Bristol Bay Native Corporation Annual Report Two

Transcription

A
RISING
TIDE
Bristol Bay Native Corporation
Annual Report
Two-Thousand and Fifteen
FY TWOTHOUSAND
AND
FIFTEEN
AT A GLANCE
"Corporate Marketer of the Year"
BBNC RECEIVED THE AMERICAN MARKETING ASSOCIATION’S ALASKA CHAPTER’S
“CORPORATE MARKETER OF THE YEAR” PRISM AWARD FOR THE 3RD YEAR IN A ROW
Over $160
million
Ranked
DIVIDENDS DISTRIBUTED BY BBNC TO SHAREHOLDERS
SINCE INCEPTION
BY ALASKA BUSINESS
MONTHLY ON THEIR
TOP 49ER LIST
#2
BBDF
ADESCO, LLC
CREATION OF BRISTOL BAY
DEVELOPMENT FUND
BRISTOL BAY DEVELOPMENT FUND'S FIRST
INVESTMENT IN A BRISTOL BAY-BASED BUSINESS
3 Years
Get Out the Native
Vote Effort
BBNC SUBSIDIARY KAKIVIK
COMPLETED 3-YEARS OF
BEING INCIDENT FREE
EVERY BRISTOL BAY VILLAGE HAD AN INCREASE IN
VOTER TURNOUT AT THE GENERAL ELECTION—WITH
IGIUGIG HAVING NEARLY 100% VOTER TURNOUT
Scholarships
Awarded by
the Education
Foundation
157
HIGHER EDUCATION/
VOCATIONAL EDUCATION
SCHOLARSHIPS,
TOTALING $468,000
72
SHORT-TERM
VOCATIONAL EDUCATION
SCHOLARSHIPS,
TOTALING $34,207
229
total
TOTALING
$502,607
3
BBNC Annual Report Two-Thousand and Fifteen | A Rising Tide
Often attributed to President John F. Kennedy, the saying implies that
There’s
an old
saying—
“A rising
tide lifts
all boats.”
improvements within a community are a benefit to everyone who is part of that
community. As we began to reflect back on FY15, this adage came to mind quite
often. It seemed to embody Bristol Bay Native Corporation’s commitment to the
economic and cultural wellbeing of every shareholder, and it reflects the truism
that if we provide new opportunities here at home and throughout the BBNC
family of companies, each of us is stronger.
This has been a guiding principle for us over the past year. One of the ways we help
strengthen the Bristol Bay community is through unique partnerships—both those that
BBNC creates with individuals and other organizations, and those we make possible
through initiatives like our shareholder development efforts and partnering with programs
like Get Out the Native Vote. Partnerships took center stage this year as part of our effort to
“lift every boat,” and this year’s annual report is a celebration of the cooperation, ingenuity,
and successes those partnerships bring about.
Some of this year’s standout partnerships have been with Bristol Bay village corporations.
BBNC has been navigating the world of government contracting since the 1990s, and in
those years we’ve learned a thing or two. First and foremost, it’s a complicated landscape.
Smaller companies, who often lack the staffing, resources, patience, and proper context,
can run into challenges when trying to procure these contracts. This causes some to lose
now houses three of our own subsidiaries—CCI Industrial Services,
in building capacity for smaller businesses, while providing benefits
hope quickly. That’s why BBNC partners with village corporations—through agreements
Kakivik Asset Management, and Peak Oilfield Service Company.
to our subsidiaries, as well. Finally, we’ll take a deeper look at our
and joint ventures, or by simply serving as a mentor and resource—to help guide them
These real estate partnerships help guarantee success by providing
partnerships in the state capitol and get you up to speed on our
through what can be an intense process. This gives smaller businesses, especially those
our subsidiaries and other Native corporations the space they need to
efforts to Get Out the Native Vote in the last election cycle.
village corporations that have just received 8(a) certification, a real shot at landing these
conduct necessary business in the heart of Anchorage.
coveted government contracts. Keep in mind, this is work some of these businesses may not
Looking ahead at FY16, we’re in a fantastic position to focus on
In the pages that follow, you’ll read even more about partnership
new acquisition opportunities. We’ll be looking closely at oil and
as a means to lift us all. You’ll get a glimpse into the Bristol Bay
gas companies; leveraging our foothold there and thinking more
Development Fund, the first—and to date, only—Alaska Native
strategically about partnerships, growth, and the Alaskan economy.
Another exceptional partnership from FY15 is the relationship BBNC has formed with
owned private equity fund. We’ll cover the unique role BBDF fulfills
It’s part of our larger commitment to invest in the region. We have
the administration of Governor Walker, which gives us a much stronger voice in Juneau.
in the region and introduce you to the Fund’s first investment. We’ll
high hopes that FY16 will be productive when it comes to new
The partnership gained momentum after last year’s election, when two members of our
also take you behind the scenes of some of our recent shareholder
business investments in the region. And, as always, we’ll continue to
senior leadership and a member of our board were invited to join Walker’s transition team.
development efforts and introduce you to a handful of shareholders
connect with our shareholders and look for new ways to strengthen
Since then, we’ve spent time in the state capitol helping both the Governor and the state
who have benefitted from the strides we’re making to help
shareholder development efforts.
legislature better understand what the Bristol Bay region is all about and what’s most
shareholders, descendants, and spouses achieve their career goals.
important to our shareholders and region. And, like any partnership, it’s been a two-way
You’ll learn about an exciting and unique collaboration between our
street. We’ve gained a much clearer understanding of policy and the political process, and
subsidiary MedPro and Three Star Enterprises, a Bristol Bay village
have learned about the governor’s priorities statewide. We’ll continue to make sure BBNC
corporation subsidiary. This partnership is a real-world example of
has a seat at the table when it comes to important and sometimes difficult decisions the
how partnerships with village corporations can make a difference
have otherwise been able to get. And once our village corporations do land these contracts,
BBNC stands beside them to make sure they perform and have what they need to succeed.
Walker administration will make about the future of Alaska. We’ll continue to press for
diversification in the state economy so all of Alaska can remain vital. An exciting side note
about our relationship with Governor Walker: in his first State of the State speech, the
governor borrowed our “Fish First” approach as an illustration of how he intends to run
things throughout Alaska.
Of course partnership comes in many forms. An example: over the last year, BBNC has
Joseph L. Chythlook
Chairman of the Board
increased our investments in commercial real estate holdings. And how does this relate to
partnership? BBNC is developing and redeveloping commercial real estate in the Anchorage
market that we can then make available to our subsidiaries and even to other Native
corporations and their subsidiaries. BBNC is a minority owner of a midtown building that
Jason Metrokin
President & Chief Executive Officer
Until then, thank you for your ongoing support. We look forward to
hearing from you and seeing you out in our communities.
In partnership,
Inspiration
Innovation
Investment
A
BBDF's Inaugural Investment
t BBNC, we know that our strength as a leader depends
on our capacity to be an outstanding partner. And
being a partner requires trust, bold commitment, and
BBDF made its inaugural investment in ADESCO, LLC, a limited liability corporation founded by
sustained investment—qualities that define the Bristol
Randy Zimin of South Naknek, Alaska. Formed in 2005, ADESCO’s original line of business has been
Bay Development Fund (BBDF) to a T. Though we launched BBDF
general contracting, and has recently expanded its marine transportation business line to include
less than a year ago, its benefits are already tangible in the region.
fish tendering services and cargo transport to local communities outside of the commercial fishing
And as the fund continues to support more regional businesses,
season—a service that brings welcome cost-savings for residents. With the addition of its fourth
its potential for greater positive effect grows.
Inspiration
Innovation
Investment
vessel, the Miss Rebecca, and a staff that now reaches nine during the summer months, the positive
impact of BBDF’s investment in ADESCO is already evident.
Our commitment to our shareholders is what inspires us to innovate on
every level. That commitment also motivated us to launch the Bristol Bay
Development Fund in October 2014. The initiative is a first for BBNC:
Although we’ve provided other forms of support to shareholders for many
years, as fund manager Cameron Poindexter explains, “Entrepreneurs
haven’t had the opportunity to partner with BBNC individually in the
way that BBDF is now offering.”
As one of our proudest innovations, BBDF is a first of even broader
significance: It’s the first program of its kind—not just in Alaska, but
throughout Indian Country as a whole. As the only Native Corporation to
create a “nurture capital” fund for the region, BBNC can be a model for other
Native corporations that want to spur sustainable economic
growth in their communities.
During its first four years,
BBDF plans to inject $5 million
into the Bristol Bay economy.
work of BBDF—principles that work to
work, providing them with potential sales
liquidated, or monetized. By then, it’s
counteract systemic obstacles to economic
platforms they can research as they seek
likely the Fund will have invested in the
success in our region.
to expand their markets. And Poindexter
energy, transportation, and other sectors—
emphasizes that “While BBDF may not be
areas where the cost lowering benefits
able to fund every opportunity that comes
to shareholders are direct and dramatic.
knocking, we are able to provide assistance
What does the future look like for the
through connections and planning.”
Fund? According to Poindexter, “More
Historically, companies from outside
Bristol Bay have provided services like
construction, accounting, maintenance,
and more. This reality is less than ideal: Not
BBDF’s Facebook page shows a
cases, but the money locals spend on them
steady stream of links, resources and
drains resources from the region. But when
opportunities to connect with Poindexter
local entrepreneurs find the backing they
and learn more about the Fund. And, to
need to offer these vital services, money
reach even more people, we’ve built an
BBNC’s corporate return on investment
remains in Bristol Bay. And the funds that
app for iPhone and Android, available in
is important because it allows us to
circulate in the region produce a multiplier
the Apple Store and Google Play Store. As
share vital financial resources with our
effect, raising both spending and income
Poindexter said, “We have moved to a very
shareholders. But that’s only part of our
in the region. With ADESCO as a case in
mobile world. Access to mobile technology
investment practice. There’s no stronger
point, BBDF aims to keep jobs, services and
is very present in Bristol Bay as well.”
expression of our blended approach to
dollars in Bristol Bay—and strengthen the
Through the app, entrepreneurial-minded
investment than BBDF: Through the
region’s economy.
shareholders can contact Poindexter
Fund, we back the entrepreneurial dreams
directly and access resources that can help
of our shareholders, triggering a host of
answer questions about starting a business.
benefits throughout our region. When we
It’s challenging to start a business. Managing an existing business through
Since taking the helm of BBDF late last
a period of growth can be just as difficult—especially in rural Alaska, where a
year, Poindexter has been traveling
financial supply gap makes needed capital scarce. Yet so many shareholders
through the region, networking with
A BBNC shareholder, Poindexter combines
have great ideas and promising companies that could have a positive impact
organizations like the Small Business
a background in business with deep
on life in Bristol Bay. With BBDF, start-ups and companies throughout the
Development Center, University of Alaska
knowledge of life in Bristol Bay. He’s a
region can find the partner they need to transform their business hopes and
Center for Economic Development, Bristol
former banker and commercial lender in
dreams into long-term successes.
Bay Economic Development Corporation,
rural Alaska, and brings approachability
and the Bristol Bay Native Association
and business acumen to his role at BBDF.
among many others.
Poindexter is there to provide support,
During its first four years, BBDF will inject $5 million into the Bristol Bay
economy through $20,000 - $500,000 investments in small businesses that
Just as important, Poindexter has also been
and wellness are among the Fund’s targeted pillars, but BBNC knows that
speaking directly with shareholders about
our shareholder community is brimming with business potential across a
their needs, questions and entrepreneurial
broad spectrum of areas—so all ideas are welcome.
ideas. He’s reached out in areas where
This is just the beginning of BBDF. After
infrastructure projects could spur
four years of investments in Bristol
entrepreneurial activity. He’s spoken with
Bay, we’ll begin a seven-year period
artists who are interested in selling their
during which those initial amounts are
shareholders advance their careers mirrors the principles that drive the
opportunities for shareholders, and more
access to abundant goods and services at
better prices.”
invest directly in the economy, education
and sustainability of our communities,
we experience a cultural return on
investment that is every bit as crucial as
the profit margins of our businesses.
coaching and advice to any shareholder
benefit the region. Fisheries, transportation, energy, agriculture, technology
Zimin’s commitment to keep money in the regional economy and help
economic activity, more employment
only do these services cost more in many
who asks—whether a full-fledged business
owner or an individual with a great idea.
Get the BBDF
Mobile App
Give your start-up business ideas a
lift with resources, tips, and expertise
from the Apple Store or Google Play.
6
SHAREHOLDER
DEVELOPMENT
A PARTNERSHIP
THAT WORKS
Shareholder
Wages
Nondalton Firefighter Crew
Shareholder wages soared from
just over $4.4 million in 2011
to more than $12.4 million this
year—an increase of about 180%.
We’ve also added to our ranks
of shareholder hires. In FY15, we
averaged 159 shareholder hires
throughout the company and
our subsidiaries.
training, and employment, we also want to make sure our working
2011
$4.4 M
2015
$12.4 M
While the focus of our work is to help shareholders attain education,
shareholders have everything they need to succeed. So when the
Nondalton firefighting crew needed new gear for the 2015 summer fire
season, we didn’t hesitate to help. We provided new tents, boots, socks,
Roger Fischer
Roger Fischer, BBNC shareholder
and CCI Alliance employee:
of which
SHAREHOLDER HIRES
HAVE INCREASED FROM
and bandanas for a group of 25 firefighters. “A lot of the first time
firefighters would be unable to go if they didn’t have this gear,” said
firefighter Curtis Joseph. “This gear is vital and we appreciate BBNC
for helping out.”
"When first working with BBNC’s
shareholder development
program, I assumed that getting
a job was the end point. But
BBNC fosters interests that
include continuing education,
professional opportunities, and
real career goals. To say that
I am hugely impressed with
BBNC is an understatement. The
internship I have now with CCI
Alliance has already changed my
life, and is beyond what I ever
thought possible for my career."
Shareholder Advancement
O
7
7
ARE EXECUTIVES
Photo: The Nondalton firefighting crew in Anderson, AK
RoxAnn Roque
RoxAnn Roque started working as an intern at CCI Solutions in June
2014, as a summer Project Manager Shareholder Intern at CCI’s Fort
Wainwright, Alaska location. She was offered a full-time permanent
position with CCI in January of 2015 as Assistant Project Manager.
“It’s important to note how comfortable and inspired I feel coming to
work every day. One of my fears prior to interning was that my work
would not be relatable to my field, but I was elated to get hands-on
engineering experience. I feel like an equal; what I am doing is valued
and my coworkers are just as passionate as I am about working for CCI.”
ne of BBNC’s leading strategic
Ours is a highly personal approach. We
In the past year, we’ve focused our efforts in
goals is to help shareholders
partner with you to create a customized
the region. Bristol Bay is where our people
as well as descendants
plan based on where you want to go in your
come from; it’s part of our collective culture
and spouses attain career
career. We can help place shareholders in
and tradition. And it’s still where a large
opportunities. Through education, training,
internship programs, enroll in school or
percentage of our shareholders reside.
resources and counseling, we strive to put
training programs, and secure financial
Yet the vast majority of employment and
every shareholder on a career path that best
aid. We offer career counseling to help you
internship opportunities are out of region.
fulfills their interests and matches their
narrow your choices and hone in on the
By creating opportunities for people to
unique skill sets. Whether you live in the
best possible job for you, whether it’s with
make a living in Bristol Bay, we’ll ensure our
