361,133) $ 17,609,214 2008:
Corporate notes
and bonds
2,669,931
244,645
(35,838)
2,878,738
Common stock
15,824,723
2,735,191
(1,129,407)
17,430,507
Mutual funds
$
2009:
Gross
unrealized
losses
$
— 2,546,423 Mutual Funds
$
$
21,661,530 Unrealized
losses
September 30, 2009:
71,353,395 — Common stock
Common stock
$
$
Less than 12
months
Summaries of marketable securities follow:
Cash and cash
equivalents
71,916,683 Corporate notes
and bonds
Marketable Securities
Gross
unrealized
gains
Fair value
92,761,508 Depreciation expense related to property, plant, and equipment was
$12,511,468, $9,893,443, and $8,922,928 for the years ended September 30,
2009, 2008, and 2007, respectively.
5.
Gross
unrealized
losses
Gross
unrealized
gains
12,807,653
$ 102,655,702
—
$
2,979,836
(1,195,888)
$
11,611,765
(2,361,133) $ 103,274,405
Corporate notes
and bonds
Common stock
$
(41,276) $
(2,056,950)
$ (2,098,226) $
728,000 $
6,754,648 7,482,648 $
— $
—
—
—
—
$
—
$
(41,276) $
(2,056,950)
728,000 6,754,648 $ (2,098,226) $ 7,482,648 43
At September 30, 2009, the Company has conducted a review for other-thantemporary impairment losses on all securities in an unrealized loss position.
The Company determined that it has the ability and intent to hold their
securities in a loss position until they reach a market price recovery.
Interest
$
Dividends
Other
Net (loss) gain on sale of securities
967,912 $
$
2,438,012 $
1,666,507 466,572 532,253 1,111,572 2,321,630 1,400,332 (70,204) (72,132) 4,787,885 — (3,687,295) — (234,561) (308,121) (297,156) 2,289,286 $
1,158,666 $
2009
Current assets
2007
514,567 Other-than-temporary impairment
Portfolio management expenses
2008
Combined Balance Sheets
Assets
Revenues and expenses from marketable securities were as follows:
2009
Engineering, LLC), and NANA Major Drilling, LLC; as well as a 28.18% interest
in the Block 13 Hotel, LLC. Summarized combined (unaudited) financial
information for affiliates follows:
8,089,821 $
Equipment, net of accumulated depreciation of
$20,016,353 in 2009 and $16,518,417 in 2008
Other
Amortized cost
Fiscal years 2010 to 2014
$
Fiscal years 2015 to 2019
Subsequent to fiscal year 2019
$
6.
1,337,375 Current liabilities
451,727 $
70,601,526 $
13,917,739 $
15,201,287 8,940,580 Equity allocable to the Company
9,912,143 66,382,440 45,488,096 $
20,377,559 70,601,526 21,445,292 Combined Statements of Operations
2009
Revenues
1,437,288 Cost and expenses
— — Net Income
$ 147,629,762 2008
$
140,203,756 $
7,426,006 209,298,554 2007
$
189,119,742 $
20,178,812 103,718,258 88,314,581 $
15,403,677 2,878,738 Investments in Affiliates
A summary of net income allocable to the Company for investments in
unconsolidated affiliates by line of business follows:
2009
The Company has invested in affiliates (including joint ventures, partnerships,
and limited liability companies), which are primarily involved in oil field
services, hospitality services, professional management services, security
services, mineral exploration drilling, government contracting, construction,
transportation, and engineering services. The Company’s significant
ownership interests, through its subsidiary, include 50% ownership of NANA
Lynden Logistics, LLC, NANA WorleyParsons (formerly known as NANA/Colt
44
25,209,280 1,191,827 43,524,121 1,332,556 $
20,132,897 66,382,440 Equity
1,441,450 2,669,931 44,940,519 $
Long-term liabilities
Fair value
$
$
Liabilities and Equity
$
Contractual maturities of marketable debt securities, including U.S.
Government bonds and corporate notes and bonds, at September 30, 2009,
were as follows:
45,057,716 2008
$
27,307 2008
$
123,766 2007
$
171,302 Professional and
management services
1,854,231 6,405,157 3,955,791 Oil field and mining support
1,731,333 3,194,748 3,286,849 Other investments
14,384 $
3,627,255 272,761 $
9,996,432 116,853 $
A summary of additional capital contributions and distributions to/from
unconsolidated affiliates by line of business follows:
2009
Contributions
Hospitality and
tourism
$
Distributions
— $
Contributions
— $
— Distributions
$
— Professional and
management
services
— 1,250,000 — 4,000,000 Oil field and
mining support
— 3,444,988 550,000 1,430,000 Other investments
— — — $
7.
2008
— $
4,694,988 $
550,000 Acquisition of Remaining Ownership Interest of Akima Management
Services, Inc.
On May 31, 2009, NDC acquired 1,000 shares of Class B common stock of
Akima Management Services, Inc. (AMS), which represented a 20% ownership
in AMS’ stock. Subsequent to this transaction, NDC owned 100% of the stock
and voting control of AMS. The aggregate purchase price was $12,761,200
and was paid in cash.
The following table summarizes the approximate fair value of the assets
acquired at the date of acquisition.
Amount
$
5,430,000 Backlog
Customer relationships
Significant Transactions and Events
Trade name
Acquisition of Remaining Ownership Interest in Ki, LLC
Goodwill
On May 31, 2009, NDC acquired the remaining 25% ownership interest in
Ki, LLC for strategic considerations. Subsequent to this transaction, NDC
owned 100% of the member interest units and voting control of Ki, LLC. The
aggregate purchase price was $4,938,800 and was paid in cash.
acquired at the date of acquisition.