Bristol Bay region, elsewhere in Alaska, or
BBNC, one of our subsidiaries, or even
region thrives economically and that our
This year, we launched a number of new programs to bolster our shareholder development efforts. A new
somewhere in the Lower-48, we’re here to
with companies not affiliated with us. What
traditions and way of life are preserved.
Shareholder Employment Support Program helps shareholders identify training opportunities, sharpen
make sure you know what opportunities are
matters most is your aspiration—that you’re
resume skills, and seek out employment opportunities that meet their interests and career goals. We also
available and how to attain them.
engaged in meaningful work and earning
teamed up with the Bristol Bay Native Association to match 20 youth from the Bristol Bay region with
the best living possible.
61 IN FY11 TO 169
AT THE END OF FY15
11
ARE MANAGERS
Our Latest Efforts
Photo: The SCA Alaska High School Crew at
Lake Clark National Park.
employment opportunities. And we partnered with GCI to sponsor a Student Conservation Association
Crew at Lake Clark National Park, which will help develop the next generation of conservation leaders.
8
9
Partnerships
for Rural Alaska
When
members
community
of
come
a
to find answers to shared
problems,
happen.
good
Since
things
the
mid-
community development has
around the globe, leveraging
shared
investment
to
overcome disadvantage and
with its clients to build a solid
foundation of financial know-how
and skill in each individual.
CFI also partners with Alaska
C DFIs
20th century, the concept of
made a positive difference
small business loans, CFI partners
70
together
Housing Finance Corporation,
serve communities
in Indian Country
nationwide
allow shareholder individuals and
families to become homeowners. As
CEO Cindy Mittelstadt explained,
when borrowers repay their loans,
build stronger communities.
community
benefits
multiply.
One key community development tool is the
“Over time, CFI can re-lend to assist another family
community
institution
purchase a home. Or assist another entrepreneur. It is
(CDFI), a non-governmental entity that provides
development
financial
important for borrowers to know that they are part of
lending services to underbanked communities.
something greater in their community.”
Community Financial, Inc. (CFI) is Southwest
Alaska’s own CDFI, formed in partnership with the
Aleutian region, Bristol Bay Native Association,
Bristol Bay Economic Development Corporation,
and Bristol Bay Housing Authority. CFI delivers loans
and financial support to communities throughout
the region—Native and non-Native alike. All CDFIs
are certified by the United States Treasury, which
allows organizations like CFI access to treasury funds
and technical assistance—and requires adherence to
stringent lending standards.
The
backstory
of
CFI
reveals
yet
another,
groundbreaking partnership—our alliance with the
Aleut Corporation. CFI began in 2007 as Aleutian
Financial, Inc. Seven years later, after much
consideration and dialogue, the Aleut Corporation
joined with BBNC in a move that would expand the
CDFI’s footprint—and increase its positive impact in
the region. Not only is this a historical first, but the
alliance is also an expression of the strong affinity
between our two Native regions: “Our cultures for
both regions are inherently giving, helpful, and
Of the nearly 1,000 CDFIs across the country,
caring,” said Thomas Mack, president of the Aleut
approximately 70 bring a blend of financial expertise
Corporation. “The Aleut Corporation and BBNC
and knowledge of Native culture to communities in
have many similarities, as our regions rely heavily
Indian Country. In rural Alaska, homeownership and
on the fishing industry in the State of Alaska. Our
entrepreneurial activity are two pivotal elements of
constituents know the dynamics of living off the
community development. As such, these are CFI’s
lands and caring for one another for the betterment
main priorities. But funding is only the beginning of
of everyone. When we work together, we all succeed.”
CFI’s mission. Along with providing mortgages and
Photo: The Wayner family
which funds the mortgages that
10
p e r r y v i l l e ,
a k
b r i s t o l
b a y
r e g i o n
of a
joint venture
11
Our outreach efforts led to a match between two companies that
shared our vision: MedPro Technologies, LLC, an 8(a) certified
S
government services provider and wholly-owned subsidiary
trengthening regional partnerships is in the air
of BBNC; and Three Star Enterprises, LLC, an 8(a) certified
throughout Alaska. For our part, BBNC’s Board of
management and training consulting company and wholly owned
Directors passed a resolution in 2014 that called
subsidiary of Oceanside Village Corporation that was created to drive
for expanded investments in the Bristol Bay
the economic self-sufficiency of Perryville, AK. The 8(a) joint venture
region. One area of focus: the complex, highly competitive
between these two companies was approved by the Small Business
and regulated arena of the Small Business Administration
Administration (SBA) in October 2014.
8(a) Business Development Program (8(a) program), where
success depends on expertise, knowledge, performance,
and patience.
For both companies, the goals of the joint venture go beyond the
financial. As Anthony Caole, CEO of Three Star, explained, “Although
we have economic goals, we’re also able to achieve our social
mission.” Increasing sustainability in the village, working with tribes
to strengthen their capacities, encouraging cultural development
and language preservation—all these values underlie Three Star’s
MedPro has a proven track record in government contracting, and
drive to excel. And as a joint venture, the organization can more
Three Star has been interested in breaking further into the federal
easily advance these goals.
market. By coming together in a joint venture, their opportunities
With an abundance of village corporations within Bristol Bay who
to pursue both directed and competitive awards from federal
desire to enter into the government contracting arena, BBNC
agencies have multiplied. Each partner can expand its competencies
developed a government contracting initiative that provides training,
because of the specialties and capacity of the other; and because
guidance and mentorship to village corporations. We looked for
their backgrounds complement one another. For example, through
synergies and the combined capacity of separate companies whose
MedPro, Three Star has acquired new technologies that streamline
strengths and competencies complemented one another. Together,
the process of “onboarding,” or bringing on project staff for
two entities could be greater than the sum of their parts.
contracts—a difficult feat, especially on the tight timetables often
required by federal agencies.
When two companies come together in a joint venture, the new
entity can tap into new sources of revenue. As that revenue flows,
shareholders of both parties benefit from those profits. The
momentum of this joint venture inspires us deeply. We’re proud to
see MedPro and Three Star pursuing—and attaining—new business
with such success, less than a year after joining forces. And we’re
proud that, as a result, shareholders of both BBNC and Oceanside
Village Corporation can look ahead not only to greater dividends—
but also to a host of benefits within their communities.
A Closer Look
MEDPRO TECHNOLOGIES, LLC Led by General Manager Craig
THREE STAR ENTERPRISES, LLC Three Star Enterprises was founded
US GOVERNMENT CONTRACTING IN OUR REGION The United
Martin, MedPro provides integrated services to the United States
in 2003. CEO Anthony Caole, who has been with the company for
States government issues contracts for projects across all sectors:
Department of Defense and other federal government agencies, as
nearly a decade, leads their staff of nine. The SBA 8(a) certified
military, civil, medical, tribal. But when the federal government seeks
well as state and local governments and commercial clients. Powered
Alaska Native corporation specializes in virtual and remote workforce
to award work in our region, many contracts are awarded to companies
by a core staff of six in San Antonio, Texas, with 140 employees across
management and distance delivery management training, along with
far from Alaska. Often, those consultants arrive on the job without
the globe, MedPro’s services are twofold, supplying the government
training and technical assistance for state and federal agencies. By
the knowledge they need to succeed. “They get off the plane in a
with healthcare providers in military treatment facilities as well as the
rigorously exploring emerging technologies, Three Star envisions a
village,” said Caole, “and are overwhelmed.” It’s easy to see how a
information technology services used to manage patient information
world in which geographic constraints to employment are no longer
company like Three Star could be far more effective: “We have people
within those facilities. MedPro’s expertise in the intricacies of
an obstacle for rural workers.
with decades of experience, we speak the language, we know the
government contracting runs deep.
communities.” The joint venture will allow Three Star to compete for
these contracts for the first time.
13
PART OF
A NEW START
BBNC Representatives on Governor Walker’s Transition Team
When Governor
Bill Walker took office
last year, he both
took on challenges
and welcomed
opportunities that
every newly elected
leader faces. To
chart a path forward,
Gov. Walker needed
the support of a
strong and dynamic
transition team.
B
BNC is proud to have had representatives serve as part of Governor
Walker's team, one that also includes members from other Bristol
Bay entities. The transition team was unique in that it reflected the
diversity of the citizens of our great state. Governor Walker actively
Our shareholders are spread far and wide across the Bristol Bay
showing up at the polls on Election Day just isn’t feasible for some.
region and the state. Considering how distant many rural communities
So early voting is an essential tool because it allows shareholders
are from the seat of government, advocacy is one of our most vital
a two-week window to cast their votes. Throughout rural Alaska,
responsibilities. BBNC’s involvement in Get Out the Native Vote
however, early voting sites have been closed. In response, GOTNV
(GOTNV) shows how our commitment—brought to life in the work of
launched an aggressive, two-week calling campaign last fall, personally
groups and individuals—makes a difference in how well-represented
contacting every single village in Bristol Bay, along with villages across
our shareholders are at the state capitol.
the state. The result? Over 100 additional early voting sites were
There’s no location in the nation where voting isn’t important. In big
added statewide. In fact, the village of Igiugig reached nearly 100
percent voter turnout.
sought the involvement of Native organizations from throughout the state. It’s
cities, small towns, and rural areas alike, too many citizens’ voices
exciting and powerful that the administration recognizes the singular value of our
are missed—or woefully silent—when Election Day rolls around. And
In many areas of the state, Yup’ik is still the first language; in Bristol
combined voices and, importantly, is listening to the concerns of rural Alaska.
voting is on a downward trend: according to the Bipartisan Policy
Bay alone, there are several villages that use Yup’ik as the primary
Center, national voter turnout dropped from 62.3 percent in 2008
language of business. Through GOTNV’s efforts, younger voters
to an estimated 57.5 in 2012. But two defining characteristics of
have been invigorated. In turn, these younger voters play a vital role
our region make voter turnout an even trickier challenge for Bristol
in convincing other members of their community that their voices
Bay. Through GOTNV, BBNC has leveraged both creativity and
are important—that their votes will make a difference. And through
determination to address these key issues.
GOTNV, BBNC continues to help push for the translation efforts that
The people of Bristol Bay come from millennia of subsistence economics,
relying on land and water for our livelihoods. Yet we also live in the reality of a
dynamic 21st century economy, one subject to the ebbs and flows of an often
unpredictable market. Members of the governor’s transition team are joining
forces—engaging in conversations and developing proposals that will lead to
creative approaches to our state’s economic booms and busts. Ultimately, this
Autumn is election season. In Bristol Bay, it’s also hunting season. For
will ensure that Bristol Bay remains economically sound.
shareholders who are off hunting and gathering before winter comes,
will make voting more accessible for the Native language speakers
among our shareholder community.
The dialogue that takes place around the table of the governor’s transition team
affects us all. Sharing our conversations at the state capitol with our shareholder
community is crucial. We want to make sure you have every possible advantage at
the state level and to know that your voices are being heard.
For more information about GOTNV, visit AKNATIVEVOTE.COM.
15
BBNC Annual Report Two-Thousand and Fifteen | Management's Discussion and Analysis
FINANCIALS
FISCAL
YEAR 2015
MANAGEMENT’S
DISCUSSION AND ANALYSIS
Management’s Discussion and Analysis (MD&A) is intended to provide
readers of the financial statements with a narrative of the company’s financial
condition as seen through the eyes of management. The MD&A should be read
together with the Consolidated Financial Statements and accompanying Notes
included in this Annual Report. Within the MD&A, we make certain statements
that are forward-looking in nature. In making these statements we use current
information and our expectations of future events. These are subject to
assumptions, risks and uncertainties that could change at any time and could
cause actual results to differ materially from those expressed or implied by such
statements, and these should be considered with the understanding of their
inherent uncertainty. Forward-looking statements included in the MD&A are
made only as of the date of this MD&A, and we assume no obligation to update
any written or oral forward-looking statements made by us or on our behalf as
a result of new information, future events or other factors.
CORPORATE PROFILE
FISCAL YEAR
2015
BBNC revenues
BBNC earnings before interest,
84,220,000
70,819,000
$
44,891,000
49,150,000
41,318,000
$
89,618,000
120,534,000
30,489,000
Regular dividends paid
$
16,204,000
14,583,000
13,502,000
Regular dividends per share
$
30
27
25
540,100
540,100
540,100
11,109,000
398,000
381,000
159
139
90
and noncontrolling interests
Cash provided by operating
activities
Regular shares outstanding
Elder dividends paid and elders
settlement trust funding
15
MANAGEMENT DISCUSSION
AND ANALYSIS
44
AUDIT COMMITTEE REPORT
24
TEN YEAR FINANCIAL
SUMMARY
45
STATEMENT
OF MANAGEMENT
RESPONSIBILITY
25
INDEPENDENT
AUDITORS’ REPORT
46
BOARD OF DIRECTORS
AND SENIOR
MANAGEMENT TEAM
26
CONSOLIDATED
FINANCIAL STATEMENTS
48
ABOUT BBNC
$ 1,736,084,000 1,835,894,000 1,961,780,000
76,227,000
BBNC earnings after interest, taxes,
table of contents
2013
$
taxes, and noncontrolling interests
Photo: Casey Coupchiak
2014
Average shareholder hire
$
Bristol Bay Native Corporation (BBNC or the Corporation) is an Alaska Native
Regional Corporation created pursuant to the Alaska Native Claims Settlement
Act of 1971 (ANCSA). Congress enacted ANCSA to resolve longstanding conflicts
surrounding aboriginal land claims in Alaska and to stimulate economic
development throughout Alaska. The Corporation was incorporated as a forprofit corporation to benefit Alaska Natives with ties to the Bristol Bay region
and at March 31, 2015, the Corporation had 9,942 shareholders. ANCSA provided
the Corporation with a monetary entitlement from the federal government of
$32.7 million and the right to 3,079,553 acres of federal lands. At March 31, 2015,
stockholder’s equity retained by the Corporation has grown to $348.5 million,
and cash distributions to shareholders have exceeded $164.4 million.
16
BBNC is primarily a holding company and, as such, derives substantially all of
its cash flow from its subsidiaries and its portfolio of passive investments which
are the Corporation's primary two asset allocations. We rely on profits from
both to repay our creditors, to fund shareholder dividends, to fund shareholder
education opportunities and to fund corporate general and administrative
costs. BBNC’s ability to service each of these cash uses and to simultaneously
grow the Corporation’s assets is subject to the profitability of our subsidiary
businesses and the portfolio.
Management expects profits from the Petroleum Distribution business line in
FY2016 to be somewhat lower than in FY2015 but still above historical levels
of profitability. Some portion of the earnings from this business line may be
reinvested in the form of acquisitions in FY2016 and beyond. Management
intends to be very selective in evaluating potential acquisition targets and
intends to make acquisitions only where the acquisition is accretive to the
business line’s profitability and where above average returns can be earned
on our capital.
Fiscal Year 2015 (FY2015) was the fourth year of BBNC’s current, five-year
strategic plan. The plan and the Corporation’s efforts focus on the pursuit of the
following five strategic goals:
The largest subsidiary in the Oilfield and Industrial Services business line is
Peak Oilfield Service Company, LLC (Peak). FY2015 was BBNC’s first full year of
ownership of Peak. Peak and the other subsidiaries in this business line conduct
substantially all of their operations within the State of Alaska. Uncertainty in the
Alaska oil and gas industry driven by the precipitous drop in oil prices during
FY2015 will negatively affect earnings of our companies in this business line in
the coming year. To what extent we will see decreased revenues and margins
remains to be seen. However, risks have been somewhat mitigated by the strong
positioning of our subsidiaries within the industry. Our companies are some
of the safest and most efficient contractors working in Alaska providing many
services that are essential to our customers. Our large fleet of exceptionally
maintained equipment stands ready to serve the needs of our customers,
and our customer base includes some of the strongest oil and gas companies
operating in the state.
• Build the value of the Corporation’s assets by increasing its profitability
and financial strength for the future.
• Pay predictable and increasing dividends to BBNC shareholders.
• Promote improved employment and education opportunities for
BBNC shareholders.
• Position BBNC so that it will have a major voice in economic
development in the region.
• Endorse a Fish First policy for land and resource management in
Bristol Bay.
In order to meet the strategic goals, the Corporation must generate sufficient
earnings. To that end, BBNC’s assets have been allocated to a variety of
businesses that operate throughout Alaska and across the United States. As
noted above, the Corporation’s assets are primarily allocated in two key areas:
to a passive portfolio of investments (the Portfolio) and to our operating
subsidiary companies. There is also a small allocation to corporate assets which
includes the Corporation’s headquarters building in Anchorage, Alaska.
The Portfolio is comprised of a variety of assets including marketable securities,
and liquid and non-liquid alternative investments. Management classifies the
operating subsidiaries into five distinct business lines which are:
• Petroleum Distribution
• Oilfield and Industrial Services
• Construction
• Government Services
• Tourism
The Corporation also has earnings from natural resource activities that are
primarily comprised of certain revenue sharing payments received from other
Alaska Native corporations as required under ANCSA.
The following pages are management’s outlook for FY2016 and view of the
Corporation’s FY2015 results in total, for the Portfolio and of the business lines.
In order to improve readability, in some cases these results are presented in a
different format than the Consolidated Financial Statements.
FY2016 OUTLOOK
Management expects FY2016 to bring both challenges and opportunities across
the broad landscape of BBNC’s business activities. Management expects overall
earnings to be slightly lower in FY2016, primarily due to lower profits in the
Government Services, and Oilfield and Industrial Services business lines.
The Construction business line is expected to generate earnings that exceed
those seen in FY2015, but that are consistent with the longer term trend
of decreased profitability in the business line. The federal government is
the largest customer in the business line. Downward pressure on earnings
continues to come from a variety of sources including continued negative
changes to the Small Business Administration’s 8(a) program and from an
operating environment where competitors are willing to work for slim margins.
Our goal is to provide work for our customers at a price that results in the overall
best value to the customer, but also provides a profit for our shareholders.
Corporation’s debt load remains modest and we continue to enjoy access to low
cost debt financing. Both factors enable the Corporation to take on additional
debt for acquisitions if, and when, deemed appropriate by management.
RESULTS OF OPERATIONS
CONSOLIDATED RESULTS
The following table displays consolidated results for the fiscal year ended, (in
thousands except earnings per share and weighted average shares outstanding):
In order to increase the footprint of the benefits afforded by 8(a) contracting
opportunities to our shareholders, and the shareholders of our affiliated
village corporations and residents of the Bristol Bay region, the Corporation
is currently implementing a strategic initiative that includes establishing joint
ventures and mentor protégé arrangements with village corporations within
the BBNC region to pursue government contracting opportunities. In these
arrangements, BBNC typically brings its experience to bear in aiding the village
corporations to prepare to bid, win and perform contracts all while providing a
level of quality to our customers that is consistent with BBNC’s long history of
being a valued contractor to the federal government.
Investment earnings from the Portfolio are expected to exceed those of FY2015.
Our asset allocation strategy within the Portfolio is meant to accomplish a
desired rate of return with the least risk possible. Nonetheless, the returns we
will experience will be reflective of broader trends in world financial markets.
BBNC continues to seek out attractive investments in the form of new
acquisitions and “bolt-on” acquisitions to our existing business lines. We
anticipate financing acquisitions through a mix of equity and debt capital. The
2015
2014
2013
Revenues
Operating business lines
$
1,713,693
1,801,217
1,938,750
Investment earnings
11,442
25,167
14,254
Natural resources
10,186
8,396
6,524
763
1,114
2,252
1,736,084
1,835,894
1,961,780
Other
Total revenue
$
1,638,130
1,729,585
1,871,766
2,333
928
1,392
16,167
16,830
12,686
Interest
2,391
1,987
1,560
Other
3,227
4,331
5,117
1,662,248
1,753,661
1,892,521
73,836
82,233
69,259
28,000
33,047
27,941
45,836
49,186
41,318
(945)
(36)
—
$
44,891
49,150
41,318
$
83
91
77
540,100
540,100
540,100
Cost of investment management
Earnings from operations
Income tax expense
Net earnings
Less income attributable to
noncontrolling interest
Bay Native Corporation
Earnings per share
Weighted average shares outstanding
PETROLEUM DISTRIBUTION
The following table displays results of Petroleum Distribution earnings, before
interest and taxes for the fiscal year ended (in thousands):
FISCAL YEAR
BBNC’s FY2015 earnings were less than experienced in the previous fiscal year
but remained strong on a historical basis with FY2015 being the second best
year in the Corporation’s history on a pre-tax earnings basis. Revenues from the
2015
2014
2013
811,253
1,011,443
1,097,607
801,702
1,005,338
1,091,582
9,551
6,105
6,025
Revenues
$
Costs and expenses
Cost of Petroleum Distribution
Corporate general and
Net earnings attributable to Bristol
Costs of the operating business lines were less than the prior year by $91.5
million, which was primarily due to the effect of lower fuel prices experienced
by PetroCard for its inventory purchases. BBNC’s net earnings were $4.3 million
less than the prior year for the reasons described above, which equates to a
decrease in earnings per share of $8 from the prior year.
Petroleum Distribution
Costs and expenses
Cost of operating business lines
operating business lines were $87.5 million lower than the prior year primarily
due to the effect falling fuel prices had on the revenues of PetroCard. PetroCard’s
decrease in revenue was partially offset by increased revenues in the Oilfield and
Industrial Services business line with the inclusion of Peak for the first full year.
Revenues from our portfolio investment earnings were less than the prior year
by $13.7 million and were primarily due to lower than expected returns from the
Corporation’s liquid alternative holdings and non-US equity holdings.
Following are comments specific to each business line.
FISCAL YEAR
administrative expense
The federal government is the primary customer for the Government Services
business line. Declines in federal spending, as well as the challenges to the
8(a) program previously mentioned, combine to form headwinds in the
industry. Earnings in FY2016 are expected to decline from levels seen in recent
years. BBNC recently made certain changes to the strategic alignment and
management team within the business line in order to respond to the needs of
our customers.
17
Earnings from Petroleum Distribution
$
The Petroleum Distribution business line consists of one subsidiary company,
PetroCard. PetroCard, a reputable fuel distributor in the Pacific Northwest, is
based in Kent, Washington, and distributes fuel products through cardlock sites,
mobile fueling, and wholesale sales, to commercial customers through facilities
located primarily in Washington and Oregon. Though Petroleum Distribution
revenues declined primarily due to a decline in the price of fuel, earnings
improved substantially in FY2015 resulting from the completion of a multiyear restructuring plan aimed at increasing profit margins, gaining operating
expense efficiency, and reducing overhead expense.
18
19
OILFIELD AND INDUSTRIAL SERVICES
CONSTRUCTION
GOVERNMENT SERVICES
TOURISM
The following table displays results of Oilfield and Industrial Services earnings,
before interest and taxes for the fiscal year ended (in thousands):
The following table displays results of Construction earnings, before interest
and taxes for the fiscal year ended (in thousands):
The following table displays results of Government Services earnings, before
interest and taxes for the fiscal year ended (in thousands):
The following table displays results of Tourism earnings, before interest and
taxes for the fiscal year ended (in thousands):
FISCAL YEAR
FISCAL YEAR
2015
2014
2013
257,826
142,154
39,030
235,667
122,754
35,451
22,159
19,400
3,579
Revenues
Oilfield and Industrial Services
2014
2013
Construction
414,033
404,907
517,799
399,522
385,243
487,077
$
14,511
19,664
30,722
The Oilfield and Industrial Services business line consists of Peak, Kakivik Asset
Management (Kakivik), and CCI Industrial Services (CIS). Significant increases
in revenue and earnings are related to the acquisition of Peak. However, other
companies within this business line had organic growth through additional
contract work. Peak, acquired by the Corporation in November 2013, provides
specialty services to the oil and gas industry in locations including Prudhoe
Bay, Anchorage, Kenai, Valdez, Palmer, and to a small extent, North Dakota.
Peak provides a wide variety of services including crane services, rig moving, ice
road construction, drilling support, general civil work, construction, trucking,
facility operations and maintenance support, tank cleaning, and power systems.
Kakivik specializes in nondestructive testing and inspection. CCI Industrial
Services provides a diverse array of specialty services to the oil and gas industry.
The success of Oilfield and Industrial Services can be attributed to the focus on
quality safety programs that customers demand in this industry.
The Oilfield and Industrial Services business line is the Corporation’s largest
source of shareholder hire. Average shareholder hire for this business line
was 94 individuals with wages in excess of $5.2 million paid to shareholders
in FY2015. The Oilfield and Industrial Services business line is expected to
continue to play a key role in pursuit of the goals established within the
Corporation’s strategic plan.
2015
2014
2013
Government Services
228,720
240,823
282,821
199,336
214,223
256,019
$
29,384
26,600
26,802
The Construction business line is comprised of three separately managed
company groups: the Bristol Companies, the CCI Companies (excluding CCI
Industrial Services) and the SpecPro Environmental Services Companies.
Also included within the Construction business line is Bristol Bay Resource
Solutions, LLC, an Anchorage-based shared service company that provides
administrative services to the entire group. The Construction business line
companies provide civil and structural engineering, civil construction and
environmental remediation services, water and sewer line construction, and
industrial and nonresidential construction and energy services for federal, state
and local government agencies as well as commercial clients throughout Alaska
and the continental United States.
Earnings decreased by $5.2 million from FY2014 and decreased by $16.2 million
from FY2013. This trend was primarily attributable to certain unanticipated
firm fixed price contract costs resulting from a combination of project
delays, and cost overruns on certain projects within the Bristol Companies.
Bristol management has taken a number of significant steps to improve the
group’s profitability including changes in senior staff, redesigned bidding and
estimating practices and better project management.
The Corporation’s Construction business line provides services to the
federal government, and in some cases participates in contracts offered
by the government solely to small businesses. Some of the Corporation’s
construction companies have received Section 8(a) certifications from the U.S.
Small Business Administration (SBA). Section 8(a) certifications allow these
subsidiaries to bid on contracts set aside specifically for Section 8(a) certified
entities as well as other small business contracts. While the Corporation may
take advantage of direct contract opportunities under the Section 8(a) program,
government contracting opportunities that are not dependent upon the solesource provision of Section 8(a) are also pursued.
In 2015, the Corporation’s Construction businesses generated 51% of its
revenue from Section 8(a) sole source contracts, 23% from Section 8(a)
competitive bid contracts, and 26% from non-8(a) full and open bid contracts.
A majority of Section 8(a) revenue was generated from the United States
Department of Defense.
In FY2015, the Construction business line continued to provide employment
opportunities for BBNC shareholders with an average of 12 shareholder
employees throughout the year.
2014
2013
Tourism
$
1,861
1,890
1,493
1,903
2,027
1,637
(42)
(137)
(144)
Costs and expenses
Government Services
Earnings from Government Services
2015
Revenues
$
Costs and expenses
Construction
Earnings from Construction
FISCAL YEAR
Revenues
$
Costs and expenses
Industrial Services
2015
Revenues
$
Costs and expenses
Earnings from Oilfield and
FISCAL YEAR
$
The Government Services business line is comprised of four separately
managed company groups: the SpecPro Companies, the Eagle Companies,
the STS/Glacier Companies, and the Vista Companies. In addition, Bristol
Resource Solutions, LLC, based in Huntsville, Alabama, is the administrative
shared service company supporting the Government Services business line.
Companies in this business line provide a broad range of services including
engineering and technical services, information technology management
services, environmental services, operational testing and evaluation services,
medical and applied science projects, medical staffing, and biomedical research
and development primarily for the federal government.
Though the Government Services business line experienced a 5% decline
in revenue, earnings increased by $2.8 million over FY2014, primarily as a
result of general and administrative, indirect, and direct cost containment
and reductions.
As with the Construction business line, the Corporation’s Government Services
business line provides services to the federal government, and in some cases,
participates in contracts offered by the government solely to small businesses.
Some of the Corporation’s Government Services companies have received
Section 8(a) certifications from the SBA. Section 8(a) certifications allow these
subsidiaries to bid on contracts set aside specifically for Section 8(a) certified
entities as well as other small business contracts. While the Corporation may
take advantage of contract opportunities under the Section 8(a) program,
government contracting opportunities that are not dependent upon the solesource provision of Section 8(a) are also pursued.
In 2015, the Corporation’s Government Services businesses generated 63% of
revenue from Section 8(a) sole source contracts, 19% of revenue from Section
8(a) competitive bid contracts, and 18% of revenue from non-8(a) full and open
bid contracts. A majority of Section 8(a) revenue within the business line was
generated from the United States Department of Defense.
Tourism
Earnings from Tourism
$
Currently, the Corporation’s single subsidiary in the Tourism business line is
Mission Lodge on Lake Aleknagik near Dillingham in Bristol Bay. Mission Lodge
is an all-inclusive seasonal fishing lodge. In FY2015, Mission Lodge experienced
another strong year with nearly 100% occupancy. In addition, the operation
also provides opportunity for shareholder hire and development in the region.
Management continues to seek opportunities to grow the Tourism business line
through targeted acquisitions throughout the Bristol Bay region.
PORTFOLIO INVESTMENTS
The following table displays results of the Portfolio for the fiscal year ended
(in thousands):
FISCAL YEAR
2015
2014
2013
11,442
25,167
14,254
2,333
928
1,392
9,109
24,239
12,862
Revenues
Investment earnings
$
Costs and expenses
Cost of investment management
Earnings from Investments
$
The Corporation recognizes Portfolio earnings primarily from investments
in public and private passive investments including marketable securities,