Total goodwill and intangible assets acquired
Minority interest
$
3,620,000 1,480,000 540,000 5,068,539 10,708,539 4,529,320 Deferred tax liability
(2,476,659) Total purchase price
$ 12,761,200 The acquired intangible assets, all of which are being amortized, have a useful
life of approximately 15 years except backlog of $3,620,000 (10 year useful life).
Acquisition of Pegasus Aircraft Management
Amount
Backlog
Customer relationships
Trade name
$
300,000 225,000 13,000 Goodwill
283,236 Total goodwill and intangible assets acquired
821,236 Minority interest
Total purchase price
4,117,564 $ 4,938,800 The acquired intangible assets are being amortized over their useful life of 15
years except backlog of $300,000 (4-year useful life).
On September 30, 2009, Akima Management Services, Inc. (AMS) acquired
Pegasus Aircraft Maintenance, LLC (Pegasus). The balance sheet of Pegasus
has been included in the consolidated balance sheet as of that date and the
results of Pegasus’s operations will be included in the consolidated statement
of operations beginning October 1, 2009.
The aggregate purchase price was $5,681,000 consisting of a cash payment
of $4,400,000 to the sellers, future guaranteed minimum payments of
$1,200,000, and acquisition costs of $81,000. In accordance with the terms
of the Membership Interest Purchase Agreement (PA) dated September 30,
2009, the Company will pay two installments of $600,000 each following
the fiscal years ended September 30, 2010 and September 30, 2011.
45
The guaranteed minimum payments may be increased if actual EBITDA
exceeds the target results as defined and set forth in the PA. The maximum
contingent consideration is $750,000 per year.
The Company recognized the following estimates of the fair value for the
assets acquired and liabilities assumed. The values presented below are subject
to change as management completes its valuation of the Pegasus acquisition.
Amount
Current assets
$
2,442,000 Property and equipment
2,430,000 Intangible assets
4,055,000 Goodwill
1,681,361 Bank, Alaska) less 1% as determined on the closing date, March 31, 2008.
The notes require aggregate payment of $1,687,370 plus accrued interest on
or before January 15, 2009 and December 31, 2009. The sellers entered into
a subscription agreement with the DOWL LLC to purchase 2,767 units in
DOWL LLC at a per unit price as of October 1, 2007, as defined in the
DOWL LLC minority members agreement dated January 4, 1999, and the
memorandum to minority shareholders dated October 5, 2004.
acquired and liabilities assumed at the date of acquisition.
Amount
Current assets
$
Property and equipment
Total assets acquired
(1,245,000) Intangible assets
Deferred tax liability
(1,652,361) Goodwill
Other liabilities
(2,030,000) Total liabilities assumed
(4,927,361) 975,000 Other assets
Net assets acquired
$
5,681,000 The transaction was consummated as a purchase of membership interests.
The acquired intangible assets, all of which are being amortized, have a
weighted average useful life of approximately 15 years. The intangible assets
include a trade name of $350,000 (15-year weighted average useful life),
customer relationships of $3,350,000 (15-year weighted average useful life),
permits and leases of $255,000 (15-year weighted average useful life) and
covenant not to compete of $100,000 (4-year weighted average useful life).
Acquisition of HKM Engineering
On March 31, 2008, DOWL LLC, an entity controlled by the Company,
acquired HKM Engineering Inc. (HKM). The results of HKM’s operations have
been included in the consolidated financial statements since that date.
The aggregate purchase price was $9,001,279 for which the Company paid
$5,626,541 in cash and issued notes payable to sellers in the amount of
$3,374,738. The notes bear interest at the prime rate (as set by Wells Fargo
46
385,000 2,800,000 2,631,000 Total assets acquired
(2,708,000) Other liabilities
(230,000) Total liabilities assumed
Net assets acquired
5,148,000 (2,938,000) $
9,001,000 The acquired intangible assets, all of which are being amortized, have a
weighted average useful life of approximately 14 years. The intangible
assets that make up that amount include a trade name of $150,000 (20-year
weighted average useful life), customer relationships of $1,700,000 (20-year
weighted average useful life), backlog of $600,000 (2-year weighted average
useful life) and covenant not-to-compete of $350,000 (2-year weighted
average useful life). The transaction was consummated as a stock purchase.
Augustine Energy Center
Effective January 31, 2008, the Company entered into an operating agreement
with Augustine Land, LLC to form Augustine Energy Center, LLC (AEC). AEC
is a special-purpose entity formed to construct the Augustine Energy Center,
a high-rise office complex and parking facility in downtown Anchorage,
Alaska. Augustine Land, LLC contributed $5,563,319 in assets and transferred
$5,185,748 in liabilities to AEC effective January 31, 2008. The Company made
$0 and $5,137,216 cash contributions for the years ended September 30, 2009
and 2008, respectively. Additionally, the Company provided guarantees of
$5,121,000 in debt collateralized by AEC real property as of September 30, 2008.
These transactions resulted in NDC maintaining an ownership interest of 60.4%
and 74.0% as of September 30, 2009 and 2008, respectively.
Aggregate amortization expense for amortizing intangible assets was
$1,971,189, $2,747,613, and $2,611,366 for the years ended September 30,
2009, 2008, and 2007, respectively. Estimated amortization expense for the
next five years is: $2,368,930 in 2010, $1,965,210 in 2011, $1,861,456 in 2012,
$1,825,000 in 2013, $1,749,072 in 2014, and $8,212,302 thereafter.