private equity placements, and a number of commercial real estate investments
located primarily in Anchorage, Alaska. The Portfolio provides the Corporation
with a stable and consistent source of earnings and cash flow in support of the
Corporation’s strategic objectives.
The Portfolio is managed pursuant to an investment policy which calls for an
asset allocation as follows: 50% equity securities, 5% fixed income securities,
20% real estate and 25% alternative investments. Real estate and alternative
20
investments are often private, non-publicly-traded equity interests. The
allocation to each of these four investment classes was developed with the help
of the Corporation’s external investment advisor using modern portfolio theory.
The established policy allocation to different investment classes is designed
to achieve a target annual return of 8.2% while exposing the Corporation to
the lowest level of risk possible. At March 31, 2015, the total market value of
the Portfolio was $167.3 million compared to $158.3 million at March 31, 2014.
Portfolio holdings in private, non-publicly traded investments were $33.9
million at March 31, 2015, compared to $21.5 million at March 31, 2014. The
Corporation’s Portfolio appreciated in value during 2015 by $11.4 million, which
represents a return on investment of 6.8%. The Corporation’s Portfolio returns
are benchmarked against a custom index that approximates our investment
allocation targets. The Portfolio performed under its target custom benchmark
of 10.4% during 2015.
GENERAL AND
ADMINISTRATIVE EXPENSES
BALANCE SHEET
Corporate general and administrative expenses (G&A) decreased from $16.8
million in FY2014 to $16.2 million in FY2015. G&A expenses are incurred by
the Corporation in its efforts to provide corporate governance and oversight
of its increasingly complex subsidiary operations, pursue new investments,
protect the Corporation’s assets and provide shareholder services. G&A as a
percentage of revenue was 0.9%, 0.9%, and 0.6% in FY2015, FY2014 and FY2013,
respectively.
FISCAL YEAR
Property, plant and equipment, net
Goodwill and intangible assets
2014
2013
Current income tax expense
$
Deferred income tax expense
2015
2014
2013
19,388
24,687
27,269
8,612
8,360
672
28,000
33,047
27,941
Revenues
Natural Resources
7(i) revenue sharing
Total income tax expense
$
Natural Resources
Earnings from Natural Resources
$
9,609
7,796
6,424
577
600
100
10,186
8,396
6,524
Natural Resource earnings consist primarily of 7(i) revenue sharing, net of
the 50% distribution to village corporations and at-large shareholders that
the Corporation receives from other regional Alaska Native Corporations. 7(i)
receipts received are primarily from NANA Regional Corporation and Arctic
Slope Region Corporation. The Corporation distributes 50% of these receipts to
village corporations and at-large shareholders as 7(j) payments.
Revenue from the sale of the Corporation’s Natural Resources, primarily sand
and gravel, is driven largely by resource development and infrastructure
improvement activities in the Bristol Bay region. Revenues from the sale of
natural resources tend to fluctuate from year-to-year.
The Corporation continues to advocate for responsible development of natural
resources on BBNC lands and other lands within the BBNC region. We are
committed to supporting a strong business climate that encourages investment
in natural resource activities throughout the entire State of Alaska. Nevertheless,
BBNC continues to oppose the proposed Pebble project because of its potential
to harm the region’s commercial and subsistence fisheries, communities, and
cultural heritage. The proposed project also lacks regional or shareholder
support. In summary, BBNC opposes the proposed Pebble project because it is
inconsistent with the Corporation’s responsible resource development criteria
and Fish First policy.
$
Total tax expense is comprised of current and deferred federal and state taxes
which are primarily income based. To a lesser extent, the Corporation is subject
to certain foreign income tax expense. Current tax expense represents expected
taxes the Corporation will pay to taxing authorities on taxable income generated
within the fiscal year plus or minus any prior year tax adjustments. Deferred tax
expenses represents the current year change in deferred tax assets net of changes
in the Corporation’s deferred tax liabilities. Deferred tax assets and liabilities
arise in the normal course of business and represent future differences between
taxable income and book income reported in the Corporation’s annual report.
These differences exist because of a lack of parity with respect to when certain
items of income and expense are recognized under the tax code, compared
to treatment under Generally Accepted Accounting Principles. Our average
blended tax rate is approximately 40% of earnings from operations.
The following table displays total Liquidity and Capital Resources as of March
31, for the fiscal year ended (in thousands):
FISCAL YEAR
Investment in unconsolidated affiliates
FISCAL YEAR
LIQUIDITY AND CAPITAL
RESOURCES
FISCAL YEAR
Marketable securities
TAXES
The following table displays results of Natural Resource earnings for the fiscal
year ended (in thousands):
2015
The following table displays key Balance Sheet data as of March 31, for the fiscal
year ended (in thousands):
Cash and cash equivalents
The following table displays our income tax expense for the fiscal year ended
(in thousands):
NATURAL RESOURCE MANAGEMENT
21
$
2015
2014
2013
62,464
49,471
38,214
133,445
136,807
176,781
2015
27,822
15,114
7,524
174,337
70,263
Marketable securities
Less: collateral on
46,235
47,923
50,128
656,621
629,922
559,034
Current liabilities
184,688
185,180
206,437
Long term liabilities
122,557
113,845
55,865
BBNC shareholders equity
349,376
330,897
296,732
2013
Available funds
170,630
Total assets
2014
$
marketable securities
Total available funds
$
62,464
49,471
38,214
133,445
136,807
176,781
(44,136)
(35,355)
(28,531)
151,773
150,923
186,464
60,864
54,645
61,469
(825)
(825)
(825)
60,039
53,820
60,644
211,812
204,743
247,108
Available line of credit
Total line of credit
Cash and cash equivalents continue to increase primarily due to the
Corporation’s continued profits. The primary reason for the decrease from
FY2013 to FY2014 in marketable securities was the sale of certain marketable
securities for purposes of partially funding the Peak acquisition. Investment in
unconsolidated affiliates continues to increase as the Corporation increases its
investments in real estate and other alternative investments held in partnership
and partnership like entities where the Corporation owns less than 100%
of the entity. Property, plant and equipment, net of depreciation increased
significantly from FY2013 to FY2014 due to the Peak acquisition. Peak owns and
operates a significant fleet of equipment and vehicles.
Long-term liabilities increased significantly from FY2013 to FY2014 as the
Corporation utilized debt financing to partially fund the Peak acquisition. BBNC
shareholders equity continues to grow as a result of increased earnings, net of
dividends paid to shareholders.
Less: outstanding letters of credit
Total available line of credit
Total liquidity
$
To meet both our short and long-term liquidity requirements, we look to a
variety of funding sources, both internal and external. Our primary source of
liquidity is cash generated from operating activities and from Portfolio earnings.
In order to meet additional liquidity needs at the parent level, the Corporation
has two lines of credit with which it may draw upon to fund cash needs. The
primary line of credit has a ceiling of $75.0 million and is secured by marketable
securities, and the secondary line has a ceiling of $30.0 million and is secured
by the receivables of certain subsidiary companies. If further acquisition
opportunities arise, the Corporation will consider the costs and benefits of
additional debt sources. Our cash flow from operations, and access to short
term debt, gives management confidence that the Corporation’s liquidity needs
can be met in both the short and longer terms.
22
SIGNIFICANT SOURCES
AND USES OF CAPITAL
FINANCING ACTIVITIES
The following table displays sources/uses of capital and capital structure for the
fiscal year ended (in thousands):
FISCAL YEAR
2015
2014
2013
Sources/uses of capital
Cash flows from operating activities
$
89,618
120,534
30,489
Cash flows from investing activities
(32,073)
(141,115)
(30,119)
Cash flows from financing activities
(44,552)
31,838
(8,291)
$
12,993
11,257
(7,921)
$
111,144
112,006
49,155
349,376
330,897
296,732
460,520
442,903
345,887
31.81%
33.85%
16.57%
Increase (decrease) in cash and
cash equivalents
Capital structure:
Short and long-term debt
BBNC shareholders' equity
Total capital
Debt to equity ratio
$
OPERATING ACTIVITIES
The operating activity section of the statement of cash flows reconciles net
income to the amount of cash provided by operating transactions. Cash flows
from operating activities was $89.6 million which was primarily comprised of
net income of $45.8 million plus depreciation expense of $24.9 million and
other changes in working capital. For FY2014, in addition to $49.2 million in
cash flows from net income, there was $60.3 million of cash generated from the
sale of marketable securities which was used to partially fund the acquisition
of Peak.
INVESTING ACTIVITIES
Investing activities include our acquisition and divestiture activities including
portfolio related investment activity and other capital transactions. The increase
in cash used from investment activities from FY2013 to FY2014 was primarily
related to the $135.9 million cash outflow for the acquisition of Peak. Net
cash activity from investment activity is typically consistent unless significant
acquisition activity occurs during a fiscal year. FY2015 and FY2013 are reflective
of the Corporation’s more normalized uses of cash for investing activities on a
year-to-year basis.
both higher education degrees and vocational certifications.
Financing activities include transactions involving shareholder dividends,
noncontrolling interests and borrowings and repayments of debt. Cash used by
financing activities in FY2015 includes shareholder dividends of $27.3 million.
The increase in cash provided by financing activities in FY2014 is mainly due
to $60.0 million of long-term debt proceeds used to partially fund the Peak
acquisiton. FY2015 and FY2013 are more reflective of uses of cash for financing
activities on a year-to-year basis, absent any large acquisitons.
Our total capital structure consists of the original monies received by the
Corporation under ANCSA on behalf of its shareholders, funds provided by debt
financing arrangements, and accumulated earnings that have not been paid out
in dividends. The overall increase in total capital in FY2015 is comprised of the
fisal year earnings offset by dividends paid.
We continue to monitor the Corporation’s debt to equity ratio and intend to
maintain an appropriate balance of debt and liquidity. Management expects
that doing so will enable us to both meet our financial obligations and ready the
Corporation to take advantage of strategic opportunites in the future.
BBNC retains ownership of approximately 3.1 million acres of subsurface and
approximately 100,000 acres of surface real estate. BBNC shareholder’s equity
does not include the value of lands conveyed as a result of ANCSA, which
cannot be readily estimated. Consistent with most Alaska Native Corporations,
the Corporation did not record a value for such lands due to the inability
to establish the value of those lands at the time of conveyance, especially
considering the time and expense of obtaining appraisals.
DIVIDENDS AND
SHAREHOLDER BENEFITS
FISCAL YEAR
2015
2014
2013
16,204
14,583
13,502
11,109
398
381
$
27,313
14,981
13,883
$
164,377
137,064
122,083
$
Elder dividends paid and elders
Total dividends paid and elders
Cummulative dividends paid, since
inception
Recognizing the value of job skills that do not require four-year college degrees,
the Foundation also awards scholarships to help pay for vocational training
and provides assistance for shareholders to attend various vocational training
programs. This program specifically assists those that are in need of specialized
certification or training in order to enhance their employment or career
opportunities. In many instances, vocational assistance recipients, who are also
shareholders, have used their certifications to be eligible for employment by the
Corporation and its subsidiaries. The Corporation funded over $2.3 million in
contributions to the BBNC Education Foundation in FY2015.
The Corporation further hosts the Bristol Bay Leadership Forum (formerly
the Village Leadership Workshop), a two-day session that provides Bristol Bay
area village corporation, village council, borough, and city council leaders
with an opportunity to meet with business, government, and Native leaders, to
share experiences, discuss issues affecting the people they represent, explore
solutions to common problems, and to consider new opportunities that may
help lead to economic, educational and cultural benefits.
In FY2012, the Corporation initiated an Elder’s Benefit Program. Eligible
original shareholders age 65 or older began receiving a benefit of $125 per
quarter beginning in the third quarter of FY2012. In October 2013, shareholders
approved establishment and funding of an elders’ settlement trust, which was
funded with a $10.8 million contribution from the Corporation in FY2015.
Distributions from the trust to eligible shareholders are not taxable to the
shareholders to the extent they are paid out of the current year or cumulative
undistributed income of the trust.
The following table displays total dividends paid in each of the fiscal years
ended (in thousands):
Regular dividends paid
In 1992, BBNC formally incorporated the BBNC Education Foundation (the
Foundation) as a 501(c)(3) entity and has continued to invest in education
and training through the Foundation. Scholarship recipients have graduated
with bachelors, masters, and other advanced degrees, such as a Ph.D. in
anthropology, doctorates of medicine, veterinary medicine, law, and degrees in
engineering, business administration, education, nursing, guidance counseling,
environmental science, economics and philosophy, and associate degrees and
other vocational certifications in dental therapy, culinary arts, professional
piloting, health and human services, occupational safety and health training,
and medical assistant training. Providing increased support for these types of
programs is one of the Foundation’s long-term objectives.
Many of the benefits provided to our shareholders are a result of revenues
derived from federal government contracting. The Corporation’s long-term
strategy is to enhance its financial strength while paying increasing shareholder
dividends and promoting educational and employment opportunities. The
core of our success is our focus on education and protecting our cultural
heritage. We are committed to training our future generations. Since 1986, the
Corporation has provided educational scholarships to its shareholders pursuing
The Corporation’s operations allow BBNC to provide meaningful career
opportunities for our shareholders. During FY2015, our average number of
shareholder employees increased by 20 for an average of 159 shareholders
employed throughout the year. Total shareholder wages paid in FY2015 were
$12.4 million. We continue to focus on expanding opportunities for shareholder
employment and beginning in FY2016, will form a new shareholder development
department dedicated solely to shareholder development programs.
23
CRITICAL ACCOUNTING
ESTIMATES
The Corporation’s consolidated financial statements are prepared in
accordance with generally accepted accounting principles. Significant
accounting policies are discussed in (note 1) Nature of Operations and
Summary of Significant Accounting Policies accompanying the consolidated
financial statements of this report. In connection with the preparation of
the financial statements, management is required to make assumptions and
estimates about future events, and apply judgments that affect the reported
amounts of assets, liabilities, revenues, expenses, and related disclosures.
Amounts recognized in the financial statements from such estimates are
necessary based on numerous assumptions involving varying and potentially
significant degrees of judgment and uncertainty. Actual results may differ from
management’s assumptions and estimates.
Areas in which accounting estimates could be different from the final results
include estimates of total contract costs for fixed price contracts, the fair value
of investments, intangibles and goodwill, and the tax valuation of oil and gas
rights, and deferred tax assets.
24
BBNC Annual Report Two-Thousand and Fifteen | Ten Year Financial Summary
BBNC Annual Report Two-Thousand and Fifteen | Independent Auditors' Report
TEN YEAR FINANCIAL SUMMARY
25
INDEPENDENT AUDITORS’ REPORT
(In thousands except share data, ratios, and percentages)
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
The Board of Directors and Stockholders
Bristol Bay Native Corporation:
We have audited the accompanying consolidated financial statements of Bristol Bay Native Corporation and its
subsidiaries, which comprise the consolidated balance sheets as of March 31, 2015 and 2014, and the related
consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the threeyear period ended March 31, 2015, and the related notes to the consolidated financial statements.
Revenues:
Investment income
$
Petroleum sales operations
Contract Services
11,442
25,167
14,254
5,537
14,935
23,282
(34,293)
2,334
7,503
18,631
811,253
1,011,443
1,097,607
1,173,249
948,873
791,736
—
—
—
—
—
—
994,918
993,676
796,558
601,977
—
290,569
195,747
137,545
Oilfield Services
257,826
142,154
39,030
39,360
37,637
33,923
46,775
—
—
—
Construction
414,033
404,907
517,799
449,868
401,608
375,776
268,503
—
—
—
Government Services
228,720
240,823
282,821
287,186
256,247
152,199
102,296
—
—
—
Tourism
1,861
1,890
1,493
—
—
—
—
—
—
—
10,186
8,396
6,524
9,877
7,648
3,965
12,706
7,331
5,538
3,369
763
1,114
2,252
430
252
1,515
666
944
793
892
Total operating revenue
1,736,084
1,835,894
1,961,780
1,965,507
1,667,200
1,382,396
1,391,571
1,294,854
1,006,139
762,414
Costs and expenses (1)
1,662,248
1,753,661
1,892,521
1,898,335
1,597,930
1,346,170
1,394,362
1,285,723
983,611
734,424
73,836
82,233
69,259
67,172
69,270
36,226
(2,791)
9,131
22,528
27,990
(28,000)
(33,047)
(27,941)
3,054
(26,253)
(4,289)
8,853
(3,500)
(5,358)
(5,809)
(945)
(36)
—
—
—
—
(888)
(608)
(1,074)
(924)
$
44,891
49,150
41,318
70,226
43,017
31,937
5,174
5,023
16,096
21,257
$
89,618
120,534
30,489
36,975
17,484
5,631
56,439
19,483
15,370
13,534
Natural Resources
Other income (1)
Earnings (loss) from operations
Income tax benefit (expense), net
of extraordinary benefit
Earnings applicable to minority interests
Net earnings
Cash flow data:
Net cash provided by operating activities
Net capital expenditures
Addition (reduction) to long-term debt
Dividends paid
19,552
7,215
18,014
16,992
5,669
5,750
8,548
3,988
3,267
11,675
(862)
62,851
18,974
(11,648)
(2,731)
6,884
(11,146)
(3,787)
7,128
8,806
27,313
14,981
13,883
12,070
7,453
6,913
6,481
5,941
5,185
4,568
$
Dividends per share
Return on average stockholders’ equity
83.00
91.00
76.51
130.02
79.65
59.13
9.58
9.30
29.80
39.36
30.00
27.00
25.00
22.00
13.80
12.80
12.00
11.00
9.60
8.60
12.9%
15.7%
14.6%
29.2%
22.2%
19.6%
3.4%
3.3%
10.9%
15.9%
62,464
49,471
38,214
46,135
35,118
25,521
26,170
21,687
9,822
7,522
83,572
59,827
37,931
71,655
10,469
27,479
34,340
24,650
19,304
9,496
133,445
136,807
176,781
115,202
97,830
84,820
59,645
89,431
98,112
103,925
Financial position:
Cash and equivalents
Working capital (1)
Marketable equity securities at fair market
value
$
Property, plant and equipment, at cost
170,630
174,337
70,263
56,940
46,481
46,748
47,170
44,387
45,027
40,484
Total assets
656,621
629,922
559,034
518,703
448,322
370,456
305,896
327,600
293,578
253,982
111,144
112,006
49,155
30,181
41,829
44,560
37,676
48,822
52,503
45,370
349,376
330,897
296,732
269,297
211,141
175,577
150,553
151,860
152,778
141,867
Long-term debt (including current
maturities)
Stockholders’ equity
Management is responsible for the preparation and fair presentation of these consolidated financial statements
in accordance with U.S. generally accepted accounting principles; this includes the design, implementation,
and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We
conducted our audits 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
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates made
by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Shareholder data:
Earnings per share
Management’s responsibility for the financial statements
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of Bristol Bay Native Corporation and its subsidiaries as of March 31, 2015 and 2014, and
the results of their operations and their cash flows for each of the years in the three-year period ended March 31,
2015, in accordance with U.S. generally accepted accounting principles.
Anchorage, Alaska
June 9, 2015
Ratios:
Current ratio (1)
Long-term debt to equity ratio
1.4
1.3
1.2
1.3
1.1
1.2
1.3
1.2
1.2
1.1
0.35
0.34
0.17
0.11
0.20
0.25
0.25
0.32
0.34
0.32
NOTES: (1) Marketable equity securities have not been included as part of current assets for this computation
26
BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements
BRISTOL BAY NATIVE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2015 AND 2014
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2015 AND 2014
(In thousands, except shares)
(In thousands, except shares)
ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
2015
2014
62,464
49,471
133,445
136,807
Current assets
2015
2014
780
17,113
Current liabilities
$
Marketable securities (notes 5, 7, and 10)
Accounts receivable:
Trade, net (note 8)
Natural resources (note 1(k))
Inventories
$
Accounts payable
67,246
59,965
Accrued liabilities (notes 9, 10, 11 and 12)
83,250
73,965
Billings in excess of costs and earnings (note 1(l))
17,619
17,184
166,492
9,895
8,545
Unclaimed dividends
512
710
Current maturities of long-term debt (note 10)
9,718
9,705
Deferred tax liability (note 12)
5,563
6,538
Total current liabilities
184,688
185,180
Long-term debt, less current maturities (note 10)
101,426
102,301
21,131
11,544
307,245
299,025
29,571
29,571
3,968
4,460
23,104
14,476
Prepaid expenses and refundable taxes (note 12)
2,102
1,563
Total current assets
Notes payable (note 9)
166,727
Costs and earnings in excess of billings (note 1(l))
401,705
381,814
Deferred tax liability (note 12)
Investments in unconsolidated affiliates (note 6)
27,822
15,114
Other assets
10,229
10,734
Land
12,333
12,333
Buildings
39,097
38,463
Leasehold improvements
19,963
19,963
176,950
161,083
Property, plant, and equipment, at cost (notes 1(h) and 10):
Machinery and equipment
Total liabilities
Stockholders’ equity
Class A common stock, no par value. Authorized, 1,000,000
shares; issued and outstanding, 488,500 shares (note 2)
Class B common stock, no par value. Authorized, 300,000
shares; issued and outstanding, 51,600 shares (note 2)
Retained earnings
Less accumulated depreciation
248,343
231,842
77,713
57,505
170,630
174,337
9,442
11,130
36,793
36,793
656,621
629,922
Total stockholders’ equity attributable to Bristol Bay Native Corporation
Intangible assets, net (note 4)
Goodwill (notes 1(i) and 4)
Total assets
27
$
Noncontrolling interest
Total stockholders’ equity
3,124
3,124
315,784
298,206
348,479
330,901
897
(4)
349,376
330,897
656,621
629,922
Commitments and contingencies (notes 6, 9, 10, 11, 12, 13, and 14)
Total liabilities and stockholders' equity
See accompanying notes to consolidated financial statements.
$
28
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 2015, 2014, AND 2013
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except shares and per share data)
(In thousands)
2015
2014
2013
Revenues
Petroleum Distribution
$
811,253
1,011,443
1,097,607
257,826
142,154
39,030
Construction
414,033
404,907
517,799
Government Services
228,720
240,823
282,821
Tourism
1,861
1,890
1,493
Investment Earnings (notes 5 and 6)
11,442
25,167
14,254
Natural Resources
10,186
8,396
6,524
763
1,114
2,252
1,736,084
1,835,894
1,961,780
Other
29
Costs and expenses
Common Stock
Balance, April 1, 2012
$
Class A
Class B
Retained
Earnings
Total
shareholders’
equity
attributable
to Bristol
Bay Native
Corporation
Non controlling
Interests
Total
stockholders’
equity
29,571
3,124
236,602
269,297
—
269,297
Dividends ($25.00 per share)
—
—
(13,883)
(13,883)
—
(13,883)
Net earnings
—
—
41,318
41,318
—
41,318
29,571
3,124
264,037
296,732
—
296,732
—
—
(14,981)
(14,981)
—
(14,981)
Net earnings
—
—
49,150
49,150
36
49,186
Distributions to noncontrolling interest
—
—
—
—
(40)
(40)
29,571
3,124
298,206
330,901
(4)
330,897
Balance, March 31, 2013
Cost of Petroleum Distribution
801,702
1,005,338
1,091,582
Cost of Oilfield and Industrial Services
235,667
122,754
35,451
Cost of Construction
399,522
385,243
487,077
Cost of Government Services
199,336
214,223
256,019
—
—
(27,313)
(27,313)
—
(27,313)
1,903
2,027
1,637
Net earnings
—
—
44,891
44,891
945
45,836
Distributions to noncontrolling interest
—
—
—
—
(44)
(44)
29,571
3,124
315,784
348,479
897
349,376
Cost of Tourism
Cost of Investment Management
2,333
928
1,392
16,167
16,830
12,686
Interest
2,391
1,987
1,560
Other
3,227
4,331
5,117
Corporate General and Administrative Expense
$
1,662,248
1,753,661
1,892,521
73,836
82,233
69,259
28,000
33,047
27,941
45,836
49,186
41,318
(945)
(36)
—
$
44,891
49,150
41,318
$
83
91
77
540,100
540,100
540,100
Earnings from operations
Income tax expense (note 12)
Net earnings
Less income attributable to noncontrolling interest
Net earnings attributable to Bristol Bay Native Corporation
Earnings per share
Weighted average shares outstanding
30
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014
(in thousands)
2015
2014
2013
45,836
49,186
41,318
(187)
(331)
(279)
Cash flows from operating activities:
Net earnings
$
Items not affecting cash:
Undistributed income from unconsolidated affiliates
Loss of disposition of business unit
Unrealized depreciation (appreciation) of marketable securities
Depreciation and amortization
Gain (loss) on disposal of property plant and equipment
Gain on sale of marketable securities
Gain on interest rate swap
Deferred tax expense
Bad debt expense
—
2,417
—
3,164
(9,956)
712
24,896
16,399
10,393
51
(1,509)
(18)
(9,816)
(10,351)
(10,424)
(50)
(1,183)
(93)
8,612
8,360
672
765
305
654
Changes in operating assets and liabilities that provided cash, net of acquisitions:
Accounts receivable
(2,350)
27,339
6,574
Costs and earnings in excess of billings
(8,628)
2,588
(1,286)
435
(5,916)
(449)
Billings in excess of costs
Recognition of forward losses on construction contracts
444
522
45
10,014
60,281
(51,867)
492
(688)
717
Accounts payable
7,281
(21,792)
844
Accrued liabilities and other
8,659
4,863
32,976
89,618
120,534
30,489
Net sale (purchase) of marketable securities
Inventories
Net cash provided by operating activities
Cash flows from investing activities:
(1) NATURE OF OPERATIONS
AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Bristol Site Contractors, LLC
(A) NATURE OF OPERATIONS
CCI Energy and Construction Services, LLC
The operations of Bristol Bay Native Corporation (Corporation) include the
following:
CCI Group, LLC
• Petroleum Distribution
• Oilfield and Industrial Services
• Construction
—
Proceeds from sale of business unit
(135,854)
—
9,213
—
(12,521)
(7,259)
(740)
Additions to property, plant, and equipment
(19,552)
(7,215)
(18,014)
(32,073)
(141,115)
(30,119)
Cash flows financing activities:
Aerostar SES LLC
SES Construction and Fuel Services LLC
• Subsurface and other natural resource management
SpecPro Environmental Services LLC
(B) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Corporation and its wholly, and majority owned, subsidiaries:
Bristol Resources, Inc.
Bristol Bay Corporate Services, Inc.
Bristol Bay Parking, LLC
Bristol Bay Development LLC
Bristol Bay Development Fund LLC
27,506
98,946
Repayment of long-term debt
(28,368)
(36,095)
(11,809)
PetroCard, Inc.
Notes payable
(16,333)
(15,992)
(13,382)
Bristol Bay Petroleum Properties, LLC
(44)
(40)
—
(27,313)
(14,981)
(13,883)
(44,552)
31,838
(8,291)
Distributions to noncontrolling interests
Dividends paid
Net cash provided by (used in) financing activities
Increase (decrease) in cash and cash equivalents
12,993
11,257
30,783
(7,921)
Cash and cash equivalents:
End of year
Bristol Bay Mission Lodge, LLC
Bristol Bay Resource Solutions, LLC
Bristol Construction Services, LLC
Bristol Design Build Services, LLC
Beginning of year
$
49,471
38,214
46,135
62,464
49,471
38,214
Bristol Environmental Remediation Services, LLC
Bristol Engineering Services Corporation
Supplemental disclosure of cash flow information :
Bristol Fuel Systems, LLC
Cash paid (received) during the year for:
Interest
Income taxes
$
3,319
2,607
2,248
(22,164)
(23,987)
(11,882)
CCI Solutions, LLC
• Portfolio of public and private passive investments, some of which are
managed by outside investment managers
AN-AN, C, LLC
Proceeds from long-term debt
CCI Mechanical, LLC
• Tourism
Bristol Bay Private Equity Investments, LLC
Net cash used in investing activities
CCI, Inc.
CCI General Contractors, LLC
(11,365)
Investment in unconsolidated affiliates
CCI Construction Services, LLC
• Government Services
Bristol Bay Architects, Inc.*
Acquisition of businesses, net of cash acquired
Bristol Prime Contractors, LLC
Bristol General Contractors, LLC
Bristol Industries, LLC
Workforce Resources, LLC
SES Engineering & Design LLC
SES Electrical LLC
SES Civil Contractors LLC
SES Installation Support LLC
Badger Technical Services, LLC
Business Resource Solutions, LLC
DefendSafe, LLC
Eagle Applied Sciences LLC
Eagle Medical Services, LLC
Glacier Technical Solutions, LLC
Glacier Technologies LLC
JL-BBNC, LLC *
MedPro Technologies, LLC
SpecPro Asset Management, LLC
SpecPro, Inc.
SpecPro Professional Services, LLC
SpecPro Technical Services LLC
SpecPro Management Services, LLC
STS Systems Integration, LLC
STS Solutions & Training, LLC
TekPro Services, LLC
31
32
Vista International Operations, Inc.
Vista Technical Services, LLC
Vista Defense Technologies, LLC
Peak Oilfield Service Company LLC
CCI Industrial Services, LLC
Kakivik Asset Management, LLC
Bristol Bay Alaska Tourism, LLC *
Bristol Earth Sciences, LLC *
determined either by its respective ownership percentage or, when appropriate,
by using the hypothetical liquidation at book value method (HLBV). When
using the HLBV, the Corporation evaluates at each balance sheet date, the
amount it would receive or be obligated to pay if the investee were liquidated.
The difference between this amount at the beginning of the period compared
to end of the period plus cash received from the investments during the period
and less amounts contributed to the investment during the period, represents
the Corporation’s earnings or losses for the period from such investment.
Cost method investments are reviewed for impairment in the occurrence of
a triggering event indicating impairment. Equity method investments are
analyzed for impairment on an ongoing basis. An impairment charge is recorded
whenever the fair value of the investment is considered to be less than the
carrying amount and the impairment is considered other than temporary.
KAM Resources Group, LLC *
*No significant activity in 2015, 2014 or 2013.
(F) TRADE ACCOUNTS RECEIVABLE
The Corporation consolidates majority owned subsidiaries that are not
considered variable interest entities for which the Corporation exercises
operational control. The Corporation will also consolidate any variable interest
entities of which it is the primary beneficiary. The Corporation consolidates
AN-AN, C, LLC as the primary beneficiary of a variable interest entity. Included
in the Corporation’s consolidated balance sheet as of March 31, 2015, is
$19,935,000 of assets and $14,057,000 of liabilities of AN-AN, C, LLC, consisting
primarily of a building and the associated long term loan payable for the
building. The Corporation contributed $6,463,000 of equity and guarantees the
long term loan payable of AN-AN, C, LLC.
Trade accounts receivable are recorded at the invoiced amount and do not
bear interest. The allowance for doubtful accounts is management’s best
estimate of the amount of probable credit losses in existing accounts receivable.
The Corporation determines the allowance based on its historical write off
experience and current economic conditions. Past due balances over 60 days
in a specified amount are reviewed individually for collectibility. All other
balances are reviewed in aggregate. 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 Corporation does not have any off balancesheet credit exposure related to its customers. The allowance for uncollectible
accounts was $1,260,000 and $725,000 at March 31, 2015 and 2014, respectively.
All significant intercompany accounts and transactions have been eliminated
in consolidation.
(C) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash and investments with initial maturities,
at the time of purchase, of three months or less.
(D) MARKETABLE SECURITIES
Marketable securities are used to supplement cash provided by operations in
order to fund corporate overhead and shareholder dividends. The marketable
securities are recorded at fair value and are classified as trading. The
Corporation includes net unrealized gains and losses as a part of investment
earnings. Realized gains or losses resulting from the sale of securities are also
included in investment earnings. Cost of securities is determined using the firstin, first-out method.
(E) INVESTMENTS IN UNCONSOLIDATED
AFFILIATES
Investments in unconsolidated affiliates are accounted for using the cost or
the equity method, depending on whether the Corporation has the ability
to exercise significant influence over operating and financial policies of an
investee. Under the cost method, investments are carried at acquisition cost
and distributions are recognized as income when received. Under the equity
method, the Corporation’s share of affiliate earnings is included in income when
earned, and distributions are credited to the investment when received. For
flow-through entities (i.e., partnerships, limited liability companies, subchapter
S corporations, etc.), the ability to exercise significant influence is presumed
to exist if the percentage of ownership is equal to or greater than 5%. For other
entities, significant influence is presumed to exist if the percentage of ownership
is equal to or greater than 20%. The Corporation’s share of earnings or losses is
(G) INVENTORIES
Inventories, which consist primarily of petroleum products, are stated at the
lower of cost (principally, first-in, first-out) or market.
(H) PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are recorded at cost. Depreciation of property,