Goodwill
Substantially all capital contributions have been funded to pay for developer
fees, developer overhead costs, and overall design costs. The developer,
Venture Development Group, LLC, and the General Contractor, Neeser
Construction, Inc., are affiliates of Augustine Land, LLC.
The changes in the carrying amount of goodwill for the years ended
September 30, 2009 and 2008, were as follows:
Amount
Elders’ Settlement Trust
Balance as of October 1, 2007
Additions
In April 2008, the Company’s shareholders approved the creation of the
Elders’ Settlement Trust, an irrevocable trust. Beneficiaries of the Elders’
Settlement Trust are those living individuals who attain the age of 65 and are
registered as shareholders of NANA. In 2008, the Board of Directors authorized
a distribution of $33,379,000. The Company reduced retained earnings and
recorded a current liability for $33,379,000 at September 30, 2008. During the
year ended September 30, 2009, the Company paid $879,000 to the Elders’
Settlement Trust and reclassified the remaining balance of $32,500,000 as
a long-term liability. Additionally, during the year ended September 30,
2009, the Company contributed $10,000 to the Elders’ Settlement Trust from
retained earnings to compensate for administrative costs.
8.
Intangible Assets and Goodwill
Balance as of September 30, 2008
(797,304)
19,260,386
Additions
6,688,137
Impairment loss
Balance as of September 30, 2009
(972,592)
$ 24,975,931
The Company recorded impairment charges on goodwill of $972,592 and
$797,304 for the years ended September 30, 2009 and 2008, respectively,
to reflect the decline in value of its investment in WHPacific, Inc. caused by
operating losses in this entity. The fair value was calculated using a present
value of cash flow technique.
Lines of Credit
A summary of lines of credit follows:
A summary of intangible assets follows:
2009
Estimated
amortization
period
2009
2008
Trade names, licenses and franchise
agreements
15 to 20 years
Backlog and customer relationships
3 to 20 years
21,896,002 18,124,426 Noncompete agreements
2 to 4 years
470,000 300,000 23,787,602 18,688,026 5,805,632 9,315,206 $ 17,981,970 $
9,372,820 Less accumulated amortization
3,231,374
Impairment loss
9.
Intangible Assets
$ 16,826,316
$
1,421,600 $
263,600 Authorized line of credit with a bank,
collateralized by accounts receivable, interest at
an indexed rate (4.500% at September 30, 2009),
due December 27, 2009
Authorized line of credit with a bank,
collateralized by marketable securities, interest at
an indexed rate, due September 30, 2011
$
60,000,000 2008
$
65,000,000 $ 125,000,000 20,000,000 — $
20,000,000 47
The amount available to be drawn on the lines of credit collateralized by
marketable securities is reduced by the amount of outstanding irrevocable
letters of credit the Company has provided to third parties. The amount
of outstanding irrevocable letters of credit the Company provided was
$6,954,582 and $7,396,196 as of September 30, 2009 and 2008, respectively.
See further discussion in Note 18.
At September 30, 2008, the line of credit collateralized by accounts receivable
had an authorized limit of $75,000,000. In December 2008, the authorized
limit on the line of credit was increased to $100,000,000. In November 2009,
the Company renewed the line of credit collateralized by accounts receivable,
increased the authorized line commitment to $125,000,000 and extended
the maturity to November 13, 2012; with no other material changes to
underlying terms. At September 30, 2008, the line of credit collateralized by
marketable securities had an authorized limit of $75,000,000. In December
2009, the line of credit collateralized by marketable securities was modified
to increase the authorized limit to $85,000,000, with no material changes to
underlying terms.
The Company must pay a quarterly commitment fee ranging from 0.20% to
0.30% on the average daily unused commitment on both lines of credit.
48
10. Long Term Debt
A summary of long-term debt follows:
2009
Note payable, due December 2019, interest at a fixed rate
(5.76% at September 30, 2009), collateralized by real property
8,985,705 $
9,598,154 Note payable, due December 2019, interest at a fixed rate
5,422,408 5,791,990 Note payable, due December 2019, interest at a fixed rate
3,253,445 3,475,194 Note payable, due June 2018, interest indexed to the U.S.
Treasury rates (6.06% at September 30, 2009), collateralized
by real property
1,304,977 1,412,960 Note payable, due May 2018, interest indexed to the U.S.
by real property
1,168,484 1,268,179 — 200,000 1,079,955 1,312,603 Note payable, due April 2013, interest at a fixed rate (7.25% at
September 30, 2009), collateralized by real property
275,492 339,533 Note payable, due January 2012, interest at a fixed rate (6.25%
at September 30, 2009), collateralized by real property
76,664 76,249 Note payable, due November 2014, non-interest-bearing
Note payable, due October 2013, interest at a fixed rate (7.25%
$
2008
At September 30, 2009, the current ratio requirement on the line-of-credit
collateralized by accounts receivable was 1.15:1. The Company obtained
a modification of this line-of-credit agreement changing the current ratio
requirement such that a minimum current ratio shall be maintained at all
times on or after January 8, 2010. In addition, the Lender has waived any
default or event of default that may arise or has arisen by not maintaining a
current ratio of 1.15:1 prior to January 8, 2010. The current ratio, as defined
in the line of credit agreement, is calculated as current assets less the current
portion of deferred tax assets divided by the sum of current liabilities and
the outstanding portion of the lines of credit.
Note payable, due July 2011, interest at a fixed rate (5.75% at
158,007 237,627 Note payable, due March 2011, non-interest-bearing
333,503 568,916 4,371,000 4,371,000 750,000 750,000 2,444,356 4,523,034 141,120 282,240 Additionally, the business loan agreement for each line of credit contains
restrictive covenants including maintaining a fixed charge ratio of not less than
1.25:1; the Company had a fixed charge ratio of 3.14:1 as of September 30, 2009.
Various notes payable, maturing through April 2011, interest
at rates ranging from 0.90% to 8.50%, collateralized by real
property
24,909 77,656 Note payable, due Janaury 2010, interest indexed to the U.S.
Treasury rate (3.246% at September 30, 2009), collateralized
by real property
9,095,618 — Note payable, due June 2010, interest indexed to the U.S.
by real property
Note payable, due February 2010, interest at a fixed rate
Notes payable, maturing through January 2012, interest at
1.0% below prime rate (2.25% at September 30, 2009)
Note payable, due January 2010, interest at 1.00% above prime
rate (4.25% at September 30, 2009)
11. Lease Commitments
A summary of long-term debt continued:
2009
Note payable, due January 2017, interest indexed to the U.S.
Treasury rate plus 4.00% (8.56% at September 30, 2009),
collateralized by real property
Capital Leases
320,868 $
— Note payable, due December 2013, interest indexed to lender's
index (8.890% at September 30, 2009), collateralized by real
property
703,840 — Note payable, due October 2015, interest indexed to the U.S.
Treasury rates plus 1.50% (4.75% at September 30, 2009),
collateralized by real property
264,729 — Note payable, due December 2014, interest at a fixed rate
236,594 — Note payable, due February 2015, interest at a fixed rate (6.78%,
217,568 — Note payable, due March 2010, interest at a fixed rate (7.75% at
Total long-term debt
Less current installments
Long-term debt, less current installments
$
2008
50,266
—
40,679,508 34,285,335 9,755,727 4,360,487 $ 30,923,781 $ 29,924,848 Several of the Company’s debt agreements contain various covenants and
restrictions, which include maintaining deposits accounts restricted for
repairs and maintenance and debt service coverage ratios. For the year
ended September 30, 2009, the Company was in compliance with all
applicable covenants and restrictions. Scheduled maturities of long-term
debt are as follows:
Amount
Fiscal year ending:
2010
$
9,755,727 2011
2,743,555 2012
2,577,889 2013
2,453,029 2014
Thereafter
2,328,097 20,821,211 $ 40,679,508 Amortization of capital lease equipment, utilizing the straight-line method
over the lease terms, has been included in depreciation and amortization
expense. Cost and accumulated amortization related to leased vehicles and
equipment purchased under capital leases at September 30, 2009 and 2008,
are as follows:
2009
Vehicles and equipment
Less accumulated
amortization
$ 2,916,718 2008
$
(771,567) $ 2,145,151 2,382,272 (728,121) $
1,654,151 Future minimum capital lease payments consist of the following:
Amount
Fiscal year ending:
2010
$
853,046 2011
709,705 2012
299,070 2013
181,711 2014
121,490 Thereafter
67,137 Total minimum lease payments
2,232,159 Less amounts representing interest
(226,097) Present value of net minimum lease payments
2,006,062 Less current portion
(750,435) $
1,255,627 Operating Leases
The Company leases office space and equipment under various operating
lease agreements. Rent expense for operating leases is recorded on a
straight-line basis over the lease term unless the lease contains an escalation
clause which is not fixed and determinable. The lease term begins when
the Company has the right to control the use of the leased property, which
49
is typically before rent payments are due under the terms of the lease. If a
lease has a fixed and determinable escalation clause, the difference between
rent expense and rent paid is recorded as deferred rent and is included in
the consolidated balance sheets. Rent for operating leases that do not have
an escalation clause or where escalation is based on an inflation index is
expensed over the lease term as it is payable.
Total rent payments under operating leases were $14,240,035, $14,855,051,
and $11,960,527 for the years ended September 30, 2009, 2008, and 2007,
respectively. Certain of these leases provide that the Company or subsidiary
pay taxes, maintenance, insurance, and certain other operating expenses
applicable to the leased assets. Additionally, future minimum lease payments
under the terms of the leases are as follows at September 30, 2009:
12. Income Taxes
Total income taxes were allocated as follows:
2009
2010
$
15,953,404
2011
13,050,910 2012
10,978,356 2013
7,186,597 2014
6,582,727 Thereafter
40,628,738 $
94,380,732 The Company, through its subsidiary, has undertaken the construction of a
hotel property in Anchorage, Alaska. A long-term noncancelable lease has
been negotiated to provide the physical site for this property. The leasing
agreement contains free rent periods and contingent escalation clauses,
whereby rents are reset at scheduled dates based on the property’s fair value
on the reset date. Additionally, the agreement requires the Company to pay
all property taxes or to compensate the lessor in the event that the lessor
gains tax-exempt status. Upon the termination of the lease, the Company is
required to transfer title of the hotel, in commercially operable condition, or
demolish the building. Based upon the uncertainty of future market values,
the Company does not have the ability to estimate future rent escalations, as
such minimum rents as stipulated within the leasing documents have been
recorded on a straight-line basis and are included in the above table based
on the amounts stipulated in the lease documents.