plant, and equipment is provided based on the estimated useful lives of the
respective assets using the straight-line method. Estimated lives for buildings
are 10 to 40 years, and for machinery and equipment, 3 to 10 years. Leasehold
improvements are amortized straight-line over the shorter of the lease term
or estimated useful life of the asset. The Corporation recorded depreciation
expense of $23,208,000, $14,088,000 and $8,320,000 for the years ended March
31, 2015, 2014 and 2013, respectively.
The cost of current repairs and maintenance is charged to expense, while the
cost of betterment is capitalized.
(I) GOODWILL AND INTANGIBLES
Goodwill is an asset representing the future economic benefits arising from
other assets acquired in a business combination that are not individually
identified and separately recognized. Goodwill is reviewed for impairment
at least annually. The Corporation has an option to assess qualitative factors
to determine whether the existence of events or circumstances leads to a
determination that it is more likely than not that the fair value of a reporting
unit is less than its carrying amount. If after assessing the totality of events
or circumstances, the Corporation determines it is not more likely than not
that the fair value of a reporting unit is less than its carrying amount, then
performing the two-step goodwill impairment test is unnecessary. However, if
the Corporation concludes otherwise, the Corporation is required to perform
33
the first-step of the two-step impairment 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 entity
must perform step-two of the impairment test (measurement). Under steptwo, 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, and the
residual fair value after this allocation is the implied fair value of the reporting
unit’s 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.
The Corporation performs its annual impairment review of goodwill at March
31, and when a triggering event occurs between annual impairment tests.
No impairment loss was recorded in 2015, 2014 or 2013. The reporting units
assessed for impairment include PetroCard (PC), SpecPro Technical Services
(STS) group, and SpecPro Environmental Services (SES) group.
Intangible assets with finite lives are recorded at cost and are primarily
amortized on a straight line basis over the estimated period of economic
benefit. The Corporation reviews intangible assets with finite lives for
impairment whenever events or changes in circumstances indicate that the
carrying value of the assets may not be recoverable. Recoverability of these
intangible assets is assessed based on the undiscounted future cash flows
expected to result from the use of the asset. If the undiscounted future cash
flows are less than the carrying value, the purchased intangible assets are
considered to be impaired. The amounts of the impairment loss, if any, is
measured as the difference between the carrying amount of these assets and
the fair value based on a discounted cash flow approach, or when available and
appropriate, to comparable market values. The Corporation has not acquired
intangible assets with indefinite lives.
(L) REVENUE AND COST RECOGNITION
In general, the Corporation recognizes revenue when the following criteria are
met: services have been performed or delivery has occurred, collection of the
receivable is probable, persuasive evidence of an arrangement exists, and the
sales price is fixed and determinable.
The Corporation’s oilfield service, government service, and construction revenues
are derived from fixed price, time and material, and cost plus contracts to provide
services under various federal, state, and commercial contracts. Revenue on fixed
price contracts is recognized by the percentage of completion method based on
the proportion of costs incurred to date to management’s best estimate of total
contract costs. Revenues from time and material contracts and cost plus contracts
are recognized currently as the work is performed. Change orders are not
included in contract revenue until agreed upon and approved by the customer
and Corporation regarding both scope and price. Claims are not included in
contract revenue until it is probable that the claim will result in additional
contract revenue and the amount can be reliably estimated or when amounts
have been received. Contract costs include all direct costs and any indirect,
or overhead, costs allocable to contracts. Included in indirect or overhead are
allocable general and administrative to the extent such costs are allowable under
government procurement regulations and recoverable under the contract.
Revisions in cost and profit estimates are made during the course of work and are
reflected when facts that require revision become known. Provision for losses on
uncompleted contracts is made in the period in which such losses are identified.
The costs and estimated earnings on contracts in progress include costs and
estimated earnings on firm fixed price contracts. The following table reconciles
costs incurred, earnings, and billings to date on contracts in progress at March
31 (in thousands):
Costs incurred on contracts in
progress to date
(J) IMPAIRMENT OF LONG-LIVED ASSETS
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 the assets to the future undiscounted net
cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount, or
fair value less the cost to sell.
$
Estimated earnings to date
Contract revenue earned to date
Less billings to date
2014
1,060,508
1,045,059
131,581
142,780
1,192,089
1,187,839
(1,186,604)
(1,190,547)
5,485
(2,708)
Contracts revenue adjustment
required to reflect percentage of
$
completion
Included in the consolidated balance sheets are costs and estimated earnings
on contracts in progress compared to billings and consist of the following, at
March 31 (in thousands):
(K) NATURAL RESOURCE REVENUES
Natural resource revenues are derived from sand and gravel quarry operations,
and natural resource revenues distributable to the Corporation from other
Alaska Native Regional Corporations, under Section 7(i) of the Alaska Native
Claims Settlement Act. Revenues distributable under Section 7(i) are recorded
when received or when the amount is determined and receipt is assured. Natural
resource revenues are recorded net of amounts distributable under Section 7(j).
2015
Costs and earnings in excess of
billings on uncompleted projects
$
Billings in excess of costs and
earnings on uncompleted contracts
$
2015
2014
23,104
14,476
(17,619)
(17,184)
5,485
(2,708)
Costs and earnings in excess of amounts billed are classified as current assets
under “costs and earnings in excess of billings.” Billings in excess of costs and
earnings are classified under current liabilities as “billings in excess of costs and
earnings.” Contract retentions are included in accounts receivable.
34
Where the Corporation acting in an agency capacity, by agreement, has
transferred all significant risk to vendors, manufacturers, or purchasers, the
Corporation records only the net profit in contract services revenues. Gross
volume from such activity excluded from the financial statements totaled
$11,297,000, $8,780,000 and $30,486,000 for fiscal years 2015, 2014 and
2013, respectively.
Revenue from petroleum sales is recognized when the related goods are sold
and all significant obligations of the Corporation have been satisfied, which
generally occurs at time of delivery. Petroleum revenues and the cost of
petroleum operations, generated from purchases outside the PetroCard (PC)
network, are recorded gross of state and federal fuel taxes. PC is not responsible
for collecting or remitting fuel tax for petroleum revenues from fuel directly
acquired by the Corporation. Included in petroleum sales operations and costs
of petroleum sales operations is $87.3 million, $103.7 million and $107.8 million
of state and federal fuel taxes for the years ended March 31, 2015, 2014 and
2013, respectively.
(M) INTEREST RATE SWAP
From time to time the Corporation enters into interest rate swaps as a means
to hedge against the uncertainty of future increases in interest rates on the
Corporation’s long-term debt. The Corporation applies Financial Accounting
Standard Board (FASB) Accounting Standards Codification (ASC) Topic 815,
Derivatives and Hedging, which among other provisions requires that all interest
rate swaps be recognized as either assets or liabilities in the consolidated
balance sheet and measured at fair value. Gains and losses resulting from
changes in the fair value are recorded in other comprehensive income when
the swaps qualify for hedge accounting. The change in the fair value of swaps
that do not qualify as a hedge must be included as part of earnings. The fair
values of interest rate swaps are included in accrued liabilities with the effect
on earnings included as part of interest expense. Notes 6, 9 and 10 on fair value,
notes payable and long-term debt contain a description of any current interest
rate swaps.
(N) INCOME TAXES
The Corporation and its subsidiaries file consolidated federal and state income
tax returns. The Corporation accounts for income taxes on the liability method.
Income tax expense includes income taxes currently payable and those deferred
because of differences between the financial statement and tax basis of assets
and liabilities. The Corporation records a valuation allowance to reduce the
amount of the gross deferred tax assets to the amount that is more likely
than not to be realized. Factors considered in determining the amount of the
valuation allowance include historical levels of taxable income, projected levels
of taxable income in future years, expected future Corporation trends in results
from existing operations, and the scheduled reversal of deferred tax liabilities.
Deferred tax liabilities are recorded as they arise.
The Corporation recognizes the effect of income tax positions only if those
positions are more likely than not of being sustained. Recognized income tax
positions are measured at the largest amount that is greater than 50% likely
of being realized. Changes in recognition or measurement are reflected in the
period in which the change in judgment occurs.
The Corporation records penalties and interest related to unrecognized tax
benefits as part of interest expense.
(O) USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affected the amounts reported in the financial
statements. These estimates are based on management’s current judgment
and may differ from actual results. Significant items subject to estimates
and assumptions include investments, accounts receivable, estimates of
total contract costs for fixed price contracts, the fair value of investments,
intangibles, and goodwill, and the tax valuation of oil and gas rights, and
deferred tax assets.
(P) RECENTLY IMPLEMENTED ACCOUNTING
PRONOUNCEMENTS
In April 2014, the FASB issued Accounting Standards Update (ASU) No.
2014-08 Reporting Discontinued Operations and Disclosures of Disposals of
Components of an Entity, which changes the criteria for reporting discontinued
operations. The Corporation early-adopted ASU No. 2014-08 in fiscal year
2014. In December 2013, PetroCard (PC) disposed of its lube business unit.
This disposal does not represent a strategic shift that will have a major effect
on the Corporation’s operations and financial results and does not qualify for
discontinued operations reporting under ASU No. 2014-08. The pre-tax net
income (loss) of the PC lube's business unit was $(1,989,000) and $(70,000) for
years ended March 31, 2014 and 2013, respectively.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with
Customers (Topic 606). ASC Update 2014-09 provides guidance for the
recognition, measurement and disclosure of revenue related to the transfer of
promised goods or services to customers. This update is effective for fiscal years
beginning after December 15, 2016, for which early application is prohibited.
The Corporation will begin application of ASC 2014-09 on April 1, 2017. The
Corporation is evaluating the effect on its results of operations, financial
position, and cash flows.
In April 2015, the FASB proposed deferring the effective date of ASC Update
2014-09 by one year and also proposed permitting early adoption of this update,
but not before the original effective date.
In April 2015, the FASB issued ASC Update 2015-03, Interest – Imputation of
Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.
ASC Update 2015-03 revises the presentation guidance for debt issuance costs
related to a recognized debt liability. The effect of this update is to present the
debt issuance costs as a direct deduction to the liability on the balance sheet
and retrospective application is required. This update does not change the
recognition and measurement guidance for debt issuance costs. This update is
effective for fiscal years beginning after December 15, 2015, with early adoption
permitted. The Corporation will begin application of ASC 2015-03 on April 1,
2016. Adoption is not expected to have any incremental effect on results of
operations, financial position, and cash flows.
35
(2) ALASKA NATIVE CLAIMS
SETTLEMENT ACT
The Corporation is a regional corporation organized pursuant to the Alaska
Native Claims Settlement Act of 1971 (ANCSA).
ANCSA provided for a monetary entitlement to be disbursed through the Alaska
Native Fund to the regional and village corporations created under ANCSA
and to certain regional corporation shareholders. The Corporation received
$32,694,953 as its total proportionate share of the monetary entitlement.
The Corporation is also entitled under ANCSA to select and receive
approximately three million acres of land, primarily subsurface estate.
Stockholders’ equity includes net cash receipts from the U.S. government and
the State of Alaska under ANCSA. Land and subsurface rights conveyed under
ANCSA are not recorded because it is not reasonably possible to determine the
value of the assets conveyed at this time. Of the Corporation’s entitlement of
3,079,553 acres, the Corporation has received interim conveyance to 434,874
acres of subsurface estate and has received patent to 2,593,893 acres. The
Corporation has also received interim conveyance to 115,349 acres of surface
and subsurface estate.
The Corporation’s Articles of Incorporation, in accordance with the
requirements of ANCSA, provided for the issuance of 100 shares of common
stock at the inception of the Corporation to each Alaska Native enrolled in the
Bristol Bay region as follows:
• Class A shares to Alaska Natives enrolled in the Bristol Bay region who
are also enrolled in one of the village corporations in the region.
• Class B shares to Alaska Natives enrolled in the Bristol Bay region who
are not enrolled in one of the village corporations in the region. The
stockholders of Class B stock are referred to as “at large” shareholders.
This stock, stock dividends or distributions, and any other stock rights may not
be sold, pledged, assigned, subjected to a lien or judgment execution, treated
as an asset in a bankruptcy proceeding or otherwise alienated except in limited
circumstances by court decree, by gift to certain relatives and by death. All
holders of stock have the same economic rights.
During the period that restrictions on stock alienation are in effect, the stock
carries voting rights only if the holder is an Alaskan Native or a descendant of
an Alaskan Native, as defined in the amended ANCSA. As of March 31, 2015
and 2014, there were 9,213 and 8,949 holders of Class A stock and 918 and 872
holders of Class B stock, respectively. Among these stockholders, 9,067 and
857 hold voting stock at March 31, 2015, and 8,798 and 811 hold voting stock at
March 31, 2014.
The outstanding stock of the Corporation will remain subject to restrictions on
alienability unless a decision is made by shareholders pursuant to ANCSA to
terminate the restrictions.
A quarterly distribution in the amount of $125 is made to each Elder that is an
original shareholder and age 65 and older.
Under Section 7(i) of ANCSA, the Corporation is required to distribute
annually 70% of the net resource revenues received from the Corporation’s
timber and subsurface estate to all 12 Alaska Native Regional Corporations
organized pursuant to ANCSA. Under Section 7(i) of ANCSA, the Corporation
also redistributes 50% of revenues received under Section 7(i) of ANCSA to the
Corporation’s village corporations and at-large shareholders.
In June 1982, an agreement was reached among the Native regional
corporations settling several years of litigation concerning the meaning and
application of Section 7(i). The settlement agreement sets past liabilities
and establishes rules for the future by which distributable revenues will
be determined. These consolidated financial statements comply with the
settlement agreement.
(3) ACQUISITIONS
PEAK OILFIELD SERVICE COMPANY LLC
In November 2013, the Corporation acquired 100% of Peak Oilfield Service
Company LLC (Peak), an oilfield services company, for total consideration of
$137,890,000 funded through cash and debt financing.
The purchase price was allocated as follows (in thousands):
Assets:
Cash
$
Accounts receivable
2,036
24,481
Inventory
417
Cost and earnings in excess of billings
5
Other assets
1,162
Property, plant and equipment
111,988
Intangibles:
Trade names (amortized over 11 years)
1,122
Customer relationships (amortized over 5 years)
1,683
Noncompete agreements (amortized over 5 years)
701
Total Assets
143,595
Liabilities:
Accounts payable
2,414
Accrued liabilities
3,291
Total liabilities