50
$ 12,042,891 $
2007
19,394,158 $
30,900,907 Loss from discontinued operations
— (155,075) Shareholders’ equity, for unrealized
holding gains on debt and equity
securities
(1,014,341) (3,479,292)
1,194,973
Shareholders’ equity, for liability for
pension benefits
(1,938,212) (455,543)
(67,297)
Shareholders’ equity, for tax benefit
attributed to ANCSA resources
— $
Amount
Fiscal year ending:
2008
9,090,338 (2,487,157) —
$
15,304,248
(118,401,000)
$
(88,859,574)
Income tax expense attributable to income from continuing operations
consists of:
2009
Current
$
Deferred expense
Tax expense
2008
(75,303)
$
12,118,194
$ 12,042,891
768,654
2007
$
2,751,426
$
30,900,907
18,625,504
$
19,394,158
28,149,481
Tax Rate Reconciliation
Income tax expense attributable to income from continuing operations differed
from the amounts computed by applying the U.S. federal income tax rate of
35% to pretax income from continuing operations as a result of the following:
2009
Computed “expected” income tax expense
$ 14,135,582 2008
2007
$ 21,562,137 $
28,389,726 State tax, net of federal effect
1,737,118 2,436,618 7,003,315 Nondeductible expenses
1,497,851 807,755 377,027 (126,061) (114,310) (130,402) — (1,333,774) (6,766,979) (1,621,750) 716,502 5,220,198 Dividends received exclusion
Change in the beginning-of-the-year
valuation allowance
Change in estimates and other
Total income tax provision
Earnings in LLCs taxable to minority
interest holders
$ 15,622,740 (3,579,849) $ 12,042,891 $ 24,074,928 $
34,092,885 (4,680,770) (3,191,978) $ 19,394,158 $
Deferred Taxes
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at September 30, 2009
and 2008, are presented below.
2009
Accrued liabilities
$
2,530,020
3,991,772
$
6,733,889 —
Pension liability
2,688,833 — Marketable securities
1,146,051 1,422,016 Basis in Red Dog Mine
21,763,247 33,384,747 Net operating loss carryforwards
96,022,886 94,212,508 Other carryforwards
4,637,727 4,551,953 Investments in affiliates
1,482,703
892,230 Other
Total gross deferred tax assets
940,505 635,749 135,203,744 141,833,092 (227,868) (1,242,209) Deferred tax liabilities:
Unrealized holding gains on marketable securities
Property and equipment
(3,989,596) (982,526) Goodwill and intangible assets
(7,439,492) (2,859,951) Other
Total gross deferred tax liabilities
Net deferred tax asset
(6,681)
—
(11,663,637) (5,084,686) $ 123,540,107
• Authority to evaluate the economic development potential of such lands
• Authority to develop such lands if determined to be feasible
2008
Deferred tax assets:
Allowances, compensation, and benefit accruals
• An economic interest in mineral-bearing lands received by the Company
pursuant to the Act
$ 136,748,406 The Company has not recorded a valuation allowance related to their
deferred tax assets as of September 30, 2009 and 2008. Realization of
deferred tax assets is dependent on generating sufficient taxable income
prior to expiration of the loss carryforwards and basis differences. Although
realization is not assured, management believes it is more likely than not that
all of the recorded deferred tax assets will be realized.
13. Resource Development Agreement
In 1982, the Company signed an agreement with Cominco Alaska,
Incorporated (CAI) to develop and operate zinc and lead deposits currently
known as Red Dog Mine. The agreement granted CAI:
In 1988, Teck Cominco Alaska, Incorporated (Teck), CAI’s successor, began
operating Red Dog Mine and is required to pay a guaranteed minimum
advance royalty of $1,000,000 per year for the remaining term of the
agreement, adjusted for inflation, or a 4.5% advance net smelter royalty,
whichever is higher. A net proceeds royalty is payable when Teck fully
recovers certain capital costs, accrued interest, and advance royalties. These
costs were recovered in 2007 and Teck began paying net proceeds revenue.
The amount of the net proceeds royalty starts at 25% of net cash receipts
from the sale of minerals and will increase at five-year intervals by 5%, to
a maximum of 50%. The Company recognized royalties of $43,801,649,
$212,182,444, and $58,134,000 for the years ended September 30, 2009,
2008, and 2007, respectively. When received, royalties described above are
subject to sharing with the other regional Native corporations pursuant to
section 7(i) of ANCSA.
As part of the development and operating agreement, all lands disturbed
as a result of the operations pursuant to the agreement must be reclaimed
in accordance with a reclamation plan prepared by Teck. A reclamation and
post production account has been established on the books of the project.
Accrual into the account will be sufficient to cover all reclamation and post
production costs as estimated by Teck. Teck has posted a performance
bond with the State of Alaska for the unfunded amount of the estimated
reclamation costs. In the event that the accrual account is insufficient to
cover the reclamation costs, Teck and the Company will share any deficiency.
The Company’s portion of the deficiency will be the same percentage as its
net proceeds royalty rate at the time of the deficiency.
14.Defined Benefit Pension Plan
Effective January 1, 1989, the Company adopted a noncontributory defined
benefit pension plan which covers all of its employees, and the employees of
its wholly owned subsidiary, except those who are members of a collective
51
bargaining unit for which retirement benefits have been the subject of good
faith bargaining or in an unrelated line of business. Benefits are based on
the length of service and compensation. The Company’s funding policy is to
contribute annually an amount at least equal to the minimum requirements
of the Employee Retirement Income Security Act of 1974. Contributions are
intended to provide not only for future benefits attributable to service to
date, but also for those expected to be earned in the future.
The following table sets forth the status of the plan at September 30, 2009
and 2008:
2009
Projected benefit obligation at beginning of year
$ 11,123,260 2008
$
11,609,600 Service cost
686,242 642,810 Interest cost
798,136 661,455 3,989,976 (1,589,916) (224,427) (200,689) Actuarial loss (gain)
Benefits paid
Projected benefit obligation at end of year
16,373,187 11,123,260 Fair value of plan assets at beginning of year
8,897,127 10,449,133 (40,094) (1,903,317) 1,200,000 552,000 (224,427) (200,689) 9,832,606 8,897,127 Actual return on plan assets
Employer contribution
Benefits paid
Fair value of plan assets at end of year
Unfunded status
$
(6,540,581) $
(2,226,133) Actuarial gains and losses are generally amortized subject to the corridor,
over the average remaining future service period of active employees
expected to receive benefits under the plan.
The accumulated benefit obligation for the plan was $14,055,931 and
$9,715,021 at September 30, 2009 and 2008, respectively.
At September 30, 2009 and 2008, the Company recognized an accrued
benefit liability of $6,540,581 and $2,226,133, respectively, which is included
in other long-term liabilities. Additionally, unrecognized net loss that has not
52
yet been reflected in net periodic benefit cost amounted to $5,986,505 and
$1,271,807 (both pre-tax) for the years ended September 30, 2009 and 2008,
respectively, and is included in accumulated other comprehensive income
(loss). Upon adoption of Statement 158 in 2007, the Company recorded all
of the unrecognized net loss into accumulated other comprehensive income
(loss) in order to fully recognize the funded status of the plan.
The estimated amortization of unrecognized net loss from accumulated
other comprehensive income (loss) in 2010 is $420,211.
Net periodic benefit cost included the following components for 2009, 2008,
and 2007:
2009
Service cost
$
Interest cost
Expected return on plan assets
Recognized loss
Net periodic benefit cost
686,242 2008
$
642,810 548,944 798,136 661,455 581,732 (699,948) (794,707) (656,428) 15,320 $
2007
$
799,750 — $
509,558 — $
474,248 Weighted average assumptions used to determine benefit obligations at
September 30, 2009 and 2008, were as follows:
2009
2008
Discount rate
5.56%
7.25%
Rate of compensation
increase
4.00
4.00
Weighted average assumptions used to determine net benefit cost for the
years ended September 30, 2009 and 2008, were as follows:
2009
2008
Discount rate
7.25%
5.75%
Expected long-term rate of
return on plan assets
7.50
7.50
Rate of compensation
increase
4.00
4.00
The Company’s overall expected long-term rate of return on assets is 7.50%,
which is based on the historical performance of the portfolio as a whole and
not on the sum of the returns on individual asset categories.
Plan Assets
The weighted average asset allocation of the Company’s pension benefits and
post-retirement benefits at September 30, 2009 and 2008, were as follows:
Pension Benefits
Plan Assets
2009
2008
Asset category:
Cash equivalents
1%
International equities
19
1%
19
Stocks
53
56
Bonds
27
24
100%
100%
Total
The Company’s investment policies and strategies for the pension plan
include target allocations of 15% international equities, 55% stocks, and 30%
bonds. The Company’s investment goals are to meet or exceed the Consumer
Price Index rate by 5% annually.
Cash Flows
15.Defined Contribution Benefit Plans
The Company and certain subsidiaries of NANA Development Corporation
sponsor defined contribution compensation deferral plans (collectively,
the Plans). Substantially all employees who meet the eligibility criteria
may participate in the Plans except for employees covered under certain
collective bargaining agreements and leased employees. Each plan has
defined eligibility criteria which may consist of providing service to the
sponsor of specified length of service of up to three months, and reaching
a specified age of 18 or 19. Depending upon the plan, an employee’s
contribution may be eligible for matching in an amount ranging from 3%
to 20% of eligible compensation, as defined by the Plans. The Company
contributed $10,387,201, $9,691,243, and $7,311,768 to the Plans for the
years ended September 30, 2009, 2008, and 2007, respectively.
16. Accumulated Other Comprehensive (Loss) Income
Accumulated other comprehensive (loss) income consists of the following:
2009
Unrealized gains on securities
Pension liability adjustment
Income taxes on pension liability adjustment
$
The Company expects to contribute $2,400,000 to its pension plan in 2010.
The expected benefits are based on the same assumptions used to measure
the Company’s benefit obligation at September 30, 2009, and include
estimated future employee service and are as follows:
Amount
Fiscal year ending:
Change in unrealized gains (losses)
Reclassification adjustment for realized losses
(gains) included in net income
2011
472,195 Pension liability adjustment
2012
579,616 Income taxes
2013
683,315 2014
761,186 2015 – 2019
$
3,083,665 (1,242,209) (5,986,505) (1,271,808) 2,461,052 522,840 (3,134,618) $
2009
359,990 $
618,703 (227,868) 1,092,488 Changes in accumulated other comprehensive (loss) income follow:
Reclassification adjustment for other-thantemporary impairment of marketable securities
2010
$
Income taxes on unrealized holding gain
2008
2008
$ (2,464,962) $
— (12,266,077) 72,132 — 3,687,295 (4,714,697) (1,108,108) 2,952,553 $ (4,227,106) 3,978,113 $
(5,636,645) 5,509,329 $ 8,365,631 53
17. Fair Value of Financial Instruments
Effective October 1, 2008, the first day of the Company’s fiscal year 2009, the
Company adopted the authoritative guidance for fair value measurements
and the fair value option for financial assets and financial liabilities. The
Company did not record an adjustment to retained earnings as a result of
the adoption of the guidance for fair value measurements, and the adoption
did not have a material effect on the Company’s results of operations. The
guidance for the fair value option for financial assets and financial liabilities
provides companies the irrevocable option to measure many financial assets
and liabilities at fair value with changes in fair value recognized in earnings.