5,705
Net assets acquired
$
137,890
The Corporation incurred $3,100,000 of acquisition related costs, which are
included in corporate general and administrative expense in the Consolidated
Statements of Operations for the year ended March 31, 2014.
Peak’s operating results are included in the consolidated statement of
operations in the Oilfield and Industrial Services line of business.
36
(4) GOODWILL AND INTANGIBLES
(5) MARKETABLE SECURITIES
The change in the carrying amount of goodwill for the years ended March 31, 2015 and 2014 are as follows (in thousands):
The cost and fair value of marketable securities included in the trading portfolio at March 31 are as follows (in thousands):
Balance as of March 31, 2013
40,193
Disposition of PC lube’s business unit
2015
COST
GROSS
UNREALIZED
GAINS
GROSS
UNREALIZED
LOSSES
FAIR VALUE
12,154
—
—
12,154
Domestic
47,955
20,150
(1,662)
66,443
International
24,404
5,073
(1,728)
27,749
Mutual Funds
13,226
307
(428)
13,105
Government
3,866
30
—
3,896
Government-sponsored
(3,400)
Balance as of March 31, 2015 and 2014
36,793
Money market mutual funds
$
$
Equities:
The changes in the carrying amount of intangibles for the years ended March 31, 2015 and 2014 are as follows (in thousands):
37
SES
PC
ASL
BBML
PEAK
TOTAL
881
4,290
4,588
176
—
9,935
Fixed income securities
Acquisitions
Customer relationships
—
—
—
—
1,683
1,683
Noncompete agreements
—
—
—
—
701
701
Tradenames
—
—
—
—
1,122
1,122
3,592
20
—
3,612
International government
255
—
(1)
254
Mortgage-backed
460
17
—
477
5,120
108
(30)
5,198
618
—
(61)
557
111,650
25,705
(3,910)
133,445
COST
GROSS
UNREALIZED
GAINS
GROSS
UNREALIZED
LOSSES
FAIR VALUE
14,544
—
—
14,544
Domestic
48,020
22,226
(866)
69,380
International
17,285
3,796
(967)
20,114
18,279
1,002
(327)
18,954
Corporate – domestic
Amortization
(881)
(399)
(234)
(43)
(140)
(1,697)
—
—
(309)
—
(59)
(368)
Tradenames
—
—
(91)
—
(42)
(133)
Contractual backlog
—
—
(113)
—
—
(113)
—
3,891
3,841
133
3,265
11,130
Corporate – international
$
2014
Acquisitions
—
—
—
—
—
—
—
—
—
—
—
—
Money market mutual funds
Tradenames
—
—
—
—
—
—
Equities:
Amortization
—
(319)
(234)
(43)
(337)
(933)
—
—
(309)
—
(140)
(449)
Mutual Funds
Tradenames
—
—
(91)
—
(102)
(193)
Fixed income securities
Contractual backlog
—
—
(113)
—
—
(113)
$
Government
224
12
—
236
3,276
—
—
3,276
369
—
(34)
335
Mortgage-backed
1,770
—
(1)
1,769
7,256
145
(13)
7,388
825
—
(14)
811
111,848
27,181
(2,222)
136,807
Government-sponsored
$
—
3,572
3,094
90
2,686
9,442
Estimated amortization expense for the next five years is $2.3 million in 2016, $2.2 million in 2017, $1.8 million in 2018, $1.7 million in 2019 and $1.4 million in 2020.
$
38
not to exceed $3,825,000. The Corporation accounts for this investment using
the equity method, and reports its share of earnings or losses within other
revenue.
The Corporation’s revolving note agreement, disclosed in note 10, requires a
money market value of 95% plus marketable equity securities in an amount
greater than 75% of the outstanding loan balance maintained in a custodian
account administered by the bank.
Investment earnings consist of the following (in thousands):
YEAR ENDED MARCH 31
2015
Dividends
$
Interest
Gain on sale of marketable securities, net
Unrealized (depreciation) appreciation of
marketable securities
$
2014
2013
1,854
2,199
2,590
503
664
809
9,816
10,351
10,424
(3,164)
9,956
(712)
9,009
23,170
13,111
In June 2013, the Corporation purchased a 5% interest in JL Office Tower,
LLC for $2,075,000. The purpose of the LLC is to operate a commercial
office building in Anchorage, Alaska. As of March 31, 2015, the equity for JL
Office Tower, LLC was $32,692,000, net income was $786,000, and partner
distributions were $500,000 for the fiscal year ended March 31, 2015. As of
March 31, 2014, the equity for JL Office Tower, LLC was $32,406,000, net income
was $740,000, and partner distributions were $600,000 for the fiscal year ended
March 31, 2014. The Corporation accounts for this investment using the equity
method, and reports its share of earnings or losses within other revenue.
In June 2013, the Corporation purchased a 17.5% interest in JL Denali Tower,
LLC for $1,750,000. The Corporation is a Class B member of which no profit
or loss is allocated to the Corporation. As a Class B member, the Corporation
does not have the ability to exercise any influence over operating and financial
policies of the LLC. Class B members receive a preferred distribution of 8%
of the Corporation’s capital contributions. The Corporation accounts for this
investment using the cost method.
(6) INVESTMENTS IN
UNCONSOLIDATED AFFILIATES
In July 2013, the Corporation made a $5,000,000 commitment to invest in the
KKR North America Fund XI Limited Partnership, of which it owns less than
a 1% interest. As of March 31, 2015 and 2014, the Corporation has funded
$2,480,000 and $2,165,000, respectively, of the commitment. The Corporation
accounts for this investment using the cost method.
In July 2010, the Corporation made a $5,000,000 commitment to invest in the
Siguler Guff Distressed Opportunities Fund IV, Limited Partnership, of which
it owns less than a 1% interest. As of March 31, 2015 and 2014, the Corporation
has funded $4,175,000 and $3,600,000, respectively, of the commitment. The
Corporation accounts for this investment using the cost method.
In September 2013, the Corporation made a $4,000,000 commitment to invest
in the KKR Asian Fund II, Limited Partnership, of which it owns less than a 1%
interest. As of March 31, 2015 and 2014, the Corporation has funded $1,162,000
and $514,000, respectively, of the commitment. The Corporation accounts for
this investment using the cost method.
In March 2009, the Corporation purchased a 10% interest in CenterPoint
West, LLC, for $2,229,000. The purpose of the LLC is to construct and operate
a commercial office building in Anchorage, Alaska. In connection with the
purchase, during 2010, the Corporation contributed an additional $1,221,000
to the LLC, bringing its total investment contributions to $3,450,000. The
Corporation accounts for this investment using the equity method, and reports
its share of earnings or losses within other revenue.
In August 2013, the Corporation purchased an initial 10% interest in
International Office Building, LLC and subsequently, in October 2014, the
Corporation purchased an additional 10% interest for a total purchase price of
$3,538,000. The purpose of the LLC is to operate a commercial office building in
Anchorage, Alaska. As of March 31, 2015 and 2014, the equity for International
Office Building, LLC was $14,468,000 and $13,059,000, respectively. For the
year ending March 31, 2015, net losses for International Office Building, LLC
was $532,000. There was no income for the year ended March 31, 2014, as
the building was still under construction. The Corporation accounts for this
investment using the equity method, and reports its share of earnings or losses
within other revenue.
Summarized financial information for CenterPoint West, LLC is as follows (in
thousands):
YEAR END MARCH 31
Net income
Partner distribution
Equity
$
2015
2014
2013
388
565
2,787
450
5,800
2,100
25,540
25,602
30,837
In September 2011, the Corporation purchased a 45% interest in First Alaska
Capital Partners – Gas Storage, LLC for $1,740,000. Total net income for First
Alaska Capital Partners – Gas Storage, LLC was $1,100,000 during fiscal year
2015. There was no income during fiscal year 2014. Total Partner distributions
for First Alaska Capital Partners – Gas Storage, LLC was $1,100,000 and
$1,202,000 during fiscal years 2015 and 2014, respectively. Total equity for First
Alaska Capital Partners – Gas Storage, LLC was $2,665,000 at March 31, 2015 and
2014, respectively. The Corporation’s total capital contribution requirement is
In April 2014, the Corporation purchased a 24% interest in JL-LFGTE, LLC for a
total $3,000,000 commitment. In September 2014, the LLC operating agreement
was amended to include an additional member, reducing the Corporations
interest to 20%. As of March 31, 2015, the Corporation has funded $2,579,000
of the commitment. The purpose of the LLC is to partially fund an entity to
acquire, build, and operate landfill gas to energy projects in various locations.
The LLC’s year end is December 31, 2014. As of December 31, 2014, the equity
for JL-LFGTE, LLC was $11,445,000, net losses were $1,537,000, and partner
distributions were $175,000 for the fiscal year ended December 31, 2014.
Pursuant to the operating agreement partner distributions differ from the
ownership interest including liquidation, and accordingly, the company is using
the HLBV method to recognize earnings or losses from this investment, and
reports its share of earnings or losses within other revenue.
39
In March 2014, the Corporation purchased a 99.99% interest in JL-BBNC, LLC,
which owns a 16.67% interest in JL-FX Hotel Development, LLC, for $4,000,000.
The purpose of the LLC is to construct and operate a hotel in Orlando, Florida.
JL-BBNC, LLC accounts for their interest in JL-FX Hotel Development, LLC
using the equity method. Accordingly, the Corporation consolidates the results
of the equity method, and reports its share of earnings and losses within
other revenue. As of March 31, 2015, the equity of JL-FX Hotel Development,
LLC was $19,880,000. No income has been generated from operations as the
Development is currently under construction.
In November 2014, the Corporation purchased a 50% interest in JL-BBNC Mezz
Utah, LLC for $2,500,000. The purpose of the LLC is to make loans to an entity. As
of March 31, 2015, the equity for JL-BBNC Mezz Utah, LLC was $5,003,000, net
income was $153,000 and partner distributions were $150,000 for the fiscal year
ended March 31, 2015. The Corporation accounts for this investment using the
equity method, and reports its share of earnings or losses within other revenue.
The following tables present the balances of assets and liabilities measured at fair
value on a recurring basis as of March 31, 2015 and 2014 at each hierarchical level:
MARCH 31, 2015
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
Assets
Trading securities:
Money market funds
$
YEAR END MARCH 31
Domestic
International
Earnings from unconsolidated affiliates
Lease revenue from portfolio
Gain on sale of unconsolidated affiliates
—
66,443
66,443
—
—
27,749
27,749
—
—
13,105
13,105
—
—
Government
3,896
3,896
—
—
Government – sponsored
3,612
3,612
—
—
254
254
—
—
Mutual funds
2014
2013
Mortgage-backed
477
—
477
—
5,198
5,198
—
—
557
557
—
—
$ 133,445
132,968
477
—
—
—
(501)
$
—
Equities:
Earnings on cost method investments
12,154
Fixed income securities:
Investment earnings include the following (in thousands):
2015
12,154
547
280
—
164
331
279
1,722
1,386
457
—
—
407
Total trading securities
Liabilities
$
2,433
1,997
1,143
(7) FAIR VALUE MEASUREMENTS
FASB ASC Topic 820 establishes 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 1 measurements) and the lowest
priority to measurements involving significant unobservable inputs (Level 3
measurements). The three levels of the fair value hierarchy are as follows:
Interest rate swaps
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
Assets
Trading securities:
$
14,544
14,544
—
—
Domestic
69,380
69,380
—
—
International
20,114
20,114
—
—
18,954
18,954
—
—
Money market funds
Equities:
• Level 2 inputs are inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly or
indirectly.
Mutual funds
Fixed income securities:
Government
Government – sponsored
FAIR VALUE MEASUREMENTS ON A
RECURRING BASIS
Financial assets and liabilities are classified in their entirety based on the
lowest level of input that is significant to the fair value measurements. The
Corporation assessment of the significance of a particular input to the fair value
measurements requires judgment, and may affect the valuation of the assets
and liabilities being measured and their level within the fair value hierarchy.
(501)
MARCH 31, 2014
• Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Corporation has the ability to
access at the measurement date.
• Level 3 inputs are unobservable inputs for the asset or liability.
$
236
236
—
—
3,276
3,276
—
—
335
335
—
—
Mortgage-backed
1,769
—
1,769
—
7,388
7,388
—
—
811
811
—
—
$ 136,807
135,038
1,769
—
—
—
(551)
Total trading securities
Liabilities
Interest rate swaps
$
(551)
40
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Corporation, using market information and appropriate valuation
methodologies, has determined the estimated fair value of financial
instruments. However, the estimates are not necessarily indicative of the
amounts that the Corporation could realize in a current market exchange.
The carrying amounts of cash and cash equivalents, marketable securities,
notes payable, accounts payable, accrued liabilities, unclaimed dividends, and
long term debt are considered a reasonable estimate of their fair value. Variable
interest rates that are currently available to the Corporation for the issuance of
debt were used to estimate the fair value of long term debt and notes payable.
(8) ACCOUNTS RECEIVABLE, TRADE
YEAR END MARCH 31
2015
2014
Accounts receivable, trade (in thousands)
$
Billed accounts receivable
163,931
164,471
3,625
2,066
431
680
Accounts receivable, trade
167,987
167,217
Less allowance for doubtful accounts
(1,260)
(725)
166,727
166,492
Unbilled accounts receivable
Contract retainage
$
Scheduled principal payments on long-term debt are as follows:
On April 27, 2009, PC entered into a swap agreement on a $15,000,000 notional
amount on its line of credit with a fixed interest rate of 2.43% with a maturity
date on July 1, 2012. This swap agreement was amended effective August 1,
2011, to 1.60% and a maturity date on January 1, 2015. The termination liability
of this swap as amended at March 31, 2014, was $172,000, and is included in
accrued liabilities. The change in the fair market value of the swap decreased
interest expense by $172,000, $176,000 and $71,000 in fiscal years 2015, 2014
and 2013, respectively.
2017
57,021
2018
9,010
2019
23,307
2020
12,088
On September 30, 2010, PC entered into a swap agreement on a $10,000,000
notional amount on its line of credit with a fixed interest rate of 2.74%. This
swap agreement matured on January 1, 2014. The termination liability of this
swap at March 31, 2013, was $214,000 and was included in accrued liabilities.
The termination liability of the swap decreased interest expense by $214,000 in
2014 and by $222,000 in 2013.
2015
2014
$ 44,136
35,355
$75,000,000 revolving note payable to bank, interest based
upon the London Interbank Offering Rate (LIBOR) in effect
June 1, 2016
$11,120,000 term loan payable to bank, interest
based upon LIBOR in effect at month-end plus 0.65% (0.92% at
March 31, 2015) payable in monthly payments of $62,000 for 10
MARCH 31
years starting July 2006, the balance remaining due July 2016,
4,633
5,313
secured by a deed of trust on the Bristol Bay Building and
2015
2014
—
16,333
$60,000,000 bank line of credit, interest
based at PC’s option at LIBOR plus 0.80%
(1.07% at March 31, 2015), secured by PC’s
guaranteed by the Corporation
$14,700,000 term loan payable to bank, interest based upon the
$
accounts receivable
LIBOR in effect plus 1.70% (1.97% at March 31, 2015) payable in
monthly amortizing payments for 8 years starting December
13,803
14,195
2012, the balance remaining due December 2019, secured by a
deed of trust on a building and assignment of rents
$780,000 short-term notes payable by PC to
village corporations, interest at 2.25%, notes
780
due on September 30, 2015, and October 31,
780
$60,000,000 term loan payable to bank interest based
upon the LIBOR in effect plus a margin ranging from
2015 guaranteed by the corporation
1.75 to 3.50% based on a quarterly ratio of funded debt
$
780
17,113
to EBITDA (2.52% at March 31, 2015) payable in monthly
48,572
57,143
111,144
112,006
(9,718)
(9,705)
$ 101,426
102,301
payments of $714,000 for five years starting November 2013,
the balance remaining due October 2018, secured by assets of
Peak and guaranteed by the Corporation
PC entered into the Third Amendment to the September 30, 2010 Wells Fargo line
of credit as amended, effective in September 2014. The maximum borrowings
available under the facility are $60.0 million, and borrowing capacity was
determined on a borrowing base of 80% of eligible accounts receivable which
secures the line of credit. As of March 31, 2015, PC’s eligible accounts receivable
Less current maturities
$
9,718
Thereafter
Total
—
$
111,144
The revolving note agreement requires a money market collateral value be
95% plus marketable equity securities in an amount greater than 75% of the
outstanding loan balance maintained in a custodian account administered
by the bank. The revolving note has an issued letter of credit in the amount of
$825,000.
The $60,000,000 term loan payable has certain financial loan covenants that
consists of a minimum basic fixed charge coverage ratio, debt service coverage
ratio, current ratio, funded debt to borrower EBITDA ratio, net worth ratio, and
funded debt ratio.
Long-term debt consists of the following (in thousands):
collateralized by marketable securities, commitments expire
Notes payable consists of the following (in thousands):
2016
The $14,700,000 term loan payable has certain financial loan covenants that
consists of a minimum basic fixed charge coverage ratio, unencumbered liquid
assets, and debt service coverage ratio.
(10) LONG-TERM DEBT
as draws are made plus 0.3% (0.57% at March 31, 2015),
(9) NOTES PAYABLE
(11) BENEFIT PLANS