The Company has not elected to measure any financial assets or liabilities at
fair value that were not previously required to be measured at fair value.
The Company measures marketable securities at fair value. Fair value is
an exit price, representing the amount that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants. As such, fair value is a market-based measurement that should
be determined based on assumptions that market participants would use in
pricing an asset or a liability. A three-tier fair value hierarchy is established as
a basis for considering such assumptions and for inputs used in the valuation
methodologies in measuring fair value:
• Level 1—Observable inputs that reflect quoted prices (unadjusted) for
identical assets or liabilities in active markets.
• Level 2—Include other inputs that are directly or indirectly observable in
the marketplace.
• Level 3—Unobservable inputs which are supported by little or no
market activities.
The fair value hierarchy also requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when
measuring fair value.
54
Assets and liabilities measured at fair value on a recurring basis are
summarized below:
September
30, 2009
Cash and cash
equivalents
$
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
71,353,395
$
Significant
Other
Observable
Inputs (Level 2)
71,353,395
$
Significant
Unobservable
Inputs
(Level 3)
—
$
—
Corporate notes
and bonds
2,878,738
—
2,878,738
—
Common stock
17,430,507
17,430,507
—
—
Mutual funds
11,611,765
11,611,765
—
$ 103,274,405
$ 100,395,667
$ 2,878,738
Total marketable
securities
$
—
The following table presents the carrying amounts and estimated fair values
of the Company’s financial instruments at September 30, 2009 and 2008.
2009
Carrying
Amount
2008
Fair Value
Carrying
Amount
Fair Value
36,482,144 $
36,482,144 Financial assets:
Cash and cash
equivalents
$
23,756,340 $
23,756,340 $
Trade accounts
receivable
290,973,868 290,973,868 284,277,216 284,277,216 Investment securities
103,274,405 103,274,405 110,863,583 110,863,583 — — 7,470,307 7,470,307 Derivative instruments
Financial liabilities:
Line of credit
Accounts payable and
accrued expenses
$ 125,000,000 $ 125,000,000 $ 20,000,000 $ 20,000,000 194,214,436 194,214,436
188,701,663 188,701,663 Deferred revenue
19,393,867 19,393,867 15,972,291 15,972,291 Dividends payable
17,660,938 17,660,938 22,584,394 22,584,394 Elders’ Settlement Trust
payable
32,500,000
32,500,000
33,379,000
33,379,000
Resource revenues
distributable to others
36,460,128 36,460,128 133,390,289 133,390,289 Long-term debt,
including capital
leases
42,685,570 44,786,573 35,720,816 35,554,331 Notes to consolidated FINANCIAL statements
The carrying amounts shown in the table are included in the consolidated
balance sheets under the indicated captions.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
• Cash and cash equivalents, trade accounts receivable, unbilled
work-in-progress, investment securities, line of credit, trade accounts
payable, and accrued expenses: The carrying amounts approximate fair
value because of the short maturity of these instruments.
• Common stock and mutual funds: The fair values of securities are based
on quoted market prices at the reporting date for those or similar
investments.
• Corporate notes and bonds: The fair values of securities are based on the
lower of two independent valuations using inputs that are either directly
or indirectly observable in the marketplace.
• Long-term debt: The fair value of the Company’s long-term debt is
estimated by discounting the future cash flows of each instrument at
rates currently offered to the Company for similar debt instruments of
comparable maturities by the Company’s bankers.
18. Commitments and Contingencies
The Company is self-insured insured for healthcare up to $200,000 per
participant and $13.1 million in aggregate. The Company has purchased
stop-loss insurance for amounts in excess of these limits. The Company also
retains the risk for specific workers’ compensation losses up to $500,000.
The Company’s insurance carrier assumes losses incurred above the retained
amounts. The Company has established a liability for workers’ compensation
and healthcare claims incurred but not reported.
In the ordinary course of business, the Company has provided several third
parties irrevocable letters of credit pursuant to the terms of the underlying
agreements. At September 30, 2009 and 2008, these letters of credit were
still outstanding and totaled $6,954,582 and $7,396,196, respectively. If a
draw is requested on a letter of credit, payment would automatically be
advanced from the line of credit collateralized by marketable securities (see
Note 9). As a result, the amount available to be drawn on this line of credit is
reduced by the amount of outstanding letters of credit.
The Company invests in various investment securities. Investment securities
are exposed to various risks such as interest rate, market, and credit risks.
Due to the level of risk associated with certain investment securities, it is at
least reasonably possible that changes in the values of investment securities
will occur in the near term and that such change could materially affect the
amounts reported in the consolidated balance sheet. The Company may
have investments that include securities with contractual cash flows which
may include asset-backed securities, collateralized mortgage obligations
and commercial mortgage-backed securities. The value, liquidity, and related
income of those securities are sensitive to changes in economic conditions,
including real estate value, delinquencies or defaults, or both, and may be
adversely affected by shifts in the market’s perception of the issuers and
changes in interest rates.
The Company, through its subsidiary, provides “managed facility services”
to various government customers. As part of those services, the Company
leases certain premises at the direction of the government customers, and
provides to them under government contract deliverables. Contract lease
terms expire through October 31, 2013. Significant terms and conditions
of the underlying contracts have been passed through to the government
customers. Accordingly, the Company does not have any significant retained
risk. Total lease payments were $2,639,595, $18,308,447, and $20,060,133
for the years ended September 30, 2009, 2008, and 2007, respectively.
Total proceeds from the related government contracts were $4,119,667,
$19,741,322, and $21,504,425 for the years ended September 30, 2009,
2008, and 2007, respectively.
U.S. Government agencies, including the Defense Contract Audit Agency
and various agency Inspectors General, routinely audit and investigate
government contractors. These agencies review a contractor’s performance
under its contracts, cost structure and compliance with applicable laws,
regulations, and standards. The U.S. Government also reviews the adequacy
of, and a contractor’s compliance with, its internal control systems and
policies, including the contractor’s management, purchasing, property,
estimating, compensation, accounting, and information systems. Any costs
found to be misclassified may be subject to repayment and could result
in a reduction to recorded revenue. If an audit or investigation uncovers
55
improper or illegal activities, we may be subject to civil or criminal penalties
and administrative sanctions, including termination of contracts, forfeiture
of profits, suspension of payments, fines, and suspension or prohibition from
doing business with the U.S. Government. In addition, we could suffer serious
reputational harm if allegations of impropriety were made against us.
The Company may be involved in other legal actions, contract disputes,
regulatory issues, and employment matters incidental to its operations. In
the opinion of management, the ultimate liability, if any, of such actions will
not materially affect the Company’s financial position, results of operation,
or liquidity.
Other commitments and contingencies are disclosed in the notes to the
financial statements as follows: Lines of Credit (Note 9); Long-Term Debt
(Note 10), Leases (Note 11); Taxes (Note 12); Defined Benefit Pension Plan
(Note 13); and Defined Contribution Benefit Plans (Note 15).
19. Related-Party Transactions
During the course of normal business operations, the Company is involved in
certain related-party transactions. These transactions include the purchase
and sales of goods and services, the allocation of management expenses, as
well as intercompany financing and leasing transactions. All intercompany
transactions with consolidated entities have been eliminated.
For the years ended September 30, 2009, 2008, and 2007, the Company
recorded the following related-party revenues and expenses relating to
transactions with unconsolidated affiliates and noncontrolling interest partners:
2009
Revenues from related parties
Expenses paid to related parties
56
$
3,379,702
18,955,344 2008
$
653,850 21,298,456 2007
$
155,437 9,048,563 As of September 30, 2009, 2008, and 2007, the Company had recorded
the following receivables and payables related to transactions with
unconsolidated affiliates and noncontrolling interest partners:
2009
Receivables from related parties
$
Payables to related parties
1,956,425 281,186 2008
$
1,136,936 945,655
20.Discontinued Operations
As of June 2007, Qivliq LLC, a wholly owned subsidiary of NDC, elected to
discontinue operations of Lynxnet and Cazador Apparel LLC (Cazador). In
July 2007, Lynxnet executed a mutual release from its sole contract, which
resulted in its discontinued operations. On July 1, 2007, Cazador entered
into a partnering agreement whereby significant operations and personnel
were transferred to the partner company, which began the formal process
of discontinuing its plant operations in Puerto Rico. In February 2008,
Qivliq LLC finalized an asset purchase agreement with the aforementioned
partner for $170,000. Lynxnet reported a gain from operations of $375
and losses of $1,195,286, net of tax, as of September 30, 2008 and 2007,
respectively. Cazador reported a loss from operations of $225,952 and
$2,504,514, net of tax, as of September 30, 2008 and 2007, respectively.
21. Subsequent Events
UMED Hotel, LLC Note Refinance
On December 14, 2009, the Company executed a 20-year promissory note
in the amount of $14,000,000 that is secured by real estate. This note
has been entered into as a refinancing of debt incurred to construct the
SpringHill Suites Anchorage University Lake hotel. Variable interest charges
on $1,400,000 of this note are incurred based on the Inter-Bank Market
Offered Rate, 3.234% as of December 14, 2009, and reset on a monthly
basis. Fixed interest charges are incurred on the remaining $12,600,000 at
a rate of 6.52%.
BOARD
OF DIRECTORS
Pictured From Left to Right: Donald Sheldon, Chairman, Noorvik; Joseph Luther, Noatak; Tony Jones, Jr., Buckland; Dood Lincoln, Kotzebue;
Eugene Douglas, Shungnak; Gladys Jones, Ambler; Diana Ramoth, Selawik; Charlie Curtis, Kiana; Linda Lee, Secretary, Shungnak; Roland Booth, Sr.,
Noatak; Ron Moto, Deering; Harvey Vestal, At Large; Allen Ticket, Sr., Selawik; Millie Hawley, Kivalina; Henry Horner, Sr., Kobuk; Nellie Sheldon, Ambler;
Emerson Moto, Deering; Mary Sage, Treasurer, Kivalina; Levi Cleveland, Elder Advisor; Pearl Gomez, Kobuk; Lester Hadley, Sr., Buckland; Luke Sampson,
At Large; Robert “Dad-Dad” Sampson, Noorvik; and Janice Westlake-Reich, Kiana.
57
NANA
REGIONAL CORPORATION, INC.
P.O. Box 49
Kotzebue, Alaska 99752
TEL 907.442.3301
FAX 907.442.2866
www.nana.com

2009 annual report - NANA Development Corporation

Transcription

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