totaled $31,248,000. This amended line of credit expires on August 31, 2017, and
includes financial covenant requirements that PC maintain a minimum tangible
net worth and a minimum fixed charge coverage rate.
MARCH 31
Total accounts receivable, trade, net
41
In March 2012, the Corporation entered into a revolving note payable to a
bank, amended and restated in May 2014, for $30,000,000, interest based upon
LIBOR in effect, as draws are made, plus a margin ranging from 1.10% to 1.45%,
secured by accounts receivable of the Corporation, commitments expire on
October 1, 2016. There is no outstanding amounts payable on this revolving
note at March 31, 2015 and 2014.
The Corporation maintains a 401(k) savings plan that contains a safe harbor
matching contribution up to 5% of covered wages for all contributing
employees. In addition, at the discretion of the Corporation’s Board of Directors,
the Corporation may make a profit sharing contribution to the plan. Employee
contributions were matched up to 5% of the employees’ salaries in 2015, 2014
and 2013, respectively. Amounts expensed for the plan for the years ended
March 31, 2015, 2014 and 2013 were $11,736,000, $12,739,000 and $12,505,000,
respectively. Kakivik maintained a separate contributory 401(k) savings plan for
its employees through December 31, 2012. At January 1, 2013, the Kakivik 401(k)
savings plan was frozen and subsequently merged into the Corporation 401(k)
savings plan. Amounts expensed for the Kakivik plan for the year ended March
31, 2013, were $568,000.
The Corporation is self-insured for healthcare, which covers the majority of
employees of the Corporation and its wholly owned subsidiaries. The cost of
providing the benefits for employees and dependents is limited to agreedupon stop-loss levels of $500,000 per claim. At March 31, 2015 and 2014, the
Corporation had accrued liabilities of approximately $2,885,000 and $3,083,000.
The Corporation has a large deductible insurance plan for workers’
compensation covering all employees except foreign employees and
employees in the states of Washington, North Dakota, Wyoming and Ohio. At
March 31, 2015 and 2014, the Corporation had accrued liabilities recorded of
approximately $2,879,000 and $2,067,000, of which $2,538,000 and $1,632,000,
respectively, was for workers’ compensation claims incurred but not reported.
At March 31, 2015 and 2014, the Corporation had a $3,200,000 letter of credit
balance held by its workers’ compensation insurer pursuant to the terms of a
collateral agreement with the insurer.
(12) INCOME TAXES
On June 5, 2009, through an interest rate swap agreement, the Corporation
changed the interest rate on a portion of the outstanding revolving note to fix
the floating LIBOR. Through August 1, 2012, the fixed rate was 1.755%. This
swap matured on August 1, 2012. The change in the fair market value of the
swap decreased interest expense by $25,000 in 2013.
The components of income tax expense (benefit) for the years ended
March 31, 2015, 2014 and 2013 are as follows (in thousands):
On June 24, 2005, through an interest rate swap agreement, the Corporation
changed the interest rate on the $11,120,000 term loan to a fixed rate. Through
June 30, 2016, the term loan bears a fixed interest rate of 5.01%. The swap’s fair
value of the estimated termination liability of $247,000 and $469,000 at March
31, 2015 and 2014, respectively, is included in accrued liabilities. The change
in the fair market value of the swap decreased interest expense by $222,000 in
2015, $273,000 in 2014 and $205,000 in 2013.
Currently payable federal and state taxes
On December 1, 2012, through an interest rate swap agreement, the
Corporation changed the interest rate on the $14,700,000 term loan to fix the
floating LIBOR. Through December 1, 2019, the fixed rate is 1.716%. The swap’s
fair value of the estimated termination asset (liability) of $(254,000) at March 31,
2015 and $90,000 at March 31, 2014, is included in accrued liabilities and other
assets, respectively, increasing interest expense by $344,000 in 2015, decreasing
interest expense by $520,000 in 2014, and increasing interest expense by
$430,000 in 2013.
$
Deferred tax expense
$
2015
2014
2013
19,388
24,687
27,269
8,612
8,360
672
28,000
33,047
27,941
42
Income tax expense (benefit) differs from the amounts computed by applying
the U.S. federal income tax rate of 35% for 2015, 2014 and 2013 to pretax income
as a result of the following (in thousands):
Computed expected tax expense
$
State income tax (benefit) expense,
net of federal effect
Benefit of permanent differences
Change in net operating loss estimates
and carryforward items
Other
$
2015
2014
2013
25,509
28,768
24,241
3,504
4,229
2,453
(385)
(529)
(365)
—
—
1,832
(628)
579
(220)
28,000
33,047
27,941
The income tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March 31, 2015
and 2014 are presented below:
2015
2014
Deferred tax assets
Net operating loss – federal and state
$
182
242
Forward contract losses/impairments
693
1,025
Accounts receivable allowance
518
301
Interest rate swaps
101
264
Incurred-but-not-reported claims
1,118
952
Accrued liabilities
1,186
1,449
Total gross deferred tax assets
3,798
4,233
$11,000,000. Approximately $24,700,000 of net operating loss carryforwards
were available and used to offset taxable income for the year ended March
31, 2013. In July 2013, the Corporation was notified by the IRS of its intent
to examine the Corporation’s consolidated federal income tax return for the
year ended March 31, 2012 and the amount of net operating loss available
for carryback to the March 31, 2011 and 2010 tax years. The examination is
currently underway with the primary focus being the loss recognized on the sale
of the oil and gas rights in 2012. The Corporation and its subsidiaries are open
to examination for tax years March 31, 2010 through March 31, 2015.
It is not practicable to determine the tax basis of most of the Corporation’s
ANCSA lands and it is not known if they will provide future tax benefits.
Therefore, no tax value has been assigned to them consistent with the
accounting treatment for financial reporting.
(13) LEASES
PC leases most of its fueling sites and administrative office space under
noncancelable operating leases, which expire at various times through
2024. Peak Oilfield Service Company leases most of its operational sites and
administrative office space under noncancelable operating leases which expire
at various times through 2025. CCI Industrial Services leases a warehouse and
administrative offices under leases that expire through 2025. Some of the PC
leases also require a contingent rent based upon gallons of fuel sold. Included
in total rental expenses are contingent rents of $290,000, $317,000 and $124,000,
respectively. At March 31, 2015, the minimum rental commitments under
noncancelable operating leases payable over the remaining lives of the leases
are as follows (in thousands):
Deferred tax liabilities
Minimum Rentals
Fixed assets
(16,703)
Intangibles
(2,140)
(1,804)
2016
Unrealized gain on investments
(8,960)
(10,261)
2017
6,675
Prepaid expenses and other
(291)
(236)
2018
5,689
Investment in joint ventures
(2,398)
(1,211)
2019
5,031
2020
3,961
Total gross deferred tax liabilities
Net deferred tax liability
$
(8,803)
(30,492)
(22,315)
(26,694)
(18,082)
The Corporation has an income tax receivable at March 31, 2015, of $530,000
and an income tax payable at March 31, 2014, of $2,168,000 included in
refundable taxes and accrued liabilities, respectively.
During 2012, the Corporation sold the oil and gas rights to 37,000 acres for
$1,000 and recognized a loss of approximately $153,400,000 for tax purposes.
The tax loss offset taxable income and generated a net operating loss that
was carried back to its March 31, 2011 and 2010 tax returns for a refund of
$
Thereafter
Total
7,643
10,065
$
Minimum Rentals
39,064
Total rental expense charged to operations in 2015, 2014 and 2013 was
$8,378,000, $6,992,000 and $6,654,000, respectively.
Commencing in November 2012, the Corporation entered into a
noncancelable operating lease of a building and land with a tenant expiring
in 10 years. This building under lease had an aggregate cost and accumulated
depreciation of $15,695,000 and $903,000 at March 31, 2015, and an aggregate
cost and accumulated depreciation of $15,695,000 and $500,000 at March 31,
2014, respectively.
$
1,499
2018
1,544
2019
1,590
2020
1,667
Thereafter
9,692
$
The Corporation maintains its cash in accounts with third party financial
institutions which, at times, may exceed federally insured limits. The
Corporation has not experienced any losses in such accounts.
1,455
2017
Total
In assessing the realizability of deferred tax assets, management considers
whether it is probable that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets depends
upon the generation of future taxable income during the periods in which
those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment.
(15) CREDIT RISK
At March 31, 2015, the minimum future rental revenues under this
noncancelable operating lease are as follows (in thousands):
2016
43
17,447
(14) CONTINGENCIES
In the normal course of business, the Corporation may be a participant in legal
proceedings related to the conduct of its businesses that will result in contingent
liabilities or contingent assets that are not reflected in the accompanying
consolidated financial statements. In the opinion of management, the financial
position, results of operations or liquidity of the Corporation will not be
materially affected by any such current legal proceeding.
The Corporation has entered into contracts to provide services to commercial
and government agencies. The majority of these contracts are subject to audits
and potential adjustments by the respective customer. At this time, there
are no pending audits or audit adjustments on the government contracts.
Management believes that any adjustments that could potentially be made
under the contract will not have significant impact on the Corporation’s
financial position, results of operation, or liquidity.
(16) CONCENTRATION OF
REVENUE AND RECEIVABLES
During 2015, 2014 and 2013, 87%, 86% and 93%, respectively, of the
Corporation’s government and construction services revenues were derived
from contracts with U.S. government agencies. A significant portion of these
contracts were granted under the Small Business Administration (SBA) 8(a)
program that exempts U.S. government granting agencies from certain federal
procurement regulations when awarding contracts to 8(a) participants. The SBA
further exempts awarding agencies from certain contract size limitations when
awarding contracts to 8(a) participants owned by Alaska Native Corporations.
Changes in U.S. government spending, the 8(a) program, or both, could have
a significant positive or negative impact on the liquidity, results of financial
operations, and financial condition of the Corporation. As of March 31, 2015
and 2014, 40% and 49%, respectively, of trade accounts receivable are due from
government agencies.
(17) SUBSEQUENT EVENTS
On May 29, 2015, the Board of Directors of the Corporation declared an $8.10
share dividend payable to shareholders of record of Class A and B stock as
of May 15, 2015. The dividend was paid on June 5, 2015. The total dividend
amount was approximately $4,375,000.
The Corporation has evaluated subsequent events from the consolidated
balance sheet date through June 9, 2015, the date at which the consolidated
financial statements were available to be issued, and determined there are no
other items to disclose.
44
BBNC Annual Report Two-Thousand and Fifteen | Audit Committee Report
AUDIT COMMITTEE REPORT
JUNE 9, 2015
Bristol Bay Native Corporation Shareholders:
The BBNC Audit Committee, consisting of four directors, is pleased to issue this report. The primary
responsibilities of the Audit Committee are to ensure that the Corporation’s accounts are properly maintained
and adequately verified by the Company’s public accountants, to review and approve major changes in the
Corporation’s accounting policies and to report to the full Board of Directors upon the foregoing.
To fulfill our duties, we met with the public accountants and the Corporation's chief financial officer on two
occasions during the 2015 fiscal year.
Among other matters discussed and reviewed at the meetings were the scope of the audit to be performed
by the public accountants and the associated work plan, areas of identified risk and focus, the results of the
public accountant’s audit, the adequacy of the Corporation’s system of internal controls, the appropriateness of
the Corporation’s accounting policies and the public accountant’s opinion regarding the financial statements
prepared by the Corporation.
We believe that the committee has been informed fully by management and the public accountants regarding
the accounting and financial aspects of the Corporation. Nothing of any material nature has come to our
attention.
BBNC Annual Report Two-Thousand and Fifteen | Statement of Management Responsibility
STATEMENT OF MANAGEMENT
RESPONSIBILITY
Management is responsible for the fairness, integrity and objectivity of the Corporation's financial statements
including all related information included in this Annual Report. The statements and related information are
prepared in accordance with generally accepted accounting principles.
We believe that fostering an environment conducive to good internal control is a basic responsibility.
Management maintains a system of internal accounting controls which provides reasonable assurance
that assets are safeguarded and transactions are properly executed and recorded in accordance with the
Corporation's policies for conducting business. This system includes policies which required adherence to
ethical business standards and compliance with laws to which the Corporation is subject. The internal controls
process is monitored by direct management review as well as independent review.
The Board of Directors, through its Audit Committee, is responsible for determining that management fulfills
its responsibility with respect to the Corporation's financial statements and the system of internal accounting
controls (see the Audit Committee's report on the previous page).
Management acknowledges its responsibility to provide financial information that is reliable, representative of
the Corporation's operations, and relevant for a meaningful appraisal of the Corporation. We believe that our
control process meets this responsibility.
We thank all those involved for their cooperation and assistance in our efforts to fulfill our Audit Committee
responsibilities.
Joseph L. Chythlook
Chairman, Board of Directors
Daniel P. Seybert
Committee Chairman
Jason Metrokin
President and Chief Executive Officer
Jeffrey E. Sinz
Senior Vice President & Chief Financial Officer
45
46
BBNC Annual Report Two-Thousand and Fifteen | Board of Directors and Senior Management Team
BBNC
BOARD
OF
DIRECTORS
AND SENIOR
MANAGEMENT
TEAM
BOARD OF DIRECTORS
(TOP PHOTO)
Back row: Karl Hill, Daniel P. Seybert, Russell S. Nelson,
H. Robin Samuelsen Jr., Everette Anderson, Peter Andrew Jr.,
Melvin C. Brown, Robert Clark, and Shawn Aspelund
Front row: Dorothy M. Larson, Joseph L. Chythlook, and Marie Paul
SENIOR
MANAGEMENT TEAM
(BOTTOM PHOTO)
Daniel Cheyette, Sara Peterson, Andria Agli, Jeffrey Sinz,
Nancy Schierhorn, Ryan York, Greta Goto, Jason Metrokin,
April Ferguson, William Gornto, Rick Baird, and Scott Torrison
BBNC Annual Report Two-Thousand and Fifteen | Board of Directors and Senior Management Team
47
BRISTOL
BAY
NATIVE
CORPORATION
Corporate profile
Bristol Bay Native Corporation (BBNC) is a responsible Alaska Native investment corporation dedicated to the mission of
“Enriching Our Native Way of Life.” Established through Alaska Native Claims Settlement Act of 1971 (ANCSA), BBNC works to
ensure the continuation of the life and culture of its more than 10,000 shareholders—the Eskimo, Indian, and Aleut Natives of
Southwest Alaska’s Bristol Bay region.
Mission
Values
Enriching our Native way of life.
To protect the best interests of our shareholders.
To maintain or grow total dividends paid annually by providing a
solvent corporation.
Vision
To celebrate and preserve the Alaska Native culture and linkage with
To be a corporation that protects the past, present
land that provides the basis of our style of life.
and future of the Natives from Bristol Bay.
Goals
Build the value of the
Pay predictable and
Promote improved
Position BBNC so that
Endorse a Fish
Corporation’s assets
increasing dividends
employment
it will have a major
First policy for
and increase its
to BBNC shareholders.
and educational
voice in economic
land and resource
financial strength for
opportunities for
development in the
management in
the future.
BBNC shareholders.
region.
Bristol Bay.
A special thanks
to Misty Nielsen Photography
for providing photography featured
on the inside front cover, pages 3, 7,
11, 12, 14 and the inside back cover.
www.mistynielsenphotography.com
A
R
I
T
111 West 16th Avenue, Suite 400
Anchorage, AK 99501
907.278.3602 | www.bbnc.net

Bristol Bay Native Corporation Annual Report Two

Transcription

Similar documents

Eloxite Corporation

Challenger 2/3 Level 0 Control

Compared to cold-tip thermometers

Project Description: In 2008 Hoyne Savings Bank realized that their

Company Profile - Javedan Resources Corporation

Hawaiian Party

Mission Statement - Joslyn Sunbank Company

In2m pr1 - Home of Kelly McNulty

TM3000-TableTopSEM-BrochureHTD-E188Q

Ecocarat - Guocera